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ournal of Research in Interactive Marketingmerald Article: Sources of brand equity for online companiesosa E. Rios, Hernan E. Riquelme

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Sources of brand equityfor online companies

Rosa E. Rios Australian College of Kuwait, Safat, Kuwait, and

Hernan E. Riquelme Kuwait-Maastricht Business School, Salmiya, Kuwait

AbstractPurpose The purposes of this paper are to test sources of brand equity for online companies and toexamine the role of selective internet marketing activities on the brand equity sources.Design/methodology/approach These objectives were pursued by testing the nomologicalvalidity of the model using structural equation modelling.Findings The paper nds evidence for the proposed sources of brand equity for online companiesbased on brand awareness and recognition, brand association (trust) and loyalty. The investigatedantecedents namely functionality, fullment and customer service on line, signicantly inuence thesources of brand equity.Research limitations/implications The study is cross-sectional, the dimensions to measuresources and antecedents of brand equity may not be comprehensive enough. The stimuli representonly a few online retailers.Practical implications Businesses are well advised to invest resources in creating brandrecognition, customer loyalty and trust. Both of these can be achieved by developing internetmarketing efforts around functionality, fullment of the promise and customer service support.Originality/value The nomological validity of the measurement and structural models forcompanies that operate on the internet, constitute a modest contribution. It is believed that a model,which integrates both, creates a more systemic view of brand equity. Apart from this one, there is noother study measuring the impact of internet marketing activities on brand equity sources.Keywords Brand equity, Marketing, Electronic commerce, Customer services qualityPaper type Research paper

IntroductionNotwithstanding the debacle of the dotcom industries in the early 2001, and despite thepredictions of the end of brand management as a result of the new electronic market,brands still continue to carry value for the companies that created them.

It appears that far from dying, new corporate brands such as Amazon.com, Yahoo!,Google, eBay, Facebook have arisen in the new digital age and command immensebrand equity, putting them at the top of many traditional ofine companies.

Although a large amount of research has been conducted to understand how brandscreate revenue for companies in the package industry, little is known about the way inwhich brand equity is created and measured on the internet. Recent papers suggestthat a model of brand equity for packaged goods can be extended to explain brandequity for companies on the internet whereas others propose alternative measurementmodels. Not many researchers have tested the nomological validity of the measurementmodels for internet companies, nor have they tested the inuence of internet marketing

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/2040-7122.htm

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Received July 2009Revised October 2009Accepted November 2009

Journal of Research in InteractiveMarketingVol. 4 No. 3, 2010pp. 214-240q Emerald Group Publishing Limited2040-7122DOI 10.1108/17505931011070587


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activities on the sources of brand equity, a model, which integrates both, creates a moresystemic view of brand equity.

The aim of this research is to investigate the role of a number of selective internetmarketing activities (online customer service, fullment and web functionality) createdby online companies to inuence the sources of brand equity.

As the market has evolved to encompass a new type of competition, one thatinvolves pure internet companies and many others using a mix of brick and clickstrategies, it is suspected that companies need more than just a brand.

A common view about the internet is that it has the potential to erode brand equityfor several reasons: the emergence of new business models on the internet (e.g. nameyour price), the availability of large amount of information including price, productcharacteristics and tools (e.g. price comparison) and not least, the access to a largenumber of suppliers (Chen, 2001; Dussart, 2001). Early studies on the internetmarket conducted by economists refute the above speculation. Economists found thatconsumers were willing to pay a premium price of up to 6.8 per cent higher forcommodity products such as CDs and books when they were bought from awell-recognised branded online store such as Amazon.com, rather than a less-knownonline retailer like CDNow (Smith et al., 2000). Other research studies have reportedprice dispersion for products sold on the internet of up to 33 per cent demonstratingthat brand still matters on the internet, even for commodity products (Riquelme, 2001).

The remainder of this paper is organized as follows: rst, the concept of brandequity is dened and its importance explained. Second, brand equity models in ofineand online contexts are reviewed. Third, a proposed model is advocated and explained

to derive a number of hypotheses that are nally tested.

Literature reviewBrand equity is an important intangible asset of a company therefore creating it is awise investment. Some companies such as Coca Cola, Amazon.com and eBay, arebelieved to be worth substantially more because of this intangible asset rather thanother measurable tangible benets (Interbrand, 2006).

Brand equityVarious denitions of brand equity have been proposed, some dened from apsychological point of view under the assumption that brand equity is constructed inthe mind of individuals, whilst others dene it from a nancial perspective. Brandequity, as rst dened by Farquhar (1989, p. 24), is the added value to the rm, thetrade, or the consumer with which a given brand endows a product, and market factsconceive brand equity, similarly to loyalty, as the willingness for someone to continueto purchase your brand or not. Perhaps the most widespread denitions are thosesuggested by Aaker (1991) and Keller (2003). The former denes brand equity as:

[. . .] a set of brand assets and liabilities linked to a brand, its name and symbol that add to orsubtract from the value provided by a product or service to a company and/or to thatcompanys customer (Aaker, 1991, p. 15).

Keller (2003, p. 60), on the other hand, denes consumer-based brand equity (CBBE)(a term thathe coined to separate it from alternative nancial modelling of brand equity),

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as the differential effect that brand knowledge has on consumer response to themarketing of that brand.

Brand equity modelsHow does a company create brand equity? Models of brand equity based on consumerperceptions have been abundant in the past 20 years with disagreements in relation tothe dimensions included in the models, the number of dimensions and the denition of brand equity itself. Some researchers argue for a conceptualisation of brand equitybased on ve factors, for example, social image, value, performance, trustworthinessand attachment (Lassar et al., 1995). Others represent it in four different concepts likebrand loyalty, brand awareness, brand associations and perceived quality (Aaker and Joachimsthaler, 2000).

