THE CAUSAL RELATIONSHIPS BETWEEN COMPONENTS OF CUSTOMER-BASED BRAND EQUITY FOR A DESTINATION: EVIDENCE FROM SOUTH KOREAN TOURISTS IN DANANG CITY, VIETNAM

Tran Trung Vinh^1† --- Vo Thi Quynh Nga² --- Nguyen Phuc Nguyen³

^1,2,3University of Economics, The University of Danang, Danang City, Vietnam

Keywords: Customer-based brand equity, Destination, South Korean tourist, Danang.

Received: 24 November 2016/ Revised: 23 December 2016/ Accepted: 31 December 2016/ Published: 10 January 2017

Contribution/ Originality

This study is the first research conducted which examines the causal relationships between components of customer-based brand equity for Danang City as a tourism destination in the case of South Korean tourists. Therefore, the findings have provided policymakers with managerial implications for strategic planning of tourism development for this destination.

1. INTRODUCTION

Brand equity has been an important subject that attracts attention among marketing academicians and practitioners (Tong and Hawley, 2009). Among many definitions, brand equity can be viewed from two main perspectives (Keller, 1993; Chaudhuri, 1995). The first perspective on brand equity is the financial view in which it is considered to be the monetary value of a brand to the firm (Simon and Sullivan, 1993) while brand equity is the total value of the brand as a separable asset when it is sold or included on a balance sheet (Feldwick, 1996). The second perspective is the customer’s view (customer-based brand equity) in which brand equity refers to the value of a brand to the customer (Aaker, 1991; Keller, 1993). Customer-based brand equity has been studied not only for product but also for tourism destinations. Researchers have adapted (Aaker, 1991) model to study brand equity for destinations (e.g. (Pike et al., 2010; Bianchi and Pike, 2011; Myagmarsuren and Chen, 2011; Pike and Bianchi, 2013)).

Vietnam has integrated its economy into global market. Danang City has recently become one of the most attractive destinations for international travelers. In the years of 2013 and 2014, according to Smart Travel Asia, Danang was ranked in the Top 10 most attractive destinations in Asia (Chi, 2014) especially, TripAdvisor  has named the central coastal city of Danang as a top destination on the rise in Asia and the world in 2014 (Han, 2015). The number of foreign tourists coming to Danang has increased significantly to 1.25 million in 2015, rising by 30.8% in comparison to that in 2014 (Phan, 2016). The component structure of these visitors shows that although the South Korean market only places second in the market share, this market has a relatively rapid growth rate rising from 7.48% (55,559 visits) in 2013 to 17.22% (218,075 visits) in 2015 (according to The Danang Department of Culture, Sports and Tourism’s statistics). In its development strategy, Danang has always acknowledged South Korean as one of its main markets whereas Chinese market is the biggest and the most potential but also contains many uncertainties. Therefore, studying the causal relationships between the components of customer-based brand equity for Danang City in the case of South Korean tourists is urgently needed. The results of this study can be used as a reference source for strategic planning of tourism development for this destination.

2. LITERATURE REVIEW

2.1. Customer-Based Brand Equity and its Application to Destination

According to Aaker (1991) brand equity is "a set of brand assets and liabilities linked to a brand, its name and symbol which add to or subtract from the value provided by a product or service to a firm and/or the firm’s customers”. Aaker’s model takes into account four main dimensions, namely brand awareness, perceived quality, brand association, and brand loyalty. Keller (1993) defined customer-based brand equity as “the differential effect of brand knowledge on the consumer response to the marketing of the brand”. Keller (1993) grouped components of brand equity into two categories: brand awareness and brand image. Lassar et al. (1995) suggested that brand equity is the consumers’ perception of the overall superiority of a product carrying that brand name compared to other brands. Performance, social image, value, trustworthiness, and attachment are five dimensions of brand equity (Lassar et al., 1995). Overall, although there are many definitions of brand equity and its components proposed by other researchers, they are quite similar to the one constructed by Aaker (1991); Chang and Liu (2009). Moreover, the model by Aaker (1991) is the most commonly cited and applied (Tong and Hawley, 2009).

