The Comparison of Social and Traditional Media Marketing Impacts On Customer Equity and Purchase Intention in Luxury Fashion Business

THE COMPARISON OF SOCIAL AND TRADITIONAL MEDIA MARKETING
IMPACTS ON
CUSTOMER EQUITY AND PURCHASE INTENTION
IN LUXURY FASHION BUSINESS

BRIAN CHOW
BA (Hons) Scheme in Fashion and Textiles
Marketing and Merchandising Specialism

INSTITUTE OF TEXTILES & CLOTHING
THE HONG KONG POLYTECHNIC UNIVERSITY
2013

THE COMPARISON OF SOCIAL AND TRADITIONAL MEDIA MARKETING
IMPACTS ON
CUSTOMER EQUITY AND PURCHASE INTENTION
IN LUXURY FASHION BUSINESS

A Thesis Submitted in Partial Fulfillment of the Requirements
for the Degree of
Bachelor of Arts (Honours)
in
Fashion & Textiles
(Marketing and Merchandising)
under the Supervision of
Dr. Carrie Wong
By
Brian Chow

Institute of Textiles & Clothing
The Hong Kong Polytechnic University
2013

Dedicated to My Beloved Teachers

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ACKNOWLEDGEMENTS

This study consolidates what I have learnt from fashion retailing to fashion
marketing in university for four years, and it takes about a year to finish it. In here, I would
like to take this opportunity to express my heartfelt thanks to all teachers who impart me
plenty of valuable knowledge in fashion and apparel industry, from manufacturing, supply
chain management to wholesaling, marketing and retailing. Special thanks is given to my
supervisor, Dr. Carrie Wong, for her valuable guidance and advice, she inspired me greatly to
work in this project and motivated me to contribute tremendously in this project. It gave me
an opportunity to learn how to write a good, organized thesis and provide some insights
which is really important and helpful to fashion companies.
Finally, an honorable mention goes to my families and friends for their continuous
support on me in completing this study. Special thanks is given to my mentor, Mr. Michael
Poynor, who has tremendous experience in the retail industry, for giving me some useful
information about what does the fashion marketers want to know nowadays. Without their
affection and encouragement, I would not have been able to complete this study. Thank you
once again for everyone who helped me during this process.

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CERTIFICATE OF ORIGINALITY

I hereby declare that this thesis is my own work and that, to the best of my knowledge and
belief, it reproduces no material previously published or written, nor material that has been
accepted for the award of any other degree or diploma, except where due acknowledgement
had been made in the text.

_____________________________________________________________(Signed)

______________________________________________________(Name of student)

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ABSTRACT

China is the dragonhead in the luxury consumers market in the 21
st
century. A
growing number of luxury fashion retailers worldwide have focused considerable attention
on China market and online marketing in recent years and to find effective ways to target the
new rich young Chinese customers. With no doubt that social media marketing (SMM) has
become a hot topic for fashion markers, whether it is appropriate to invest more in social
media marketing is a big question to many fashion marketers nowadays.
In this connection, this study aims to explore how Chinese view and assess luxury
fashion brands using social media for their marketing purpose. Also, the relationship between
SMM and customer equity, which constitutes of value equity, brand equity and relationship
equity is identified. More importantly, comparison between SMM and traditional media
marketing (TMM) for the effectiveness in enhancing customer equity and whether SMM or
TMM is better at increasing customers purchase intention in luxury fashion is also examined.
The objectives of this study are to identify the relationship between social media
marketing (SMM), traditional media marketing (TMM) and customer equity and to explore
the relationship between each customer equity driver and customers purchase intention.
Comparison between SMM and TMM in influencing customers purchase intention is also
being analyzed.
The present findings reveal that, in terms of SMM, there is a positive relationship
between SMM and "quality, convenience, aesthetics (value equity), brand awareness,
brand image/ association (brand equity), trust (relationship equity) and purchase

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intention, but there is no relationship between SMM and price (value equity), brand
loyalty (brand equity), commitment and overall quality (relationship equity).
In terms of TMM, there is a positive relationship between TMM and quality,
convenience, aesthetics, price (value equity), brand awareness, brand image/
association (brand equity), trust (relationship equity) and purchase intention, but there
is no relationship between TMM and brand loyalty (brand equity), commitment and
overall quality (relationship equity).As for the comparison between SMM and TMM on
purchase intention, SMM is better than TMM in enhancing customers purchase intention.
All the aforementioned results were statistically analyzed quantitatively and
qualitatively by empirical evidence. For the quantitative method - online questionnaire
survey with a sample size of 300 was carried out, descriptive data analysis, reliability test,
one-sample t-test and paired-samples t-test were used to analyze the findings. The empirical
results were further supported and justified by the qualitative data method - discussion group
conducted in London and other scholars studies, which makes this study become more
generalized.
Finally, the findings of this study enable luxury brands to formulate their online
marketing strategy and provide important managerial implications and insight for them to
target Chinese customers through social media more accurately.

v

Table of Content

ACKNOWLEDGEMENTS ........................................................................................................................... i
CERTIFICATE OF ORIGINALITY................................................................................................................. ii
ABSTRACT .............................................................................................................................................. iii
Table of Content ..................................................................................................................................... v
Lists of Figures ..................................................................................................................................... viii
List of Tables .......................................................................................................................................... ix
Chapter 1. Introduction .................................................................................................................... 1
1.1 Research background ................................................................................................................... 1
1.1.1 The growth of Chinese luxury market ................................................................................... 1
1.1.2 Trend of luxury brands entering China market and its challenges ........................................ 2
1.1.3 Importance of Social and Traditional Media Marketing (SMM & TMM) ............................ 3
1.2 Research gap................................................................................................................................. 4
1.3 Aim and objectives ....................................................................................................................... 5
1.4 Scope of study .............................................................................................................................. 6
1.4.1 Target areas ........................................................................................................................... 6
1.4.2 Target group .......................................................................................................................... 7
1.5 Methodology ................................................................................................................................ 8
Chapter 2. Literature Review ........................................................................................................... 9
Introduction ........................................................................................................................................ 9
2.1 Importance and recent trend of SMM in China ............................................................................ 9
2.2 SMM in luxury brand ................................................................................................................. 11
2.2.1 Background of SMM in luxury business ............................................................................. 11
2.2.2 Cases of SMM applications on luxury brands ..................................................................... 12
2.3 Relevant literatures on customer equity ..................................................................................... 14
2.3.1 Measuring Customer Equity ................................................................................................ 15
2.3.2 Customer Equity Drivers ..................................................................................................... 17
2.4 Value equity & its components .................................................................................................. 18
2.5 Brand equity& its components ................................................................................................... 21