According to Keller (2003) and his CBBE model, brand equity emerges from twosources namely brand awareness and brand image. According to this model, consumersbuild associations in their minds around a brand as the resultof themarketing programscompanies developfor their brands. Kellerhas proposed several observable measures totrack the performance of brand building namely salience, imagery, performance, judgements, feelings and resonance.

The CBBE model and Aakers model have been extensively tested for theirpredictability of brand equity for packaged branded products and there is evidence of the validity of observable measures of brand equity across some countries (Buil et al.,2008; Jung and Sung, 2008; Yoon, 2002).

Brand equity for online companiesPractitioners who have reviewed best practices of outstanding online businesses in theearly years of e-commerce concluded that these companies build brand awareness,cultivate customer commitment, create reputation for excellence and deliveroutstanding value (Carpenter, 2000). Similarly, McKinsey consultants, based on theirown ndings, recommended executives of online companies to create a distinctive valueproposition, create a full-edged internet business, or digital brands that can ultimatelyfull consumers expectations (Dayal etal., 2000). Other recommendations to help brandrecognition include corporate web site design, content, navigation, graphic design andfunctionality ( Johnson and Grifth, 2002).

Academics have also started to explore brand equity for online companies eithertheoretically or empirically. Some of these studies seem to apply implicitly or explicitlyexisting conceptualisations of brand equity as dened by Keller (2003) or Aaker (1996),whereas others depart from them. Among the latter is the development of ameasurement model of retail brand equity for online companies called onlineretail/service (Christodoulides et al., 2006).

The online retail service (ORS) brand equity model is based on ve sources:emotional connection, online experience, responsive service nature, trust andfullment. In this model, the ORS brand equity is dened as a relational type of intangible asset that is co-created through the interaction between consumers and thee-tail brand. It is important to note that this is the rst attempt to conceptualise brandequity within the relationship paradigm (Rios and Riquelme, 2008). However, theirdenition of brand equity differs from a more conventional product brand equity thatspecies brand equity as an outcome that accrues to a branded product compared with

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those that would accrue to an unbranded alternative (Keller, 2003). The ORS brandequity model does not include awareness among the sources of brand equity.Unfortunately, there is no explanation as to why this could not be the case given thatbrand equity models include awareness as their building block (Rios and Riquelme,2008). It is also unclear why the independent factors in the ORS model such asresponsiveness, trust and fullment could not be conceived as brand associationstherefore justifying the use of the traditional model of brand equity. Putting theseobservations aside, the model, resulting from the application of structural equationmodelling (SEM), has a good t to the data as demonstrated in goodness of t index(GFI) 0.93, adjusted GFI 0.88, comparative t index (CFI), incremental t indexand non-normed t index (NNFI) equal to 0.94, 0.95 and 0.92, respectively. Themeasurement model has not been tested for its nomological validity, that is, to predictbrand equity.

In perhaps one the rst brand equity models developed for online companies, Pageand Lepkowska-White (2002) proposed that web equity can be created in a similarfashion as ofine product brand equity by inuencing two main sources, as suggestedby Keller (2003): brand image and brand awareness, and proposed loyalty as anoutcome of web equity. To create web awareness, Page and Lepkowska-White (2002)suggest several marketing communication activities that can be developed bymarketers and non-marketers (e.g. word of mouth) to create web equity. Content is oneway marketers create awareness about the company, together with more web-specicadvertising tools such as interstitials and banners. To build web image, the authorssuggests four types of drivers: marketing communication activities, web design

features, vendor (customer service, security) and product-related characteristics(e.g. quality, selection and price).Page and Lepkowska-Whites web equity model implies that the main difference

between packaged brand equity and web equity is in the marketing program. However,in using loyalty as an outcome of brand equity it is not clear if the model is explainingloyalty rather than brand equity. Loyalty is considered by Aaker (1996) a source of equity rather than an outcome. Furthermore, the web equity conceptual frameworkseems to assume that online the web site is the brand however; the authors do notprovide any justication for this assumption.

An alternative brand equity model for online companies has been tested by Rios andRiquelme (2008) following Aakers model. In their study, instead of singling outperceived quality, the authors identied value associations as a more comprehensiveterm than product quality and trust associations, in addition to the original sources of equity: loyalty and awareness. Consistent with evaluations of SEM, the measurement

model proposed has good t to the data (root mean square error of approximation(RMSEA) 0.048, p-value 0.56; NNFI 0.99; CFI 0.99; standardised root meansquare residual (SRMR) 0.02 and GFI 0.98). It was further tested to predict brandequity measured as the willingness to pay a premium and purchase intention. Thestructural model indices also indicate a good t to the data: RMSEA 0.065,p 0.34;CFI 0.99; NNFI 0.98; SRMR 0.03 and GFI 0.96. From the application of thestructural model, value associations and loyalty emerge as the only main (statisticallysignicant) sources of brand equity. Trust associations play an indirect role byinuencing loyalty. Brand awareness and recognition associations did not come up asa signicant source of brand equity conrming other studies suggesting brand recall


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and awareness do not necessarily create brand equity (Bravo Gil et al., 2007; Faircloth,2005; Graebner-Kraeuter, 2002). An alternative explanation to the lack statisticalsignicance could be that the online retailers were all perceived very familiar except forone, CDNow. Perhaps the model could have included the source brand awareness andrecognition as a moderating source since the results show no direct impact of thissource on brand equity contrary to expectations.

Despite many studies measuring online activities and outcomes such as awarenessand attraction to bring customers to a web site, there is no study measuring the impactof online marketing activities on brand equity sources.

Thus, this study adds to the body of research in brand equity by incorporatinginternet and web site features as branding mechanisms and further as antecedents of brand equity sources. The following section explains the conceptual framework, whichguides this research.