Although the question is whether a customer-based brand equity methodology traditionally developed for brands can be transferred into destinations (Konecnik and Gartner, 2007) there has been a growing interest from researchers and scholars to apply customer-based brand equity model to tourism destinations. When studying about this topic, previous studies (e.g. (Boo et al., 2009; Pike et al., 2010; Bianchi and Pike, 2011; Myagmarsuren and Chen, 2011; Pike and Bianchi, 2013)) adapted the customer-based brand equity model of Aaker (1991). Then, applying it to tourism destinations that consists of four components: destination brand awareness (destination brand salience), destination perceived quality, destination brand image and destination brand loyalty. Therefore, the authors have applied these components to test the causal relationships among them to Danang as a destination in this study.

2.2 Research Concepts

Destination brand awareness. Brand awareness is defined as “the ability of the potential buyer to recognize and recall that a brand is a member of a certain product category” (Aaker, 1991). Brand awareness is of great importance since without it, there will be no communication and no transaction (Rossiter and Percy, 1987). In tourism and hospitality, awareness implies that an image of the destination exists in the minds of potential travelers (Gartner, 1993) and in other studies, this concept is called destination brand salience (e.g. (Pike et al., 2010; Bianchi and Pike, 2011; Pike and Bianchi, 2013)). Therefore, these two terms have been used almost interchangeably. Brand awareness plays an important role in choosing a destination (Kashif et al., 2015) and in order for a tourist destination to be successful, it has to initially grasp the awareness of tourists (Milman and Pizam, 1995). Before visiting any destination, tourists form an “awareness set” which generally developed into a “consideration set” that will assist in selecting a destination brand (Kashif et al., 2015).

Destination brand image. Brand image is defined as “perceptions about a brand as reflected by the brand associations held in consumer memory” (Keller, 1993). Brand associations are informational nodes that link to the brand nodes and contain the meaning of the brand in consumers’ memory (Keller, 1998). In tourism and hospitality, destination brand image (also shortly called destination image) has been widely researched and considered to be a significant dimension in destination brand equity (Cai, 2002; Boo et al., 2009; Pike et al., 2010; Bianchi and Pike, 2011). Destination image is “an interactive system of thoughts, opinions, feelings, visualizations, and intentions toward a destination” (Tasci et al., 2007). Image is used not only to aid the tourist in reducing the risks related to visiting a place he/ she knows a little about but also to counteract negative attributes that may have been acquired through media sources (Gartner and Ruzzier, 2011).

Destination perceived quality. Perceived quality is defined as “the consumer’s judgment about a product’s overall excellence or superiority'' (Zeithaml, 1988). Objective quality differs from perceived quality. The former is pre-designed to a product while the latter is based on customers’ recognition (Garvin, 1983). Perceived quality is an important factor affecting consumer behavior. In tourism and hospitality, it is difficult to integrate quality into destination since tourists’ perceived quality of a destination is a combination of products, services, and experiences (Konecnik and Gartner, 2007). It is proved over time that evaluating quality is a difficult task, yet customers personally keep evaluating quality and providing various benchmarks for comparison. Quality is commonly understood as responding to or going beyond expectations (Gartner and Ruzzier, 2011). According to Pike et al. (2010) destination perceived quality is related to the perceptions of the quality of a destination’s infrastructure, hospitality services and amenities such as accommodation.

Destination brand loyalty. Brand loyalty can either be expressed through behaviors or attitudes. From a behavioral perspective, behavioral loyalty can be shown through repetition of the purchase of a brand (Pappu et al., 2005). On the other side, brand loyalty is defined as “the tendency to be loyal to a focal brand demonstrated by the intention to buy it as a primary choice” (Oliver, 1997). Scholars in tourism marketing studies have prioritized “loyalty” as a subject of special practical importance for their studies (Shoemaker and Lewis, 1999). Compared to the behavioral approach, the attitude approach is more appropriate to study traveler loyalty, since travelers can be loyal to a destination even when they do not visit the place (Chen and Gursoy, 2001). In this study, we focus on loyalty in attitudes since in the tourism literature, destination brand loyalty is defined as an intention of tourists to return to a destination and willingness to recommend it to others (Myagmarsuren and Chen, 2011; Nam et al., 2011; Pike and Bianchi, 2013).

