Brand Building and Firms’ Performance, A Study of Small and Medium Firms in Hong Kong BY Tam Yuk Man 07010168 China Business Studies Major & Wong Yin Yuk 07014716 China Business Studies Major An Honours Degree Project Submitted to the School of Business in Partial Fulfillment Of the Graduation Requirement for the Degree of Bachelor of Business Administration (Honours) Hong Kong Baptist University Hong Kong April 2010
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Brand Building and Firms’ Performance,
A Study of Small and Medium Firms in Hong Kong
BY
Tam Yuk Man
07010168
China Business Studies Major
&
Wong Yin Yuk
07014716
China Business Studies Major
An Honours Degree Project Submitted to the
School of Business in Partial Fulfillment
Of the Graduation Requirement for the Degree of
Bachelor of Business Administration (Honours)
Hong Kong Baptist University
Hong Kong
April 2010
ACKNOWLEDGEMENTS
First of all, we would like to express our sincerest thankfulness to everyone who assisted
and encouraged us in doing this project.
We especially like to express our deepest gratitude for our supervisor, Professor Ji Li,
who provided us valuable guidance and many professional opinions in the whole process.
With his expertise in marketing and research, he gave us lots of valuable advices and
challenges that pushed us to strive for excellence in this research.
Lastly, we wish to thank the industry experts who were involved in the study. Their
cooperation and diligence in completing the questionnaires was critical in bringing the
success of our study.
i
EXECUTIVE SUMMARY
This study was concerned about the brand building and business performance
of Hong Kong small and medium-sized firms which set up their own factory in mainland
China. Since the electronic industry and the electrical & optical products industry are
now facing a relatively stiff competition, to establish and consolidate the intangible assets,
particularly brands, become one of the most effective strategies to sustain the business.
Three variables namely trade shows, ISO certificates and magazine
advertisings were examined. And their contributions on the brand images were further
investigated. Then, the impacts of brand images toward the company survival and the
brand longevity were tested.
The results of this research reveal that ISO certificates in 2001 plays a
significant and positive role on the brand image. However, the result is insignificant in
2009. Besides, trade shows attendance and advertising placement in magazines are not
significant in contributing better image of the company brands. At the same time, there is
no positive and significant effect of brand image on the survival of the brand name can be
concluded. On the other hand, the analysis supports the positive relationship between the
brand image and the survival of firms.
ii
TABLE OF CONTENTS
ACKNOWLEDGEMENTS i
EXECUTIVE SUMMARY ii
CHAPTER I INTRODUCTION 1 - 2
1.1. Background 1 - 2
CHAPTER II LITERATURE REVIEW 3 -10
2.1. Trade Shows 3 - 5
2.2. ISO Certificates 5 - 6
2.3. Magazines advertising 6 - 7
2.4. Brand survival 7 - 8
2.5. Firm survival 8 -10
CHAPTER III METHODOLOGY 11-14
3.1. Setting, Sample, and Data 11
3.2. Measurement 12-14
3.3. Data Analysis Method 14
CHAPTER IV RESULTS 15-22
4.1 Descriptive statistics 15-16
4.2 Hierarchical linear regression 17-18
4.3 Logistic regression analyses 19-21
4.4 Summary table 22
CHAPTER V DISCUSSION 23-29
5.1. Discussion 23-27
5.2. Limitations 28
5.3. Implication 29
CHAPTER VI CONCLUSION 30
REFERENCES
Appendix 1: Questionnaires
Appendix 2: Electrical and Optical products industry
Appendix 3: Electronic products industry
CHAPTER I INTRODUCTION
The study was about investigating the correlation between brand building and
firm’s performance. Some recommendations were provided after analyzing the
relationship. The main objective was to find ways that help small and medium-sized
firms to outperform the others under the financial crisis.
1.1 Background
Facing the intense competition within the industry and the increasing number
of new entrants, many Hong Kong small and medium-sized firms counter this challenge
by building its own brands. Brands play as important a role in business to business as
they do in consumer markets.
In the last decade, the business practitioners especially those from electronic
industry, the electrical & optical products industry developed names for their lines, with
the prime objective of differentiating themselves from competitors. In industrial
marketing, the most important components of brand equity were considered to be
perceived quality and recognized image. Therefore, many of them attended trade shows,
advertised in magazines and acquired ISO certificates to strengthen the brand equity.
More importantly, positive brands are a valuable asset for an organization, it
performs five main functions: identity, shorthand summary, security, differentiation and
added value (Randall, G. (2001)). Therefore, it may able to help the company to achieve
the ultimate goal: profitability and growth. As a result, the longevity of the company can
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be ensured.
In summary, the purpose of this study is to explore the key factors
contributing to the brand building first, and then to examine the correlation between
brand building and the business performance, and finally to suggest feasible ways for
small and medium-sized firms to improve its performance under the economic downturn.
2
CHAPTER II LITERATURE REVIEW
How can firms improve their brand image?
Brand image is largely a subjective and perceptual phenomenon that is formed
through consumer interpretation, whether reasoned or emotional (Dobni and Zinkhan,
1990). It includes conceptions of quality, value, and attitude—as well as brand
associations.
2.1 Trade Shows
Trade exhibitions are temporary marketplaces where suppliers can meet
buyers (Wright, R. (2004)) . Many small and medium-sized industrial companies
invest little or no money in advertising, promotion, market research, new product
development, or other marketing activities, but most attend trade fairs, either as
visitors or as exhibitors (Jackson, D. W., Keith, J. E., & Burdick, R. E. (1987)).