Proposed conceptual model Considering that the paper advocates the application of an existing model of brandequity, we recognise the following as sources of brand equity based on previous models:brand awareness and recognition, loyalty, brand value associations and trust. UnlikeAaker (1996) who treats perceptions of brand quality separate from associations of value, we instead decide to use brand value. There is literature suggesting thatconsumers make a judgment on value rst and that quality is but one component of allvalue associations (Holbrook and Cornan, 1985; Netemeyer et al., 2004; Zeithaml, 1988).Furthermore, recent empirical tests (Rios and Riquelme, 2008) conrmthe importance of

value as a source of brand equity. Given the importance of trust in the context of e-commerce (Ha, 2004; Pennanenet al., 2007; Tan and Sutherland, 2004), we alsohighlight it as a source of brand equity for online retailers. This brand association hasbeen acknowledged by Aaker in his model of brand equity but only as one of the manypossible associations related to an organization.

In addition, we propose that certain internet marketing activities namely fullment,functionality and online customer service created by online companies inuence thesources of brand equity. Although these activities do notcover thefull range of a marketingprogram, they represent frequently cited marketing actions and recommendations foronline companies (Carpenter, 2000; Lindstrom and Andersen, 1999; Page andLepkowska-White, 2002). Based on the literature, we hypothesise direct relationshipsbetween the internet marketing activities, the sources of brand equity and brandequity itself.

Since loyalty and brand awareness/recognition have been extensively substantiated

as source of brand equity in the literature (Aaker, 1991, 1996; Keller, 2003) and giventhe constraint of space, these will not be described in this paper but they are assumedas H1 and H2 in the proposed model in Figure 1. On the other hand, brand associationsspecically related to the concept of value for the consumer and trustworthiness will becommented upon. The next section justies the relational paths shown in Figure 1.

Brand association (trust)Aaker (1996) considers brand-related associations with trustworthiness as one amongthe many other associations, however, given the importance of the concept for onlinecompanies; we believe it should be singled out. Consumers inability to trust web sites

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have been one of the main deterrents to conducting transactions online. This lack of trust emanates from three sources: security/privacy, electronic fraud and disreputablenew merchants (Gorriz, 2003).

Trust associations in an entity, or a product brand, do not only affect the belief aboutthe entity but has also been suggested to affect the willingness to buy from an onlineentity (Jarvenpaa et al., 2000), intention to purchase (Bart et al., 2005), willingness totransact (Bhattacherjee, 2002; Pavlou, 2003), pay a price premium (Ba and Pavlou, 2002)and stay with a web site (Li et al., 2006). In a study where Australian and Hong Kongstudents were asked if they would purchase required course textbooks from an onlinebookstore, trustingbeliefs led to buying intentions among Australiansbutnot HongKong

students(Sia et al., 2009).And in an experiment where participants were required to buyatravel package from an unknown online travel agency, trust in the brand directlyinuenced brand equity and led to provide personal information and to purchaseintentions (Delgado-Ballester and Hernandez-Espallardo, 2008). From this evidence, it isadvocated that:

H3. Trust is positively related to brand equity.

Brand association (value)Practitioners and academics agree on the importance of a companys value proposition(Thomas and Kohli,2009; Tolba and Hassan, 2009) and its relationship with brand equity

Figure 1.Proposed structural model

Brandequity

Awareness/ Recognition

Loyalty

Trustassociations

Value

associations

Customerservice

Fulfilment

Functionality

H1

H2

H3

H4

H8

H6

H7 H5

H9

H10

H11

H12

H13


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(Aaker, 1996;Kleindl,2001;Lassaret al., 1995; Lee and Overby, 2004; Leuthesser, 1988). Ina study where 167 undergraduate students reported on measures of perceivedquality/value and uniqueness in relation to willingness to pay a premium and purchasefrom any of three fast-food retailers, Netemeyer et al. (2004) found that perceivedquality/value and uniqueness were statistically signicantly in relation to price premiumforall threefast-food retailers.In a followup of Netemeyer etal.s study, Taylor etal. (2007)found that willingness to pay a price premium was positively related to perceived brandvalue. Companies, regardless of thetype of industry, strive to develop strategiesthat offervalue to consumers. There is recent evidence that supply chain managers perceive greatvalue fromsupply chain responsiveness and that thisresponsivenesscontributes to createbrand enquity (Kim and Cavusgil, 2009).

Hence, it is hypothesised that:

H4. Perceived brand value association is positively related to brand equity.

In order to maintain the model relatively simple in terms of number of hypotheses, nospecied relationship is described between the sources of brand equity. However, thereis empirical evidence that awareness of the brand is positively associated to value andtrust and that value associations are positively related to trust and loyalty (Rios andRiquelme, 2008). These relationships are tested and reported in our study under theunspecied relationships column in Table III in the Results section.

The following internet marketing activities have been selected to study their impacton the sources of brand equity: fullment, functionality and online customer service.The justication for the selection of each is given below.

Web functionalityFunctionality refers to the web site design elements that make the interaction a fun andenjoyable web experience, where the consumer may be offered various options such asspeed of download, graphics, 3D images, video, audio and availability 24/7 (Heeter,2000). Web functionality is broadly understood as the user interface which includesweb site design, ease of use, ease of navigation (Dabholkar, 1996; Kaynama and Black,2000; Zeithaml et al., 2002) and the order process (Choate, 2000).

Thedifferent webfunctionalitieshave thecapacityto createa memorable experienceinconsumers minds which will generate greater brand awareness (Berry, 2000) and affectsalesby creating loyalty (RanganathanandGrandon, 2002).Navigation aids on a websiteproved useful to computer users because it reduces cognitive load, searching steps andconfusion, thus creating value to consumers (Chiu and Wang, 2000; Chou and Lin, 1998;Trumbull and Gay, 1992). This last relationship has been conrmed empirically amongonline consumer purchases of products such as CDs, books, computer hardware, etc.(Semeijn and van Riel, 2005). Given the above evidence, it is proposed:

H5. Perceived awareness/recognition is positively inuenced by the functionalityof the business web site.

H6. Perceived value is positively inuenced by the functionality of the businessweb site.