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2.6 Relationship equity & its components ........................................................................................ 25
2.7 Purchase intention ...................................................................................................................... 28
2.8 Research gap............................................................................................................................... 30
2.9 Proposed generic framework ...................................................................................................... 31
Chapter 3. Research Methodology ................................................................................................ 37
Introduction ...................................................................................................................................... 37
3.1 Research method outline ............................................................................................................ 37
3.2 Qualitative method - Group discussion ...................................................................................... 39
3.2.1 Group discussion strategy.................................................................................................... 40
Sample frame ................................................................................................................................ 40
Sampling method Non- probability sampling ........................................................................... 40
3.2.2 Group discussion in London, United Kingdom ................................................................... 41
3.3 Quantitative method - Questionnaire survey .............................................................................. 44
3.3.2 Questionnaire design ........................................................................................................... 46
3.4 Data analysis tools ...................................................................................................................... 49
3.4.1 Descriptive data analysis ..................................................................................................... 49
3.4.2 Reliability test ...................................................................................................................... 50
3.4.3 One-Sample T-Test ............................................................................................................. 50
3.4.4 Paired-Samples T-Test ........................................................................................................ 51
Chapter 4. Results .......................................................................................................................... 52
Introduction ...................................................................................................................................... 52
4.1 Findings of quantitative data Online questionnaire ................................................................. 53
4.1.1 Response rate & valid sample size ...................................................................................... 53
4.1.2 Descriptive statistic ............................................................................................................. 54
4.1.3 Reliability test ...................................................................................................................... 62
4.1.4 One-Sample T-Test ............................................................................................................. 66
4.1.5 Paired Samples T-Test ....................................................................................................... 119
4.2 Findings of qualitative data Discussion group ...................................................................... 123
Chapter 5. Discussion and Conclusion ......................................................................................... 132
Introduction .................................................................................................................................... 132
5.1 Discussion ................................................................................................................................ 132
5.2 Study implications .................................................................................................................... 137

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5.3 Limitations and future research ................................................................................................ 141
5.4 Conclusion ................................................................................................................................ 142
Appendix I: Survey instrument ........................................................................................................... 144
REFERENCES ....................................................................................................................................... 150

viii

Lists of Figures
Figure 2-1: Customer Equity drivers .................................................................................................... 17
Figure 2-2: The proposed generic framework for social media marketing (SMM) in this study ......... 33
Figure 2-3: The proposed generic framework for traditional media marketing (TMM) in this study . 34
Figure 3-1: The research process of this study ..................................................................................... 39
Figure 4-1: Gender distribution of respondents .................................................................................... 55
Figure 4-2: Age distribution of respondents ......................................................................................... 56
Figure 4-3: Education level distribution of respondents ...................................................................... 57
Figure 4-4: Monthly household income distribution of respondents ................................................... 58
Figure 4-5: Monthly household income distribution of respondents ................................................... 59
Figure 4-6: First screening question: Have you heard of the following brands? Louis Vuitton, Gucci,
Burberry and Dolce & Gabbana ........................................................................................................... 60
Figure 4-7: Summary of SMM generic framework hypothesis results .............................................. 131
Figure 4-8: Summary of TMM generic framework hypothesis results .............................................. 131

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List of Tables
Table 2-1: Overview of Value Equity Components ............................................................................. 18
Table 2-2: Overview of Brand Equity Components ............................................................................. 23
Table 2-3: Overview of Relationship Equity Components .................................................................. 26
Table 2-4: Summarize of hypothesized relationships for social media marketing ............................... 35
Table 2-5: Summarize of hypothesized relationships in for traditional marketing media.................... 35
Table 2-6: Summarize of hypothesized relationships comparing customers purchase intention
influenced by social media marketing and traditional media marketing on value, brand and
relationship equity ................................................................................................................................ 36
Table 4-1: Acceptable response rate of online survey .......................................................................... 54
Table 4-2: Have you set up an account in any of the following social media platforms? .................... 61
Table 4-3: Reliability test on value equity components with regards of social media marketing ........ 63
Table 4-4: Reliability test on value equity components with regards of traditional media marketing . 63
Table 4-5: Reliability test on brand equity components with regards of social media marketing ....... 63
Table 4-6: Reliability test on brand equity components with regards of traditional media marketing 64
Table 4-7: Reliability test on brand equity components with regards of social media marketing ....... 64
Table 4-8: Reliability test on brand equity components with regards of traditional media marketing 64
Table 4-9: Result of One-Sample T Test on the first component of value equity quality ................. 67
Table 4-10: Result of One-Sample T Test on the second component of value equity convenience . 69
Table 4-11: Result of One-Sample T Test on the third component of value equity aesthetics ......... 71
Table 4-12: Result of One-Sample T Test on the fourth component of value equity price............... 73
Table 4-13: Result of One-Sample T Test on customers purchase intention influenced by SMM value
equity .................................................................................................................................................... 75
Table 4-14: Result of One-Sample T Test on the first component of brand equity brand awareness77
Table 4-15: Result of One-Sample T Test on the second component of brand equity brand loyalty 79
Table 4-16: Result of One-Sample T Test on the third component of brand equity brand
image/association ................................................................................................................................. 81
Table 4-17: Result of One-Sample T Test on customers purchase intention influenced by SMM
brand equity .......................................................................................................................................... 83
Table 4-18: Result of One-Sample T Test on the first component of relationship equity trust ......... 85
Table 4-19: Result of One-Sample T Test on the second component of relationship equity
commitment .......................................................................................................................................... 87
Table 4-20: Result of One-Sample T Test on the third component of relationship equity overall
quality ................................................................................................................................................... 89
Table 4-21: Result of One-Sample T Test on customers purchase intention influenced by SMM
relationship equity ................................................................................................................................ 91
Table 4-22: Result of One-Sample T Test on the first component of value equity quality ............... 93
Table 4-23: Result of One-Sample T Test on the second component of value equity convenience . 95
Table 4-24: Result of One-Sample T Test on the third component of value equity aesthetics .......... 97
Table 4-25: Result of One-Sample T Test on the fourth component of value equity price............... 99

