Editorial Board

A Refereed Monthly International Journal of Management

The Impact of Brand Image on Brand Loyalty and Brand Equity in Banking Sector: A Case of State Bank of India

Author

Abstract

In today’s competitive business environment, banks operate in a severe rivalry due to various factors, including globalization, fast technological developments and homogeneous nature of banks services. For this reason, strong brand image is crucial in differentiating banks and adding value to the banking services. The present study aimed at investigating relationship among brand image, brand loyalty and brand equity in banking sector. The data in this study were collected from a sample of 100 customers of State Bank of India (SBI) in Indore region.  Data collection was done through personal administration of a close-ended structured questionnaire to the sample respondents. Obtained data from the questionnaire were analyzed using SPSS software. Presented hypotheses in this study were examined using Pearson coefficient of correlation and regression analysis. The results reveal that bank brand image has positive effects on brand loyalty and brand equity. It means that a positive brand image not only increases customer loyalty directly, but it also enhances brand equity of banks.

Keywords: Brand Image, Brand Loyalty and Brand Equity.

I. Introduction

Banking sector has witnessed a lot of fluctuations recently. Customers have become more demanding and markets more competitive, banks are focusing on building strong brand image in order to respond to these changes. Brand image is the key driver of brand equity refers to consumer’s general perception and feeling about a brand, and has an influence on consumer loyalty. For marketers, whatever their companies’ marketing strategies are, the main purpose of their marketing activities is to influence consumers’ perception and attitude toward a brand, establish the brand image in consumers’ mind, and stimulate consumers’ actual purchasing behavior of the brand, therefore increasing sales, maximizing the market share and developing brand equity.

Previous studies reported that good brand image is vital for developing long-term relationships with customers and building brand equity. The current research aims to examine the relationship among brand image, brand loyalty and brand equity in banking sector focusing on State Bank of India (SBI) in Indore region.

II. Literature Review

A. Brand Image

Brand image is customers’ overall perceptions toward a brand. Brand image is a mental image that reflects the way a brand is perceived, including all the identifying elements, the product or company personality, and the emotions and associations evoked in the consumer’s mind (Porter, 1985). In other words, brand image is a perception of a brand held in customer memory and reflecting a customer’s overall impression. A positive brand image can be considered as a crucial ability of a company to hold its market position (Onyancha, 2013). Thus, a favorable bank brand image helps strengthen the intentions customers have for selecting a bank.

B. Brand Loyalty

Loyalty is a positive propensity for an organization or brand (Da Silva & Syed Alwi, 2006). Customer loyalty is a deep held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influence sand marketing efforts that have the potential to cause switching behavior (Oliver, 1997).

Relationship between brand image and brand loyalty

 (Ogba & Tan, 2009) In a study concluded that brand image can positively influence customers' loyalty to a market offering and possibly boost customer commitment. The study also suggested that good brand image should positively impact on customers' loyalty, which at long run should also influence the overall brand equity of the firm.

C. Brand Equity

Brands exist in the minds of their consumers and what those consumers think of a particular brand determines the value it has to its owner. (Aaker, 1996) Defines brand equity as ‘a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and / or that firm’s customers ’. Strong brand equity allows an organization to gain competitive market power and various benefits such as: successful product and brand extensions, strong acceptance of promotional programs, and high entry barriers to competitors (Farquhar, 1989).

Relationship between brand image and brand equity

(Sajjad, Rasheed, Ibrahim, & Iqbal, 2015) In their study examined the impact of brand image brand equity. The research results identified that there is positive significant relationship between the dependent (brand equity) and independent variable (brand image).

Relationship between brand loyalty and brand equity

(Yoo & Donthu, 2001) Model illustrated that the relationship of brand loyalty is much stronger than the relationship of perceived quality and brand associations to overall brand equity.

III. Objectives of the Study

1. To study the impact of brand image on brand loyalty in banking sector.
2. To study the impact of brand loyalty on brand equity in banking sector
3. To study the impact of brand image on brand equity in banking sector.

IV. Research Hypotheses

H₀₁. There is no positive effect of brand image on brand loyalty in banking sector.

H₀₂.  There is no positive effect of brand loyalty on brand equity in banking sector.

H₀₃. There is no positive effect of brand image on brand equity in banking sector.

V. Methodology

The research design used in the present study is descriptive in nature as it is based on primary data. The sample respondents are comprised of the customers who avail banking services of SBI in Indore city. The sample size is 100 respondents. The sampling technique used is non probability convenience sampling wherein the respondents are chosen as per the convenience of the researcher.

Data collection has been done using structured questionnaire with customers of the SBI. The questionnaire consists of two parts. First part states demographic variables such as gender, age, educational level and occupation of sample respondents. Second part includes 18 statements used to find out the relationship between brand image, brand loyalty and brand equity in banking sector.

Information was obtained on a 18-items index regarding banking customers’ responses towards brand image, brand loyalty and brand equity of banks in relation to SBI. For each item, respondents used a 5-point Likert scale i.e. 1 being “Strongly Disagree” to 5 being “Strongly Agree.”After collection of data, it is analyzed by using reliability statistics, frequency distribution and regression analysis.