Some empirical evidence also suggests that web functionality creates loyalty (Roy et al.,2001; Wolnbarger and Gilly, 2003; Yoo and Donthu, 2001). In interviews conducted todetermine web site functionality, one of the Piccoli et al.s (2004, p. 445) interviewees

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reports that, ease of use enhances loyalty in our customers; designing it the way theywant it to function makes them more loyal to our services. Furthermore, whenconsumers encounter technical difculties, 52 per cent have split loyalty, that is,consumers will seek an alternative online business. From the above evidence, it ishypothesised that:

H7. Perceived loyalty of a brand is related positively to the extent to which theonline business web site is perceived as functional.

A relationship between trust and functionality is posited in this study becauseconsumersobtaincues from thefunctionalityof thebusinesswebsite to infer evidence of theonline business competence to provide theservice (Chau et al., 2006; Gummeruset al.,2004). It is been noted in personal interviews that some consumers need to pre-teste-services to determine how they are functioning before they trust them (Pennanen et al.,2007). This inuence of web functionality over trust is stronger among security-mindedconsumers than excitement-minded individuals. Finally, it is intuitively true that todevelop trust, companies must keep or full their promises. Hence, it is proposed that:

H8. Perceived trust of an online business is related positively to the extent towhich the brand is perceived as functional.

Fullment Simply put, fullment refers to the delivery-related aspects of the purchasing process(Maltz et al., 2005), also referred to as the last mile (Lee and Whang, 2001). From theconsumers perspective, fullment means online businesses deliver the product they

promised.In many respects, companies did not live up to consumers expectations and this

inuenced the trust they had placed in the online business. Tarn et al. (2003, p. 353)quote Krueger to illustrate the importance of fullment over some aspects of functionality; What good is a well-designed web site if it cant deliver the goods? Inaddition, as obvious as it may sound, strong negative associations can be formed if theproduct received does not match the order, if it is delivered late, or if it is not deliveredat all. Delivery is everything. If your courier lets you down it can spoil all the hardwork it takes to get customers to order from you, says Peter Bowman founder of BuyWineOnline.com (Vernon, 2001).

Ariely and Carmon (2000) note that the last part of the shopping experiencecustomers face will be determinant in deciding whether these consumers will repeat apurchase. Harrington (2000) raties this belief by linking the debacle of the dot com tothe lack of fullment.

Some online companies, knowing that some fullment problems can lead todissatisfaction, mistrust, or relationship extinction, have adopted different levels of service guarantee or remedial measures (Pitta et al., 2006). Toys R Us realised that itcould not deliver all its orders before Christmas, closed down its web site and issued$100 certicates to customers whose deliveries would be late (Lee and Whang, 2001).

Wolnbarger and Gilly (2003) in thedevelopment of their e-tail quality (eTailQ) indexconcluded that web site design, fullment, privacy/security and customer service arestrongly predictiveof satisfaction,customer loyalty andattitudes towarda website.TheeTailQ study supports ndings derived from focus group interviews where fullmentalong with other features determined trust and loyalty (McCole, 2002). Other studies


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have tested the role of several web site characteristics and concluded that navigation,advice, familiarity with the web site and shopping experience were drivers of trust (Bartet al., 2005).

Fullment of expectations (keeping promises) is central to relationship marketingand more specically, to service relationships and it has been found to create value forconsumers and companies (Brodie et al., 2006; Davis et al., 2000; Gronroos, 1996).Consequently, from the above review, it is hypothesised:

H9. The more an online business web site fulls the promise, the more consumerswill trust it.

H10. Perceived loyalty of an online business is related positively to the extent towhich the online business is perceived as fullling the promise.

Online customer support serviceIf a business web site is taken as an internet store from the standpoint of buildingonline brand equity and extending Jarvenpaa et al. s (2000) metaphor of the internetstore as a sales person, then it could be expected that customer support service caninuence online brand equity sources. This metaphor may not be too far fetched sinceit has been reported that most lost sales in a store are due to a lack of customer service(Kim and Stoel, 2005). Sometimes the design of an online business web site is notintuitive for customers therefore it is necessary to have an alternative way of supporting consumers throughout the different stages of the purchasing process. Linksto frequently asked questions and more importantly, linked to live representatives

whether via a free phone number or online are useful in order to assist customers inthe process.Customer support service has been stated as reducing the insecurity among

consumers when buying on the internet (Gommans et al., 2001). In an information-richenvironment such as the internet, information load maybe overwhelming, henceproviding a contact with a real person to dissipate doubts can create a bond with theonline company thus decreasing the trust barrier and creating loyalty (Pitta et al., 2006).

Perceptions of customer service performance have proved to be statisticallysignicant in previous studies when related to online loyalty, purchase intention andtrust (Kim and Lee, 2006; Tih and Ennis, 2006; Zeithamlet al., 2002). Gummeruset al.(2004) found that responsiveness (i.e. a quick response to requests from consumers)was a direct inuence on trust and an indirect inuence on satisfaction and loyalty.Consequently, this study hypothesises that:

H11. Perceived loyalty of an online business is related positively to the extent towhich the online business is perceived as providing customer service support.

H12. Perceived trust of an online business is related positively to the extent towhich the online business is perceived as meeting customer service supportdemands.

H13. Perceived value of an online business is related positively to the extent towhich the online business is perceived as offering customer service support.

No explicit hypotheses are suggested to test the inuence of internet marketingactivities on brand equity to simplify the model, however, tests were conducted to check

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for model misspecication and are reported in Table III under unspeciedrelationships column.

Methodology Product stimuli selectionThree of the online businesses selected in the study belong to the retail sector (Amazon,eBay and CDNow) and one is a manufacturer (Dell) which sells online. This researchassumes the companys (web site) brand name (e.g. the brand name Amazon) ratherthan a product or service brand, since online companies sell different products andconsumers main interaction is with the web site.

