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Management Research Review Are social media replacing traditional media in terms of brand equity creation?
Management Research Review Are social media replacing traditional media in terms of brand equity creation?

Management Research Review

Are social media replacing traditional media in terms of brand equity creation? Manfred Bruhn, Verena Schoenmueller, Daniela B. Schäfer,

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Manfred Bruhn, Verena Schoenmueller, Daniela B. Schäfer, (2012) "Are social media replacing traditional media in terms of brand equity creation?", Management Research Review, Vol. 35 Issue: 9, pp.770-790,

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Are social media replacing traditional media in terms of brand equity creation?

Manfred Bruhn, Verena Schoenmueller and Daniela B. Scha¨fer

Department of Marketing and Management, University of Basel, Basel, Switzerland

Abstract

Purpose – The purpose of this paper is to investigate the relative impact of brand communication on brand equity through social media as compared to traditional media. In a juxtaposition of different industries it aims at: investigating whether both communication instruments have an impact on consumer-based brand equity; comparing the effect sizes of these two communication instruments; and separating the effects of firm-created and user-generated social media communication. Design/methodology/approach – A total of 393 data sets from three different industries, namely tourism, telecommunications, and pharmaceuticals, were generated using a standardized online-survey. Structural equation modeling was used in the analysis of the data obtained to investigate the interplay of social media and traditional media in general, as well as in an examination of industry-specific differences. Findings – The results of the empirical study show that both traditional communications and social media communications have a significant impact on brand equity. While traditional media has a stronger impact on brand awareness, social media communications strongly influence brand image. Firm-created social media communication is shown to have an important impact on functional brand image, while user-generated social media communication exerts a major influence on hedonic brand image. Furthermore, the present study highlights significant differences between the industries under investigation. Originality/value – The research described in this paper is pioneering in that it juxtaposes the impacts of social media and traditional media on brand equity – a topic of increasing interest to firms in the era of Facebook and Twitter but so far largely uninvestigated. Moreover, the differentiation between firm-created and user-generated social media communication, which is gaining increasingly in importance, as companies see their brand marketing power devolve to the consumer through social media platforms, offers valuable insights to marketing practitioners and academics.

Keywords Brand management, Brand equity, Marketing communications, Social media, Traditional media, Word of mouth

Paper type Research paper

Traditional media, Word of mouth Paper type Research paper Management Research Review Vol. 35 No. 9,

Management Research Review Vol. 35 No. 9, 2012 pp. 770-790 q Emerald Group Publishing Limited

2040-8269

DOI 10.1108/01409171211255948

1. Introduction The media landscape has undergone an immense transformation over the past decade (Mangold and Faulds, 2009). Social media, i.e. social networks or microblogs, are increasingly replacing traditional media, and the buzz about these new marketing opportunities seems unlimited: millions of fans declare their love to Coca-Cola on Facebook, the roller babies of the Danone’s water brand Evian have become the most frequently viewed video on YouTube, and thousands of Starbucks consumers work together on the platform Mystarbucksidea.com to create new ideas for the popular coffee house brand – for free. This trend of consumers becoming fans of brands on social media platforms and using social media as an increasing source of information about brands

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leads to the assumption that social media in addition to traditional marketing communication instruments exerts an important impact on a brand’s success. In 2008, companies invested more than 1.54 billion dollars for the implementation and support of social media communications. This growth in social media seems unlimited so far (Trusov et al. , 2009), as the investments in social media are expected to increase to more than three billion dollars per year by 2013 (Kozinets et al., 2010). Social media has established itself as a mass phenomenon with a wide demographic distribution:

75 percent of the US internet users use social media (Miller, 2009). The viral diffusion of information through social media has a far greater capacity to reach the public than “short tail” – media such as TV, radio, and print advertisements (Keller, 2009). However, the rapid growth of social media platforms over the last few years have raised the question of whether this development has diminished the marketer’s control of brand management (Berthon et al., 2007). Since social media offers an opportunity for consumers to talk to hundreds or even thousands of other consumers around the world, companies are no longer the sole source of brand communication. Additionally, consumers are turning away from traditional media such as TV, radio, or magazines and are increasingly using social media to search for information (Mangold and Faulds, 2009). They regard social media as a more trustworthy source of information than the traditional instruments of marketing communications used by companies (Foux, 2006). According to a study conducted by Nielsen (2009a), 70 percent of internet users trust the evaluations of consumers on social media platforms. Consequently, marketers can expect that brand communication will cease to be generated solely by the company, but increasingly by the consumers themselves through so-called user-generated social media communication. Therefore, it is crucial to differentiate between firm-created and user-generated social media communication and examine the impact of these two forms of social media communication separately. This is highly important, as firm-created social media communication is under the control of the company and the brand manager, whereas user-generated social media communication is independent of the company’s control. We follow calls for research to analyze the interplay between social media and traditional marketing communication instruments in more depth (Libai et al., 2010). Additionally, the analysis of their effects on brand metrics sets the focus on a marketing outcome that has been neglected in research so far. Moreover, we aim at juxtaposing the effects of firm-created and user-generated social media communication, as these two instruments of social media differ significantly in terms of company control. This leads to three research objectives which are highly relevant for companies, and brand management in particular, in a changing communication environment (Dellarocas, 2003; Godes et al., 2005; Hennig-Thurau et al., 2004; Kozinets et al., 2010):

(1) Investigation of the influence of brand-based social media communication on metrics of brand equity compared to traditional instruments of marketing communications.