x

Table 4-26: Result of One-Sample T Test on customers purchase intention influenced by TMM value
equity .................................................................................................................................................. 101
Table 4-27: Result of One-Sample T Test on the first component of brand equity brand awareness
............................................................................................................................................................ 103
Table 4-28: Result of One-Sample T Test on the second component of brand equity brand loyalty
............................................................................................................................................................ 105
Table 4-29: Result of One-Sample T Test on the third component of brand equity brand image/
association .......................................................................................................................................... 107
Table 4-30: Result of One-Sample T Test on customers purchase intention influenced by TMM
brand equity ........................................................................................................................................ 109
Table 4-31: Result of One-Sample T Test on the first component of relationship equity trust ....... 111
commitment ........................................................................................................................................ 113
Table 4-33: Result of One-Sample T Test on the third component of relationship equity overall
quality ................................................................................................................................................. 115
Table 4-34: Result of One-Sample T Test on customers purchase intention influenced by TMM
relationship equity .............................................................................................................................. 117
Table 4-35: Summary of the hypothesized relationships results ........................................................ 118
Table 4-36: Result of Paired-Samples T-Test on customers purchase intention influenced by SMM/
TMM value equity, brand equity and relationship equity .................................................................. 121
Table 4-37: Summary of the hypothesized relationships results ........................................................ 122
Table 5-1: Summary of popular social media active users number, April, 2013 .............................. 140

1

Chapter 1. Introduction
1.1 Research background
1.1.1 The growth of Chinese luxury market

Starting from the Open Door Policy and economic reforms by the Peoples Republic
of China in 1979, China has experienced high economic growth in the past three decades.
Since 1980s, Chinas GDP increased at annual rates close to 10%. Also, China is one of the
few countries that declared positive growth rates during the recent economic recession.
(Peoples Daily Online, 2011)
In 2009, the number of millionaires in the world increased by 23 percent, with much
of the increase in new wealth occurring in Asia, demand for luxury goods in emerging
markets was projected to grow at 10 percent annually. Rising income and new wealth
allowed Chinese consumer to account for 11 percent of all luxury goods purchases in 2004,
and it was predicted to increase to 24 percent of global revenue by 2014, which would make
it the worlds largest market for luxury goods. (John Gamble, 2013)
In 2010, China overtook Japan and became the worlds second biggest economy. The
economic boom in China has benefited different business areas, apparel business is one of
them. According to the National Bureau of Statistics of China, the apparel sales in China
grew by 24.8 % year-on-year to reach 587.4 billion in 2010. According to Boston Consulting
Groups Survey conducted in 2010, urban and rural households on average spent 10.7% and
6.8% of their annual expenditure on clothing, and Chinese consumers aged 26-35 spend the

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most on clothing. (Li & Fung Research Center, Nov, 2011) With the huge market potential,
more and more foreign apparel enterprises are eager to expand their business to China.

1.1.2 Trend of luxury brands entering China market and its challenges

Many international luxury fashion brands have already expanded their business in
China, while some succeed, the others failed. In 2005, 39 of the top 50-retailers had foreign
operations and these retailers accounted for 65.3% of Top 100 sales (Badillo & Kidder,
2007). A number of prestigious Western retailers such as Louis Vuitton, Givenchy, Fendi,
Chanel, Dior, Gucci, Versace and Tommy Hilfiger have already had opened stores in China
to build a first-mover advantage in the growing market (Investors Business Daily, February
10, 2005).
Some brands have achieved good performance in entering new market. For example,
Prada announced a 30% year-on-year increase in net income in the third quarter of 2012,
with sales in China jumping up by 33% year-on-year in the third quarter, which it attributed
largely to Chinese tourists (Prada annual report, 2012). However, not every brand could do a
good job like Prada, blindly applying international business paradigms to retail
internationalization without considering organizational differences between manufacturers
and retailers could be dangerous, as cautioned by Dawson (1994). Understanding
sociological factor is particularly important because lifestyle, attitudes and social-culture
varies from country to country. If retailers can understand and appreciate local customers
needs, rules, routines and norms, their brands will be more likely to gain social acceptance by
the customers, and the successful rate of global expansion will be higher.

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With over 5,000 years of history in China, it is important for international retailers to
understand the value of Chinese consumers. The Chinese customers like showing off their
purchasing power and shopping and it is a way to differentiate themselves from friends and
neighbors (Francois Pinault, CEO of PPR). Also, Chinese luxury consumers are significantly
younger the west (Evans et al. 2012), this again shows the importance of social media
marketing.

1.1.3 Importance of Social and Traditional Media Marketing (SMM & TMM)

An essential requirement for understanding the wealthy elite in China is to understand
how they influence and are influenced by the massive, unique, fragmented and dynamic
social media landscape in China, opined by Sam Flemming, Founder and Chairman, CIC
(Sophie Doran; Luxury society, 2011).
Apart from the traditional media communication platforms, one cannot deny the
common use of social media platform is also one of the most important integrated marketing
communications approach used by international retailers nowadays. The media landscape has
transformed immensely over the past decade in the fashion business, social networks and
Microblogs like Facebook and Twitter (Sina Weibo and Renren.com for Chinese SMM) are
increasingly replacing traditional media, the new media channel provides a two-way
communication platform for the brands and the consumers, and consumers become fans of
the brands. One may wonder if companies invest huge amount of money on social media is
worthwhile or not, yet many retailers believe social media can provide them an opportunity

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to foster their relationships with customers, which in turn have positive effects on value
equity, brand equity and relationship equity of the company.
Although we understand the importance of using social media in companys
integrated marketing communications strategy, so far there are very few empirical studies
which dealt with these issues, not even expect they mentioned the social media situation in
China or Asia Pacific. Many studies just focused on marketing and branding in social media
with only descriptive narratives, definitions, characteristics and some advice without any
empirical evidence or data support. In this study, detailed research on the effects of branding
on marketing variables related to social media would take place. The objective of this study
aims to provide fashion companies, particularly luxury brands, some useful managerial
implications about the SMM strategy should be used when entering China market. The
detailed objectives are mentioned in section 1.3.

