Industrial Marketing Management

Industrial Marketing Management 40 (2011) 424 438 Contents lists available at ScienceDirect Industrial Marketing Management A model to investigate the influence of marketing-mix efforts and corporate image on brand equity in the IT software sector Ji-Hern Kim 1, Yong J. Hyun Graduate School of Management, Korea Advanced Institute of Science and Technology, 207-43 Cheongryang, Dongdaemoon, Seoul, Republic of Korea article info abstract Article history: Received 17 December 2009 Received in revised form 26 April 2010 Accepted 15 June 2010 Available online 7 July 2010 Keywords: Brand equity Industrial branding Dimensions of brand equity Marketing-mix efforts Corporate image A model is developed to examine the relationships among marketing-mix efforts (channel performance, value-oriented price, promotion, and after-sales service), corporate image, three dimensions of brand equity (brand awareness with associations, perceived quality, and brand loyalty), and market performance. The model considers three distinctive aspects of business markets. After-sales service is taken as a key marketing-mix effort. Corporate image is placed as a mediator from the marketing-mix efforts to the dimensions of brand equity. Personal selling is defined as a main component of promotion. The model is tested in the context of a Korean IT software sector. The test results show that all the marketing-mix efforts positively affect the overall value of brand equity, which is a proxy of market performance, via the three dimensions of brand equity. Corporate image mediates the effect of the marketing-mix efforts on the three dimensions of brand equity. 2010 Elsevier Inc. All rights reserved. 1. Introduction A product is branded when target buyers learn about the product and, as a result, store in their memory knowledge structures of the product (Keller, 1993; Krishnan, 1996). These knowledge structures increase the value buyers obtain from the product by influencing their thinking, feeling and doing with respect to the product. Thus, the product is of more value when it is branded than unbranded, and this greater value is referred to as brand equity (Aaker, 1991, 1996; Keller, 1993). When the brand equity of a product is high enough, target buyers behave positively towards the product. For example, they pay more for the product, purchase it repeatedly, engage in favorable word-of-mouth behaviors, and so on (Aaker, 1991; Keller, 2008). In this respect, a firm can enhance its competitive position and increase financial performance by making its brand stronger. Brand equity as sourced from the knowledge structures may be characterized by a set of dimensions. According to Aaker (1996), these dimensions include brand awareness, brand associations, perceived quality, and brand loyalty. Keller (2008) proposes six dimensions of brand equity, arranged in four hierarchical levels: salience in the bottom level, performance and image in the next level, judgment and feeling in the second-to-top level, and resonance in the top level. Consumer choice is much affected by brand equity characterized as Corresponding author. Tel.: +82 2 958 3528; fax: +82 2 958 3604. E-mail addresses: jihern@business.kaist.ac.kr (J.-H. Kim), yhyun@business.kaist.ac.kr (Y.J. Hyun). 1 Tel.: +82 2 958 3648. such, and thus those in consumer markets are fully aware of the need to appropriately manage brand equity (Aaker, 1991, 1996; Keller, 2008). On the other hand, brand equity is relatively downplayed in business markets due to some distinct aspects of the business market exchange (Kotler & Pfoertsch, 2007; Webster & Keller, 2004). A relatively small number of buyers exist in business markets and then it is wasteful to invest in building up a vast coverage in, for example, brand awareness and brand loyalty. Also, a group of people with different roles (defined as initiators, users, buyers, deciders, influencers, and gatekeepers) participate in the process of purchasing industrial goods. Decision making in this process is more rational because it is group-oriented, and experts in product purchase and/or usage are involved in it. Individuals' perceptions and feelings are less likely to affect the group-oriented decision making (Bendixen, Bukasa, & Abratt, 2004). Thus, it may be argued that brand equity plays a less important role in industrial marketing than consumer marketing (Saunders & Watt, 1979; Sinclair & Seward, 1988). Despite the argument, research indicates that brand equity is a critical competitive driver in industrial marketing, as well as in consumer marketing (Kotler & Pfoertsch, 2007; Mudambi, 2002; van Riel, Pahud de Mortanges, & Streukens, 2005; Webster & Keller, 2004). As brand strength increases, industrial buyers become more likely to repurchase and pay a price premium (Bendixen et al., 2004; Hutton, 1997; Roberts & Merrilees, 2007; Taylor, Hunter, & Lindberg, 2007). Higher brand reputation would lead to more assurance of the industrial product quality (Cretu & Brodie, 2007). Even in a much earlier period, for example, it was once popularly mentioned: Purchase managers prefer IBM PCs to unbranded high value 0019-8501/$ see front matter 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2010.06.024

J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 425 alternatives. Furthermore, Borghini and Cova (2006) explain that brand equity is a basis for sellers' cultivating relationships with buyers. Webster and Keller (2004) also explain that sellers with higher brand equity are more likely to develop and maintain their relationships with buyers. A strong brand helps sellers to reinforce their control over the relational exchange with buyers. For example, Intel successfully launched the Intel Inside campaign, which brought Intel more of such control. In sum, brand equity is instrumental to making the buyer seller relationship stronger, and in turn this stronger relationship leads to the higher brand equity. Cretu and Brodie (2007) reported that three brand-relevant studies were conducted prior to 1990. These three studies focus mainly on issues involving the brand-naming factor and its impact on marketing activities such as positioning and promotion. As seen in Tables 1 and 2, a literature survey reveals that a limited number of studies have been conducted since 1990 to investigate the phenomena of brand equity in business markets. Among these studies, 12 studies focus on the relationships between the dimensions of brand equity and marketingmix efforts (e.g., price and promotion) or market performance variables (e.g., profit and sales volume). They do not comprehensively consider the key variables that concern (1) the characteristics of brand equity in business market context, (2) marketing-mix efforts, and (3) market performance. In addition, none of the studies looks into the entire structural relationships among the three sorts of variables. Instead, each study selects several variables relevant to a particular product market context, and only explores relationships among those selected variables. We thus address a gap in the research i.e., the need to establish a comprehensive model that incorporates the three sorts of key variables and explain the entire structural relationships among these variables. This structural relationships model is managerially important because it helps firms to understand which marketing efforts they should undertake to build up the dimensions of brand equity that contribute to strengthening their market power and in turn increasing their financial performance. As an example, suppose channel performance has more impact on brand image, a dimension of brand equity, than the value-oriented price, and brand image is the most influential on profit among all the critical dimensions of brand equity. Given this information, the firm may decide to allocate a large portion of its resources to leveling up channel performance. The structural relationships model is well established in consumer marketing, and knowledge produced from this model is useful for understanding how brand equity is developed and how it affects market performance in business markets (Atilgan, Aksoy, & Akinci, 2005; Chaudhuri & Holbrook, 2001; Netemeyer et al., 2004; Simon & Sullivan, 1993; Villarejo-Ramos & Sanchez-Franco, 2005; Yoo & Donthu, 2001, 2002; Yoo, Donthu, & Lee, 2000). However, this model cannot capture some distinctive aspects of business markets, and as a result we need to develop a comprehensive model for business markets, taking into consideration these distinctive aspects. Among these aspects, three are particularly noteworthy. First, it is frequently acknowledged that the role of corporate image is more important in industrial marketing than consumer marketing (Bendixen et al., 2004; Schuiling & Moss, 2004; van Riel et al., 2005; Webster & Keller, 2004). Research in business markets indicates that corporate image has greater impact on brand loyalty than product image (van Riel et al., 2005), or choice decision varies depending on corporate reputation (Cretu & Brodie, 2007). Few studies in consumer marketing systematically investigate the role of corporate image in the brand equity building process. Second, the relationship between the seller and the buyer is much more critical for securing market power in business markets than consumer markets. After-sales service is instrumental to cultivating the buyer seller relationship in business markets (Kuhn, Alpert, & Pope, 2008). It contributes a great deal to buyer satisfaction and in turn strengthens the buyer seller relationship (Mudambi, Doyle, & Wong, 1997; van Riel et al., 2005). In consumer marketing, after-sales service is taken as a product-, promotion-, or channel-related element; because of this, its role has been less emphasized. Third, as mentioned above, relatively few buyers exist and group decision making frequently occurs for product purchase in business markets. Thus, promotion in business markets is pursued in a very different manner from that in consumer markets (Kuhn et al., 2008; Mudambi, 2002; Webster & Keller, 2004). For example, personal selling plays a more important role in business markets than consumer markets, and cents-off promotional activities are frequently undertaken in consumer marketing, whereas they are generally irrelevant in the context of the business market. This nature of promotion should be fully reflected in the analysis of brand equity in the business market context. Considering the above three aspects, we aim to develop and test a model to comprehensively consider marketing-mix efforts, corporate image, dimensions of brand equity and market performance. This model is addressed in the context of an IT software sector. Brand equity is an important factor to affect buyers' choice behaviors and firms' marketing activities in the industrial market of IT software. Considering what Hutton (1997) explains, for example, we may think that buyers prefer well-known software brands rather than lesserknown ones for three primary reasons. First, they are not familiar with Table 1 Studies on brand naming and conditions for branding activities. Study Business market Major findings Saunders and Watt (1979) Sinclair and Seward (1988) Shipley and Howard (1993) Hutton (1997) Man-made fiber products Wood products Random-sampled industrial products listed on the Kompass Register of U.K. companies Personal computers, copiers, fax machines and floppy disks Brand naming is not useful to buyers for distinguishing how the products are differentiated; rather, it is rather confusing. Brand naming is rarely effective in the competitive market unless it is accompanied by active promotion. Retailers are not sure about the effect of the supplier's brand naming. However, brand naming may be helpful due to a halo effect when corporate image is good enough. Ten propositions about the importance of brand naming, the incidence of brand-name usage, brand naming strategies, brand naming processes, and managerial resource commitment to brand naming are supported. In addition, branding strategies and practices of small firms are different from large firms. Branding strategies are effective in business markets. Brand is especially important when products are complex and require greater service and support, when buyers face time pressure or resource limitations, and when buyers are afraid of product failure. Mudambi (2002) Precision bearings The industrial buyers are divided into three clusters: branding-receptive, highly tangible, and low-interest buyers. Different branding strategies should be used depending on to which clusters the target buyers belong. Schuiling and Moss (2004) Pharmaceutical products The pharmaceutical and FMCG industries are compared in terms of the choice of brand name strategies, the level of brand globalization, the use of brand extension, and the subject of co-branding. The pharmaceutical industry would benefit from benchmarking of the FMCG branding experience because they rarely have structural differences.

