Title: Retail branding in Taiwan - An examination of the relationship between brand

knowledge and brand loyalty.

Introduction
The concept of retail branding has been a popular issue and the relevant literatures and
theories have been researched for decades, especially in the European market. In Taiwan, the
concept of retail branding was introduced around 1998 and 2000 by international retail brands,
e.g. Carrefour, COSTCO and TESCO (Ho, 2008). Since then they started creating and
promoting low-priced own brand products as the first stage for developing retail branding in
Taiwan. According to Ho, Vignali and Temperley’s research (2006), the first few years still
stayed at the introduction stage, but in recent years, it is forecasted to have a growth trend
(Carat Media Weekly, 2008). It has been believed that more and more Taiwanese consumers
have started to know, accept and use retail own brand products. The key issue therefore is
whether the more retail brand knowledge consumers acquire, the more retail brand loyalty
they have. It is an interesting issue to observe and explore after a decade into retail brand
development in Taiwan.

Therefore, this research paper is going to explore consumers’ retail brand knowledge by
applying Keller’s brand knowledge model (1993). The previous discussions about the
relationship between brand knowledge and brand loyalty are mainly for the manufacturer
brand or in general, less for the field of retail branding specifically, thus this research will
investigate a proposed conceptual research framework for the relationship between retail
brand knowledge and retail brand loyalty. The support of Taiwan’s National Science Council
is acknowledged in enabling fieldwork to be undertaken in Taiwan.

Brand Knowledge and Brand Loyalty

According to Keller (2003), brand knowledge is defined in terms of two components: brand
awareness and brand image. Figure 1 presents the dimensions of brand knowledge.

Figure 1：Dimensions of brand knowledge

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 Brand recall
Symbolic
Brand
Awareness
Brand Benefits Functional
recognition

Experiential Price
Brand
Type of brand
Knowledge association
Attributes Packaging
Non-
Favorability Product-
of brand Related User
associations
Brand imagery
Attitudes
Image
Strength of Product-
brand Related Usage
associations
imagery

Uniqueness
of brand
associations

Sources: Keller (1993)

Brand awareness is one of the main crucial issues for consumers when assessing products
(Aaker, 1991). The importance of brand awareness has been discussed a great deal in previous
literatures, e.g. Simon (1970), Shimp and Bearden (1982), Rao and Monroe (1988) and Hoyer
and Brown (1990). From Keller’s model (Figure 1), brand awareness consists of brand
recognition and brand recall performance. Brand recognition requires that consumers can
correctly distinguish the brand as having been previously seen or heard (Keller, 2003). Brand
recall requires that consumers correctly generate the brand from memory (Keller, 1993).
Aaker (1996) indicated that brand awareness could influence consumers’ perceptions and
attitudes, as well as drive the choice and loyalty of a brand. Therefore, this study is going to
apply brand recognition and brand recall as the research elements for brand awareness.

The issue of brand image has been seen as one of the key topic in the field of consumer
behavior since the 1950’s (Dobni and Zinkhan, 1990). Keller (1993) defined brand image as
perceptions about a brand as reflected by the brand associations held in consumer memory. He
also believed that brand image includes types, favorability, strength and uniqueness of brand
association (Figure 1). Aaker (1996) proposed that the brand association involves image
dimensions that are unique to a product or to a brand. The measurement of brand association
can be structured around three aspects: the brand-as-product (value), the brand-as-person
(brand personality) and the brand-as-organization (organizational associations). Aaker
considered organizational associations as one of the key issue for exploring brand image,
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which is suitable for the meaning and the definition of retail branding in this study. Therefore,
we need to take brand value, brand personality and organizational associations as the means
of measurement.

Brand loyalty means that consumer insists on buying the same brand the next time (s)he needs
to buy the product again without any reason or stimulation (Hu, 2006; Bloemer and Kasper,
1995). Many studies have been discussed how to measure brand loyalty, e.g. Dick and Basu,
1994; Jones and Sasser Jr., 1995, but it still depends on the research object to decide which
measurement is suitable. Among those, Jones and Sasser Jr. (1995) used three major
categories to conduct measures of loyalty, which is considered to be applied in this research as
the measurement for brand loyalty:

 intent to repurchase, e.g. consumers’ future intentions to repurchase a given product or

service
 primary behavior, e.g. actual repurchasing behavior- recency, frequency, amount,
retention and longevity
 secondary behavior, e.g. consumer referrals, endorsements and spreading the word

Previously the brand knowledge model, brand loyalty and their relationships are argued in the
field of brands in general (e.g. Peng, 2006). This research study is going to apply the above
discussions into the area of retail branding to propose a conceptual research framework for the
relationship between consumers’ retail brand knowledge and retail brand loyalty in Taiwan.