1.2 Research gap
Social media marketing (SMM) is still a relatively new topic in todays marketing
world, there is not so many research has been done so far which relates to SMM. The
mainstream of study topics related to fashion marketing is mainly about green or eco-
marketing, corporate social responsibility, logistics supply chain or customers preference on
particular products etc. Little does the research has covered one of the most important issues
that marketers must need to know nowadays, that is, the relationship between SMM and
customer equity, as well as customers purchase intention.
So far there are some researches about the relationship between social media
marketing and customer equity. For example, Angella et al.(2011) conducted a study about

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how value equity, brand equity and relationship equity related to customer equity. Other
scholars such as Rust et al. (2002), Kim, Park et al.(2010) and Lemon et al.(2001) already
proved value equity, brand equity and relationship equity are the three key drivers of
customer equity, but her study again supported that is true. Also, Angellas study focused
more on SMM by examining the relationship between social media activities and value
equity, brand equity and relationship equity. However, her study did not compare the effect
of social media marketing on final customer purchase intention with the traditional media
marketing. Furthermore, the social media studied by Angella focused mainly on Facebook
and Twitter, which was not updated enough to include other popular social media, such as
Instagram and actually, Facebook and Twitter were forbidden to use in mainland China, in
our study, all these research gaps would be filled.
Firstly, the relationship between SMM (social media used in Hong Kong and China)
and customer equity, together with the influence on customers purchase intention was
discovered. Secondly, comparison between the effect of SMM and TMM on customer equity
and customers purchase intention on luxury goods was revealed in the study as well.
1.3 Aim and objectives
Recognizing the importance of understanding how SMM affecting potential
customers in China market, and the need to investigate the importance of SMM compared to
TMM, four objectives were established to better define the focus of this study.
a) To identify the relationship between social media marketing (SMM) and customer
equity composed of value equity, brand equity, and relationship equity.
b) To identify the relationship between traditional media marketing (TMM) and
customer equity composed of value equity, brand equity, and relationship equity.

6

c) To explore the relationship between each customer equity driver and customers
purchase intention influenced by SMM and TMM.
d) To compare the difference between SMM and TMM in influencing customers
purchase intention.
e) To provide managerial implications for luxury fashion marketers on the amount of
investment and effort should be paid on SMM, as well as TMM.

1.4 Scope of study
1.4.1 Target areas

Hong Kong, mainland China and London were chosen as the target areas for
investigation. All these three places are separated geographically to a certain extent, but each
has developed independently with a certain degree of cultural difference, this provides a
greater diversification of consumer behavior being investigated in our study. London was
chosen because the researcher stayed in London during 2012 summer, and had a chance to
hold a group discussion with Chinese from different Chinese provinces, this is important
because fashion business has turned global nowadays, and a large proportion of Chinese
fashion consumers are actually tourists in Europe and America, interviewing Chinese with
different cultural influence but have a certain degree of behavioral similarities can provide
significant, representative data input to the study.
Hong Kong was also selected because of its position as an international financial and
economic center. It has been greatly influenced by Western culture due to its past
development as a British colony (Davison and Reed, 1998).Many researchers supported the
use of urban consumers as national representatives since they tend to act as opinion leaders
for consumers in other parts of the country (Papadopoulos et al., 1987, Hu, 1994).

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1.4.2 Target group

Male and female Chinese with no age limit were chosen as study subjects, Chinese
was chosen because result showed that the top 20% of Chinese netizens contributed 80% of
the content within the luxury category (Sophie Doran, 2013), and there is no age limit
because considering in China, there are many young rich people in the Chinese society
structure, also many of them are active users in social media.
In addition, our target consumers group has to be fashion-conscious and owns at least
one account in one of the popular social media platforms used in Hong Kong and mainland
China. People are considered to be fashion-conscious if they know the following brands,
Louis Vuitton, Gucci, Burberry and Dolce & Gabbana (Digital IQ Ranking by Scott
Galloway, NYU Stern, L2 ThinkTank, 2010). Also, our target group should have an
understanding of well-known luxury brands as this study was set to investigate the luxury
fashion market. Taking this approach allows us to understand our target group and to achieve
our study objectives in a more comprehensive way.

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1.5 Methodology
This section introduces the methodologies used in the data collection and analysis
process, with full details provided in chapter three. In this research, both quantitative (online
questionnaire) and qualitative (group discussion conducted in London) methods were
employed.
Firstly, for the qualitative method, a group discussion was conducted in London with
Chinese students from mainland China and Hong Kong at the initial stage of the study (May,
2012). The aim of the discussion was to get some initial insights of social network usage
behavior of Chinese customers, to provide additional insights to the topic and to offer a
contextual basis for the survey questionnaire design.
Secondly, for the quantitative method, questionnaires were distributed on a Chinese
online survey website called sojump (http://www.sojump.com/), other internet
platforms were also used, such as using direct mail and posting the link of the questionnaire
on social networks, like Renren.com and SinaWeibo. All questionnaires were distributed and
collected within two weeks in February, 2013. A total number of 304 surveys were collected,
with 302 considered as reliable data.
Four main types of data analysis were employed in analyzing the survey data.
Descriptive data analysis, Reliability Test, One-Sample T-test and Paired-Samples T-test
using SPSS 21.0 were performed for statistical analyzing the survey results.

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Chapter 2. Literature Review

Introduction

In this chapter, it includes a total of ten sections.
In section 2.1, it explains the importance and recent trend of Social Media Marketing
(SMM) in China. Section 2.2 outlines the SMM used in luxury brands, discusses the
background of SMM in luxury business and also list out some cases of SMM applications on
luxury brands.
Section 2.3 explains customer equity and its key drivers. Sections 2.4, 2.5 and 2.6
explain the value equity, brand equity and relationship equity respectively and its
components. Section 2.7 reviews the latest literatures concerning the analysis of customers
purchase intention.
The research gap is identified in section 2.8. Finally, the generic framework and
propositions set for testing in this study are presented in section 2.9.