426 J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 Table 2 Study Business market Classification of studies Relationships BED ABED CBED DCIB a. Exploratory studies on industrial branding Mudambi et al. (1997) Precision bearings ABED BED ABED: (1) company: profit, share, reputation, image, (2) distribution: reliable, hassle, EDI/JIT, lead time, (3) product: reliable, high-tech, fit, defects, (4) support services: expertise, rapport, range of service BED: brand value (single-dimension construct) DCIB: corporate image, support service Michell et al. (2001) McQuiston (2004) Bendixen et al. (2004) Industrial products listed in the Kompass Register of U.K. companies Steel for laser cutting machine Medium-voltage electrical equipment ABED BED ABED (antecedents of brand loyalty): quality, reliability, performance, service, value for money, availability, familiarity, relationship with sales team, price, advertising, and company performance BED: brand name benefits (brand awareness), brand sponsor strategy (brand associations), competitive differentials of brands (tangible and other proprietary assets) and the generators of customer loyalty (brand loyalty and perceived quality) DCIB: corporate image, salesperson ABED BED ABED: (1) physical product: good quality, (2) logistics: fast and efficient delivery, spirit of cooperation among stockholders, (3) customer support: skilled staff, (4) corporate image and policy: recognized brand name and strong customer orientation BED: brand value (single-dimension construct) DCIB: support service, corporate image ABED BED ABED (antecedents of brand awareness): technical consultant, sales representative, conference, exhibition, direct mail, journal, magazine, word of mouth, mass media BED: brand awareness, perceived quality, brand loyalty DCIB: salesperson b. Modeling studies on the antecedents and consequences of dimensions of brand equity Baldauf et al. (2003) Tiles (reseller) market BED CBED BED: brand awareness, perceived quality, brand loyalty, end user's brand value and purchase intention (perceived by resellers) CBED: profitability performance, market performance, van Riel et al. (2005) Specialty chemicals ABED BED ABED: value for money, distribution performance, providing information (promotion), personnel BED: perceived quality of product and service, loyalty intention DCIB: corporate image, salesperson, support service Cretu and Brodie (2007) Shampoo for hair salons ABED BED ABED: company reputation, prices/cost BED: customer value, customer loyalty, brand image, product and service quality DCIB: corporate image Roberts and Merrilees (2007) Mall tenants ABED BED ABED: service quality, empowerment to tenants and responsive behavior of mall center, consumers' brand attitude to mall BED: trust, lease contract renewal Taylor et al. (2007) Professional liability insurance service Davis et al. (2008) Logistics service BED CBED BED: brand awareness, brand image CBED: overall value of brand equity Han and Sung (2008) Electronics, electricity, engineering, chemicals, plastics, equipment BED CBED BED: perceived quality, perceived brand value, brand attitude, brand uniqueness, brand satisfaction, loyalty intention CBED: overall value of brand equity ABED BED CBED ABED: supplier's competence, purchasing value BED: brand loyalty, brand trust, brand satisfaction, switching cost, commitment, relationship quality CBED: transaction performance Jensen and Klastrup (2008) Pumps ABED BED ABED: product quality, service quality, price, differentiation, promise, trust and credibility BED: customer brand relationship BED: Brand Equity Dimensions. ABED: Antecedents of Brand Equity Dimensions. CBED: Consequences of Brand Equity Dimensions. DCIB: Distinctive Characteristic of Industrial Branding. the product category because of its complexity. Second, IT software entails a large amount of support services. Third, the malfunction of IT software would create serious problems for the company and buyers themselves. Also Webster and Keller (2004) notice that Hewlett Packard, IBM, Intel, Siemens, and Cisco are top performers in business markets and their high brand equity contributes to such top

J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 427 performance. Despite the importance of brand equity in the IT software sector, little research has been conducted to uncover the process by which brand equity is developed (Ojasalo, Natti, & Olkkonen, 2008). Moreover, the distinctive nature of industrial branding is found in the IT software sector. Srivastava and Mookerjee (2004) conduct in-depth interviews with professionals working for two IT software companies and show that corporate image (characterized by stability, reliability and financial strength) and after-sales service (characterized by upgrade policy, maintenance and responsiveness) are critical determinants of brand equity. Thus, the IT software sector may be a context where the model is meaningfully pursued. Adapted from Aaker (1996) and Yoo and Donthu (2001), our model in the IT software context regards brand equity as consisting of three dimensions: brand awareness with associations, perceived quality, and brand loyalty. Applying the hierarchy-of-effects theory (Lavidge & Steiner, 1961), the model posits three causal paths from brand awareness with associations to perceived quality, from that awareness to brand loyalty, and from perceived quality to brand loyalty. In the model, corporate image is an antecedent of the dimensions of brand equity, as well as a consequence of marketingmix efforts. The model specifies the effects of marketing-mix efforts on corporate image. The model addresses after-sales service as a marketing-mix element, and defines and operationalizes promotion in adaptation to the business market context. The three dimensions of brand equity are placed in the model to affect market performance. This paper is organized as follows. First, a literature review is presented that reveals how research on brand equity has been conducted in the area of industrial marketing during the past two decades. Then, based on the literature review, this paper develops the model as mentioned above, and addresses a set of hypotheses from the model. Next is the empirical test of the hypotheses. The collection and analysis of data for testing the hypotheses is described. This is followed by the results of the hypotheses tests and a discussion of them. Finally, limitations of the present study and directions of the future study are mentioned. 2. Literature review Our literature survey dates back to the 1970s. As Table 1 shows, six studies examine the effect of brand naming activity on product differentiation and buyer behavior (Saunders & Watt, 1979; Shipley & Howard, 1993; Sinclair & Seward, 1988), or suggest a variety of conditions where branding activities are effective and which branding strategies should be used in those conditions (Hutton, 1997; Mudambi, 2002; Schuiling & Moss, 2004). Twelve studies in Table 2 analyze the structures of brand equity and/or its relationships with the antecedents and consequences. The six studies in Table 1 are not directly relevant to our study, and thus we hereafter discuss the 12 studies in Table 2. In consumer marketing, there is a significant amount of research that empirically tests the relationships among dimensions of brand equity, their antecedents, and consequences (e.g., Atilgan et al., 2005; Netemeyer et al., 2004; Simon & Sullivan, 1993; Villarejo- Ramos & Sanchez-Franco, 2005; Yoo & Donthu, 2001, 2002; Yoo et al., 2000). In contrast, research on such relationships rarely exists in industrial marketing though there are some efforts to examine the relationships among them. Some of the studies are summarized in Table 2. Four studies in the first part of Table 2 use exploratory approaches in that they seek to discover something about how brand equity structures relate to antecedents, using qualitative methods and/or presenting descriptive data produced in an ad hoc manner. One shortcoming of the exploratory studies is that they do not examine how dimensions of brand equity relate to their consequences. Another shortcoming is that they do not consider an entire set of key brand equity dimensions, namely, brand awareness with associations, perceived quality, and brand loyalty. According to their research focus, they selectively consider in their analysis some of the key dimensions (Bendixen et al., 2004; Michell, King, & Reast, 2001) or take brand equity as a single-dimension construct (McQuiston, 2004; Mudambi et al., 1997). Moreover, they only consider some distinctive aspects of industrial branding that concern the importance of corporate image, after-sales service and personal selling in the brand equity building process. Michell et al. (2001) adopt dimensions of brand equity proposed by Aaker (1991) and reinterpret them in the business market context. They do not consider the consequences of brand equity dimensions, and only examine the antecedents of brand loyalty among dimensions of brand equity. In addition, they do not address the role of after-sales service in industrial branding. The results of their survey show manufacturers of industrial products believe the key drivers of brand loyalty are quality of a product, availability, value for the money, relationships with sales teams, advertising and company performance. Bendixen et al. (2004) take brand awareness as a dimension of brand equity, and show that its two most important antecedents in an electrical equipment market are technical consultant and salesperson. The antecedents of other dimensions of brand equity are not examined. The consequences of dimensions of brand equity and the role of corporate image are likewise not considered. Mudambi et al. (1997) conduct in-depth interviews with manufacturers, distributors and customers in a precision bearings market to uncover the antecedents of brand equity. They address brand equity as a single-dimension