Brand

equity

creation

771

(2)

Determination

of

whether

firm-created

and

user-generated

social

media

(3)

communication have different effects on the metrics of brand equity. Juxtaposition concerning the effects of social media and traditional media on brand equity in different industries.

We organize the remainder of this article as follows. We begin by summarizing previous research to help to put our contributions into perspective. We then describe our

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conceptual framework and develop our research hypotheses. In the following, we present our data sources and the empirical model as well as the estimation. Next, we outline our quantitative empirical analysis to verify our model. In order to identify potential industry-specific differences, we differentiate between the tourism, telecommunications, and pharmaceuticals industries. After summarizing and discussing the results, we conclude with an outline of the managerial implications thus derived and suggest

772 avenues for further research.

2. Research background The stated research questions require a deeper understanding regarding the relationship between brand communication and brand equity as well as the impact of brand-based communication vehicles on social media platforms. Therefore, this paper relates to two streams in the existing literature; namely, studies focusing on the impact of consumer-to-consumer communication (i.e. research on (electronic) word of mouth) on consumer behavior and research regarding the impact of marketing communications on marketing outcomes. Regarding the first literature stream, there is an established consensus that communication between consumers is an influential source of information transmission (Dellarocas, 2003). The emergence of social media platforms facilitates consumer-to-consumer communication and accelerates communication especially between unknown consumers (Duan et al. , 2008). In this context, Godes and Mayzlin (2004) demonstrate that social media platforms are a cost-effective and simple alternative to accessing and gathering consumer-to-consumer communication. Additionally, work on consumer-to-consumer conversations demonstrates that these conversations drive important outcomes for companies. Chevalier and Mayzlin (2006) find that an improvement in a book’s reviews leads to an increase in relative sales. Liu (2006) confirms the impact of consumer-to-consumer communication on company revenue, in particular box office revenue. Dellarocas et al. (2007) add online movie ratings to their revenue-forecasting model and show that this significantly improves the model’s predictive power. In this context, De Bruyn and Lilien (2008) analyze the impact of consumer-to-consumer communication during the different stages of a viral marketing recipients’ decision-making process. The second related literature stream concerns the influence of marketing communications on marketing outcomes. In a study that aims to develop a measurement model of brand equity, Simon and Sullivan (1993) identify marketing communications as one of the sources driving brand equity. Yoo et al. (2000) show in their study that marketing communications exert a positive influence on perceived brand quality as well as on brand loyalty, brand associations, and brand awareness. However, previous research concerning the relationship of marketing communications and brand equity only focus on traditional instruments of marketing communications (Aaker, 1991; Keller and Lehmann, 2003; Yoo et al., 2000). The study of Trusov et al. (2009) is one of the first that aims to achieve an understanding of the relationship between word of mouth and traditional media. The authors analyze the relative influence of referrals compared to the traditional instruments of marketing communications on the membership growth of a social media platform. The results show that word of mouth referrals positively influence membership growth and have a substantially longer carryover effect than traditional marketing activities. In this context, Stephen and Galak (2009) investigate how social

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media (e.g. online discussion forums and blogs) and traditional media (e.g. print media articles and TV coverage) affect sales, identified by the number of loans and the size of loans allocated to new and existing members of a micro-financing website. They demonstrate that both social and traditional media have strong effects on marketing performance. However, the authors reveal that the effect of traditional media is stronger than the effect of social media. In sum, the literature review demonstrates that consumer-to-consumer communication affects marketing outcomes. Nevertheless, hardly any study compares the effects of consumer-to-consumer communication with those of traditional marketing communication. Research still needs to compare the relative sizes of consumer-to-consumer communication – or, more specifically, user-generated social media communication – and traditional media communication on key marketing outcomes (Stephen and Galak, 2009). Therefore, it is not surprising that there is a growing interest in research that investigates the differentiated impact of social media and traditional media on marketing outcomes (Libai et al., 2010). However, only two studies, namely Stephen and Galak (2009) and Trusov et al. (2009), deal with this research topic so far. But these studies are not situated in the branding context. They use social network membership growth as well as number and size of loans, respectively, as dependent variables. Thus, the impact of social versus traditional media on target variables of brand management remains unclear. Our study builds on this research gap by investigating the individual impacts of social media and traditional media on brand equity. Moreover, in order to gain a deeper insight into the effect of social media communications, we differentiate between firm-created and user-generated social media communication – a topic of growing importance (Godes and Mayzlin, 2009). Additionally and in contrast to previous research, we compare the effects between three industries which differ regarding their social media engagement and thereby gain valuable insights into existing industry differences. To sum up, this paper follows recent calls for research regarding a more comprehensive and multi-faceted analysis on consumer-to-consumer communication (Libai et al., 2010) and research aiming at a broader understanding of the roles and mechanisms of traditional and social media communication (Stephen and Galak, 2009).

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3. Conceptual framework and hypotheses development We build on Keller and Lehmann’s (2003) brand value chain as a conceptual framework in order to develop our model. The brand value chain takes account of different levels of effect caused by marketing mix efforts. However, the traditional brand value chain only focuses on company-controlled marketing communication (Aaker, 1991; Keller and Lehmann, 2003). It therefore does not consider the impact of the worldwide exchange of consumer information on social media platforms. A recognition of this gap has consequences for the analysis of the brand value chain, which we therefore modified to accommodate both company and consumer communication activities. The basic structure of this modified brand value chain consists of four levels: first, the sender of brand-based communication content (no longer solely the company as communicator via traditional and social media, but now also the consumer as content creator, e.g. brand weblogs and brand communities on online social networks); second, the consumers’ mindset consisting of brand awareness and brand image; third, consumer behavior as reflected by word of mouth or purchase intention; fourth, company financial performance in terms of turnover and market share, for example. Level two and three constitute the

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Figure 1.