Trade shows offer exhibitors a chance to display and demonstrate products that are
often difficult to move and complex in design and operation. It allows direct contact
with prospects and enables customer the quick comparisons of products (Reeder, R.,
Brierty, G. & Reeder, H. (1991)).Trade Shows participation—like other business
investments—is expected to yield positive results (Hansen, K., 2004). And the roles
of exhibition include: reinforce relationship with prospects, generate goodwill and
improve public relations (Wright, R. (2004)).
There are different determinants on brand image during the stages of pre-show,
at-show, and post-show activities of the trade fairs are shown below:
3
Pre-show and personal promotion characteristics make booth staff
training affect all four dimensions namely image-building, sales-related,
information-gathering, and relationship-improvement performances of trade shows.
Booth staffs provide the explanations about the company, product demonstrations,
and promotional materials more actively and these allow exhibitors to enhance their
corporate and brand image among the visitors (Lee, C.H. ,& Kim, S.Y., 2008).
At-show impersonal promotion has an impact on the performance of
image-building and information-gathering. An increase in booth size results in a
greater number of visitors attracted from the potential audience (Gopalakrishna &
Lilien, 1995). With larger number of potential customers, the exhibitor can enhance
corporate and brand image and gather information about the visitors attracted to the
booth. In addition, booth location is expected to have a positive effect on
image-building and information-gathering performance since good booth location
places the exhibitor in a better position to exposure them to the attendees and gather
information about the market and customers. Besides, a great number of booth
personnel can have more opportunities to communicate directly and improve the
relationships with the visitors attracted to the booth. They can provide the
explanations about the company, product demonstrations, and promotional
materials more actively and these may assist the exhibitors to strengthen their
corporate and brand image among the visitors (Chan, S.W. & Wong, C.K., 2008)
Follow-up activities were also found to have valid influence on
4
image-building performance, and this result implies that it is important to further
reinforce corporate and brand image positioned in visitors during the trade show, by
carrying out feed back activities after the trade show. (Chan, S.W. & Wong, C.K.,
2008)
In sum, if an exhibitor take the above variables into consideration and attend
more trade show, the product brand image will be sharpened. Based on such arguments,
following hypothesis is established:
H1: The more a given firm attending the trade shows, the better the image of its brand.
2.2 ISO Certificates
International Organization for Standardization (ISO) is the world largest
standards developing organization. It has published more than 18 000 International
Standards, ranging from standards for activities such as agriculture and construction,
through mechanical engineering, to medical devices, to the newest information
technology developments. Qualification certificates can tell a customer something about
the products and services such as quality, environmental friendliness, safety, reliability,
efficiency and interchangeability - and at an economical cost.
It is suggested that implementing ISO Environmental Management System
(EMS) standard can bring benefits to a company not only in financial terms through a
reduction in energy costs and other resources, but also in terms of improving the
5
company’s goodwill with the general public and other stakeholders (Hemenway, G.&
Hale, J.,1995). The achievement of ISO certification is an endorsement of the company’s
commitment towards product and service excellence. It can contribute a positive impact
on the image of the brands.
The hotel industry is also taking various initiatives for the sake of the
environment, for economic reasons, or to build a positive image. Internally, hoteliers may
pursue ISO certification …[that] enhance their company’s competitive position by
portraying a better image of the company(Chan, S.W. & Wong, C.K., 2004). That is to
say, more quality accreditation would lead to more reputable image. The value of a firm′s
overall reputation is easily seen in its relationship to firm′s revenues: as a firm′s
reputation increases, so does its sales (Shapiro, 1982). A firm with a good overall
reputation owns a valuable asset – ―goodwill‖: brand names, corporate logos and
customer loyalty (Herbig, P. & J. Milewicz (1995)). Based on this, the following
hypothesis is proposed:
H2: The more a given firm obtains ISO certificates, the better the image of its brand.
2.3 Magazines advertising
Every advertisement must be considered as a contribution to the complex
symbol which is the brand image --as part of the long term investment in the reputation of
the brand (Herr, M.,1994). Marketing communication and advertising in particular is an
extremely well-suited instrument to give content to the brand image (Rik Riezebos, 2003,
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P.66).
Magazine advertising is associated with the largest number of consumers
impacted per media dollar spent, based on the subset of 10 studies in terms of brand
awareness, ad awareness, brand favorability, and the purchase intention / consideration
(Havlena, J. (2006)). That is to say, advertising in magazine is effective in promoting
brand image. Higher frequency that the brand appears in the magazine implied a more
positive image. Based on these reasons, following hypothesis is established:
H3: The more a given firm advertising in magazine, the better the image of its brand.
How may brand building influence performance?
2.4 Brand survival
In the marketing literature, brand survival is defined as the longevity of the
brand over time (Butterfield, L., 2007). Similarly in this research, brand survival is
defined simply as the continued existence of a particular brand in the market.
Branding has become a critical factor in business performance over the last
few years. It is widely recognized that brands can provide value and strength in the
market well beyond that which is provided by the intrinsic characteristics of the products.
Indeed, strong brands stand the test of time, are leveraged for decades and provide
increases in revenue streams for the products sold under those brands (Aaker, D.A.