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The Importance of Brand Awareness in Consumers’ Buying Decision and Perceived Risk Assessment

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Abstract

Brand awareness, as one of the fundamental dimensions of brand equity, isoften considered to be a prerequisite of consumers’ buying decision, as itrepresents the main factor for including a brand in the consideration set.Brand awareness can also influence consumers’ perceived risk assessmentand their confidence in the purchase decision, due to familiarity with thebrand and its characteristics. On the other hand, brand awareness can bedepicted into at least two facets – unaided (brand recall) and aided (brandrecognition) – each of the two facets having its more or less effectiveinfluence on buying decision and perceived risk assessment. This paper triesto reveal, on one hand, the importance of unaided brand awareness when itcomes to consumers’ buying decision and, on the other hand, the importanceof aided brand awareness when assessing the perceived risk associated withthe purchase. The analysis is conducted in a comparative manner,considering the case of durable versus non-durable products, and with focuson urban Romanian consumers.
THE IMPORTANCE OF BRAND AWARENESS IN
CONSUMERS’ BUYING DECISION AND PERCEIVED
RISK ASSESSMENT
Lecturer PhD Ovidiu I. MOISESCU
Babeş-Bolyai University of Cluj-Napoca
Abstract:
Brand awareness, as one of the fundamental dimensions of brand equity, is
often considered to be a prerequisite of consumers’ buying decision, as it
represents the main factor for including a brand in the consideration set.
Brand awareness can also influence consumers’ perceived risk assessment
and their confidence in the purchase decision, due to familiarity with the
brand and its characteristics. On the other hand, brand awareness can be
depicted into at least two facets – unaided (brand recall) and aided (brand
recognition) – each of the two facets having its more or less effective
influence on buying decision and perceived risk assessment. This paper tries
to reveal, on one hand, the importance of unaided brand awareness when it
comes to consumers’ buying decision and, on the other hand, the importance
of aided brand awareness when assessing the perceived risk associated with
the purchase. The analysis is conducted in a comparative manner,
considering the case of durable versus non-durable products, and with focus
on urban Romanian consumers.
Keywords: brand aided and unaided awareness, brand choice, perceived risk
Brief literature review
Although the last decades’
specialized literature revealed and
crystallized the concept of brand equity
(in relation to which brand awareness is
one of the fundamental dimensions) the
term has been and still is approached in
several manners in the specialized
literature.
Aaker (1991) approaches brand
equity as a set of fundamental
dimensions grouped into a complex
system comprising mainly: brand
awareness, brand perceived quality,
brand loyalty and brand associations.
He also suggests a “brand equity ten”
model for assessing brand equity
(Aaker, 1996), taking into consideration
several factors among which brand
awareness is fundamental.
Kevin Lane Keller (1998, p.45)
approaches brand equity from a
customer based perspective defining it
as “the differential effect of brand
knowledge on consumer response to
the marketing of the brand”.
Farquhar (1989) considers that
building a strong brand within
consumers’ minds means creating a
positive brand evaluation, an accessible
brand attitude, and a consistent brand
image, the accessible brand attitude
actually referring to what the others
term as awareness.
As already mentioned, an
important dimension of brand equity is
brand awareness, very often an
undervalued component. Not only that
awareness is almost a prerequisite for a
brand to be included in the
consideration set (the brands that
receive consideration for purchase), but
it also influences perceptions and
attitudes, and can be a driver for brand
loyalty (Aaker, 1991).
Reflecting the salience of the
brand in the customers mind,
awareness can be assessed at several
104
levels such as recognition, recall, top of
mind, brand dominance (the only brand
recalled), or, even more, brand
knowledge (what the brand stands for is
very well known by consumers) (Aaker,
1996).
Brand awareness is the first and
prerequisite dimension of the entire
brand knowledge system in consumers’
minds, reflecting their ability to identify
the brand under different conditions: the
likelihood that a brand name will come
to mind and the ease with which it does
so (Keller, 1993).
Brand awareness can be depicted
into brand recognition (consumers’
ability to confirm prior exposure to the
brand when given the brand as cue)
and brand recall (consumers’ ability to
retrieve the brand when given the
product category, the needs fulfilled by
the category, or some other cues).
Brand awareness is essential in
buying decision-making as it is
important that consumers recall the
brand in the context of a given specific
product category, awareness increasing
the probability that the brand will be a
member of the consideration set.
Awareness also affects decisions about
brands in the consideration set, even in
the absence of any brand associations
in consumers’ minds. In low
involvement decision settings, a
minimum level of brand awareness may
be sufficient for the choice to be final.