construct, termed a pinwheel of brand value.theythenexplainhowitrelates to four antecedents: product performance, distribution performance, support services performance, and company performance. The consequences of brand equity are not considered, and promotional activities such as personal selling, ad campaigns and Web site communications are not addressed as the antecedents of brand equity. McQuiston (2004) conducts a case study of a Finnish steel company and addresses brand equity as a single-dimension construct. The study relates brand equity to four antecedents: technical solution, logistical solution, customer support solution, and corporate image and policy. The consequences of brand equity are not considered, and promotional activities are not defined as the determinants of brand equity. The second part of Table 2 shows eight studies that empirically test the relationship of dimensions of brand equity with antecedents and/ or with consequences. Among them, only one study examines the entire structural relationships among dimensions of brand equity, their antecedents, and consequences (Han & Sung, 2008). However, this study does not investigate the distinctive nature of industrial branding that concerns how corporate image, after-sales service and personal selling affect the development of brand equity. The remaining studies focus on the relationships between dimensions of brand equity and either consequences (Baldauf, Cravens, & Binder, 2003; Davis, Golicic, & Marquartdt, 2008; Taylor et al., 2007) or antecedents (Cretu & Brodie, 2007; Jensen & Klastrup, 2008; Roberts & Merrilees, 2007; van Riel et al., 2005). Moreover, except van Riel et al. (2005), some of the remaining studies do not fully cover the distinctive nature of industrial branding that concerns how corporate image, after-sales service and personal selling affect the development of brand equity (Cretu & Brodie, 2007), and the others do not deal with issues related to the distinctive nature (Baldauf et al., 2003; Davis et al., 2008; Jensen & Klastrup, 2008; Roberts & Merrilees, 2007; Taylor et al., 2007). Baldauf et al. (2003) examine the relationship between dimensions of brand equity and their consequences in a tile reseller market. They find that five dimensions of brand equity brand awareness, perceived quality, brand loyalty, purchase intention and end user's perceived brand value are significant predictors of market

428 J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 performance (e.g., sales volume) and profitability performance (e.g., margin). They do not examine the relationships between dimensions of brand equity and their antecedents while not considering the distinctive nature of industrial branding that concerns how corporate image, after-sales service and personal selling affect the development of brand equity. Davis et al. (2008) examine the applicability of Keller (1993) concept of brand equity to an industrial logistics service market. They consider brand equity as comprising two dimensions: brand awareness and brand image. The overall value of brand equity is used to operationalize market performance of the brand. The results of structural equation modeling show that brand awareness and brand image explain a significant amount of variance in the overall value of brand equity. The relationships between dimensions of brand equity and their antecedents are not examined, and the distinctive nature of industrial branding as mentioned above is not considered, either. In an industrial insurance market, Taylor et al. (2007) uncover the relationships between dimensions of brand equity and their consequences as well as relationships among dimensions of brand equity. Their proposed model addresses brand equity as comprising perceived quality, brand value, brand attitude and brand uniqueness. The overall value of brand equity is proposed as their consequence. It also presents brand satisfaction and loyalty intention as consequences of the overall value of brand equity, but they should be interpreted as dimensions of brand equity according to the results of previous research (Aaker, 1991, 1996; Yoo & Donthu, 2001). In other words, only relationships among dimensions of brand equity are analyzed, while ignoring relationships between dimensions of brand equity and their consequences. The antecedents of dimensions of brand equity are not examined while the aforementioned distinctive nature of industrial branding is not considered. van Riel et al. (2005) propose a model that distinguishes between product brand equity and corporate brand equity, and investigate their antecedents. The model proposes perceived product quality and service quality as dimensions of brand equity, and brand loyalty (termed loyalty intention) as their consequence. However, according to the results of existing research, all of these elements should be considered dimensions of brand equity (Aaker, 1991, 1996; Yoo & Donthu, 2001). Moreover, corporate brand equity may be interpreted as corporate image, because the construct is measured with items related to corporate reputation (e.g., financially stable company and leading edge supplier). As such, van Riel et al. (2005) analyze the relationships among dimensions of brand equity and their antecedents, taking into account the important role of corporate image in industrial branding. However, relationships between dimensions of brand equity and their consequences are not examined. The results of structural equation modeling show that value for the money and distribution performance are the key drivers of perceived product quality and brand loyalty, while promotion and personnel (i.e., employee and staff) are the antecedents of perceived service quality, brand loyalty and corporate image. Corporate image is found to positively affect brand loyalty. Cretu and Brodie (2007) examine the relationships between dimensions of brand equity and their antecedents, and the relationships among dimensions of brand equity. They also do not consider the consequences of the dimensions of brand equity. Their model suggests that the dimensions of brand equity include brand image, product and service quality, customer value, and customer loyalty. The corporate image (termed company reputation) is considered to be an important antecedent of dimensions of brand equity. However, the role of after-sales service and personal selling as the antecedents of brand equity dimensions are not scrutinized. Results of an analysis show that product and service quality as well as price and costs as an antecedent has effects on customer loyalty, directly and indirectly through customer value. The brand image is found to have direct effects on customer value and indirect effect on customer loyalty through product and service quality, while corporate image has a direct effect on both of them. Roberts and Merrilees (2007) make the point that products have dominated the conventional branding research in business markets, and extend the scope of research into service sectors. They analyze the relationships between dimensions of brand equity and their antecedents in a mall tenant contract market. The consequences of dimensions of brand equity are not investigated while the aforementioned distinctive nature of industrial branding is not considered. The brand trust (i.e., the trust between mall center and tenants) and repurchase intention (i.e., lease contract renewal) are proposed as dimensions of brand equity, and service quality, responsive behavior of mall center, and empowerment to tenants as their antecedents. The consumer's brand attitude toward mall is proposed as a mediator in relationships between dimensions of brand equity and their antecedents. The results of a structural model show the responsive behavior of the mall center has a direct effect on brand trust and repurchase intention while service quality of the mall center and empowerment to tenants have an indirect influence on them through the consumer's brand attitude to the mall. Jensen and Klastrup (2008) examine the relationships between customer brand relationship as a dimension of brand equity and its antecedents. The results of a structural model show that customer brand relationship is influenced by product quality, service quality, price, differentiation, promise, and trust and credibility. They examine the antecedents of only customer brand relationship among dimensions of brand equity, and however do not consider its consequences and the aforementioned distinctive nature of industrial branding. Han and Sung (2008) propose a comprehensive model that considers both antecedents and consequences of dimensions of brand equity using samples from various business markets: electronics, electricity, engineering, chemicals, plastics and equipment markets. They address the supplier's competence and buyer's purchasing value as the antecedents of dimensions of brand equity such as brand satisfaction, brand trust, brand loyalty, commitment and relationship quality. The transaction performance is used as a consequence of dimensions of brand equity. However, they do not consider the aforementioned distinctive nature of industrial branding. In light of the shortfalls discovered in a review of the literature, it is necessary to develop and empirically test a comprehensive model that encompasses dimensions of brand equity, their antecedents and consequences, and reflects the distinctive aspects of industrial branding. 3. Model and hypotheses As shown in Fig. 1, the model addresses three dimensions of brand equity, four marketing-mix efforts as antecedents of the dimensions, and the overall value of brand equity as a consequence of the dimensions. It also includes corporate image as a mediator between the marketing-mix efforts and dimensions of brand equity, which reflects distinctive aspects of industrial branding. The three dimensions of brand equity are brand awareness with associations, perceived quality, and brand loyalty. These are adapted from Aaker (1996), and Yoo and Donthu (2001). According to Yoo et al. (2000), the overall value of brand equity is adopted as a proxy of market performance. Marketing-mix efforts include channel performance, value-oriented price, promotion and after-sales service. It is noteworthy that after-sales service is included as an antecedent of dimensions of brand equity, and promotion is defined and operationalized in adaptation to the business market context, which is described later. In the model, the marketing-mix efforts affect the three dimensions of brand equity both directly and indirectly through corporate image. In turn, these three dimensions affect the overall value of brand equity. They are structured in a hierarchy: brand awareness