2.3. Relationship between Research Concepts

2.3.1. Effect of Destination Brand Awareness on Destination Brand Image, Destination Perceived Quality and Destination Brand Loyalty

Brand awareness is the first step to building brand equity, and consumers' awareness of a brand leads to other attitudes such as brand associations and perceived quality (Buil et al., 2013). According to Aaker (1991) consumers must first be aware of the brand in order to have a set of brand associations (brand image). In term of destination, awareness is one of basic perceptual indicators of tourist behavior (Woodside and Lysonski, 1989). The empirical results (e.g. (Pike et al., 2010; Myagmarsuren and Chen, 2011; Tran et al., 2015)) pointed out the relationship between destination brand awareness and brand image. Moreover, customer's awareness is a significant antecedents to perceived quality (Buil et al., 2013) and can lead customers’ perception to the quality of the brand (Keller, 1993). An empirical investigation (Pike et al., 2010) showed that destination perceived quality was enhanced by destination brand awareness. Additionally, Aaker and Keller (1990) mentioned that the higher the awareness and the better the image are, the higher the customer’s brand loyalty is. In tourism, the empirical evidences (e.g. (Bianchi and Pike, 2011; Pike and Bianchi, 2013; Srihadi et al., 2015) indicated that destinations brand awareness affects positively destination brand loyalty. Thus, the following hypotheses are formulated:

H1: Destination brand awareness has a positive influence on destination brand image

H2: Destination brand awareness has a positive influence on destination perceived quality

H3: Destination brand awareness has a positive influence on destination brand loyalty

2.3.2. Effect of Destination Brand Image on Destination Perceived Quality and Destination Brand Loyalty

According to Keller (1993) indicated that customer's awareness and associations lead their perception of the quality of the brand. In tourism research, previous research findings (e.g. (Myagmarsuren and Chen, 2011; Aliman et al., 2014)) found that a destination brand image affects positively destination perceived quality. Moreover, according to Chang and Shin (2004) the impact of image is not confined to the phase of choosing the destinations in particular but also effect on the tourist behavior in general. A positive relationship between destination brand image and destination brand loyalty has been found from several studies (e.g. (Boo et al., 2009; Pike et al., 2010; Bianchi and Pike, 2011; Pike and Bianchi, 2013; Aliman et al., 2014; Kashif et al., 2015)). The above arguments lead to the following hypotheses:

H4: Destination brand image has a positive influence on destination perceived quality

H5: Destination brand image has a positive influence on destination brand loyalty

2.3.3. Effect of Destination Perceived Quality on Destination Brand Loyalty

In marketing literature, Keller and Lehmann (2003) pointed out that perceived quality is step leading to brand loyalty. In the tourism sector, many empirical studies (e.g. (Boo et al., 2009; Pike et al., 2010; Tran et al., 2015)) demonstrated that there is a significant relationship between destinations perceived quality and destination brand loyalty. This discussion leads to the last hypothesis:

H6: Destination perceived quality has a positive influence on destination brand loyalty

2.4. Conceptual Framework

Based on the relationships as mentioned above, a conceptual framework and hypotheses are illustrated in Figure 1. The proposed model investigates the relationships among components of destination brand equity.

Figure-1. Conceptual framework

Source: Compiled by this study

3. METHODOLOGY

3.1. Sample Selection and Data Collection

The target population was South Korean tourists who were spending their holidays in Danang City. The survey was conducted randomly in Danang from November to December 2015. The questionnaire firstly developed in English and was translated into Korean. As a result, 252 of valid observations were used for the econometric analysis (Table 1).