Awareness can also influence
consumer decision making by affecting
brand associations that form the brand
image (Keller, 1998).
Considering Farquhar’s (1989)
approach of brand equity, the
accessible attitude he refers to is
related to how quickly a consumer can
retrieve brand elements stored in
his/her memory (brand awareness).
The attitude activation is
sometimes “automatic” (it occurs
spontaneously upon the mere
observation of the attitude object) and
sometimes “controlled” (the active
attention of the individual to retrieve
previously stored evaluation is
required). It was also proven (Farquhar,
2000) that only high accessible attitudes
(brands with a high level of awareness)
can be relevant when purchasing or
repurchasing a brand.
Other authors (Laurent, Kapferer
and Roussel, 1995) suggest three
classical measures of brand awareness
in a given product category:
spontaneous (unaided) awareness
(consumers are asked, without any
prompting, to name the brands they
know in the product category – in this
case the unaided awareness of a brand
is the percentage of interviewees
indicating they know that brand), top of
mind awareness (using the same
question, the percentage of
interviewees who name the brand first is
considered) and, respectively, aided
awareness (brand names are presented
to interviewees – in this case the aided
awareness of a brand is the percentage
of interviewees who indicate they know
that brand).
The outcome of any brand choice
can only be known in the future, the
consumer being thus forced to deal with
uncertainty. Brand choice could be
considered the central problem of
consumer behavior, while the perceived
risk associated to buying decisions is a
pivotal aspect of brand choice. Risk is
often perceived to be painful in that it
may produce anxiety, in which case it
must be dealt in some manner by the
consumer.
Among the main functions of a
brand from the consumers’ perspective
is considered to be the minimization of
perceived purchasing risk, which in turn
helps cultivate a trust-based
relationship. Brand awareness can
influence consumers’ perceived risk
assessment and their confidence in the
purchase decision, due to familiarity
with the brand and its characteristics.
Methodology
The aspects analyzed within this
paper are part of a larger study
105
conducted in order to generate a model
capable to explain the combined and
synergic influence of brand dimensions
on consumer behavior.
Within this paper, the specific
objectives of the research were to
reveal, on one hand, the importance of
unaided brand awareness when it
comes to consumers’ buying decision
and, on the other hand, the importance
of aided brand awareness when
assessing the perceived risk associated
with the purchase, in a comparative
manner (the case of durable versus
non-durable products) and with focus on
urban Romanian consumers.
In order to meet the research
specific objectives, several particular
indicators were used to measure brand
recall, brand choice share and the
perceived risk associated with the
purchase of an unknown brand.
Furthermore, the influence of
brand unaided awareness level on
brand choice share and of brand aided
awareness level on perceived risk
assessment were statistically tested and
analyzed, considering two particular
product categories from durables and
non-durables market types, and taking
into consideration several consumer
demographic characteristics like age,
income level, education level and
gender.
The needed information in order to
study the above mentioned issues
basically consisted in:
the consumers’ ability to retrieve
the brand when given the product
category (unaided brand awareness for
each durable and non-durable brand),
the most recent purchased brand
in each product category (brand choice
share for each durable and non-durable
brand),
the perceived risk associated to
buying a brand with no aided brand
awareness (also considering each
product category)
demographic characteristics (age,
income, education and gender).
The data collection had to be
conceived in such a way so that
consumers could reveal their attitudes
regarding the analyzed product
categories and corresponding brands,
as easily and correctly as possible.
Therefore, the particular product
categories chosen for the research
consisted in tooth-paste, as being
representative for non-durables, and
television sets as being representative
for durables, selected this way because
they are different in usage duration, not
too technical and have a large rate of
penetration into households usage
(thus, most of the respondents were
able to express their attitudes towards
those products).
In order to collect the needed data,
a questionnaire based survey was
conducted among a representative
sample of the investigated population.
The indicators designed in order to
reflect the necessary information for the
study were computed as it follows:
each respondent had to mention
the first three brands of tooth-paste and
television sets that came to his/her
mind, finally unaided awareness of
each brand being reflected by the
percentage of respondents that recalled
that brand;
each respondent had to mention
the most recent purchased brand in
each of the two selected product
categories, each brand choice share
being finally reflected by the percentage
of respondents that mentioned that
brand as being the most recent
purchased one;
each respondent had to evaluate
his/her perceived risk associated to
buying a brand with no aided
awareness (when it came to buying a
brand he/she had never heard of
before), both in the case of tooth-paste
and television sets; the data collection
instrument was designed using a
symmetric scale with six answering
options from 1="Strongly disagree" to
6=“Strongly agree” (so that neutral
responses be avoided and either
106
positive or negative attitudes be
revealed) associated to the statement “I
consider buying a brand I have never
heard of before as being very risky”;
finally, perceived risk assessment for
each brand was reflected through the
statistical mean of all answers
considering that brand.