Conceptual framework

consumer-based brand equity which is also termed brand strength (Keller, 2008). The focus of the present study is on the investigation of the relative impacts of company-controlled and user-generated brand communication on consumer-based brand equity and therefore relates to the first three levels of the brand value chain (Figure 1). The input factors of the modified brand value chain are constituted by the companies’ marketing communications, comprising traditional media as well as firm-created social media, and the communication between consumers, i.e. user-generated social media communication. Thus, the modified brand value chain differentiates between firm-created and user-generated social media communication in order to take account of the fact that companies as well as consumers are senders of brand-based information. Based on the modified brand value chain, our study divides communication into the traditional instruments of brand communication, represented by advertising (e.g. on TV or in print media), firm-created, and user-generated social media communication. We assume that the different instruments of marketing communications as well as the information sender have a different impact on the consumer mindset (Hirschman and Holbrook, 1982; Zajonc and Markus, 1982). According to Keller (1993), the consumer mindset is divided in two dimensions, namely brand awareness and brand image. Brand awareness signifies the presence of a brand in a consumer’s memory and therefore indicates how well a consumer will recall or recognize that brand (Rossiter and Percy, 1987). Brand image signifies the consumer’s associations linked to a brand (Keller, 1993). We further differentiate brand image into functional and hedonic brand image, following the differentiation made by Park and Srinivasan (1994) between brand associations related to a product’s attributes and brand associations unrelated to its specific attributes. The overall brand evaluation is reflected by brand attitude. Since the consumer mindset influences actual consumer behavior as a result of an unobservable decision-making process, we integrated a brand’s purchase intention in our model as a behavioral outcome variable. Thus, consumer-based brand equity is the result of both consumer reactions to a company’s brand-based activities and the consumer response to the brand-based communication of other consumers on social media platforms compared to the consumer reactions that an equivalent non-branded product receives. Reaction differences can be ascribed to the consumers’ mindset (Keller, 1993). Figure 1 shows our conceptual framework.

Communication Source

C o m m u n i c a t i o n S o u

Consumer-Based Brand Equity

t i o n S o u r c e Consumer-Based Brand Equity Traditional Instruments of
Traditional Instruments of Marketing Communication H1a Advertising H1b H1c Social Media Communication H2a H2b
Traditional Instruments
of Marketing
Communication
H1a
Advertising
H1b
H1c
Social Media
Communication
H2a
H2b
Firm-Created
H2c
H3b
H3a
User-Generated
H3c
Consumer Mindset Consumer Behavior Brand Awareness H4a Functional H4b Brand Attitude Purchase Intention Brand
Consumer Mindset
Consumer Behavior
Brand Awareness
H4a
Functional
H4b
Brand Attitude
Purchase Intention
Brand Image
H5
H4c
Hedonic
Brand Image

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A theoretical foundation of the relationship between communication and consumer-based brand equity is offered by Schema Theory (Eysenck, 1984) illustrating that consumers compare communication stimuli with their stored knowledge of comparable communication activities. The degree of fit influences subsequent processing of the stimulation as well as the attitude formation of the recipient (Goodstein, 1993). Communication stimuli therefore trigger a positive effect in the consumer as recipient, so that his or her perception of the communication positively influences his or her awareness and image of a brand. Thus, brand communication is positively associated with brand equity as long as the communication leads to a favorable consumer reaction to the product in question, compared to the equivalent non-branded product (Yoo et al., 2000). In sum, brand-based communication realizes the transmission of brand knowledge in terms of brand awareness and brand image regardless of the communication sender. Social and traditional media communications therefore both play an important part in improving the brand equity by increasing the probability that a brand will be incorporated in the consumer’s consideration set, simplifying the consumer’s brand choice and turning that choice into a habit (Yoo et al., 2000). As marketers always aim at presenting their brand in a positive light, communication through traditional media and firm-created social media communication – both fully controlled by the marketer – will always transport positive brand-based communication content. Thus, it is assumed that a positive evaluation of the traditional instruments of marketing communications and firm-created communication will positively influence brand awareness, functional, and hedonic brand image:

H1. A positive evaluation of brand-based traditional media communication positively influences ( H1a ) brand awareness ( H1b ) functional brand image, and ( H1c ) hedonic brand image.

A positive evaluation of brand-based firm-created social media communication positively influences ( H2a ) brand awareness ( H2b ) functional brand image, and ( H2c ) hedonic brand image.

Regarding the effect of user-generated social media communication on awareness, functional, and hedonic brand image, it has to be acknowledged that user-generated social media communication is not generally amenable to marketing intervention, nor to company control. Therefore, user-generated social media communication cannot be expected to be unequivocally positive, but can be either positive or negative. Both forms of positive and negative content convey information about a brand that can be particularly useful for consumers in terms of purchase decisions, for example, and thus increase the brand’s awareness. Hence, positive as well as negative brand-related user-generated content on social media platforms can lead to a high level of satisfaction with this form of brand-based communication and therefore are expected to increase the awareness of a brand – regardless of whether the content reflects the brand positively or negatively. We hypothesize:

media

H2.

H3a. A

positive

evaluation

of

brand-based

user-generated

social

communication positively influences brand awareness.