Table-1. Sample characteristics

Source: Research findings

3.2. Measurement Model

The measurement constructs include destination brand awareness (DBA, 4 items), destination brand image (DBI, 4 items), destination perceived quality (DPQ, 4 items) and destination brand loyalty (DBL, 4 items). All items of mentioned scales were adapted from the works of Boo et al. (2009). These measurements used a five-point Likert scale ranging from 1 to 5 to present strongly disagree, disagree, no opinion, agree and strongly agree.

Exploratory factor analysis (EFA), Cronbach’s reliability, and Confirmatory factor analysis (CFA) are three techniques that were used to evaluate and select items. At the end, the proposed model and hypotheses were tested by analyzing the structure equation modeling (SEM) using AMOS software 21.

4. RESEARCH ANALYSIS AND RESULT

4.1. Exploratory Factor Analysis and Cronbach's Alpha Analysis

Firstly, exploratory factor analysis was conducted (using principal component analysis and applying varimax rotation technique) to extract the main factors. The result indicated that there were 4 main factors extracted with Eigen value of 1.391 (> 1). It contributed 70.487% (> 50%) of the item variance. The KMO index was found to be 0.846 (> 0.5) and Bartettlett’s statistics was significant. Two items DBA4 and DPQ4 had factor loadings less than 0.5 and thus needs to be excluded. On the contrary, the remaining indicators were significant, with factor loadings higher than 0.5 and no cross loading (Table 2). Therefore, they will be retained for subsequent step.

Table-2. Cronbach’s Alpha, composite reliability, average variance extracted and factor loadings

α = Cronbach’s alpha, CR = Composite reliability, AVE = Average variance extracted

Subsequently, Cronbach’s measure reliability coefficient was calculated for the items of each scale. The values of Cronbach’s α of destination brand awareness, destination brand image, destination perceived quality and destination brand loyalty were 0.881; 0.868; 0.838 and 0.891 respectively (Table 2) which means that Cronbach’s alpha in all of the constructs are above 0.60 (Nunnally and Bernstein, 1994). Moreover, the item-to-total correlations were all higher than 0.30 and thus the reliabilities of all constructs were acceptable.

4.2. Confirmatory Factor Analysis

Next, confirmatory factor analyses (CFA) with Amos 21.0 were performed. The result indicated that all factor loadings were higher than 0.5 and were statistically significant. In addition, the average variance extracted (AVE) for all constructs ranged from 0.625 to 0.728, and exceeded the value of 0.5 suggested by Hair et al. (1998). The composite reliability (CR) for all constructs fell between 0.842 and 0.892, passed the threshold of 0.7 for good reliability (Hair et al., 1998) (Table 2). Moreover, square correlation estimate was less than the average variance extracted for any two constructs (Table 3), thus the discriminant validity was also supported (Fornell and Larcker, 1981).

Table-3. Discriminant validity in measurement model

Source: Research findings

4.3. Structural Model

A structural equation model was developed to evaluate the statistical significance of the suggested relationships between constructs (Figure 2). The goodness-of-fit statistics indicated that the structural model was acceptable to criteria suggested by Hu and Bentler (1999): ((χ2)/df = 1.959 (< 3); CFI = 0.966 (> 0.9); AGFI = 0.893 (> 0.8); GFI = 0.928 (> 0.9); RMR = 0.072 (< 0.1); RMSEA = 0.062 (< 0.1)).

Figure-2. The SEM finalized model and results

Source: Research findings

As shown in table 4, results show that destination brand awareness has direct and positive effects on destination brand image (Ses = 0.268, p = 0.006), but not on destination perceived quality (Ses = 0.118, p = 0.103), and destination brand loyalty (Ses = 0.096, p = 0.117). These results support H1, not support H2 and H3. Similarly, Hypothesis H4 & H5 are accepted meaning that destination brand image has direct significant influences on destination perceived quality (Ses = 0.262, p = 0.000) and destination brand loyalty (Ses = 0.308, p = 0.000). Finally, destination perceived quality influences destination brand loyalty significantly and positively (SEs = 0.428; p = 0.000) which means H6 is supported.