The investigated population was
limited to the urban consumers of Cluj-
Napoca, one of the largest cities of
Romania, although the intention of the
research was to analyze the urban
Romanian consumers as a whole.
Nevertheless, the research could
still be considered, with certain
limitations, as being representative for
the entire urban Romanian population
as Cluj-Napoca is the second largest
higher education center of Romania
and, excepting the capital of the country
(Bucharest), the second largest city of
Romania, representing almost 3% of the
Romanian urban population.
The questionnaire based
interviews were conducted “face-to-
face”, at the household’s residence of
the respondents, by a group of 119
students, each student completing a set
of five interviews.
The sampling method used for the
survey consisted in a mixture of
classical probabilistic and non-
probabilistic methods. Firstly, the
population was geographically clustered
considering the 474 postal areas of
Cluj-Napoca. Afterwards, 119 clusters
were extracted through systematic
random sampling. The 119 clusters
(postal areas) were assigned to the 119
interview operators (one cluster to each
operator), and each operator had to
complete five questionnaire based
interviews on the basis of an itinerary
sampling method (5 consumers from
different households, located into five
consecutive buildings from the assigned
cluster – postal area). The data
collected was afterwards verified and
validated by contacting (via phone
and/or email) a random sample of
respondents in order to confirm his/her
answers. The interview operators
identified as trying to mislead the
research through providing non-valid
questionnaires were fully verified.
At the end of the data collection
process, from the total of 595 assumed
completed interviews, only 551 were
validated, therefore, the research
having, considering a statistical
confidence level of 95%, an estimation
error of ±4,2%
(5515,05,096,1 =e),.
Results
Analyzing the general situation,
without considering specific product
categories or brands, according to the
collected data, almost a third (29,67%)
of the investigated consumers associate
a very high level of risk to buying a
brand with no aided brand awareness,
while the cumulative percent of those
who are more likely to confirm the fact
that they consider buying a brand they
have never heard of as being very risky
is nearly 60% (the consumers that
chose 4, 5 or 6 on the answering scale
represented 58,35% of the investigated
sample).
This finding is compatible with the
general assumption that most of the
consumers would prefer buying brands
that are familiar to them, brands which
they have heard of (aided brand
awareness).
Furthermore, the perceived risk
associated to buying a brand with no
aided awareness (an unknown brand)
was measured using the previously
described six option scale, taking into
consideration potential significant
differences between product categories
– durables versus non-durables (Figure
1). In order to identify any statistically
significant differences between durables
and non-durables in the perceived risk,
both parametric Student (T) and non-
parametric Mann-Whitney (Z) tests were
run considering the following
hypothesis:
107
H1: The perceived risk associated
to buying a brand with no aided awareness varies between durables
and non-durables.
Figure 1. Perceived risk associated to buying a brand with no aided brand
awareness
(Mean of “I consider buying a brand I have never heard of before as being very
risky” with answers from 1 = "Strongly disagree" to 6 = “Strongly agree”)
The tests’ results (T=–2,633 with
p=0,009; Z=–2,712 with p=0,007)
confirmed the hypothesis with a
confidence level of 99% and, therefore,
the perceived risk associated to buying
a brand with no aided awareness could
be considered significantly higher in the
case of durables (Mean=4,07) than in
the case of non-durables (Mean=3,79).
Furthermore, using the same tests
as before and the parametric Anova (F)
and non-parametric Kruskal-Wallis (H)
tests, potential significant differences in
the perceived risk among demographic
market segments were investigated,
starting from the following statistical
hypothesis:
H1: The perceived risk associated
to buying a brand with no aided
awareness varies among age /
education / income / gender categories.