J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 429 Fig. 1. Structural-relationships among marketing mix efforts, corporate image, and brand equity. with associations affects perceived quality and brand loyalty; perceived quality affects brand loyalty. 3.1. Marketing-mix efforts and brand equity dimensions 3.1.1. Channel In consumer marketing, research shows that channel performance contributes to building brand equity (Dodds, Monroe, & Grewal, 1991; Grewal, Krishnan, Baker, & Borin, 1998; Rao & Monroe, 1989; Yoo et al., 2000). Good store-image not only attracts more attention, interests, and contacts from potential consumers, but also increases consumer satisfaction and positive word of mouth. Thus, it levels up brand awareness with associations and brand loyalty. In addition, distributing through good-image stores signals that a brand has good quality. Distribution intensity also has a positive impact on dimensions of brand equity because high distribution intensity increases the probability of buying a brand wherever and whenever consumers want (Farris, Olver, & Kluyver, 1989; Yoo et al., 2000). Specifically, since the increase in distribution intensity reduces consumer efforts for finding and acquiring a brand, consumers are likely to perceive it as more valuable, which in turn increases consumer satisfaction and brand loyalty (Yoo et al., 2000). In industrial marketing, the activities of order processing, coverage, and delivery are found to be critical for building brand equity (McQuiston, 2004; Mudambi et al., 1997). van Riel et al. (2005) find that these activities positively affect perceived quality and brand loyalty. These activities relate to channel performance, and the positive image of the industrial channel member makes buyers more assured of the performance. In this respect, as Schuiling and Moss (2004) argue, we may reason that in the context of industrial marketing, channel performance that concerns the distribution density and the channel member's image has a positive impact on the dimensions of brand equity. Considering all this, we may formulate the following hypotheses: H1a. Channel performance positively affects brand awareness with associations. H1b. Channel performance positively affects perceived quality. H1c. Channel performance positively affects brand loyalty. 3.1.2. Price In consumer markets, price is an extrinsic cue of product quality, and thus high-priced brands are often perceived to be of higher quality (Dodds et al., 1991; Yoo et al., 2000). On the other hand, given product quality is homogeneous and easily substantiated, a higher price may negatively affect brand loyalty because it does not signal higher product quality, but instead only highlights that more money must be paid. This negative effect of high price on brand loyalty has been reported in industrial branding (Cretu & Brodie, 2007; Jensen & Klastrup, 2008; Michell et al., 2001). Mudambi et al. (1997) propose that some industrial buyers estimate low price accounts for about 70% of the final decision in business markets. In contrast, however, Abratt (1986) shows that industrial buyers consider low price less important than other product selection criteria (e.g., technical service and product reliability), and are willing to pay a price premium for the superior equipment in hightech markets. Higher price with more channel service would increase brand loyalty. As the impact that the price has on brand equity varies depending on market characteristics, van Riel et al. (2005) use value for the money as an antecedent of dimensions of brand equity instead of the price. They demonstrate that value for

430 J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 the money has a positive impact on brand satisfaction, which in turn increases brand loyalty. It is likely that the value-oriented price would be a salient characteristic of the brand, and thus grab attention while motivating consumers to think more about the brand. On the other hand, it would undermine higher quality perception although it tells that product quality is fair for the price. For example, it makes buyers perceive that the brand is of high value, but it may have a negative impact on the buyer's perception that the brand has premium quality. With all this in mind, we develop the following hypotheses: H2a. The value-oriented price positively affects brand awareness with associations. H2b. The value-oriented price negatively affects premium-quality perception. H2c. The value-oriented price positively affects brand loyalty. 3.1.3. Promotion Promotion is defined as providing information for persuasion (van Riel et al., 2005). It includes advertising, promotional events, personal selling, Web site-based communication activities, and so on. In consumer marketing, the positive effects of advertising on the dimensions of brand equity have been fully substantiated (Aaker & Jacobson, 1994; Cobb-Walgren, Ruble, & Donthu, 1995; Simon & Sullivan, 1993; Yoo & Donthu, 2002; Yoo et al., 2000). Promotional events with long-term goals could build brand equity through offering actual product experience that helps to create strong, favorable, and unique associations (Keller, 2008). On the other hand, short-term price reductions such as cent-off deals might not be desirable for building brand equity, even though they boost sales in the short run (Aaker, 1991; Yoo et al., 2000). In industrial marketing, promotional activities such as brochures, salesperson, and Web sites are frequently mentioned as antecedents of dimensions of brand equity (Sharma, Krishnan, & Grewal, 2001; van Riel et al., 2005). Exhibition, trade show, conferences, direct mail ads, press releases, word of mouth, and technical consultant are also considered as sources of information, particularly in high-tech markets (Abratt, 1986). A salesperson is often emphasized as an especially important medium of communication in business markets (Kuhn et al., 2008; Lynch & Chernatony, 2004; Mudambi, 2002). The rationale is that personal selling is instrumental to offering information tailored to the different needs that each member in an organization buying center has (Mudambi, 2002; Webster & Keller, 2004). Gordon, Calantone, and di Benendetto (1993) argue that initial awareness and association of a brand are often achieved by direct contacts with salespersons in business markets. Bendixen et al. (2004) also find that technical consultant and sales representative are the most effective avenues for achieving brand awareness in an industrial electrical equipment market. Abratt (1986) shows that sales representative is a major source of information for increasing buyers' awareness and choice in high-tech industrial markets. Moreover, van Riel et al. (2005) demonstrate the positive influence that promotion has on brand loyalty as well as perceived service quality. Therefore, the following hypotheses are devised: H3a. Promotion positively affects brand awareness with associations. H3b. Promotion positively affects perceived quality. H3c. Promotion positively affects brand loyalty. 3.1.4. After-sales service In consumer marketing, after-sales service (often referred to as support service) has not been considered a major antecedent of brand equity, but rather has been taken as a product-, promotion-, or channel-related element. In contrast, it has been used as a key element for positively affecting brand equity in industrial marketing since the rapport with the customer as well as technical support may give good opportunities to establish close relationships with customers, which in turn compels customers to patronize the company (Kuhn et al., 2008; Mudambi et al., 1997). Arguing that support service is one of the primary factors for building brand loyalty in business markets, Kuhn et al. (2008) make the point that Keller's customer-based brand equity (CBBE) model tends to ignore elements relevant to support services, and suggest a revised CBBE model for industrial branding. van Riel et al. (2005) show that satisfaction with support service has a positive effect on brand loyalty in business markets. After-sales service is also found to be a more important product-selection criterion than price in hightech markets (Abratt, 1986). Little research examines the effects of after-sales service on brand awareness with associations and perceived quality. However, excellent support service is expected to be a memorable characteristic of a brand, leading to the creation of favorable brand associations. For instance, Acme Brick is remembered as offering excellent support services such as a 100-year limited guarantee (Kotler & Pfoertsch, 2006). Furthermore, unless consumers are satisfied with repair or restoration through after-sales service, the quality of a product is not likely to be considered credible. Thus, we arrive at the following hypotheses: H4a. After-sales service positively affects brand awareness with associations. H4b. After-sales service positively affects perceived quality. H4c. After-sales service positively affects brand loyalty. 