VI. Findings and Discussion

A. Descriptive Statistics

The questionnaire consists of two parts where Part-A states the demographic profile of the respondent. Part-B consists of the questions related to variables- brand image, brand loyalty and brand equity. The detailed analysis of the questionnaire is as under:

Table 1: Demographic profile of respondents

From the Table-1 it can be observed that 63% individuals are male and 37% individuals are female. This shows that male respondents are contributing more in the study. In case of ‘age’ of respondents, the majority of respondents fall in the age group of 21-30 and 31-40 years. So the majority of customers of SBI fall in this age group. It was observed that most of the respondents are working professionals. Out of total 100 respondents, 48 are service class respondents. As the education qualification is concerned, findings depicts that the most of the respondents are post graduate. Respondents have been asked how long they are associated with their bank. Maximum number of respondents showed their association of 8-12 yrs. As the frequency of respondent’s visit is concerned, more than 50% of respondents visit their bank as and when need arises.

Thus, it can be interpreted from the findings of the study that majority of the sample respondents are working class people who visit bank when need arises. Most of them have been associated with SBI since a long time which shows that loyalty level of customers is high for SBI.

B. Reliability Statistics

Table 2: Test of Reliability

Cronbach’s alpha reliability test (Table-2) has been conducted to find out the reliability of the questionnaire for measuring the impact of brand image on brand loyalty and brand equity in banking sector. Cronbach alpha in this case is .856 this means the instrument is reliable to undergo data analysis.

C. Hypotheses test results

H₀₁. There is no positive effect of brand image on brand loyalty in banking sector.

H₀₂.  There is no positive effect of brand loyalty on brand equity in banking sector.

H₀₃. There is no positive effect of brand image on brand equity in banking sector.

Table 3: Regression table for brand image and brand loyalty

Table 4: Regression table for brand loyalty and brand equity

Table 5: Regression table for brand image and brand equity

In order to test the affect of brand image on brand loyalty and brand equity; and affect of brand loyalty on brand equity, three different bivariate regression analyses (Table-3, 4 & 5) were conducted.  Regression tables show that the relationship is statistically significant with all the three variables. Regression tables show that the significance level for all the three measured variables is 0.000 at different level of degree of freedom, which is less than p value i.e. 0.05. It is found in Table-3 that brand image of banks affects brand loyalty of customers. In the light of this all the null hypotheses are rejected and alternate hypotheses are selected. The results of Table-4 depicts that brand loyalty have a positive impact on brand equity of banks. Table-5 shows that brand image of banks influence brand equity in banking sector. Thus it can be concluded that the brand loyalty and brand equity is affected by brand image of banks.

VII. Conclusion and Managerial Implication

The purpose of the research is to investigate the relationship between brand image, brand loyalty levels and brand equity of SBI in Indore city. The results show that brand image significantly related to brand loyalty and brand equity in banking sector. Finding of the study also suggested that brand image and brand loyalty are important determinants of brand equity. It means that a positive brand image not only increases brand loyalty directly, but it also enhances brand equity of banks. Therefore, this study confirms that brand image of banks is an important factor that affect the loyalty levels of the customer, which also influence the brand equity of banks.

The managerial implication from this result suggests that in order to succeed, it is very crucial for banks to build strong brand image. It is also essential that the bank should use the right marketing strategies to build desired brand image. Only such banks will tend to survive in the rat race for market shares in the days to come. 

The marketers of the service providers can use the research results to leverage their brand equity through the building and maintaining strong brand image. Banks can increase their brand equity by focusing on customer loyalty levels.

VIII. References

[1] Aaker, D. (1996). Building Strong Brands. USA: The Free Press.

[2] Da Silva, R. V., & Syed Alwi, S. F. (2006). Cognitive, affective and conative behavioural responses in retail corporate branding. Journal of Product and Brand Management , 293 305.

[3] Farquhar, P. (1989). Managing Brand Equity. Journal of Advertising Research , RC7-RC12.

[4] Ogba, I.-E., & Tan, Z. (2009). Exploring the impact of brand image on customer loyalty and commitment in China. Journal of Technology Management in China , 132 - 144.

[5] Oliver, R. (1997). Satisfaction: Behavioral Perspective on the Consumer. New York: McGraw- Hill.

[6] Onyancha, G. K. (2013). The Impact of Bank Brand Image on Customer Satisfaction and Loyalty: A Case of Kenya Commercial Bank. European Journal of Business and Management , 35-40.

[7] Porter, M. (1985). Competitive Advantage. New York: Free Press.

[8] Sajjad, F., Rasheed, I., Ibrahim, M., & Iqbal, S. (2015). Impact of Brand Extension and Brand Image on Brand Equity. Journal of Marketing and Consumer Research , 37-41.

[9] Yoo, B., & Donthu, N. (2001). Developing and validating a multidimensional consumer-based brand equity scale. Journal of Business Research , 1-14.