According to the tests’ results (see
Table 1), the hypothesis was rejected
with a confidence level of 95% and,
therefore, it was statistically proven that
the perceived risk associated to buying
a brand with no aided awareness could
be considered similarly high, no matter
the age, education, income or gender of
consumers. Table 1
Perceived risk associated to buying a brand with no aided awareness in
relation to consumers’ demographics
Non-durables Durables
Age F=1,490 (p=0,204>0,05)
H=5,213 (p=0,266>0,05) F=0,195 (p=0,941>0,05)
H=0,521 (p=0,971>0,05)
Education F=1,080 (p=0,370>0,05)
H=5,090 (p=0,405>0,05) F=0,723 (p=0,606>0,05)
H=2,708 (p=0,745>0,05)
Income F=1,713 (p=0,146>0,05)
H=7,082 (p=0,132>0,05) F=1,086 (p=0,363>0,05)
H=4,830 (p=0,305>0,05)
Gender T=-0,596 (p=0,551>0,05)
Z=-0,601 (p=0,548>0,05) T=-0,530 (p=0,596>0,05)
Z=-0,351 (p=0,726>0,05)
108
In order to investigate the
importance of unaided brand awareness
in consumers’ buying decision, bivariate
regression models were tested (linear
Y=a+b·X, logarithmic Y=a+b·ln(X) and
exponential Y=a·eb·X) with the
independent variable (predictor)
represented by unaided awareness, and
the dependent (predicted) variable
represented by choice share:
H1: Brand choice share is
positively correlated with brand unaided
awareness, both in the case of durables
and non-durables.
In order to analyze the above
described relation and to select the
most appropriate model to explain the
relation, the existence of a relation
between variables was firstly tested (in
order to test the relation, the null
hypothesis of “no relation” was rejected
depending on the value of the statistical
indicator p, with a statistical confidence
level of 95% if p<0,05, or with a
statistical confidence level of 99% if
p<0,01), then the intensity of the
relation was evaluated, according to the
tested model (considering the bivariate
correlation coefficient R and the
determination coefficient R2, indicating
the proportion of the dependent
variable’s variation explained by the
predictor’s variation), and, finally, the
regression coefficients were determined
according to the tested model, along
with an appropriate mathematical
function to reflect the relation (Figure 2).
Figure 2. The importance of unaided brand awareness in consumers’ buying
decision
The bivariate regression
coefficients proved, with a confidence
level of 99% (p<0,01), that there was a
positive exponential relation between
brand unaided awareness and brand
choice share (88,5% of the variation
being explained by the model, in the
case of non-durables, and 96,8%, in the
case of durables).
The model suggests that there is
an upper limit for brand choice share, as
unaided awareness grows, limitation
given by the durable/non-durable nature
of the product (according to the
identified models, considering 100%
109
unaided awareness, the value of brand
choice share is 66,81% for non-
durables, and 100% for durables).
Conclusions
Brand awareness, as one of the
fundamental dimensions of brand
equity, is a prerequisite for the market
success of both durables and non-
durables brands. It represents a main
factor for a brand to be included in the
buying decision process consideration
set, as most of the consumers prefer
buying brands they are aware of
(brands they are familiar with or, at
least, they have heard of).
Brand awareness influences
consumers’ perceived risk assessment
and their confidence in the purchase
decision, both in the case of durables
and non-durables. Still, the importance
of brand awareness in perceived risk
assessment is significantly higher in the
case of durables, which suggests that,
in order to reduce the perceived risk
associated to brand choice, it is
essential for brand awareness to be
generated (at least at the unaided
level), especially in the case of
durables.
Moreover, considering the fact that
the perceived risk associated to buying
a brand with no aided awareness is
similarly high, no matter the age,
education, income or gender of
consumers, there is no sense in market
segmentation (considering the above
mentioned demographics) in order to
identify consumer categories for which
brand awareness does not influence
perceived risk assessment.
Although the research results
should be adjusted considering other
factors which could impact consumers’
buying decision, they suggest that in the
case of non-durables there is a stronger
limitation to brand choice share growth
as brand unaided awareness grows, in
comparison to the case of durables.
Actually, if to be considered, an unaided
brand awareness based monopoly
could be generated only in the case of
durables.
Even though brand choice share
can not be exclusively caused by the
level brand unaided awareness, the
depicted exponential model suggests
that, both in the case of durables and
non-durables, as unaided brand
awareness modifies, the brand’s choice
share also has a tendency to modify in
the same direction, but at a higher
variation rate. Therefore, the elasticity of
brand choice share in relation to
unaided awareness is higher as the
brand’s market leadership has a higher
level. Unaided awareness growth has a
stronger impact on choice share when
the brand already has a high brand
unaided awareness.
In order to create, maintain and
expand own brands’ choice share,
companies must understand the
importance of growing and leveraging
brands’ aided and unaided awareness
and act accordingly. Marketing
integrated communication must be
implemented, with special emphasis on
advertising and customer relationship
management, which play fundamental
roles in this direction.
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