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equity

creation

775

Accordingly, the effect of user-generated communication on functional and hedonic benefits can be both positive and negative. In the case of functional benefit, the impact

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of user-generated communication relates to content dealing mainly with quality aspects

of the brand that can be judged positively or negatively by users, thus influencing functional brand image either favorably or unfavorably. The same reasoning applies to the impact on a brand’s hedonic benefit. The effect of user-generated communication can again be expected to be either positive or negative depending on the written content, as users can comment either positively or negatively on a brand’s attractiveness and desirability on social media platforms. To sum up, it is reasonable to expect a positive as well as a negative effect of user-generated social media communication on functional and hedonic brand image. Because the possible explanations are ambiguous and permit two equally plausible lines of reasoning, we submit two competing sets of hypotheses for empirical exploration. We hypothesize the following alternative hypotheses:

H3b 1 ; c 1 . A positive evaluation of brand-based user-generated social media communication positively influences ( H3b 1 ) functional brand image and ( H3c 1 ) hedonic brand image.

H3b 2 ; c 2 . A positive evaluation of brand-based user-generated social media communication negatively influences ( H3b 2 ) functional brand image and (H3c 2 ) hedonic brand image.

The overall evaluation of the brand is represented by brand attitude. According to the theory of reasoned action (Fishbein and Ajzen, 1975), attitude constitutes

a multiplicative combination of brand-based associations of attributes and benefits

assuming that brand attitude is influenced by brand awareness and brand image. Regarding the effect of brand awareness on brand attitude, the ambiguity of the effect of

user-generated social media communication on brand awareness has to be taken into account. Since positive and negative user-generated social media communication both increase brand awareness, we assume two possible indirect effects on brand attitude:

consumers’ brand awareness which is increased due to negative user-generated content should have a negative indirect effect through brand awareness on brand attitude and that due to positive user-generated content should have a positive indirect effect on brand attitude. Despite this ambiguous effect of user-generated social media communication on brand awareness, the overall effect of brand awareness on brand attitude can be assumed to be positive. This reasoning is based on the assumption that the impact originating from traditional media and firm-generated social media communication on brand awareness can be expected to be unequivocally positive. Taking into account the results of previous research demonstrating that word of mouth, i.e. user-generated communication, and communication originating from the company have a significant effect on brand awareness (Godes and Mayzlin, 2009; Jansen et al., 2009; Yoo et al. , 2000), we assume this overall positive effect on brand attitude when weighting the impact of the three forms identically. However, the strength of this relationship should be influenced by the valence (positive or negative) of user-generated social media communication. These considerations result in the following hypotheses:

( H4a ) Brand awareness ( H4b ) functional brand image, and ( H4c ) hedonic brand image positively influence brand attitude.

We further expect the path via brand attitude to have a strong influence on purchase intention, as brand attitude is considered to be a good indicator for behavioral

H4.

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intention (Wang, 2009). The behavioral intention to purchase is a psychological variable, which is identified as an intervening variable between attitude and actual behavior (Miniard et al. , 1983). According to the attitude-behavior hypothesis, attitudes have a positive effect on purchase intention (Eagly and Chaiken, 1993). Thus, the following hypothesis is put forward:

H5.

Brand attitude positively influences brand purchase intention.

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4. Methodology Data collection procedure Data collection was effectuated through a standardized online-survey. A total of 393 participants fully completed the questionnaires. Three different industries were selected in order to reflect reality more precisely. The industry selection was based on considerations regarding relevance and variance criteria. We integrated industries that differed in their social media engagement indicated by their estimated expenses on social media communications. The telecommunications industry shows by far the highest expenses on social media, while the tourism as well as the pharmaceuticals industries show a lower level of expenditures on social media communications. However, the tourism industry demonstrates a far stronger growth compared to the pharmaceuticals industry (Nielsen, 2009b). The participants were evenly split between the three industries – tourism, telecommunications, and pharmaceuticals – randomly. For each industry, the participants indicated all the brands, from a selection of the 20 best-selling brands in German-speaking countries that they had recognized lately on social media platforms – regardless of whether the brand was presented positively or negatively. This procedure is based on the assumption that consumers of all ages have been exposed to each of the best-selling brands via traditional media, as these brands invest heavily in traditional media marketing. This assumption, however, does not hold for social media communication for the two following reasons:

(1) At present not all age groups are represented on social media platforms.

Social media platforms are visited very selectively by users, as every platform has its own focus.

Therefore, we needed to ensure that the participants had actually perceived a specific brand on social media platforms in order to be eligible to participate in the survey. From each participant’s selection of brands, one brand was randomly assigned to that participant. By limiting the choice of brands to those perceived on social media platforms as well as randomizing the actual brand that the participants evaluated in the survey, we avoided the possible bias that participants might chose a brand on the basis of a personal positive evaluation. Table I gives an overview of the sample demographics.

(2)

Measurement procedure We exclusively used reflective measurements, where changes in a construct’s measures indicate changes in the latent construct (Edwards and Bagozzi, 2000). We drew on established scales used in the literature and adapted them to our research context. Measure reliability and validity of the reflective measurements were assessed using Cronbach’s a and confirmatory factor analysis (CFA). All constructs show a high

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Table I.