2.1 Importance and recent trend of SMM in China
As a developing country with one-fifth of the world population, China is considered
the worlds largest consumer with a 100150 million middle class oriented population (Falk,
2008). With this massive consumer group, China has become the third largest luxury market
in the world (Liao and Wang, 2009). A desire for a worldwide material lifestyle leads

10

Chinese consumers to yearn for internationally famous luxury fashion brands, which they
think it is a symbol of success, wealth, and status (Park et al., 2008).
In fact, China has over 550 million users of social media, with over 80% of them
having multiple accounts, China is not only the worlds second-biggest economy nowadays
but it also has the worlds biggest internet population, and is forecasted to be the biggest e-
commerce by 2015, (J. Angelo Racoma, 2012). Social media plays a big part in how users
interact in China and decide on online purchases.
No Facebook, Twitter, nor Youtube, one may think Facebook may be the worlds
most popular social network, but in the worlds most populous country China, Facebook is
actually a virtual unknown, because the Chinese government set-up a strictly monitored
Great Firewall which prohibits Chinese internet users from assessing social media websites
that used in the rest of the world. They are only allowed to use their own version of Facebook,
Twitter and Youtube, which are called Renren.com, literally means everyone in Chinese,
SinaWeibo and Youku respectively.
Social media has taken over the Chinese way of life, 95% internet users living in Tier
1, Tier 2, and Tier 3
1
cities are regular users of social media (McKinsey, 2011). Although the
worlds largest social media market is very different from its other counterparts in the West,
the ingredients of a winning strategy are familiar. Chinese customers follow the same
decision-making journey as in other countries, and the basic rules for engaging with them

1
First-Tier Cities: Cities with total retail sales of more than RMB30bn, annual per capita income of RMB11,000 and high
per capita retail sales as proportion of income.
e.g. Beijing, Chongqing, Shanghai, Tianjin, Guangzhou
Second-Tier Cities: 15 more cities with populations of between 500,000 and 2mn.
e.g. Ningbo, Suzhou, Wuxi, Wenzhou, Nantong, Dongguan, Zhanjiang
Third-Tier Cities: Approximately 200 county-level cities,
Source: Asian Demographics, National Bureau of Statistics, 2012

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effectively are similar. Therefore, understanding how Chinese social media affecting
customer equity is vitally important for any brands trying to engage the Chinese market.

2.2 SMM in luxury brand
2.2.1 Background of SMM in luxury business

Luxury market is a high value-added industry, due to the increased customer demand
for luxury in China; opportunities abound to expand the luxury business is more than ever.
In relation to the ongoing global economic crisis, the worlds largest luxury goods
markets Europe, Japan, and the United States showed flat or negative growth in 2009
(Cavender and Rein, 2009). In Japan after the devastating earthquake in March 2011, sales of
luxury goods declined by 5075% (Peoples Daily Online, 2011). Compared to the
downturn in these markets, Chinas consumption of luxury goods, according to Goldman
Sachs (A Plus, 2007), is projected to rise from 12% in 2007 to 29% by 2015, thus the
Chinese luxury goods market will surpass Japan (Want China Times, 2012) and become one
of the worlds biggest markets within 5 years (Peoples Daily Online, 2011).
High-end designers and luxury retailers such as Louis Vuitton, Gucci and Prada
expect that Chinas growing luxury seeking population will help boost their sales in spite of
the economic recession in other countries (Msnbc.com, 2009). Chinas strong economic
growth and Chinese government policies developed to boost national consumption will help
maintain sales levels in luxury sector (Cavender and Rein, 2009). Therefore, an
understanding of this consumer group is essential for the luxury fashion industry to survive
in the current unstable business situation.

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To have an effective communication with their customers, luxury brands have titled
their eyes toward different social media, such as Facebook, Twiiter, Youtube and Insagram.
These marketing communication tools are becoming more and more important in companys
integrated marketing communication strategy nowadays. Brands and customers can now
communicate with each other without any restriction in time, place and medium, which
means social media evolves the traditional one-way communication into an interactive two-
way direct communication. In this connection, brands and customers are working together to
create new products, business models and values, which strengthen the relationships with
customers and also elevate brand value by understanding what customers need by creating a
social media platform to exchange ideas and information among people online. Through
social media, retailers can perform integrated marketing activities with much less effort and
cost than before (EunjuKo, 2012).

2.2.2 Cases of SMM applications on luxury brands

The use of social media for luxury brands began to surge in 2009. Gucci, one of the
worlds prestige labels, has created a multicultural interactive social network site, called
Guccieyeweb.com for their new sunglasses collection Gucci Eyeweb in Nov, 2009,
targeting digital generation customers, mainly between 15-30 years old. Instead of using
professional models, Gucci's worldwide customers aged 15-25 are the stars there.
Traditional designer houses such as Louis Vuitton also keen on using the social media
platform, they have created the Weibo account to announce its latest collection design and
cultural events, they also provide live broadcasting fashion shows on their blogs and Youku

13

channel (the Chinese version of Youtube), to let customers view the show online and make
comments (Samsung Design Net, 2009).
Whereas Dolce & Gabbana uses social media to get direct feedback from customers,
they also invite fashion bloggers to the front seats of its fashion show and they instantly
upload feedback from the show on Facebook and Twitter for customers to get the latest brand
information directly without the involvement of fashion editors or merchandisers.
Also, Burberry has been labeled as a social media early adopter, they widely use
social media ranged from Facebook and Twitter to SinaWeibo, quickly going to where the
customers are going, as was the case with Instagram, Burberry unveiled its collection on
Twitter and Instagram in November, 2011, at that time Insagram was still not becoming
mainstream. Since then, Burberry has now more than 800,000 followings on Twitter, over
11.6 million fans on Facebook and their Youtube and Youku channel has received more than
12 million views, they are the luxury fashion brand that has the most customers engagement
(The Next Web, 2012).
In 2011-2012, Burberry has seen its profits increased by 21%, CEO Angela Ahredts
attributed the growth to two main factors, Our investment in flagship markets and digital
technology has enabled our global teams to continue to drive customer engagement, enhance
retail disciplines and improve operational effectiveness, further strengthening brand
momentum. More importantly, The Burberry report also emphasized its social media role,
saying that it enjoys an Extended luxury leadership position in social media (Burberry
annual report, 2012).