Data collectionThe instrument (a self-administered questionnaire) contained 27 items that measuredthe four sources of brand equity and the three antecedents of brand equity sources.Multi-item scales were generated based on previous studies. Some of the measuresused in this study have been validated recently for their factor structure and metricinvariance across a sample of consumers from the UK and Spain (Buil et al., 2008) andalso Americans and South Koreans (Jung and Sung, 2008). All items were measured onseven-point Likert-type scale, with anchors of 1 very strongly disagree and 7 verystrongly agree. Table I describes the items used in relation to the various dimensions.Respondents were asked to indicate the level of agreement/disagreement with thestatements for each of the four online stores.

Sample and procedureSubjects for the study were under graduate and graduate students from a largeuniversity in Australia. A total of 1,026 students were contacted in various classroomsto participate in the survey. The use of student samples has been questioned ongrounds of external validity (Burnet and Dunne, 1986; Wells, 1993). However, in ourcase the sample does not require to assume imaginary positions (like a chief executiveofcer) nor is put in situations unfamiliar to them. Finally, a report on Australianinternet demographics indicates that there has been signicant normalisation of theonline population since 1997 but power users are still predominantly young males(Caslon, 2008).

The sample consisted of 795 respondents. A total of 503 of these respondents hadbought oneof the four online businesses under study. A total of 292respondents hadnotpurchased from any of the stimuli but assessed an alternative online retailer where theyhad bought. Of 503 respondents (58 per cent men and 42 per cent women and a large

percentage (42) between the ages of 22 and 27) were used as the sample to test the onlinebrand equity measurement and structural models and the rest (292 cases) were used asa validating sample. The sample included individuals who had considerable level of internet experience, i.e. more than seven years (49.6 per cent); they have access toa high-speed connection and use the internet everyday.

Data analysisData were explored in terms of normality and outliers. The data presented moderatedeviations from normality, that is, with univariate skewness of two or less andkurtoses of seven or less (Curran et al., 1996). The raw data were submitted to PRELIS


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I h a v e a p r e f e r e n c e f o r [ X o n l i n e b u s i n e s s ] b e c a u s e i t a l l o w s t h e c o m p a r i s o n o f p r o d u c t p r i c e s

a c r o s s o n l i n e s t o r e s

I l i k e [ X o n l i n e b u s i n e s s ] b e c a u s e i t a l l o w s t o t r a c k m y o r d e r s

I l i k e [ X o n l i n e b u s i n e s s ] b e c a u s e i t o f f e r s a l t e r n a t i v e f o r m s o f p a y m e n t s : c a s h o n d e l i v e r y ,

c r e d i t c a r d s , m o n e y o r d e r

B r e a d t h a n d d e p t h

I l i k e [ X o n l i n e b u s i n e s s ] b e c a u s e o n e c a n n d t h e b r o a d e s t r a n g e o f p r o d u c t s

m e r c h a n d i s e

I h a v e a p r e f e r e n c e f o r [ X o n l i n e b u s i n e s s ] b e c a u s e i t p r o v i d e s t h e d e e p e s t

s p e c i a l i s e d a s s o r t m e n t s

T r u s t a s s o c i a t i o n s

B u r k e ( 2 0 0 2 )

, S u p p e h e l l e n a n d

N y s v e e n ( 2 0 0 1 )

, U r b a n e t a l .

( 2 0 0 0 )

,

W a n g e t a l .

( 2 0 0 4 )

I t f e e l s s a f e t o d i s c l o s e p e r s o n a l i n f o r m a t i o n i n [ X o n l i n e b u s i n e s s ]

I t f e e l s s a f e t o c o n d u c t t r a n s a c t i o n s i n [ X o n l i n e b u s i n e s s ]

[ X o n l i n e b u s i n e s s ] h a s m y c o n d e n c e

L o y a l t y

Y o o

e t a l .

( 2 0 0 0 )

I t m a k e s s e n s e t o b u y f r o m [ X o n l i n e b u s i n e s s ] i n s t e a d o f a n y o t h e r o n l i n e b u s i n e s s , e

v e n i f

t h e y

a r e t h e s a m e

( c o n t

i n u e

d )

Table I.Operational measuresused in theoriginal solution

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to obtain the covariance matrix that was subsequently run in LISREL V8.72 ( Joreskogand Sorbom, 1996), a software that allows analysis of SEM.

SEM has almost been used in all conceivable eld of studies and marketing has notescaped this practice since its introduction by Bagozzi (1984). SEM is more attractivethan other multivariate statistical techniques such as multiple regression, factoranalysis, multivariate analysis of variance and canonical analysis because of threereasons:

(1) it allows the examination of a series of dependence relationshipssimultaneously;

(2) its ability to assess relationships comprehensively providing a transition fromexploratory to conrmatory analysis; and(3) it has been deemed a suitable technique to test theory (Hair et al., 1998).

ResultsA completely standardised solution produced by LISREL 8.8 method (Joreskog andSorbom, 1996) was performed to test the measurement and structural models.The measurement model t indices seem to be adequate except for the x

2 ( x2

267.54,df 111) and p 0.0000. Inspection of the RMSEA (0.053) appears to be reasonablywell tting the covariance matrix and with 90 per cent condence that the upper limitis not beyond 0.06. The CFI 0.99, NNFI 0.99, GFI 0.94 and SRMR 0.03, allseem to be adequate.

Discriminant validityCorrelations among the rst-order constructs ranged between 0.39 and 0.88 below thesuggested value of 0.90 (Aaker, 1996; Keller, 1993) or below 0.70 (Hairet al., 1998).Given that the correlation between brand equity and loyalty is 0.88 a test of x

2

difference was performed (Bagozzi and Phillips, 1982).The resulting x

2 (88.08) with one degree of freedom ( x

2 355.62-267.54) and

p-value (0.000) suggests the constructs are correlationally distinct, thus conrmingdiscriminant validity.