Sample demographics

Sample demographics ( n ¼ 393)

%

Gender Male Female Education PhD University degree High school diploma Secondary school leaving certificate Elementary school certificate No indication Age , 18

46.56

53.44

9.41

34.10

21.88

20.10

3.05

11.45

1.02

18-22

5.09

23-34

25.19

35-54

55.22

. 54

13.49

Job

Apprentice

9.67

Worker

10.69

Employee

41.73

Executive employee

10.69

Self-employed

10.43

No indication

16.79

Cronbach’s a, ranging from 0.88 to 0.98. In using CFA, we assessed the composite reliability and the average variance extracted (AVE) of all the constructs. All constructs show a value higher than 0.60 for composite reliability, which is recommended as the threshold value in the literature (Bagozzi and Yi, 1988). The analysis shows values greater than 0.65 for AVE exceeding the acceptable value of 0.50 (Fornell and Larcker, 1981). Our scale properties and the corresponding reliability and validity values are provided in Table AI. Moreover, we tested for discriminant validity on the basis of the criteria that Fornell and Larcker (1981) suggest. The results show that discriminant validity is given (Table AII). We included all independent and dependent latent variables in one multifactorial CFA model. This model shows a satisfactory fit to the data ( x 2 /df ¼ 2.73; root mean square error of approximation (RMSEA) ¼ 0.07; standardized root mean square residual (SRMR) ¼ 0.03; comparative fit index (CFI) ¼ 0.97; Tucker-Lewis Index (TLI) ¼ 0.96). We used structural equation modelling (AMOS 17.0) to test the hypotheses. The overall model leads to a good fit ( x 2 /df ¼ 3.12; RMSEA ¼ 0.07; SRMR ¼ 0.06; CFI ¼ 0.96; TLI ¼ 0.95).

5. Results and implications Main effects The standardized structural coefficients are displayed in Table II. Traditional media exerts a significant positive influence on brand awareness and on the two dimensions of brand image. Therefore, H1a -H1c are supported. Firm-created social media communication also shows a positive influence on brand awareness and on functional

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Hypotheses

Standardized structural coefficients

Acceptance ( p ) or rejection (–) of

! Traditional media ! functional brand image

Traditional media ! hedonic brand image

Firm-created social media ! brand awareness Firm-created social media ! functional brand image Firm-created social media ! hedonic brand image User-generated social media ! brand awareness User-generated social media ! functional brand image User-generated social media ! hedonic brand image

Brand awareness ! brand attitude

Functional brand image ! brand attitude

Hedonic brand image ! brand attitude Brand attitude ! purchase intention

Notes: * t $ 1.282, p # 0.10; * * t $ 1.645, p # 0.05; *** t $ 2.326, p # 0.01

Traditional media

brand awareness

0.42 ***

0.25

***

0.26 ***

0.27 *

0.45 ***

0.09

0.00

0.14

0.42

***

0.14 ***

0.67

***

0.26 ***

0.87 ***

p

p

p

p

p

p

p

p

p

p

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Table II. Standardized structural coefficients

brand image, which leads to the acceptance of H2a and H2b . However, no significant effect is detected for hedonic brand image, rejecting H2c . Regarding user-generated social media communication, a significant impact is found for hedonic brand image, while a positive relationship with functional brand image and brand awareness is not confirmed. Therefore, H3c 1 is supported, while H3a , H3b 1 , H3b 2 and H3c 2 are rejected. Consistent with H4a - H4c , brand awareness, functional, and hedonic brand image positively impact brand attitude. Finally, the positive relationship between brand attitude and purchase intention is confirmed leading to the acceptance of H5 . Further insights regarding the effect of traditional instruments of marketing communications and social media communications on brand attitude as well as on purchase intention are drawn from an investigation of the indirect effects (Homburg and Jensen, 2007; Preacher and Kelley, 2011). Firm-created social media communication demonstrates the greatest indirect effect size (brand attitude: 0.36; purchase intention: 0.32) compared to user-generated social media communication (brand attitude: 0.20; purchase intention: 0.18) and traditional media (brand attitude:

0.30; purchase intention: 0.26).

Results of the industry comparison

We also tested for possible industry differences using multigroup analysis. To test for significant differences between the industries, we employed the x 2 -difference test.

A simultaneous analysis of all constructs within a single structural equation model

demands a ratio between the number of observations and the number of parameters (N:t)

of 5:1 (Baumgartner and Homburg, 1996; Bentler and Chou, 1987; Homburg and Jensen,

2007). This ratio is achieved for our data. Referring to the cross-industry research of Banerjee et al. (2003), we also tested for invariance between the three industries. Regarding the assessment of invariance, we based our analysis on the proposed

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780

procedure recommended by Steenkamp and Baumgartner (1998). Thus, we estimated the configural and metric invariance model. For this purpose, we used CFA (Steenkamp and Baumgartner, 1998). The results of all configural invariance models show a good fit. Additionally, all factor loadings are highly significant, and all (within-group standardized) factor loadings exceed the 0.70 level as Nunally (1978) suggests. Configural invariance is supported by the fact that the factor correlations are assessed as significantly below unity ( p , 0.001), confirming discriminant validity between the constructs (Steenkamp and Baumgartner, 1998). In order to test metric invariance, the matrix of factor loadings was constrained. The comparisons of all models show that equality of the factor loadings is confirmed. Only the x 2 /df-values decrease, but insubstantially, and the models still show a very good fit. These results strongly support the requirement that across the three industries invariance of the measures is achieved. As metric invariance is confirmed, the structural relations between the constructs and the hypotheses are validly investigated (Steenkamp and Baumgartner, 1998). The results of the unconstrained and the constrained models are shown in Table III. The x 2 -difference test shows that significant differences between the three industries are detected (Table IV). Regarding the comparison between the tourism and the telecommunications industries, the unconstrained model reveals a x 2 -value of 1,219.6. Firm-created social media communication exerts a greater influence on functional brand image for telecommunication brands compared to tourism brands, while user-generated social media communication has a significantly stronger influence on both brand awareness and functional brand image for tourism brands. For the comparison of the tourism and the pharmaceuticals industries, a x 2 -value of 1,228.7 is determined. The impact of firm-created social media communication on functional brand image is significantly stronger for the pharmaceutical industry. The differences between the two industries become even clearer when considering the differences regarding user-generated social media communication. For the tourism industry, user-generated social media communication has a greater impact on brand awareness as well as on both dimensions of brand image. The comparison of the telecommunications and pharmaceuticals industries reveals significant differences, too. The unconstrained model shows a x 2 -value of 1,164.3. User-generated social media communication has a significantly greater impact on functional brand image for telecommunication brands compared to pharmaceutical brands.