14

Other luxury brands such as Chanel, Ralph Lauren, Yves Saint Laurent, Donna Karan
and Stella McCartney now also have Facebook and Twitter accounts. They update its
Facebook site as often as twice per day and are constantly tweeting on Twitter.
2.3 Relevant literatures on customer equity
For the reason of growing interest in the use of social media marketing (SMM)
among luxury fashion brands, this study is set out to examine the relationships between
SMM and Customer Equity. Theoretical background including the measurement of value
equity, relationship equity and brand equity would be given in different aspects of the topic,
and three main sections are classified in this chapter, all these three drivers are determinants
and drivers of customer equity.
The first section focuses on value equity, second section discusses relationship
equity and brand equity is presented in the third section. Based on reviewing the
literatures, research gap will be highlighted, and a research model including a generic
framework and the various propositions are developed.
It is indicated by literatures that a firm should understand the value of their customer
base to determine the optimal investment in specific customers. They define customer equity
as the total of the discounted lifetime values summed over all of the firm's customers
(Blattberg and Deighton, 1996).
In terms of customer lifetime value, customer lifetime value is one of the most
critical measures in assessing the performance of business companies (Sargeant, 2001).

15

Whilein Bitrans study, lifetime value is defined as the total net contribution that a
customer generates during his/her lifetime on a house-list (or customer database) (Bitran
and Mondschein 1997).
Meanwhile, other researcher further explains that customers are a financial asset that
companies and organizations should measure, manage, and maximize just like any other
asset (Blattberg et al., 2001).
Subsequently, customer equity is also defined by other researcher as the discounted
sum of customer lifetime values, which has been considered the most determinant of the
long-term values of the firm (Kim, Park, et al., 2010 and Lemon et al., 2001).

2.3.1 Measuring Customer Equity

There are many ways of measuring Customer Equity as suggested by different
researchers, in this section, a general overview of how Customer Equity is measured will be
introduced, and at the end of the section, the most suitable approach for this study will be
selected with explanations.
First of all, it is suggested by Sargeant that two approaches should be used for
measuring customer equity: (1) time perspective and (2) unit of analysis (Sargeant,
2001).Regarding (1) time perspective, there are two ways of calculating customer equity. The
first one is the use of historic value or projected future value; historic value is the analysis of
how much the customers have been worth to the company in the past. In contrast, the second
one is the projected future value which measures how much the customers will be worth to
the company in the future. Regarding (2) the unit of analysis, organizations calculate

16

customer equity based on either individual basis or on specific groups of customers. Later on,
Barbarosogilu and Tulinextended Sargeant's approach and calculated customer equity using
an analytic hierarchy process approach (Barbarosogilu, 2000). Details of this approach will
not be explained because it is not closely relevant to this study.
Some other models and approaches for measuring customer equity also include
migration model (Dwyer, 1997), while Berger used four retention models and one migration
model for measuring customer equity (Berger and Nasr, 1998). Both Dwyer and Berger et
al.s migration model replicated previous ways of calculating customer equity in the sense
that they used the concept of customers retention probability.
These approaches measured customer equity by using different methodologies;
however, the cases they carry out to measure the customer equity are mainly for
manufacturing companies, which is not suitable for our fashion luxury brand business.
Not until 2000, a new approach was established to calculate customer equity in a
service segment of an airline company, which provides a more suitable basis of comparison
for the study aimed at developing a research model of how Chinese social media affecting
customer equity in luxury fashion business (Rust et al. 2000).
Therefore, Rusts approach will be employed for measuring customer equity and how
it affects customers purchase intention in this study. The details of Rust et al.s approach
will be provided in the next section.

17

2.3.2 Customer Equity Drivers

Value equity, relationship equity and brand equity are constructed as key constructs
of customer equity, these constructs are referred as drivers that influence changes in
customer equity and are considered as determinants of customer equity. These three drivers
operate independently and together. By improving these three drivers, firms can enhance
overall customer equity (Rust et al. 2000a, 2000b, 2004, 2005).
Rust defines three types of equityvalue equity, brand equity and relationship equity
as key drivers of overall customer equity. (Refer to Figure 2-1)
After that, different scholars further develop their own model based on Rusts one, in
their research, each driver (value equity, brand equity and relationship equity) is expanded
into different components. Various scholars have different opinions and approaches in
defining each of the equity, some of them will be applied in this study for formulating the
proposed framework, which will be discussed in section 2.9.

Figure 2-1: Customer Equity drivers
Source: Rust et al. (2002, p.9)

18

2.4 Value equity & its components

Value equity is defined as customer's objective assessment of the utility of a brand
based on perceptions of what is given up for what is received. A customers objective
evaluation of a product or service is highly influenced by perceptions of value (Rust et al.
2000 and Vogel et al., 2008).
Also, it is suggested by Holbrook (1999), customers perceived value is composed of
(1) output/input, (2) quality, (3) convenience, (4) aesthetic and (5) price.
Suggested by Lemon et al. (2001), the three key influences on value equity are (1)
quality, (2) price, (3) convenience and (4) aesthetic.
Based on these two scholars approaches, value indicates whatever a customer wants
to pay to get what they want from the retailers. More specifically, value equity is composed
of (1) output/ input, (2) quality, (3) convenience and (4) aesthetic and (5) price. (Refer to
Table 2-1)
Table 2-1: Overview of Value Equity Components
Output/ input Quality Convenience Aesthetics Price
Holbrook
(1999)

Lemon et al.
(2001)

*

Rust et al.
(2000)

*

Vogel et al.
(2008)

*

*Remarks: Lemon, Rust and Vogel believe perceived quality is grouped in value equity
instead of relationship equity. This will be further discussed in section 2.5.

