Brand Relationship Quality as a Formative Third-order Construct – Findings of a cross-industry study in the German consumer market

University of Basel / University of Hohenheim
1
Messung und Steuerung der Markenbeziehungsqualität
– Brand Relationship Quality as a Formative Third-order Construct –
– Findings of a cross-industry study in the German consumer market –
First International Consumer Brand Relationship Colloquium (22 – 24 April, 2010)
Manfred Bruhn (University of Basel)
Falko Eichen (University of Basel)
Karsten Hadwich (University of Hohenheim)

2
Overview
1. Introduction and Literature Review
2. Research Objectives and Approach
3. Proposed Measurement Model
4. Empirical Study
5. Discussion

3
Introduction
 Increasing importance of relationship marketing in the consumer market
 Comprehensive measurement of Brand Relationship Quality (BRQ) regarded as
the key to effective Brand Relationship Management
 Empirical and conceptual research gaps with regards to BRQ measurement
 Empirical:
− Focus on high-involvement product categories
− Few cross-industrial studies
 Conceptual:
− Focus on the brand in its role as relationship partner
(Brand Management Perspective)
− Missing integration of brand in its role as interaction platform
(Relationship Management Perspective)

4
Literature Review (1/2)
Source Industry
(Sample Size)
[Country]
Dimensions
Love/
Passion
Self
Connection
Interde-
pendence
Commit-
ment
Intimicy Partner
Quality
Others
Fournier (1994) Favourite Brand
(n=270)
[USA]
X X X X X
Brand
Attachment
Hayes/Capella/Alford
(2000)
Sunglasses
(n=160)
[USA]
X X X X
Brand
Attractiveness
Monga
(2000)
Favourite Brand
(n=71)
[USA]
X X X
Thorbjørnsen et al.
(2002)
Airline
(n=123)
Restaurant Chain
(n=123)
[Norway]
X X X X X
Park/Kim/Kim
(2002)
Grocery Food
(n=550)
[Korea]
X X X X X
Nostalgia,
Brand Trust
Aaker/Fournier/Brasel
(2004)
Online-Foto Services
(n=69)
[USA]
X X X X
Brand
Satisfaction

5
Literature Review (2/2)
Source Industry
(Sample Size)
[Country]
Dimensions
Love/
Passion
Self
Connection
Interde-
pendence
Commit-
ment
Intimicy Partner
Quality
Others
Kressmann et al .
(2006)
Automobile
(n=600)
[n.s.]
X X X X
Smit/Bronner/
Toolboom
(2007)
Automobile
(n=164)
Computer
(n=223)
Beer
(n=303)
Shampoo
(n=248)
[Netherlands]
X X X X X X
Nostalgia,
Brand Trust
Veloutsou
(2007)
n.s.
(n=277)
[Great Britain]
Emotional
Exchange,
Two-Way
Communication
Breivik/Thorbjørnsen
(2008)
Frozen Pizza
(n=277)
TV-Channel
(n=256)
[Norway]
X X X X X X
Behavioral
Frequency

6
Research Objectives and Approach
 Development of a holistic measurement model for BRQ that offers a more complete
understanding by considering the status of brand relationships as both a means versus an end
 Testing of the proposed measurement model across different consumer industries
(cross-industry comparison)
Research Objectives:
Approach:
1. Literature study: Review of existing BRQ measurement models and dimensions
2. Qualitative interviews with 10 customers and 5 experts: Investigation of the quality
dimensions of BRQ and item collection
3. Expert interviews with five marketing professors: Specification of measurement models
(formative versus reflective)
4. Pre-study (n=118): Optimization of measurement models
5. Cross-industry study (n=2.009)

7
Findings of literature study and Interviews
 BRQ consists of two quality dimensions:
1. Quality of the Brand as Relationship Partner (“Me and the Brand”)
 Overall assessment of the brand in its role as a partner in a dyadic relationship with the consumer
 Brand Relationship Theory (Fournier 1998)
2. Quality of the Brand as Interaction Platform (“Me, the Brand and the others”)
 Degree to what the brand meets customer`s expectations in its role as a platform for substantial and
repeated two-way interactions with other brand representatives
 Social Penetration Theory (Altman and Taylor 1973)
 Measurement of BRQ quality dimensions by means of six sub-dimensions:
 Quality of Brand as Relationship Partner: Brand satisfaction (Esch et al. 2006), brand trust (Hess
1998) and emotional brand closeness (Scarabis 2006)
 Quality of Brand as Interaction Platform: Intensity of consumer-consumer-interactions, intensity of
employee-consumer-interactions and intensity of system-consumer-interactions
 Decision for formative model specifications between the different measurement levels