Table III.

Invariance test

 

x 2

df

x 2 -difference

p

RMSEA

SRMR

CFI

TLI

Tourism – telecommunications

 

Model 1

1,219.63

566

21.73

0.24

0.07

0.06

0.93

0.92

Model 2

1,241.37

584

0.07

0.06

0.93

0.93

Tourism – pharmaceuticals

 

Model 1

1,228.69

566

12.74

0.81

0.07

0.07

0.94

0.93

Model 2

1,241.43

584

0.07

0.07

0.94

0.93

Telecommunications – pharmaceuticals

 

Model 1

1,164.34

566

17.58

0.48

0.06

0.07

0.95

0.94

Model 2

1,181.92

584

0.06

0.07

0.95

0.94

Notes: Model 1 ¼ unconstrained; Model 2 ¼ constrained

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Tourism – telecommunications x 2 -difference

Tourism – pharmaceuticals x 2 -difference

Pharmaceuticals – telecommunications x 2 -difference

 

test with 1 df

p

test with 1 df

p

test with 1 df

p

Traditional media – brand awareness Traditional media – functional brand image Traditional media – hedonic brand image Firm-created social media – brand awareness Firm-created social media – functional brand image Firm-created social media – hedonic brand image User-generated social media – brand awareness User-generated social media – functional brand image User-generated social media – hedonic brand image Brand awareness – brand attitude Functional brand image – brand attitude Hedonic brand image – brand attitude Brand attitude – purchase intention

2.05

1.10

0.37

0.67

1.96

0.19

0.16

1.19

0.38

0.66

1.94

0.54

7.70

,0.01

12.32

,0.01

0.79

1.00

1.74

0.19

4.52

,0.05

8.96

,0.01

1.26

11.47

,0.01

21.00

,0.01

3.13

, 0.10

2.04

10.13

,0.01

1.57

2.28

2.50

0.06

1.15

3.75

,0.10

10.66

, 0.01

5.83

,0.05

0.25

4.94

, 0.05

3.48

,0.05

0.24

2.68

Brand

equity

creation

781

Table IV. x 2 -difference test between industries

6. Discussion The advent of social media has introduced new channels of brand communication, evidenced currently by the application of online brand engagement on social media platforms: Starbucks’ asking consumers for advice on improving their market offerings; Coca-Cola’s and Danone’s activity on social media platforms such as Facebook and Twitter. Our study’s investigation of the increasing utilization of brand engagement through social media communications offers valuable insights on the relative influence of this media on brand equity compared to traditional instruments of marketing communications and leads to important implications for companies’ brand communication activities. The investigation of the effect sizes of traditional media and social media communications on the different dimensions of brand equity demonstrates that traditional media exert a stronger impact on brand awareness compared to social media communications, whereas social media communications have a stronger positive influence on brand image. Consequently, our comparative appraisal of these communications media shows that traditional media such as TV and print campaigns are best suited to increasing brand awareness, while corporate weblogs or brand profiles on social networking sites are best suited to improving brand image. Thus, the joint implementation of these different communication instruments offers opportunities for further increasing brand equity.

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MRR

35,9

782

A more detailed analysis of social media communications, achieved by differentiating firm-created social media communication and user-generated social media communication, reveals the importance of source credibility. The different effects of firm-created compared to user-generated social media communication on the brand image dimensions demonstrate that consumers consciously differentiate between the sources of information. A deeper consideration of these results reveals that firm-created social media communication specifically increases functional brand image, whereas user-generated social media communication positively affects hedonic brand image. The strong impact of user-generated social media communication on the hedonic brand image becomes obvious by looking at the content of positive brand-based statements on social media platforms. On these platforms, consumers often refer to the overall attractiveness or desirability of the brand. As an example, one can point out the numerous consumers who confess their love of brands like Starbucks on its Facebook profile (e.g. “Starbucks is awesome” or “I love Starbucks”). This phenomenon can be explained in terms of the degree of consumer involvement. To begin with, it is likely that consumers with high brand involvement are prepared to spend their free time writing general comments on their preferred brands’ attractiveness or desirability on social media platforms. This argument is supported by the empirical results of studies investigating consumer motivations for articulating positive (electronic) word of mouth. The results demonstrate that especially high levels of involvement with a brand can stimulate positive word of mouth (Dichter, 1966). According to Dichter (1966), product-, self-, other-, and message-involvement motivate consumers to articulate positive word of mouth about a product. Hence, it can be expected that consumers who are highly involved with a specific brand are more likely than others to engage in positive user-generated communication. Additionally, as highly involved consumers often simply wish to express positive feelings in general about a brand, their comments are more likely to be formulated as abstract statements, which often do not refer to specific product characteristics but rather to the brand’s desirability and attractiveness – thus, to the brand’s hedonic image. Moreover, as the user-generated communication is thought to be neutral and not independent of company influence for a major part, other users accept these evaluations as credible and authentic, and as “external validations” of the brand’s attractiveness or desirability. The fact that the communication about a brand takes place on a public platform also increases the visibility of the communication and confirms the attractiveness of a brand as it becomes the object of discussion. Consumers’ comments on social media platforms expressing their love for a brand can be seen as a public commitment and a confirmation of the brand’s attractiveness and desirability. Marketers should be strongly aware of the fact that they will not be able to use firm-created social media communication to improve hedonic brand image. However, they do have a certain ability to influence consumer-to-consumer communications (Mangold and Faulds, 2009). For example, firm-created social media communication can be used to stimulate user-generated content: marketers can set up a framework or create a platform so that consumers can express their opinions, experiences, and information about a brand. Godes and Mayzlin (2009) demonstrate that companies can create word of mouth. They also prove that this so-called firm-created word of mouth eventually drives sales. Companies can actively initiate consumer word of mouth about their brand by leaving indelible impressions on consumers’ minds (Mangold and Faulds, 2009).