The correlation between fullment and functionality was also high and suggestedthat items were not unidimensional thus lacking discriminant validity. A mergedconstruct named functionality/fullment was formed with some items of webfunctionality and fullment.

Convergent validity

Convergent validity of the overall measures in the model is demonstrated in severalways. See Table II for summary statistics.

Structural modelThe results of the structural relationships and standardised parameters are reported inTable III. The x

2 of this model is 281.04 with 121 degrees of freedom andRMSEA 0.051, 90 per cent condence interval for RMSEA 0.043-0.059,CFI 0.99, NNFI 0.99, SRMR 0.03 and GFI 0.94. All these indices, exceptfor the statistically signicant x 2 probability, are indicative of a reasonablewell-tting model.

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D i m e n s i o n

I t e m s

L o a d i n g s

t - v a l u e

S E

C o m p o s i t e

r e l i a b i l i t y

A v e r a g e

v a r i a n c e

e x t r a c t e d

A w a r e n e s s / r e c o g n

i t i o n

q 1

I k n o w w h a t [ X o n l i n e b u s i n e s s ] l o o k s l i k e

1 . 0 a

q 2

I c a n r e c o g n i s e [ X o n l i n e b u s i n e s s ] a m o n g o t h e r c o m p e t i n g o n l i n e

b u s i n e s s e s

0 . 9 3 *

2 9 . 4

9

0 . 0

3 6

q 3

I c a n q u i c k l y r e c a l l t h e n a m e o f [ X o n l i n e b u s i n e s s ]

0 . 8 1 *

2 3 . 6

6

0 . 0

4 0

0 . 9 0

0 . 7 7

A s s o c

i a t i o n v a

l u e

q 5

I n [ X o n l i n e b u s i n e s s ] I c a n n d t h e l o w e s t p r i c e s f o r a q u a l i t y b r a n d

1 . 0 0 a

q 6

I l i k e [ X o n l i n e b u s i n e s s ] b e c a u s e i t o n e c a n n d t h e b r o a d e s t r a n g e

o f p r o d u c t s

0 . 8 2 *

1 6 . 4

8 2

0 . 0

7 0

q 7

I h a v e a p r e f e r e n c e f o r [ X o n l i n e b u s i n e s s ] b e c a u s e i t a l l o w s t h e

c o m p a r i s o n o f p r o d u c t p r i c e s a c r o s s o n l i n e s t o r e s

0 . 7 9 *

1 7 . 2

2 8

0 . 0

6 1

0 . 8 3

0 . 6 3

A s s o c

i a t i o n t r u s t

q 2 2

[ X o n l i n e b u s i n e s s ] h a s m y c o n d e n c e

1 . 0 0 a

q 2 3

I t f e e l s s a f e t o c o n d u c t t r a n s a c t i o n s i n [ X o n l i n e b u s i n e s s ]

0 . 9 0 *

2 3 . 8

1

0 . 0

4 0

0 . 9 0

0 . 8 1

L o y a l

t y

q 2 4

I t m a k e s s e n s e t o b u y f r o m [ X o n l i n e b u s i n e s s ] i n s t e a d o f a n y o t h e r

o n l i n e b u s i n e s s , e

v e n i f t h e y a r e t h e s a m e

1 . 0 0 a

q 2 5

E v e n i f a n o t h e r o n l i n e b u s i n e s s h a s s a m e f e a t u r e s a s i n

[ X o n l i n e b u s i n e s s ] I w o u l d p r e f e r t o b u y f r o m [ X o n l i n e b u s i n e s s ]

0 . 8 7

2 4 . 1

5

0 . 0

3 8

0 . 9 0

0 . 8 1

C u s t o m e r s e r v

i c e

q 1 2

I l i k e [ X o n l i n e b u s i n e s s ] b e c a u s e i t o f f e r s a l t e r n a t i v e c u s t o m e r s u p p o r t

( c a l l c e n t r e , t o l l f r e e , e - m a i l , l i v e i n d i v i d u a l s

1 . 0 0 a

q 1 3

I h a v e a p r e f e r e n c e f o r [ X o n l i n e b u s i n e s s ] b e c a u s e i t o f f e r s s p e c i a l i s e d

c u s t o m e r s u p p o r t

0 . 8 6 *

2 2 . 5

6

0 . 8 7

0 . 7 7

( c o n t

i n u e

d )

Table II.Overall measurement

model statistics


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D i m e n s i o n

I t e m s

L o a d i n g s

t - v a l u e

S E

C o m p o s i t e

r e l i a b i l i t y

A v e r a g e

v a r i a n c e

e x t r a c t e d

F u n c t

i o n a

l i t y

f u l l m e n

t )

q 1 7

I l i k e [ X o n l i n e b u s i n e s s ] b e c a u s e i t e m s d e l i v e r e d m a t c h t h e p r o d u c t

d e s c r i p t i o n

1 . 0 0 a

q 1 8

I l i k e [ X o n l i n e b u s i n e s s ] b e c a u s e i t i s e a s y t o n a v i g a t e ( i . e . c o n t e n t

o r g a n i z e d a r o u n d u s e r s n e e d s )

0 . 8 7 *

1 9 . 4

4

q 1 9

I l i k e [ X o n l i n e b u s i n e s s ] b e c a u s e i t o f f e r s c o n s i s t e n t a c c e s s i b i l i t y ( i . e . i t

i s u p a n d r u n n i n g a t a l l t i m e s )

0 . 8 6 *

1 9 . 3

5

q 2 0

I h a v e a p r e f e r e n c e f o r [ X o n l i n e b u s i n e s s ] b e c a u s e i t i s e a s y t o o r d e r

p r o d u c t s f r o m

0 . 8 5 *

1 9 . 0

7

0 . 9 0

0 . 6 9

B r a n d e q u i t y o u t c o m e

q 2 6

I a m w i l l i n g t o p a y a p r e m i u m p r i c e o f u p t o 1 0 p e r c e n t w h e n

p u r c h a s i n g f r o m [ X o n l i n e b u s i n e s s ] a s o p p o s e d t o a l e s s w e l l k n o w n

1 . 0 0 a

q 2 7

I w o u l d d e n i t e l y b u y f r o m [ X o n l i n e b u s i n e s s ] a g a i n

0 . 8 0 *

2 0 . 5

8

0 . 8 1

0 . 6 9

N o t e s :

* P a r a m e t e r i s s i g n i c a n t l y d i f f e r e n t f r o m z e r o ; a i t e m i s x e d t o 1 . 0 f o r r e a s o n s o f m o d e l i d e n t i c a t i o n

Table II.