3.2. Relationships between marketing-mix efforts and corporate image Corporate image can be defined as a particular type of feedback from those in a given market regarding the credibility of the identity claims that the organization makes (Cretu & Brodie, 2007; Wartick, 2002; Whetten & Mackay, 2002). Dowling (1986) suggests the process by which the industrial company develops the corporate image and proposes that the corporate image is influenced by product, price, distribution channel, advertising, after-sales service, concern about the environment, and employee attitude. Henderson (1971) proposes that marketing-mix activities such as product appearance, retail outlet, and promotion are pivotal in developing the corporate image. van Riel et al. (2005) show in business markets that promotion and personnel (employee and staff) influence the corporate image. Corporate image is also found to be influenced strongly by characteristics of the salesperson (e.g., expertise, likeability, similarity and frequent business contact) as an important source of information (Doney & Cannon, 1997). Thus, we expect that marketing activities such as channel performance, value-oriented price, promotion, and after-sales service have a positive impact on the corporate image. H5a. Channel performance positively affects the corporate image. H5b. Value-oriented price positively affects the corporate image. H5c. Promotion positively affects the corporate image. H5d. After-sales service positively affects the corporate image. 3.3. Relationships between corporate image and brand equity dimensions The role of the corporate image in establishing brand equity is more emphasized in industrial marketing than in consumer marketing (Kuhn et al., 2008; Michell et al., 2001). Although there are inherent difficulties in managing corporate image due to its fragility and the time and effort required to rectify it if it becomes

J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 431 contaminated (Herbig & Milewicz, 1995) such efforts are worthwhile in business markets. Mudambi et al. (1997) suggest that corporate image is an important antecedent of brand equity in business markets. van Riel et al. (2005) show that corporate images such as financially stable, leading edge and world famous have positive effects on brand loyalty. Good corporate image is likely to give trustworthiness and credibility to consumers or industrial buyers, which in turn leads to an increase in the perceived quality of abrand(chen & Dubinsky, 2003; Cretu & Brodie, 2007; Martinez & Pina, 2005). Yoon, Guffey, and Kijewski (1993) show that company reputation affects purchase intention directly as well as indirectly through the quality expectation of offering in a business insurance market. Good corporate image also serves as entry barriers against potential competitors (Herbig & Milewicz, 1995). In addition, good corporate image is particularly important when buyers need to evaluate a new supplier or product since it reduces uncertainty and rationalizes the selection process (Blomback & Axelsson, 2007). McQuiston (2004) explains that corporate image is a key driver for creating relevant associations in industrial buyers' minds. Thus, we address the following hypotheses: H6a. Good corporate image positively affects brand awareness with associations. H6b. Good corporate image positively affects perceived quality. H6c. Good corporate image positively affects brand loyalty. 3.4. Relationships between brand equity dimensions and overall value of brand equity The overall value of brand equity is defined as the value added to the branded product relative to the unbranded product. It is the outcome of the three dimensions of brand equity: brand awareness with associations, perceived quality, and brand loyalty (Yoo & Donthu, 2001; Yoo et al., 2000). The positive effects of the three dimensions of brand equity on the overall value of brand equity are found in crosscultural study of America and Korea (Yoo & Donthu, 2002). Thus, we formulate the following hypotheses: H7a. Brand awareness with associations positively affects the overall value of brand equity. H7b. Perceived quality positively affects the overall value of brand equity. H7c. Brand loyalty positively affects the overall value of brand equity. Yoo et al. (2000) and Yoo and Donthu (2001) suggest interrelations among three dimensions of brand equity. Applying the hierarchy-of-effects theory (Lavidge & Steiner, 1961), our model lays out three causal paths: from brand awareness with associations to perceived quality, from that awareness to brand loyalty, and from perceived quality to brand loyalty. These causal relationships are supported by the CBBE pyramid (Keller, 2008) 2 and the five-stage development process of industrial brand equity (Gordon et al., 1993). 3 Thus, we arrive at the following hypotheses: H8a. Brand awareness with associations positively affects perceived quality. 2 CBBE pyramid consists of hierarchical four steps: identity, meaning, responses, and relationships in order. Four steps could correspond to each of dimensions of brand equity: identity to brand awareness, meaning to brand association, response to perceived quality, and relationships to brand loyalty. 3 The five stages in developing industrial brand equity are, in order, brand birth, creation of brand awareness and association, building of quality and value perceptions, emergence of brand loyalty, and launching of brand extension. H8b. Brand awareness with associations positively affects brand loyalty. H8c. Perceived quality positively affects brand loyalty. 4. Method 4.1. Market context The model is tested in the context of a Korean IT software market where small to midsize firms purchase the IT software customized to their needs from application service providers (ASP's). It is common that they lack resources to maintain and update the purchased IT software, and thus ASP's take the job for the maintenance and update. The estimated size of this ASP market amounted to about 0.1 billion dollars in 2002 and increased to about 0.3 billion dollars in 2007. The market is still growing. While more than 100 firms compete in the ASP market, the top five competitors (i.e., leading brands) occupy approximately 50% of the market or more. These five competitors set up the internet cable, and provide solution packages (e.g., software programs for CRM, channel management, timesheet, accounting or credit card payment) according to customer needs. In addition, they offer support services for instance, restoring malfunctioned software systems and installing newly released application programs. The promotional expenditures of the entire ASP industry could not be estimated in a precise manner. However, it is found that one of the top five competitors spent about 4 million dollars on promotional activities in 2007. Two main categories of these activities are of salesperson promotion and above-the-line advertising. 4.2. Sampling and data collection Product managers of a Korean IT software company prepared a list of the software purchasing companies. This list was delivered to the marketing research company that collected data. The sample was drawn randomly from the list. Respondents were those who participated in a process of purchasing the IT software in the sampled companies. The face-to-face interview was administered to gather data for the top five IT software brands in the Korean ASP market as mentioned above. The sample size is 390. Elimination of incomplete responses leaves 388 eligible for analysis. Respondents worked for more than one year in the purchasing department and were distributed across various industries (Table 3). More than 80% of respondents belonged to companies that had less than 20 employees (Table 4). Data from respondents who did not participate in the process of brand choice were screened out. Table 3 Industrial classification of respondents. Industry Frequency Percent Wholesale and retail trade 139 35.8 Information and communication 54 13.9 Manufacturing 52 13.4 Construction 21 5.4 Accommodation and food service 14 3.6 Education 14 3.6 Repair 12 3.1 Human health and social work activities 12 3.1 Arts, sports, and recreation 11 2.8 Accounting 10 2.6 Finance 8 2.1 Transportation 6 1.5 Real estimate and renting 6 1.5 Others 29 7.5 Total 388 100

432 J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 Table 4 Size of companies. Number of employees Frequency Percent Less than 20 319 82.2 20 to 49 42 10.8 50 to 100 16 4.1 More than 100 11 2.9 Total 388 100 4.3. Scale development Measures of marketing-mix efforts and corporate image are developed from in-depth interviews with product managers and sales representatives of a Korean IT software company. The product managers provided findings from periodical research on buyer responses to marketing activities and corporate image. The measures were initially developed based on the result from analyzing those findings and what the product managers suggested. Sales representatives of the company then reviewed the measures. The measures were finally determined after this review. Measures of channel performance, value-oriented price, and after-sales service each consist of three items, and those of promotion and corporate image each consist of six items and five items. All items are summarized in the first part of Table 5. Measures of dimensions of brand equity and the overall value of brand equity are adapted from Oliver (1999), Yoo et al. (2000), Yoo and Donthu (2001, 2002), and Atilgan et al. (2005). Eight items that measure brand awareness with associations and perceived quality are adapted from Yoo et al. (2000) and Atilgan et al. (2005). Three items that measure brand loyalty are drawn from the four-stage loyalty model of Oliver (1999). This model aims to conceptualize the cognitive affective conative-action loyalty sequence. The conative loyalty and action loyalty may be indiscriminant concepts from the overall value of brand equity, and cognitive loyalty is the weakest type of loyalty. In light of this, we choose affective loyalty for this study. Affective loyalty relates to a favorable attitude toward and satisfaction with a specific brand (Blut, Evanschitzky, Vogel, & Ahlert, 2007). Three items satisfaction, likeability, and confidence are used for affective loyalty. van Riel et al. (2005) also use satisfaction to measure loyalty intention in business markets. Finally, three items of the overall value of brand equity are adapted from Yoo et al. (2000). All items are summarized in the second part of Table 5. 