8
Measurement Model of BRQ
Brand Relationship Quality
(BRQ)
Intensity of
Employee-
Consumer
Interactions
(ECI)
Intensity of
Consumer-
Consumer-
Interactions
(CCI)
Intensity of
System-
Consumer-
Interactions
(SCI)
Brand
Trust
(BT)
Brand
Satisfaction
(BS)
Quality of Brand as
Relationship Partner
(BRP)
Emotional
Brand
Closeness
(EBC)
Quality of Brand as
Interaction Platform
(BIP)
Construct
(3rdorder)
Dimensions
(2ndorder)
Sub-dimen
(1storder)

9
Study Design
 8 industries; selection of industries and brands was guided by variance and relevance
considerations
 Online-survey; recruiting of survey respondents via GfK Online Panel Germany (30.000 people)
 Combination of randomization and quota sampling
 Of 2.241 respondents invited, 1.121 completed questionnaire (response rate of 50%)
Industry Goods type Usage focus
Proportion of
budget
Involvement
Frequency
of purchase
Automobile Consumer Durable Symbolic/functional High High Low
Cell Phone Consumer Durable Symbolic/functional Medium High Medium
Toothphaste FMCG Functional Low Medium High
Beer FMCG Symbolic/functional Low Medium High
Tissues FMCG Functional Low Low Medium
Tinned Vegetables FMCG Functional Low Low High
Motor Insurance Contract Good Functional Medium High Low
Wireless Network Operator Contract Goods Symbolic/functional Medium Medium Low

10
Index Construction of Brand Relationship Quality (BRQ)
 Item collection based on literature review and qualitative study
 Reflective multi-item measurement models
 Pre-Study for optimization of measurement models (n=118)
 PLS Graph 3.0
 Three-step approach for index construction with PLS (Ulaga and Eggert 2006):
1. Assessment of reflective measurement models
2. Summation of respective items of each sub-dimension to obtain a score, which served
as formative indicator for the two quality dimensions
3. Measurement of BRQ on the basis of (1) the two formative dimensions and (2) two
reflective items
− “There is a deep connections between me and this brand.”
− “I have a good relationship with this brand.”

11
Measurement Model of Brand Relationship Quality (BRQ)
Factor Items Loading t-Value CR AVE Alpha
Brand
Satisfaction
I am satisfied with this [brand]. .951 314.36
.960 .889 .936This [brand] has come up to my expectations. .957 315.60
This brand is close to an ideal [brand]. .920 188.90
Brand
Trust
This [brand] is reliable. .932 172.48
.962 .893 .940This is an honest [brand]. .955 301.10
I trust this [brand]. .948 260.08
Emotional
Brand
Closeness
I feel that I understand this [brand]. .828 115.07
.932 .774 .904
This [brand] and I are meant for each other. .934 260.44
This [brand] reveals a lot about my personality. .838 88.70
This [brand] plays a decisive role in my life. .913 170.27
Intensity of
Consumer-
Consumer
Interactions
I think that this [brand] provides sufficient options to get in touch with other
consumers/users of this [brand].
.841 109.89
.920 .793 .870It is interesting to share experiences with other consumers/users of this [brand]. .930 239.92
I use or would like to use the option to get in touch with other consumers/users
of this [brand].
.899 155.83
Intensity of
Employee-
Consumer
Interactions
I think that this [brand] provides sufficient options to get in touch with employees
of this [brand].
.855 120.89
.922 .797 .874It is important to me being able to get in touch with employees of this [brand]. .932 255.12
I use or would like to use the option to get in touch with employees of this
[brand].
.889 152.05
Intensity of
System-
Consumer
Interactions
I think that this [brand] provides sufficient options to get in touch with producer of
this [brand] through interactive online applications.
.844 110.65
.921 .795 .872
It is important to me being able to get in touch with the producer of this [brand]
through interactive online applications.
.936 257.29
I use or would like to use the option to get in touch with the producer of this
[brand] through interactive online applications.
.892 161.37

12
Discriminant Validity
Brand
Satisfaction
Brand
Trust
Emotional
Brand
Closeness
Intensity of
Consumer-
Consumer
Interactions
Intensity of
Employee-
Consumer
Interactions
Intensity of
System-
Consumer
Interactions
Brand
Satisfaction
.889 .581 .206 .021 .013 .023
Brand
Trust
.893 .368 .084 .082 .095
Emotional
Brand Closeness
.774 .300 .183 .189
Intensity of Consumer-
Consumer Interaction
.793 .523 .496
Intensity of Employee-
Consumer Interaction
.797 .697
Intensity of System-Consumer
Interaction
.795
Notes: Bold numbers on the diagonal show the AVE. Numbers below the diagonal represent the squared correlations.