Research Framework and Research Method

The proposed conceptual research framework (Figure 2) was used in this study as a research
model for examining whether consumers’ retail brand knowledge affect their retail brand
loyalty for both store and own brand products. Applying this framework leads to four main
hypotheses as a basis for testing with field research.

Figure 2: Research framework

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 Brand knowledge

Retail brand
awareness H2 Retail
store
H1 Brand loyalty

Retail brand H3 Retail OB

image product

H4

Demographic Background

H1: whether retail brand awareness affects retail brand image

H2: whether retail brand awareness affects consumers’ brand loyalty for retail store and own
brand product
H3: whether retail brand image affects consumers’ brand loyalty for retail store and own
brand product
H4: whether demographic issues affect retail brand perceptions

A questionnaire survey with consumers is conducted in this research for examining these 4
hypotheses. Due to the limitation of the place and time cost, convenience sampling is decided
to conduct in Taichung (the biggest city in Central Taiwan). SPSS software is considered to do
the data analysis and the analyzing techniques would be descriptive statistics, reliability test,
t-test, ANOVA, and factor analysis.

Findings
There were 465 questionnaires distributed and a total of 414 valid questionnaires resulting in
a response rate of 89.03%. Among these samples, males are 51% and females are 49% and the
majority of the respondents are under 35-year-old. Carrefour is the most frequency to shop
(58%), and then COSTCO (17.9%) and RT-Mart (16.2%). The Cronbach’s α of “Retail brand
awareness”, “Retail brand image” and “Retail brand loyalty” is 0.910, 0.937 and 0.905
respectively, which indicate that those variables correlations are considered acceptable and
significant.

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The research results can be summarized as the following 4 main issues which achieved all 4
hypotheses,
1. There is a significant difference between “retail store/own-brand product brand
awareness” and “retail store/own-brand product brand image”, so retail brand awareness
do affect retail brand image, which achieved H1.
2. Retail brand knowledge (including retail brand awareness and retail brand image) do
affect retail brand loyalty. Not only does “retail store brand/own-brand product
knowledge” affect “retail store brand/own-brand product loyalty”, but also the
cross-influence happened, namely, “retail store brand knowledge” affects “retail
own-brand product loyalty” and “retail own-brand product knowledge” affects “retail
store brand loyalty”. The details of the hypotheses testing are summarised in Appendix.
3. Basing on the second issue, a further research result can be analysed as that “retail store
brand awareness” has more significant association with “retail store brand loyalty”, but
“retail own-brand product image” has more significant association with “retail own-brand
product loyalty”. The second and third issue both achieved H2 and H3.
4. Regarding demographic concern, apart from “gender”, the issue of age, education, income,
and family size do affect the perception of both retail store brand and retail own-brand
product. Therefore, even though hypermarkets’ target market is the general public, it still
necessary targets the different segmentation by age, education, income and family size to
have different brand marketing communications. It achieved H4.

Conclusions
The purpose of this research is to find out the relationship between brand knowledge and
brand loyalty for retail branding in Taiwan. After undertaking the fieldwork research, the
results indicated that retail brand knowledge do affect retail brand loyalty. Meanwhile, the
structure of retail branding includes at least two levels, i.e. retail store brand and retail
own-brand product, so both of them would cross influence to each other and then have
different influencing situations. It could be a valuable finding from this research to contribute
both academic area and practical industry. Doing branding in retailing is much more
complicated than in manufacture or brand in general. This research would provide a different
insight into analysing retail branding and expect to be a benchmark for both retail brand
players and academic researchers for further research.

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Appendix
Hypotheses T-test*
H1-1 Retail store brand awareness / Retail store brand image
H1-2 Retail store brand awareness / Retail OB product image
H1 0<0.05
H1-3 Retail OB product awareness / Retail store brand image
H1-4 Retail OB product awareness / Retail OB product image
H2-1 Retail store brand awareness / Retail store brand loyalty
H2-2 Retail store brand awareness / Retail OB product loyalty
H2 0<0.05
H2-3 Retail OB product awareness / Retail store brand loyalty
H2-4 Retail OB product awareness / Retail OB product loyalty
H3-1 Retail store brand image / Retail store brand loyalty
H3-2 Retail store brand image / Retail OB product loyalty
H3 0<0.05
H3-3 Retail OB product image / Retail store brand loyalty
H3-4 Retail OB product image / Retail OB product loyalty
*T-test =0<0.05 have significant different

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