Table-4. Results of hypotheses testing

SE: Standard error; CR: Critical ratios

5. DISCUSSION AND IMPLICATIONS

Customer-based brand equity continues to be an important area of research in both academia and industry. Customer-based brand equity is applied not only for products (or services) but also for tourist destinations. Regarding Danang City, it is one of the most famous destinations in Vietnam, which has been capturing the foreign tourists’ preference and choice. Nevertheless, existing study on customer-based brand equity with a case of international tourist in general and South Korean tourist in particular is still limited. Therefore, this study is aimed at evaluating the causal relationships between components of customer-based brand equity with a sample of 252 Korean tourists for the mentioned destination. The results have shown that: (1) destination brand awareness has no positive impact on destination perceived quality and destination brand loyalty, but destination brand awareness has a positive influence on destination brand image; (2) destination brand image influences significantly destination perceived quality and destination brand loyalty; and (3) destination brand loyalty is also positively influenced by destination perceived quality.

5.1. Managerial Implications

The research reveals that destination brand awareness has a positive impact on destination brand image (0.268), which is similar with the previous results (e.g. (Pike et al., 2010; Myagmarsuren and Chen, 2011; Tran et al., 2015)). It indicates the more successful Danang City is in building a brand identity system, the more positive impression South Korean tourists will have to Danang’s brand image. Therefore, Danang City should have marketing campaigns to this target market. Marketing campaigns can be done by methods such as TV channels, travel magazines, organizing events, which language should be English or Korean. Conversely, these results do not confirm destination brand awareness has the positive influences on destination perceived quality (p = 0.103 > 0.1) and destination brand loyalty (p = 0.117 > 0.1). This is because destination brand awareness is just in-mind image of tourists. It might not show the quality of services that Danang has offered them, and then might not gain their loyalty. However, these results do not implicate that destination brand awareness does not affect perceived quality and loyalty; it only reflects that it does not have enough reliability to confirm these relationships. Destination brand awareness can indirectly affect destination perceived quality and destination brand loyalty by affecting destination brand image.

This study also shows that destination brand image has a positive influence on destination perceived quality (0.262), which is consistent with previous studies (e.g.(Myagmarsuren and Chen, 2011; Aliman et al., 2014)). Similarly, destination brand image also significantly affects destination brand loyalty (0.308), in line with previous studies (e.g. (Boo et al., 2009; Pike et al., 2010; Bianchi and Pike, 2011; Pike and Bianchi, 2013; Aliman et al., 2014; Kashif et al., 2015; Tran et al., 2015)). These results imply that along with building brand awareness, a tourist destination has to build its impressive and unique image, and can reflect the personality of target tourist. Therefore, Danang City should carefully learn about South Korean tourists’ styles, personalities, needs, etc. Then, the city adapts marketing activities to be fitted South Korean tourists’ specific characteristics.

The result also indicates there is significant effect of destination perceived quality on destination brand loyalty (0.428). This finding is consistent with previous studies (e.g. (Boo et al., 2009; Pike et al., 2010; Tran et al., 2015)). Therefore, Danang City should concentrate its efforts mainly on improving the product (service) quality, which has highest importance in the brand loyalty. Improving the quality of products (services) greatly depends on the involved parties who are tourism services-providers such as the government, businesses firms, and citizens. Therefore, strengthening the cooperation among involved parties is very significant for Danang City as a famous destination in Vietnam.

5.2. Limitations and Future Research

As with any research, some limitations exist in this study. Firstly, the model is tested within a small sample size of 252 South Korean tourists. Therefore, the generalizability of the result is limited. Further research should look into a larger sample to get more generalized results. Secondly, the study is conducted with South Korean tourists. Hence, future research is needed for examining the causal relationships in the model from other international tourists. Thirdly, this study does not consider the overall destination brand equity. Therefore, further studies should measure the influences of destination brand equity components on overall destination brand equity.

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