13
PLS Estimation for BRQ Measurement Model
Brand
Relationship Quality
Quality of the Brand as
Relationship
Partner
Quality of the Brand as
Interaction
Platform
Intensity
of the
Customer-
Customer
Interaction
Intensity
of the
Employee-
Customer
Interaction
Intensity
of the
System-
Customer
Interaction
Brand
Satisfaction
Brand
Trust
Emotional
Brand
Closeness
.468 .169 .455.649.444.035
.564 .282
R2
= .56
Note: All parameters, except for brand trust, are significant at 5% level.

14
Influence of Relationship Quality Dimensions on BRQ
Industries
Quality of the Brand
as Relationship Partner
Quality of the Brand
as Interaction Platform
Total In Percent Total In Percent
Average across industries 0,564 67% 0,282 33%
Automobile 0,653 71% 0,273 29%
Cell Phone 0,548 63% 0,322 37%
Toothpaste 0,599 78% 0,165 22%
Beer 0,544 71% 0,224 29%
Tissues 0,619 76% 0,194 24%
Tinned Vegetables 0,436 53% 0,389 47%
Motor Insurance 0,447 53% 0,399 47%
Wireless Network Operator 0,567 64% 0,319 36%

15
Influence of Relationship Quality Sub-Dimensions on BRQ
Ranking Average Automobile Cell Phone Toothpaste Beer Tissues
Tinned
Vegetables
Motor
Insurance
Wireless
Network
Operator
1
EC EC EC EC EC EC EC BT BT
(0,366)
[39,5%]
(0,391)
[37,5%]
(0,359)
[37,6%]
(0,435)
[57,1%]
(0,450)
[73,6%]
(0,429)
[48,1%]
(0,298)
[36,8%]
(0,268)
[26,9%]
(0,308)
[31,3%]
2
BT BT BT BT CCI BT BT EC EC
(0,250)
[27,1%]
(0,225)
[21,6%]
(0,244)
[25,6%]
(0,222)
[29,2%]
(0,162)
[26,4%]
(0,246)
[27,5%]
(0,204)
[25,2%]
(0,256)
[25,7%]
(0,224)
[22,7%]
3
CCI BS SCI SCI BS
BT
SCI
ECI
(n.s)
SCI CCI ECI CCI
(0,132)
[14,3%]
(0,119)
[11,5%]
(0,137)
[14,4%]
(0,105)
[13,7%]
(0,110)
[12,3%]
(0,154)
[19,0%]
(0,200)
[20,1%]
(0,175)
[17,7%]
4
SCI SCI CCI BS
CCI
ECI
(n.s)
CCI SCI SCI SCI
(0,128)
[13,9%]
(0,112)
[10,8%]
(0,125)
[13,1%]
(0,108)
[12,1%]
(0,154)
[19,0%]
(0,175)
[17,6%]
(0,174)
[17,6%]
5
ECI CCI ECI BS,
ECI
(n.s)
BS
ECI
(n.s)
CCI BS
(0,048)
[5,2%]
(0,105)
[10,1%]
(0,089)
[9,3%]
(0,097)
[9,7%]
(0,105)
[10,7%]
6
BS ECI BS BS ECI
(n.s.)
(0,088)
[8,5%]
(n.s.) (n.s.) (n.s)
EC: Emotional Brand Closeness
BT: Brand Trust
BS: Brand Satisfaction
CCI: Intensity of Consumer-Consumer-Interactions
ECI: Intensity of Employee-Consumer-Interactions
SCI: Intensity of System-Consumer-Interactions
n.s: Not significant on 5% level

16
Discussion
 Need for a holistic view on BRQ
Quality of Brand as Relationship Partner and Interaction Platform as drivers of BRQ
 Need for an industry-specific view on BRQ measurement and management
Importance of BRQ dimensions and sub-dimensions varies across industries
Management Implications:
 Complexity reduction for proposed measurement model
Test of alternative measurement model (first and second order measurement models)
 Further research with regards to Quality of the Brand as Interaction Platform
e.g. studies about how to best stimulate interactions among customers
 Moderating Effects:
e.g. which factors influence importance of BRQ quality dimensions
Further Research:
 Generalization of results
Test of measurement model on brand level and in different countries necessary
Limitations:

17
Thank you very much for your attention!

Brand Relationship Quality as a Formative Third-order Construct – Findings of a cross-industry study in the German consumer market

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Brand Relationship Quality as a Formative Third-order Construct – Findings of a cross-industry study in the German consumer market