4.4. Questionnaire The questionnaire is organized as follows. First, after a short introduction, respondents are requested to answer questions to check whether they participate in purchasing decisions, and are screened out if they do not. Then, dimensions of brand equity, the overall value of brand equity, corporate image, and marketing-mix efforts are measured. All items are measured on the 7-point Likert scale with anchors of 1 =strongly disagree and 7=strongly agree. Finally, questions about demographics are asked. 5. Results 5.1. Measurement model Constructs of the model are compared with one another in a pairwise manner to examine convergent and discriminant validity (Bagozzi, Yi, & Phillips, 1991). Using AMOS 4.0, we conduct confirmatory factor analysis (CFA) for the measurement model of four exogenous constructs (marketing-mix efforts) and five endogenous constructs (dimensions of brand equity, overall value of brand Table 5 Operational measures and scale reliability values. Marketing-mix efforts Standardized loading t-value Channel (α=0.827) CH1: X has various channels to purchase it 0.712 CH2: The process of purchasing X is simple 0.806 14.366 CH3: Delivering and installing X is fast and correct 0.840 14.809 Price (α=0.835) PC1: The price of X is low 0.790 PC2: The price of X is reasonable for quality of product 0.909 12.955 Promotion (α=0.897) PM1: The frequency of salesperson's visit is high 0.710 PM2: Salespersons is kind 0.738 13.745 PM3: Salesperson is able to give enough 0.838 15.539 information about services PM4: Various promotion campaigns are offered 0.757 14.101 PM5: The ad campaigns for X are seen frequently 0.805 14.953 PM6: The Web site of X provides enough information 0.788 14.664 After-sales service (α=0.860) AS1: The process of call for after-sales service is simple 0.794 AS2: The restoration of system is fast 0.861 18.238 AS3: The result of after-sales service is desirable 0.813 17.111 Dimension of brand equity and corporate image Standardized loading t-value Brand awareness with associations (α=0.822) BAA1: I am always aware of X 0.699 BAA2: Characteristics of X come to my mind quickly 0.855 14.329 BAA3: I can quickly recall the symbol or logo of X 0.804 13.859 Perceived quality (α=0.850) PQ1: The quality of X is credible 0.680 13.873 PQ2: X must be of very good quality 0.792 PQ3: High quality of X is consistent 0.800 16.877 PQ4: X has a higher quality than other brands 0.808 17.088 Brand loyalty (α=0.831) BL1: I am satisfied with X 0.906 BL2: X is my favorite brand 0.905 24.897 BL3: I have confidence in X 0.631 14.087 Overall value of brand equity (α=0.869) OBE1: Although another brand has same features as X, 0.788 I would prefer to buy X OBE2: If another brand is not different from X, it seems 0.844 18.039 smarter to purchase X OBE3: Although there is another brand as good as X, 0.870 18.682 I prefer to buy X Corporate image (α=0.869) CI1: What offers X is a high-tech company 0.728 CI2: What offers X is a leading company 0.760 14.531 CI3: What offers X has long experience 0.776 14.832 CI4: What offers X is a representative of the IT software 0.737 14.007 industry CI5: What offers X is a customer-oriented company 0.784 14.993 equity, and corporate image). Acceptable goodness-of-fit statistics are obtained in both measurement models. However, one item for price and one item for brand awareness with associations 4 are dropped out to improve convergent validity. Standardized factor loading of the two items are lower than 0.5. We conduct CFA again with the remaining items. All coefficients are found to be statistically significant (pn0.05) and goodness-of-fit statistics are acceptable (CFA with marketing activities: X 2 (71)=203.564, GFI=0.926, AGFI=0.891, SRMR=0.039, RMSEA=0.069, CFI=0.959, IFI=0.959; CFA with three dimensions of brand equity, the overall value of brand equity, and corporate image: X 2 (125)=349.161, GFI=0.909, AGFI=0.875, SRMR=0.063, RMSEA=0.068, CFI=0.950, IFI=0.950). Secondly, Average Variance Extracted (AVE) and Construct Reliability (CR) are computed for all constructs and compared with Squared Multiple Correlation (SMC) to check convergent and discriminant validity. As presented in 4 The dropped items are My company spends little in using X and I have difficulty in imagining an image of X.

J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 433 Fig. 2. Results of the structural equation modeling. Note: We also analyze an alternative model where one more relationship between corporate image and overall value of brand equity is added. The added relationship is not significant and all other relationships are maintained. Because the parsimony fit index (e.g., PGFI) is lower than original model, we adopt the present model. Appendix 1a and 1b, the AVE and CR of constructs are higher than 0.5 and 0.7, respectively, indicating an adequate level of convergent validity. AVE is higher than SMC except for perceived quality and corporate image. However, the confidence interval (±two standard errors) around the correlation estimate between the two factors does not include 1.0 (Appendix 2b), thus indicating discriminant validity (Anderson & Gerbing, 1988). Finally, Cronbach's α range from 0.822 to 0.897, which means reliability is secured (Nunnally, 1978). 5.2. Structural model The structural equations model is estimated using AMOS 4.0. Four constructs of marketing-mix efforts are specified as exogenous constructs. The exogenous constructs are related to four endogenous constructs (i.e., corporate image and three dimensions of brand equity), which are related to the overall value of brand equity. The goodness-of-fit statistics are acceptable (X 2 (403)=928.936, SRMR=0.060, RMSEA =0.058, GFI=0.870, AGFI=0.841, CFI=0.935, IFI=0.936). Results of the test are presented in Fig. 2 and Table 6. 5.2.1. Relationships between marketing-mix efforts and brand equity dimensions H1a, H1c, H2a, H3a, H3b, and H4b are accepted while H1b, H2b, H2c, H3c, H4a, and H4c are not accepted. Channel performance positively affects brand awareness with associations and brand loyalty. However, as H1b is not accepted, channel performance does not impact perceived quality. The three measurement items of channel performance are relevant to purchase convenience rather than product quality. Thus, it is not likely in the structural model that channel performance relates to perceived quality. The value-oriented price positively influences brand awareness with associations. H2b and H2c are not accepted, which indicates that the value-oriented price does not affect both perceived quality and brand loyalty. This would imply that the value-oriented price is less likely to affect quality perception and brand judgment than other marketing-mix elements in the industrial market of IT software. Abratt (1986) argues that price is considered relatively less important in the process of brand choice decision in high-tech markets. Given that IT software products are more complex and intangible, it is not easy to determine whether price is reasonable for the quality or buyers may not emphasize the role of price as an extrinsic cue of product quality. As expected, promotion positively affects brand awareness with associations and perceived quality (H3a and H3b). H3c is not accepted, however, which means that the effect of promotion on brand loyalty is not significant. The six measurement items of promotion are mainly regarding the delivery of information about the product so that product purchase may be stimulated. Brand loyalty concerns the relationship between buyers and sellers, which is not easily changed merely by such information delivery (Keller, 2008). After-sales service positively affects perceived quality (H4b). As H4a and H4c are not accepted, after-sales service influences neither brand awareness with associations nor brand loyalty. The performance of the IT software product is closely related to aftersales service. Then, after-sales service would lead mostly to qualityrelevant associations, which largely concern the construct of perceived quality. Considering this, we may guess in the structural model that the relationship of after-sales service with perceived quality is strong while its relationships with the other two brand equity dimensions (i.e., brand awareness with associations and brand loyalty) are too weak to be statistically significant. In addition, as described above, brand loyalty refers to the buyer seller relationship, which is so enduring. The impact of after-sales service would not be high enough to change the relationship. The analysis of total effect (TE) is done to compare among marketing-mix efforts in the magnitude of the effect on each dimension of brand equity. The TE analysis aggregates the direct effect between a marketing-mix effort and a brand equity dimension and the indirect effect the marketing-mix effort have on the brand equity dimension by way of an intervening variable like corporate image. Brand awareness with associations is influenced the most by promotion (TE=0.373), perceived quality by after-sales service (TE=0.416), and brand loyalty by channel performance (TE=0.529). Delivering information about the