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Examples of concrete instruments for stimulating online user participation are regular updates of company websites, forums integrated in the company website weblogs, and brand profiles on online social networks that create unforgettable brand experiences. Marketers may even use traditional media to stimulate user-generated social media communication by connecting traditional media campaigns with social media activities. This might be achieved by announcing a competition on Facebook via traditional media or by connecting an offline campaign with an online sequel, such as the following Starbucks example: the company launched a poster campaign in 2009 in major cities which enticed the public at large to enter an internet contest, challenging them to be the first to find the posters and tweet pictures (on the social media platform Twitter) of the discovered posters. A joint implementation of traditional media and social media communications is particularly effective and provides the optimal marketing mix to influence brand equity positively. Alternatively, companies may reinforce word of mouth even more directly by inviting consumers to promote their brand. For this, companies send product packages to consumers and ask them personally to talk about the brand to their friends and acquaintances (Godes and Mayzlin, 2009). However, companies have to be aware that “buying” word of mouth risks raising consumer skepticism (Mayzlin, 2006). Thus, companies have to carefully develop successful strategies for influencing consumer-to-consumer social media communication. Without necessarily needing to influence consumer discussions, companies can also benefit from simply monitoring user-generated social media communication and, in the process, gather useful information about a brand’s advantages or disadvantages, which they can then employ in future brand strategies (Mayzlin, 2006). Finally, it has to be acknowledged that user-generated social media communication does not impact consumers’ brand perception regarding reliability, credibility, and trustworthiness. The insignificant effect of user-generated communication on functional

benefit is in line with empirical results in the field of (electronic) word of mouth. Studies state that product dissatisfaction (Day et al. , 1981) and the retailers’ failure to provide appropriate complaint handling mechanisms, inadequate responses to customer complaints, and inefficiency regarding product repair (Richins, 1983) are often the cause of negative word of mouth. These reasons relate to the functional brand aspects, implying that consumers who are dissatisfied with a functional aspect of a brand will be sufficiently motivated to communicate their irritation on the internet to other consumers. In this context, previous research identified consumers’ concern for other consumers (Hennig-Thurau et al., 2004) or consumer vengeance (Sundaram et al., 1998) as motivations for expressing oneself online. However, they also use social media platforms to value positive experiences or praise functional brand aspects as a quote

from BMW’s Facebook profile shows: “We love the customer service ethic at BMW [

]

and the cars are great too”. The insignificant effect of user-generated social media on functional benefit might be precisely due to the coexistence of positive and negative

comments. In this context, marketers have to be aware that firm-created social media in contrast to user-generated social media exerts a strong impact on functional brand image. Thus, companies can influence consumers here and should use this communications channel as well as traditional media to manage brand awareness and functional brand image. Furthermore, our results demonstrate that brand awareness has the weakest impact on brand attitude compared to functional and hedonic brand image. At first, this weak