19

Three dimensions remain and are the ones used in this study, (1) perceived quality, (2)
convenience and (3) aesthetics. These components are relevant to product quality, service
quality, price level, convenient location, and environment of the retail store, and these are
widely accepted as value equity evaluation criteria of a fashion brand. Since brands
engagement in social media and traditional marketing activities perform as a marketing
activity to enhance the value of the brand, two propositions regarding to value equity are
established.
Proposition 1 (P
1
): SMM exert significant influence on value equity.
This further extends to four more sub-propositions based on the value equity components.
(Refer to Figure 2-2)
Proposition 1
a
(P
1a
): SMM significantly influences quality.
Proposition 1
b
(P
1b
): SMM significantly influences convenience.
Proposition 1c (P
1c
): SMM significantly influences aesthetics.
Proposition 1
d
(P
1d
): SMM significantly influences price.

20

Similarly, we compare traditional media marketing with social media marketing by using a
comparable set of propositions.
Proposition 7 (P
7
): Traditional media marketing exert significant influence on value equity.
This further extends to four more sub-propositions based on the value equity components.
Proposition 7
a
(P
7a
): SMM significantly influences quality.
Proposition 7
b
(P
7b
): SMM significantly influences convenience.
Proposition 7
c
(P
7c
): SMM significantly influences aesthetics.
Proposition 7
d
(P
7d
): SMM significantly influences price.

21

2.5 Brand equity& its components
Brand equity is defined as the customers subjective and intangible assessment of the
brand, stated that consumers knowledge of a brand is based on a set of associations related
to features, benefits, users, and overall attitude (Lemon et al., 2001, Rust et al., 2000
and Keller, 1993). This knowledge stems from prior brand marketing activities and
investments in advertising and promotion.
It is indicated by different scholars that brand equity influences how customers
perceive the value of the company's product (Aaker 1991, Baldauf et al., 2003, Kim et al.,
2008 and Kwun and Oh, 2004).
First of all, Aaker (1991) proposed a model stating the relationship between brand
equity and the customer's perceived value. He postulated that brand equity is a multi-
dimensional construct that represents consumers emotional perception towards a brand, and
this perception influences the customers value perception.
Later studies empirically supported his conceptual model. For example, Baldauf et al.
(2003) examined the relationship between brand equity and perceived value with data
collected from 154 participants, he found that brand equity dimensions positively and
significantly influence customer value perceptions, thus they enhance purchase intention and
firm profitability.
Similar relationship between brand perception, customers perceived value, and
behavioral intentions in the restaurant setting is also being examined (Kwun and Oh, 2004).
With data collected from 234 restaurant patrons. Based on data analysis, they concluded that
brand perception influences their perceived value of the brand and behavioral intention.

22

Kim (2008) also replicated previous studies but in the lodging industry, relationship
between brand equity, guests perceived value, and their intention to revisit are being
examined. They analyzed data collected from 264 guests and found that brand equity has a
significant positive impact on guests perceived value.
Therefore, we can conclude brand equity is key determinant of perceived value in
similar service industry, including hospitality, lodging and retail industry.
Aaker (1991, 1996) proposed four dimensions of brand equity: (1) brand awareness,
(2) perceived quality, (3) brand loyalty, and (4) brand image/ association. These four
dimensions are widely accepted and empirically tested in later studies (Keller 1993, Low and
Lamb 2000, Motameni and Shahrokhi 1998, Prasad and Dev 2000 and Yoo and Donthu
2001).
Lemon et al. (2001) stated that the key actionable levers of brand equity are (1) brand
awareness, (2) attitude toward the brand, and (3) corporate ethics.
Based on the definition of brand equity, dimensions will be adapted to enable
effective assessment of how SMM affecting fashion luxury brand equity. Take a look of the
Aaker (1991, 1996)s four dimension model, (2) perceived quality of a fashion brand should
be grouped with value equity rather than brand equity because different scholars, Lemon et al.
(2001), Rust et al. (2004) and Vogel et al. (2008) stated that perceived quality is an objective
assessment from customer, therefore it is more appropriate to group it as value equity (Refer
to Table 2-2).

23

Table 2-2: Overview of Brand Equity Components
Brand
awareness
*Perceived
quality
Brand
loyalty
Brand image
/ association
Attitude
toward
brand
Corporate
ethics
Aaker
(1991,1996)

Keller
(1993)

Low and
Lamb
(2000)

Motameni &
Shakrokhi
(1998)

Prasad and
Dev (2000)

Yoo and
Donthu
(2001)

Lemon et al.
(2001)

*Remarks: perceived quality is grouped in value equity instead of brand equity in this
study
Three dimensions remain and are the ones used in this study, (1.) brand awareness (2.) brand
loyalty and (3.) brand image and association, as perceived quality is grouped under
components of value equity.
As mentioned before, brands engagement in social media and traditional marketing
activities perform as a marketing activity to enhance the value of the brand, and two
propositions regarding to brand equity are established.

24

Proposition 3 (P
3
): SMM exert significant influence on brand equity.
This further extends to three more sub-propositions based on the brand equity components.
Proposition 3
a
(P
3a
): SMM significantly influences brand awareness.
Proposition 3
b
(P
3b
): SMM significantly influences brand loyalty.
Proposition 3
c
(P
3c
): SMM relates significantly influences brand image/ association.

comparable set of propositions.
Proposition 10 (P
10
): Traditional media marketing exert significant influence on brand
equity.
This again further extends to three more sub-propositions based on the brand equity
components. (Refer to Figure 2-3)
Proposition 10
a
(P
10a
): Traditional media marketing significantly influences brand
awareness.
Proposition 10
b
(P
10b
): Traditional media marketing significantly influences brand loyalty.
Proposition 10
c
(P
10c
): Traditional media marketing significantly influences brand image/
association.