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Direct effects of brand equity sources on brand equityOne of the hypothesised direct relationships between brand equity sources and brandequity did not reach statistical signicance, namely perceived brand value associations( b 0.00, p 0.96). As hypothesised, the constructs perceived awareness/recognition, trust and loyalty are positively related to brand equity b 0.12, p 0.000, b 0.15;p 0.01; and b 0.73, p 0.000, respectively. From inspectionof the standardised b values, it can be concluded that loyalty is the strongestdeterminant of brand equity, followed far behind by trust and awareness.

Direct effects of internet marketing activities on brand equity sourcesIt was expected that web functionality/fullment would inuence positively onlinebusiness awareness/recognition, associations of value, trust and loyalty. However, webfunctionality/fullment seems to have an inuence on awareness ( g 0.54,p 0.000)and trust ( g 0.45, p 0.000) only and not on value ( g 0.00, p 0.60) or loyalty( g 0.01, p 0.73). In relation to perception of customer support, the data support twoof the hypothesised relationships: customer support services strongly and positively

inuence perceptions of value ( g 0.33, p 0.000) and trust ( g 0.21, p 0.00).The data does not support a relationship with brand awareness/recognition ( g 0.07, p 0.23) or loyalty ( g 0.11, p 0.06).

The proposed model explains quite a substantial percentage of the variance( R 2 0.81) of brand equity. This is mainly determined by three sources of brandequity: brand awareness/recognition (0.12), brand trust associations (0.15) and loyalty(0.73). The latter accounting for the majority of the variance.

Alternative models . It has been suggested that it is important to account forpotential relationships (either directly of indirectly) that were not theoretically justied, nor specied a priori, but that could have an impact in the structural model

Hypothesis Unspecied relationships Parameter p-value Conclusion

Awareness ! brand equity (BE) ( H1 ) b 0.12 0.000 SupportedValue ! BE ( H4 ) b 0.00 0.96 Not supportedTrust ! BE ( H3 ) b 0.15 0.01 SupportedLoyalty ! BE ( H2 ) b 0.73 0.000 Supported

Awareness ! value b 0.60 0.000 SupportedAwareness ! trust b 0.04 0.36 Not supportedValue ! trust b 0.01 0.86 Not supportedTrust ! loyalty b 0.69 0.000 SupportedValue ! loyalty b 0.19 0.000 Supported

Functionality/full ! awareness ( H5 ) g 0.54 0.000 SupportedFunctionality/full ! value ( H6 ) g 0.00 0.60 Not supportedFunctionality/full ! loyalty ( H7 ) g 0.01 0.73 Not supportedFunctionality/full ! trust ( H8 ) g 0.45 0.000 Supported

Functionality/full ! BE - 0.27 Not supportedCustomer service ! loyalty ( H11 ) g 0.13 0.06 Not supportedCustomer service ! trust ( H12 ) g 0.21 0.005 SupportedCustomer service ! value ( H13 ) g 0.33 0.000 Supported

Customer service ! BE - 0.43 Not supported

Table III.Summary of structural

model hypotheses


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Perceived value association of an online business does not appear to be a relevantsource of brand equity. One plausible explanation is the narrowly conceived measureof customer value in the model. The dimensions measuring the value source thatremain in the study (after uni-dimensionality depuration) relate mainly to price, exceptfor one dimension that reects value in the form of the broadest range of products.In this context, price-related value may do little to create brand equity. In fact, if brandequity is dened as a differential in the price given as a result of the brand name, it isexpected that loyal consumers will be less sensitive to price than brand-non loyalconsumers (Bagozzi and Dholakia, 2006).

Value associations, being more specic evaluative construct than the loyalty source,inuence brand equity only through loyalty. This result may not be surprising sinceconsumers mayhave rich associationsin conjunction with a brand, but these maynot benecessary to create brand equity (Graebner-Kraeuter, 2002). Still another explanation of the lack of importance of value as a source of brand equity is that in the internet space,where functional product features are becoming commodities, it is relationship benetsthat increasingly drive brand equity.

Trust association with a brand, as expected, has proved to have a direct effect onbrand equity and an indirect one through loyalty. There is no surprise that so muchresearch has been devoted to studying this source, especially in the online environment.Trust has been deemed crucial for online businesses because without it, e-commercedevelopment will not reach its potential (Yang and Peterson, 2004). Trust only existsin uncertain and risky environments (Reichheld and Schefter, 2000) such as ina computer-mediated environment where customers cannot physically inspect or toucha product, nor can they see the salespersons gestures.

This research provides support of previous claims of the relationship between trustand brand equity (Keller, 2003). It has been noted that strong brands are a safe place forcustomers and that this safety can be cultivated by associating their brands with trust(Aaker and Joachimsthaler, 2000, p. 17), this study corroborates the importance of thissource in building brand equity. The construct is explained largely ( R 2 0.40) bycustomer support and the mix of functionality and fullment activities.

