Moderating Role Of Hofstede’s Cultural Dimensions In Brand Equity Creation

In business practice and academic research,brand equity has received significant attention due to the competitive advantage and long term profits it brings companies.Brand equity can be created,maintained and intensified through a brand’s marketing efforts,however cross-cultural misunderstanding of consumers or markets has the potential to ruin business deals,hurt sales or harm the image of a brand,thus affects brand equity building.In international marketing,culture is considered one of the influential factors that affect consumers’ motives,attitudes toward choices,intentions,product consumption and purchases on a global basis.Therefore,to achieve global success,cultural awareness cannot be overlooked.Thus,it is important for marketing efforts to be sensitive to cultural values of that particular market to imprint a good image of the brand,achieve higher brand equity and increase profit.Successful brands are those that adopt their branding strategies in line with the dominant cultural philosophy and weave their brands into the cultural fiber.Therefore,this study was carried out to develop a better understanding of the impact of culture on company’s marketing mix strategy decisions in building strong brands.Specifically,the study tested the cross-cultural invariance of the proposed research model as well as investigate the moderating effect of the culture dimensions on the relation between selected marketing activities(price,advertising spending and price promotion)and brand equity dimensions(brand image,perceived quality and brand loyalty).Thus,marketers will effectively be able to make investment in the right marketing efforts.Using the jeans(Levis,Wrangler,Diesel and Armani)and athletic shoe(Adidas,Nike,Puma and Reebok)brands category as product stimuli,an empirical study was conducted using data gathered from both above undergraduate students and consumers in the workforce(workers but not students)aged between 18 to 35 years old in Ghana and China.Two levels of data analysis were conducted: Individual(country level)and multi-group(data combined)using Statistical Package for Social Sciences(SPSS)version 19 and SPSS AMOS version 21.Exploratory factor analysis(validity and reliability tests)was employed to test the unidimensionality of the constructs and thus select and assess the final items to be used for hypotheses testing.Confirmatory Factor Analysis(CFA)was employed to evaluate the measurement model,measure model fitness of data,test model measurement and structural invariance,followed by Structural Equation Model(SEM)to estimate the parameters and test the research hypotheses and relationships among the latent constructs.Findings related to the directional effect of marketing efforts on brand equity dimensions are consistent with previous studies.The effect of advertising spending on perceived quality and brand image were both positive and equivalent in both markets whiles effect on brand loyalty was negative and insignificant.The effect of price on perceived quality was not equivalent in both markets,while the effect was positive in both markets,it was stronger in the Chinese market.Finally,the effect of price promotion on brand image was negative and equivalent in both markets,while the effect of price promotion on perceived quality was also negative and equivalent in both markets,it was insignificant.With regards to relationship among brand equity dimensions,findings reveal that the impact of brand image to brand loyalty was not equivalent in both markets,while it was substantively positive in the Ghanaian market;this impact was negative in the Chinese market and insignificant.Moreover,the effect of brand image on perceived quality was positive and equivalent in both markets but insignificant.Furthermore,the impact of perceived quality on brand loyalty was not equivalent in both markets,while it was positive in both the Chinese and Ghanaian market;it was insignificant in the later.All brand equity dimensions(brand loyalty,perceived quality and brand image)impact on brand equity were positive and equivalent in both markets.Additionally,results from invariance tests reveal marketing efforts and dimensions of brand equity have invariant effects on brand equity across the Ghanaian and Chinese samples.More importantly,the study indicates that cultural dimensions moderate the relationship between marketing efforts and brand equity dimensions.Results indicate that in high power distance and feminine cultures,the advertising spending and perceived quality positive relationship is strengthened whereas this relationship is buffered among consumers with high level of uncertainty avoidance.Price promotion to perceived quality negative relationship is also reduced in both high power distance and collectivistic cultures.The study also provides several managerial implications for international brand managers to effectively invest in the right marketing efforts in building brand equity.Marketing strategies that use price as a signal to influence perceived product quality in both Ghana and China cannot be the same.Each market’s pricing strategy needs to be adapted to the local market as this will make the difference between success or failure.Advertising is an important marketing communication tool for brands to utilize in influencing brand equity dimensions.Although,quantity of advertising(intensity)sends the cue of caring for the product,thus shaping the perception of high quality in consumers’ minds,the quality of message communicated is vital.Thus,brands should design their communication campaigns that highlight on the markets culture characteristics.Brand managers should also empower their sales people with the required skills and knowledge to first make consumers gain their trust through their welcoming attitude and friendly behavior.Frequent price promotions lead consumers to infer low product quality.When promotions are executed,brands should implement product demonstration and trial in promotional campaigns to build brand equity in both markets.Culture has often been neglected in previous consumer based brand equity creation models,however this study shows incorporating culture(as a moderator)will either enhance,buffer or antagonize the effect of marketing activities on brand equity creation.This reinforces the need that to effectively build brand equity,it is vital to understand the culture of the market and thus customize marketing practices(branding tactics)to meet local preferences.From a theoretical perspective,this study developed an integrated model of culture in the customer-based brand equity formation.