434 J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 Table 6 Results of hypotheses testing. Hypothesized relationships Standardized estimates t-value Conclusion (P b0.05) (1) Relationships between marketing activities and brand equity dimensions H1a: Channel Brand awareness with associations (+) 0.263 2.033 Supported H1b: Channel Perceived quality (+) 0.029 0.305 Not supported H1c: Channel Brand loyalty (+) 0.239 2.027 Supported H2a: Price Brand awareness with associations (+) 0.194 3.065 Supported H2b: Price Perceived quality ( ) 0.074 1.598 Not supported H2c: Price Brand loyalty (+) 0.071 1.198 Not supported H3a: Promotion Brand awareness with associations (+) 0.361 4.601 Supported H3b: Promotion Perceived quality (+) 0.184 3.126 Supported H3c: Promotion Brand loyalty (+) 0.081 1.030 Not supported H4a: After-sales service Brand awareness with associations (+) 0.048 0.505 Not supported H4b: After-sales service Perceived quality (+) 0.284 4.008 Supported H4c: After-sales service Brand loyalty (+) 0.128 1.244 Not supported (2) Relationships between marketing activities and corporate image H5a: Channel Corporate image (+) 0.573 6.229 Supported H5b: Price Corporate image ( ) 0.046 0.892 Not supported H5c: Promotion Corporate image (+) 0.180 2.918 Supported H5d: After-sales service Corporate image (+) 0.214 2.689 Supported (3) Relationships between corporate image and dimensions of brand equity H6a: Corporate image Brand awareness with associations (+) 0.070 0.607 Not supported H6b: Corporate image Perceived quality (+) 0.600 6.539 Supported H6c: Corporate image Brand loyalty (+) 0.283 1.701 Not supported (4) Relationships between brand equity dimensions and overall brand equity value H7a: Brand awareness with associations Overall value of brand equity (+) 0.403 7.642 Supported H7b: Perceived quality Overall value of brand equity (+) 0.268 4.194 Supported H7c: Brand loyalty Overall value of brand equity (+) 0.368 5.779 Supported H8a: Brand awareness with associations Perceived quality (+) 0.096 1.789 Not supported H8b: Brand awareness with associations Brand loyalty (+) 0.031 0.461 Not supported H8c: Perceived quality Brand loyalty (+) 0.411 2.169 Supported b Goodness-of-fit statistics of the model N. X 2 (403) =928.936, SRMR =0.060, RMSEA =0.058. GFI=0.870, AGFI=0.841, CFI=0.935, IFI=0.936. firm and product, promotion effectively changes brand recall and recognition. In the IT software category, after-sales service is a part of the product, and as a result after-sales service strongly impacts perceived quality. Channel performance is concerned with convenience in product purchase. The finding implies that providing such purchase convenience is critical to the development of brand loyalty. 5.2.2. Relationships between marketing-mix efforts and corporate image H5a, H5c, and H5d are accepted. Channel performance, promotion and after-sales service positively affect corporate image. Channel performance is the most influential, followed by after-sales service and promotion. As described above, the value-oriented price is less important in the process of brand judgment while it is not easy to determine whether price is reasonable. Thus, the effect of the valueoriented price on corporate image would not be strong. 5.2.3. Relationships between corporate image and brand equity dimensions H6a and H6c are not accepted, which indicates that the relationships of corporate image with brand awareness with associations and brand loyalty are not significant. Corporate image positively affects perceived quality (H6b). When products are complex and intangible, corporate image is an important basis for quality assurance. Many features of the IT software category are complex and intangible, and thus corporate image signals product quality in this category. As H1b is not accepted, channel performance does not affect directly perceived quality. However, as H5a and H6b are accepted, we may judge that channel performance positively affects perceived quality via corporate image. After-sales service positively affects perceived quality via corporate image, as well as positively affects it in a direct manner. In sum, as expected, corporate image plays a mediating role in the process of developing brand equity. Channel performance, promotion, and after-sales service positively affect perceived value by way of corporate image. 5.2.4. Relationships among brand equity dimensions and overall value of brand equity The relationship between perceived quality and brand loyalty is significant as expected (H8c). However, H8a and H8b are not accepted. Brand awareness with associations has little impact on perceived quality and brand loyalty. Promotion and after-sales service positively affect perceived quality (H3b and H4b), and perceived quality positively affects brand loyalty (H8c). Channel performance, promotion, and after-sales service positively affect corporate image (H5a, H5c, and H5d), in turn corporate image positvely affects perceived quality (H6b), and then perceived quality positively affects brand loyalty (H8c). In sum, corporate image and perceived quality are key intervening variables in the process by which marketing-mix efforts lead to brand loyalty. The relationships of the overall value of brand equity with the three dimensions of brand equity are all positive and significant (H7a, H7b, andh7c). Interestingly enough, brand awareness with associations has strong impact on the overall value of brand equity while it is not related to the other two brand equity dimensions i.e., perceived quality and brand loyalty. Perceived quality has significant positive impact on the overall value of brand equity in a direct manner. It also positively affects the overall value of brand equity indirectly via brand loyalty. 5.2.5. Summary of key findings Three findings are noteworthy. First, corporate image is found to play a pivotal role in the process of brand equity development. As described above, prior research reveals that corporate image contributes more to brand equity in business markets than consumer markets. In the estimated model, channel performance, promotion, and after-sales service impact perceived quality indirectly via corporate image. Second, in the industrial market of IT software, after-sales service is an integrative part of the product. The estimated model shows after-sales

J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 435 service has strong impact on perceived quality whereas it does not significantly affect brand awareness with associations and brand loyalty. Third, brand awareness with associations strongly affects the overall value of brand equity while it does not relate to the other two brand equity dimensions of perceived quality and brand loyalty. On the other hand, perceived quality positively relates to brand loyalty. The finding would imply that brand awareness with associations is very distinctive from perceived quality and brand loyalty, and it contributes to the overall value of brand equity in a very different manner as compared to the other two dimensions. 6. Discussion 6.1. Theoretical and managerial implications In industrial marketing, little prior research focuses on the relationships among the marketing-mix efforts, dimensions of brand equity, and market performance. The present study tests a model to explain these relationships in the context of an IT software sector. The model considers three characteristics of industrial marketing. First, it takes after-sales service as a key marketing-mix effort. Second, it places corporate image as an intervening variable from marketing-mix efforts to the dimensions of brand equity. Third, it emphasizes the importance of personal selling in promotion. Overall, the model is confirmed to a significant degree with all the three characteristics of industrial marketing substantiated. Although the external validity of the tested model is limited because its context is confined to the IT software sector, its findings help to extend our knowledge of how brand equity relates to marketing-mix efforts and market performance in business markets. Among the marketing-mix efforts addressed in the model, channel performance has the most impact (TE=0.393) on the overall value of brand equity, followed by promotion (TE=0.251), after-sales service (TE=0.136) and value-oriented price (TE=0.112). All the three dimensions of brand equity are found to significantly affect the overall value of brand equity. Interesting, though, perceived quality relates to brand loyalty while brand awareness with associations does not relate to perceived quality and brand loyalty. This implies that brand loyalty is not based on brand awareness with associations, and however, perceived quality has strong impact on brand loyalty. Given that product complexity and importance is high in the IT software product, it is plausible that mere familiarity or brand recall does not lead to brand loyalty. Previous research reveals that corporate image influences how buyers perceive the product (Bendixen et al., 2004; Mudambi et al., 1997; Schuiling & Moss, 2004; Webster & Keller, 2004), but has rarely examined in empirical settings the relationship of corporate image with marketing-mix efforts or the dimensions of brand equity. This research finds that corporate image mediates the effects of channel performance, promotion, and after-sales service on perceived quality, which in turn affects the overall value of brand equity both in a direct manner and by way of brand loyalty. However, the direct effect of corporate image on brand loyalty is not significant in the research. Cretu and Brodie (2007) investigate the relationships among corporate image, perceived quality, and brand loyalty. They find that the direct effect of corporate image on brand loyalty is significant. The relationship between corporate image and brand loyalty may differ depending on product characteristics. In Cretu and Brodie (2007), research context is the market of shampoo for hair salons while the context of this research is the market of IT software. Product complexity and involvement are high in the IT software product and thus the purchaser's brand judgment and choice decision is in a relatively serious manner. In this serious judgment and decision, brand