Brand

equity

creation

783

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MRR

35,9

784

relationship seems to be in accordance with our reasoning regarding the hypothesized effect of user-generated, firm-created, and traditional media communication on brand awareness. Firm-created and traditional media communication transport only positive information which leads to increased consumer brand awareness, which in turn enhances brand attitude positively – a presumed marketing objective. However, user-generated communication does not necessarily need to be positive in order to raise awareness, implying that negative user-generated social media communication can increase the brand awareness, but need not necessarily increase brand attitude positively. Nevertheless, our results demonstrate that user-generated social media communication does not have a significant impact on brand awareness in the overall data set which covers the three industries. A further analysis of the separate industries however indicates that for the tourism industry there is a significant impact on brand awareness, highlighting that the significance of the effect on brand awareness seems to be industry-specific. We conclude that the effect of user-generated social media communication on brand awareness seems rather complex – regarding its possible ambiguous effect on awareness and its dependency on industry – and therefore further research should be carried out in this context. Additionally, our results imply that it is not sufficient for marketing managers to simply measure consumer awareness of their brand’s presence on social media platforms. Marketing managers should rather discover the underlying causes eliciting this awareness, as it is awareness that ultimately impacts brand attitude and the nature of this relationship is equivocal, depending on the kind of information communicated – positive or negative. Therefore, it seems crucial for a company to identify (1) the source of the increased awareness (firm-created or user-generated communication) and (2) the valence of the user-generated content on social media platforms leading to an increased awareness. Discussing the industry comparison in more detail, our study reveals that there are significant differences in the effect sizes. This indicates that decisions about the implementation of social media should be driven by industry characteristics. The results demonstrate that consumers of pharmaceutical brands rely more heavily on highly qualified specialists and dismiss the opinions and evaluations of other consumers. This explains the strong impact of firm-created social media communication and the negligible importance of user-generated communication on social media platforms. In the tourism industry, on the other hand, consumers highly appreciate consumer-to-consumer communication and consult user-generated social media communication for information when making brand decisions. Here, firm-created social media communication lacks credibility in the eyes of the consumer. Finally, for the telecommunications industry, both firm-created and user-generated social media communication strongly influence functional and hedonic brand image, respectively, highlighting the importance of implementing a comprehensive social media communications strategy in this industry. To sum up, companies should recognize the need to engage in social media and to carefully define a clear strategy for their engagement. Social media offer companies numerous opportunities to listen to their consumers, to engage with them, and to even influence their conversations. Companies providing social network platforms bring like-minded consumers together and give them the opportunity to talk about brand-based topics. Therefore, companies should view social media as an essential component of their marketing communication mix, and integrate them in their marketing communications in order to increase brand equity. The rising trend of the consumer use of social media will increasingly impact brand equity in future.

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The strategic implementation of social media offers marketers an added advantage in

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About the authors Manfred Bruhn is Full Professor of Marketing and Management at the University of Basel and Honorary Professor at the Munich University of Technology. Verena Schoenmuller is a Doctoral Student at the Department of Marketing and Management. University of Basel, Basel, Switzerland. Verena Schoenmuller is the corresponding author and can be contacted at: verena.schoenmueller@unibas.ch Daniela B. Scha¨fer is a Doctoral Student at the Department of Marketing and Management. University of Basel, Basel, Switzerland.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints

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Appendix

 

Items

C a

CR

AVE

Based on

Firm-created social media communication

 

I

am satisfied with the company’s social media

Magi (2003), Tsiros et al.

communications for [brand] The level of the company’s social media communications for [brand] meets my expectations Compared with the very good social media communications of other companies, this

0.97

0.97

0.90

(2004)

company’s social media communication for [brand] performs well User-generated social media communication

 

I

am satisfied with the social media

Magi (2003), Tsiros et al.

communications expressed by other users about

 

(2004)

[brand] The level of the social media communications

0.97

0.97

0.90

expressed by other users about [brand] meets my

 

expectations

Compared with the very good social media communications of other users about other brands, the social media communications of users about [brand] performs well Traditional media

I

am satisfied with the traditional media campaigns

Magi (2003), Tsiros et al.

of [brand], i.e. radio, TV, print advertisements The level of the traditional media campaigns of [brand], i.e. radio, TV, print advertisements) meets my expectations

0.96

0.96

0.89

(2004)

Compared with the very good traditional media campaigns (i.e. radio, TV, print advertisements) of other brands, the traditional media campaigns of [brand] perform well Brand awareness

 

I

easily recognize [brand]

Yoo et al. (2000)

Several characteristics of [brand] instantly come to

0.88

0.88

0.65

my mind

 

I

easily memorize the symbol/logo of [brand]

have a very clear picture of [brand] Functional brand image [Brand] is reliable [Brand] is credible

I

0.98

0.98

0.94

Scott and English (1989), Verhoef et al. (2004)

I

trust [brand]

 

0.95

0.95

0.83

Scott and English (1989), Verhoef et al. (2004)

Hedonic brand image [Brand] is attractive [Brand] is desirable [Brand] is strong in character [Brand] is strong in personality

( continued )

Brand

equity

creation

789

Table AI. Scale items for construct measures

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MRR

35,9

790

 

Items

C a

CR

AVE

Based on

Brand attitude

 

I

have a pleasant idea of brand [brand]

Low and Lamb (2000), Villarejo-Ramos and Sa´nchez-Franco (2005)

[Brand] has a good reputation

0.97

0.97

0.91

associate positive characteristics with [brand] Purchase intention

I

 

It is possible that I will buy [brand] in the future

 

Grewal et al. (1998)

I

will seriously consider purchasing [brand]

0.98

0.98

0.93

It is highly likely that I will buy [brand]

Notes: Cronbach’s a – C a ; composite reliability – CR; average variance extracted – AVE; terminological explanation for questionnaire participants – social media communications means all internet platforms which are suitable for exchanging information, opinions or experiences; e.g. Facebook, MySpace, YouTube; both companies and users on social media platforms can promote the brand via these media

Table AI.

 

(1) Firm-

(2) User-

(5)

(6)

created social

generated

(3)

Functional

Hedonic

(7)

(8)

media

social media

Traditional

(4) Brand

brand

brand

Brand

Purchase

communication

communication

media

awareness

image

image

attitude

intention

1 0.90

2 0.85

0.90

3 0.73

0.65

0.89

4 0.39

0.35

0.42

0.65

5 0.60

0.54

0.53

0.47

0.94

6 0.46

0.49

0.44

0.29

0.56

0.83

7 0.62

0.57

0.57

0.49

0.84

0.63

0.91

8 0.54

0.47

0.48

0.40

0.67

0.54

0.76

0.93

Table AII. Test of discriminant validity

Notes: The average variance extracted (AVE) values are marked in italics; the squared construct correlations are beneath the diagonal

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