Together with trust association, loyalty is the most important source of brandequity online. In regression terms, an increment of one unit of loyalty has an incrementin brand equity of 0.73 units. This nding is consistent with models of brand equitydeveloped by Baldauf et al. (2003), Yooet al.s (2000) and Keller (2003) and reinforcesAaker and Joachimsthalers (2000) assertion that brand loyalty is at the heart of brands value. In e-commerce in particularly, loyalty is deemed a major driver of

success (Davis and Dunn, 2002) and even more valuable than ofine because of thehigher costs of acquiring customers (Yang and Peterson, 2004; Yoo et al., 2000). Thendings from the present study conrm its importance in creating brand equity and of managing loyalty as part of the brand management strategy (Christodoulides and deChernatony, 2004; Oloughlin, 2006; Page and Lepkowska-White, 2002).

This study, although it cannot prove causality, does suggest conrmation of thehypothesised hierarchical effects of brand equity sources (Bart et al., 2005; Harris andGoode, 2004). Brand awareness inuences the association customers make aboutbrand value and in turn, these associations inuence loyalty, which ends up creatingbrand equity.


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Internet marketing activities . Web functionality (a combination of fullmentactivities and web functionality) contribute to create awareness and trust directly andhelp, indirectly, in building loyalty and brand equity. Part of the results are concordantwith literature that suggest online companies that provide consistent, reliableaccessibility to businesses web sites (Page and Lepkowska-White, 2002) and simplepurchasing processes (Pitta et al., 2006) create awareness and develop associations of trust (Li et al. (2006). Web functionality/fullment does not inuence the perception of value in our study perhaps because of the narrow operationalization of the valuesource. In this context web functionality does little to create a perception of valuefor money.

Web functionality/fullment does not create loyalty directly either as it washypothesised. Perhaps, once customers learn to navigate and order products from abusiness web site and receive the products as expected, these functionalities are takenfor granted and consumers do not become loyal as a result. It may be that webfunctionality/fullment are so essential to any company nowadays that their valueas an antecedent is neutralized: without it a company is not even in the game(Barber, 1983).

Although no hypotheses were specied between web functionality/fullment andbrand equity directly, such effect was assessed by exploring alternative links in thestructural model and by judging the importance through their indirect effect. Thisindirect effect is measured by adding the product of web functionality/fullmentthrough all possible routes to brand equity. The result of this exercise conrms theimportance of web functionality/fullment as indirect inuence on brand equity

through the value and loyalty sources. Therefore, one cannot under estimateits effect.Customer support service, another common internet marketing activity, creates

value and trust directly but does not inuence web site awareness or loyalty. Theseresults are consistent with theoretical literature that suggest customer service is acritical factor affecting online purchase behaviour (Aaker and Joachimsthaler, 2000)and that the difference between a successful online company and one that is not, isbased on the level and value-added service they provide for customers (Morgan andHunt, 1994). This research also corroborates a survey by Jupiter Communications thatfound that 91 per cent of online consumers want human contact at one point in timewhile making online transactions (Page and Lepkowska-White, 2002).

The possibility to contact a company representative and obtain specialised support iswidely used in the travel industry, where sometimes retired personnel work from home toprovide advice to passengers around the clock all over the world (Chaudhuri and

Holbrook, 2001). Other industries like nancial and healthcare are also providing theseservices to enhance value. Apart from adding value, online customer service support alsoboosts trusting beliefs. This is consistent with suggestions that regular communication isa necessary condition for the formation, development and maintenance of trust (Bart et al.,2005). It is also possible that online customer support is signalling to consumers that theonline business is trustworthy since often technical or professional competence of thetrusted party generate trust relationship (Piccoli et al., 2004).

Customer service support does inuence loyalty and brand equity but onlyindirectly. The total indirect effect of customer service support on brand equityoutcome is not negligible (0.25).

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Overall, managing customer support and functionality/fullment activities areconsiderably signicant to secure trust. No wonder, some successful online retailerslike Jeff Bezos, Amazon.coms founder, suggests investing money in developing andimplementing efcient delivery mechanisms rather than advertising, which is easy tocopy (Jiang and Rosembloom, 2005).

ImplicationsOur study aimed at identifying the sources of brand equity and their antecedents tocreate brand equity for online companies. The study contributes with some evidence as

to the relationship of some web site associations as branding and brand equitymechanisms. Marketing managers arewell advised to dedicate resources to develop website functionality, fullment and customer service online. Although web site attributesand online customer service do not contribute directly to create brand equity, they doinuence the associations customers make with an internet brand like amazon.com.Marketer and web site developers should be conscious that functionality and fullmentfeatures inuence recognition and awarenessof an online company.If thefeaturesdo notsatisfy consumers that navigate through a web site (experience it), they will certainly beaware and recognise an internet brand but for the wrong reasons.

Functionality and fullment also have a direct impact on the level of trustconsumers infer from an online company. This effect supports Berrys (2000) claim forservice branding that strong brands increase customers trust of invisible products.The internet brand is akin to a service due to its intangibility, the experience of themediation of technology and the deferred benet all contributing to a degree of trustdependency (Jevons and Gabbot, 2000).

In addition to the functionality and fullment experienced by customers online,customer support on line also creates trust in the internet brand. Marketers and web sitemanagers should realise that in a technologically-mediated environment, consumersare alone in front of a computer and when something goes wrong they will try tocommunicate with somebody representing the brand online. According to our study,managers shouldprovide customer support to create have thesenseof trust and also value.

Brand awareness and recognition are the pillars to creating brand equity accordingto various brand equity models. Our study raties the importance and resourcesaiming at creating awareness and brand recognition are well spent. However, brandawareness and recognition are only the rst step in the pyramid to creating brandequity. Hence, resources must also be allocated to creating trust and loyalty.

This study corroborates the importance managers should give to developing trustin the case of internet brand because of its direct impact on brand equity. It is advisedthat managers go beyond privacy and security policies online but contemplate trust ina broader sense, perhaps condence.

ConclusionsThe main goals of this research were to test the predictability of sources of brand equityand the inuence of selected internet marketing activities as antecedents of the sources.The brand equity sources were derived from traditional models based on knowledgeconsumers haveof an internet brand measured in terms of awareness/recognition, trust,value associations and loyalty.


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