loyalty is based more on the intrinsic cue like product quality than the extrinsic cue like image. On the other hand, product complexity and involvement are low in the shampoo product. By the same token, corporate image may be a basis for brand loyalty because brand judgment and choice decision are made in a heuristic manner. This research produces evidence for the effects of after-sales service on the dimensions of brand equity in the business market. Consumer branding research tends to ignore the role of after-sales service in the brand equity development process e.g., Keller (2008). Extant research on industrial branding addresses such issues as concerned with the role of after-sales service, but it does not present little empirical evidence for the role (Kuhn et al., 2008; McQuiston, 2004; Mudambi et al., 1997). Findings of this research show that after-sales service has the highest impact on perceived quality among the marketing-mix efforts while perceived quality has significant impact on the overall value of brand equity both in a direct manner and via brand loyalty. Also, the impact of after-sales service on corporate image is greater than promotion and the value-oriented price while corporate image has strong impact on perceived quality which eventually affects the overall value of brand equity. Personal selling is very important in business markets because a relatively small number of customers require that information be tailored to particular needs depending on the customer's role in the purchase decision process (Kotler & Pfoertsch, 2006). Thus, personal selling has been addressed as a meaningful antecedent of brand equity in previous research on industrial branding (Gordon et al., 1993; Kuhn et al., 2008; McQuiston, 2004; Webster & Keller, 2004). However, evidence for the relationship between personal selling and the dimensions of brand equity is sparse (e.g., van Riel et al. (2005)). This research finds that personal selling as a key component of promotion affects the dimensions of brand equity, as well as corporate image. Managerial implications of this research could be mainly in three aspects. First, channel activities to increase purchase convenience are particularly important to reinforce brand equity. Managers should broaden distribution coverage, facilitate purchase process, and make a delivery in time so that they may develop brand equity in an efficient manner. In contrast, the value-oriented price is confirmed to have relatively less impact on the development of brand equity. It increases brand awareness with associations, but does not play a role to assure product quality and to make brand loyalty higher. Second, corporate image has high impact on perceived quality. We may guess that it plays a role to signal product quality. Thus, managers should better find influential drivers other than such marketing-mix efforts as addressed in this research. Third, brand awareness with associations has strong direct impact on the overall value of brand equity. Then, any marketing activities that level up brand familiarity or recall would reinforce the overall value of brand equity, although they do not change perceived quality or brand loyalty. Managers should find the way to efficiently undertake such activities, so that they may increase the overall value of brand equity without paying much cost. 6.2. Limitations and future research The model of this research has five major shortcomings. Future research need to overcome these shortcomings so that its findings may have both internal and external validity to a much more degree. First, it does not consider some important characteristics of industrial marketing. That is, the model does not include those variables concerned with the buyer seller relationship (Cannon & Perreault, 1999), the difference in buying behavior among market segments (Mudambi, 2002), the role difference among members of the decision-making unit (DMU) (Webster & Keller, 2004) and so on. Future research can improve the model with such variables. For example, Hallen and Johanson (1985) find that more than ten persons engage in maintaining the relationships with buyers in business markets. Gummesson (1991) states that marketing function is not confined only to the marketing department in business markets and actors from various parts of the company perform marketing function. All this is not considered in the model of this research.

436 J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 Second, the model is tested in the context of a Korean IT software sector, and most of samples are confined to small companies with less than twenty employees. In this respect its external validity is limited. Findings would differ across contexts. As research in various contexts is accumulated in the future, we may have a model with more external validity. Third, this research uses the overall value of brand equity as a proxy variable of market performance. It is found to relate positively to market performance (Baldauf et al., 2003). However, future research should develop and use a variety of direct measures of market performance, such as sales volume, market share, and profit. Fourth, in addition to the marketing-mix efforts addressed in this study, there are a variety of meaningful antecedents of the brand equity dimensions. For example, the web-enhanced brand community as a tool for relationship marketing can increase brand loyalty in business markets (Andersen, 2005). The relationship with the supplier's personnel and the ease of operation and maintenance can also affect brand equity (Bendixen et al., 2004). Lastly, the model of this research is addressed in a static viewpoint. For example, corporate image is regarded as an enduring belief (Cretu & Brodie, 2007). Current corporate image results from accumulating all the previous efforts for building up the image. In addition, brand equity drivers are likely to change over time (Parasuraman, 1997). All this dynamic aspect of the brand equity building process is not considered in the model. Appendix Appendix 1a. Reliability and validity test for marketing-mix efforts Construct Indicator Convergent validity Discriminant validity(ave NSMC) CR AVE Construct1 Construct2 Correlation SMC Channel Price Promotion After-sales service CH1 CH2 CH3 PC1 PC2 PM1 PM2 PM3 PM4 PM5 PM6 AS1 AS2 AS3 CR: Construct Reliability. AVE: Average Variance Extracted. SMC: Squared Multiple Correlations. 0.830 0.620 1 2 0.590 0.348 3 0.677 0.458 4 0.778 0.605 0.840 0.725 2 3 0.474 0.225 4 0.572 0.327 0.899 0.599 3 4 0.696 0.484 1. Convergent validity: AVEN0.5, CR N0.7 2. Discriminant validity: AVENSMC Both convergent validity and discriminant validity are secured 0.863 0.677 Appendix 1b. Reliability and validity test for brand equity and corporate image Construct Indicator Convergent validity Discriminant validity (AVENSMC) CR AVE Construct1 Construct2 Correlation SMC Brand awareness with associations Perceived quality Brand loyalty Overall value of brand equity Corporate image a. See Appendix 2a, 2b. BAA1 BAA2 BAA3 PQ1 PQ2 PQ3 PQ4 BL1 BL2 BL3 OBE1 OBE2 OBE3 CI1 CI2 CI3 CI4 CI5 0.830 0.621 1 2 0.569 0.324 3 0.499 0.249 4 0.722 0.521 0.854 0.594 5 0.598 0.358 2 3 0.742 0.551 4 0.745 0.555 5 0.890 0.792 0.975 0.679 3 4 0.769 0.591 5 0.752 0.566 4 5 0.756 0.571 0.873 0.696 1. Convergent validity: AVEN0.5, CRN0.7 2. Discriminant validity: AVENSMC Convergent validity is secured. Although SMC is higher than AVE for 0.870 0.574 perceived quality and corporate image, the confidence interval (± two standard errors) around the correlation estimate between the two factors does not include 1.0. Appendix 2a. Construct correlations among brand equity and corporate image Construct 1 2 3 4 5 1. Brand awareness with associations 1 2. Perceived quality 0.569 (0.040) a 1 3. Brand loyalty 0.499 (0.046) 0.742 (0.051) 1 4. Brand equity 0.722 (0.052) 0.745 (0.050) 0.769 (0.060) 1 5. Corporate image 0.598 (0.042) 0.890 (0.049) 0.752 (0.053) 0.756 (0.052) 1 a Standard errors in parentheses.

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438 J.-H. Kim, Y.J. Hyun / Industrial Marketing Management 40 (2011) 424 438 Webster, F. E., Jr, & Keller, K. L. (2004). A roadmap for branding in industrial markets. Journal of Brand Management, 11(5), 388 402. Whetten, D. A., & Mackay, A. (2002). A social actor conception of organizational identity and its implications for the study of organizational reputation. Business and Society, 41(4), 393 414. Yoo, B., & Donthu, N. (2001). Developing and validating a multidimensional consumerbased brand equity scale. Journal of Business Research, 52(1), 1 14. Yoo, B., & Donthu, N. (2002). Testing cross-cultural invariance of the brand equity creation process. Journal of Product and Brand Management, 11(6), 380 398. Yoo, B., Donthu, N., & Lee, S. (2000). An examination of selected marketing mix elements and brand equity. Journal of the Academy of Marketing Science, 28(2), 195 212. Yoon, E., Guffey, H. J., & Kijewski, V. (1993). The effects of information and company reputation on intentions to buy a business service. Journal of Business Research, 27 (3), 215 228. Ji-Hern Kim is a doctoral candidate in the Graduate School of Management, Korea Advanced Institute of Science and Technology (KAIST). He was a researcher at Korea Telecom (KT) Marketing Institute where he worked for developing the KT brand strategy. His current research interests include the analysis of brand asset structures and the effect of self-congruity on brand evaluation. Yong J. Hyun is a professor of marketing in the Graduate School of Management, KAIST. He received a Ph.D. degree in business administration from the University of Wisconsin-Madison. His research focuses mainly on promotion effects and brand equity, channel structure, and issues of fair trade in marketing. His papers appear in Marketing Science, the Journal of Consumer Research, the Journal of International Business Studies, and so on.