25

2.6 Relationship equity & its components
Previous scholars believe relationship equity is a key determinant of customer equity
in the sense that building a customer relationship increases the possibility that the customer
will continue to choose the company, thus increasing customer lifetime value, which also
means increasing the customer equity (Blatterberg et al. 2001, Dwyer 1997 and Reichheld
1996).
Relationship is defined as the customers tendency to return to the brand above and
beyond the objective and subjective assessment of the brand. The concept of relationship
equity includes the belief that significant brand and value equity may not be enough to hold
the customer (Lemon et al., 2001).It is believed that there should be a type of glue that
sticks customers to firms, one that enhances the stickiness of the relationship. In this context,
the relationship between customers and the company through social media platform
represents this glue.

26

Three dimensions of relationship equity are suggested by scholars Hennig-Thurau et
al. (2002) and Ju & Chung (2002), they are (1) trust, (2) commitment, and (3) overall quality.
While Dwyer identified three dimensions of relationship equity: (1) trust, (2) satisfaction,
and (3) minimal opportunism (Dwyer et al., 1987).
It is concluded that scholars in general believe the components of relationship equity
include (1) trust, (2) commitment, (3) overall quality (4) satisfaction and (5) minimal
opportunism (Refer to Table 2-3).
Table 2-3: Overview of Relationship Equity Components
Trust Commitment Overall
quality
Satisfaction Minimal
opportunism
Hennig-
Thurau et al.
(2002)

Ju and
Chung
(2002)

Dwyer
(1987)

These components are usually related to brands loyalty programs, special treatment
to customers and community programs. Also, brands engagement in social media and
traditional marketing activities perform as a marketing activity to build a relationship with
customers and increase corporate profits, luxury brands social media and traditional
marketing activity is expected to initiate significant influence on relationship equity,
therefore, two more propositions regarding to relationship equity are established.

27

Proposition 5 (P
5
): SMM exert significant influence on relationship equity.
This further extends to three more sub-propositions based on the relationship equity
Proposition 5
a
(P
5a
): SMM significantly influences trust.
Proposition 5
b
(P
5b
): SMM significantly influences commitment.
Proposition 5
c
(P
5c
): SMM significantly influences overall quality.

Similarly, we compare the result of traditional media marketing with social media marketing
by using a comparable set of propositions.

Proposition 11 (P
11
): Traditional media marketing exert significant influence on
relationship equity.
This further extends to three more sub-propositions based on the relationship equity
Proposition 11
a
(P
11a
): Traditional media marketing significantly influences trust.
Proposition 11
b
(P
11b
): Traditional media marketing significantly influences commitment.
Proposition 11
c
(P
11c
): Traditional media marketing significantly influences overall
quality.

28

2.7 Purchase intention

Purchase intention is a combination of consumers' interest in and possibility of
buying a product (Kim and Johnson, 2010). Extant studies conclude that purchase intention is
strongly related to attitude and preference toward a brand or a product so that measuring
purchase intention assumes consumers' future behavior based on their attitudes. This relates
again to brand equity definition suggested by Lemon (2001), Rust et al. (2000) and Keller
(1993). They define brand equity as the customers subjective and intangible assessment of
the brand, stated that consumers knowledge of a brand is based on a set of associations
related to features, benefits, users, and overall attitude
Other scholars also explain that purchase intention is an attitudinal variable for
measuring customers' future contributions to a brand, whereas customer equity is a
behavioral variable accounting for actual purchasing record. As forecasting of consumers'
future behavior becomes a critical issue for a firm, that future behavior should be estimated
more punctually (Park, Ko & Kim, 2010).
In addition, as proven in many extant studies dealing with decision-making process,
attitude is the antecedent, fundamental behavior. Therefore, this study will also analyze the
relationship between customer equity drivers on purchase intention. Hence, six more
propositions regarding to purchase intention are put forth as follows: (Refer to Figure 2-2)

29

Proposition 2 (P
2
): Value equity influenced by SMM exerts significant influence on
purchase intention.
Proposition 4 (P
4
): Brand equity influenced by SMM exerts significant influence on
purchase intention.
Proposition 6 (P
6
): Relationship equity influenced by SMM exerts significant influence
on purchase intention.
comparable set of propositions. (Refer to Figure 2-3)
Proposition 8 (P
8
): Value equity influenced by traditional media marketing exerts
significant influence on purchase intention.
Proposition 10 (P
10
): Brand equity influenced by traditional media marketing exerts
Proposition 12 (P
12
): Relationship equity influenced by traditional media marketing exerts

30

2.8 Research gap

Many scholars realize the importance of how marketing affecting a companys image
and profit by developing long-term relationship and changing customers perception towards
a brand. However, almost all literatures and journals are only focusing on traditional media
tools such as magazines, leaflets, posters, billboard, website or e-mail, little do they have
mentioned about the social media marketing as this is still a relatively new marketing tool in
the integrated marketing communication strategy.
Given that there has been little study of how SMM affecting customer equity and
purchase intention in luxury fashion business in Hong Kong and China, the function of
Chinese social media on customer equity and purchase intention are still a mysterious, the
research gap exists and this arouses the interest of conducting this study.
On the other hand, recent literatures did not show much comparison on the
effectiveness between traditional marketing media and SMM. Whether companies should
invest more on SMM or should they even replace traditional marketing by SMM is always a
hot topic in the marketplace, therefore in this study, this research gap will also be uncovered.
In conclusion, the past research gap about the lack of study in Chinese SMM on
customer equity in luxury brands and the missing part of comparison between SMM and
traditional marketing media on customer equity lead to the development of research model as
discussed in next section.
Initially, the idea of marketing is a multidimensional process or strategy to form a
communication by which a brand is able to inform customers of its products to create interest

31

in its offering. The ultimate goal of the marketing activities is to increase sales and
profitability. According to Srivastava et al. (1998), marketing is an investment that improves
customer equity drivers, that is value equity, relationship equity and brand equity.
2.9 Proposed generic framework

Based on the literature review in last section, nine major propositions together with
ten sub-propositions are developed regarding the relationships between modern and
traditional marketing communication tools with customer equity and customers purchase
intention. A generic framework is established to summarize the hypothesis relationships
between SMM and customer equity with purchase intention, while (Figure 2-3) displays the
hypothesis relationships between traditional media marketing with customer equity and
purchase intention, each proposition will be explained in section 2.10.
The framework encompasses three major components, including (1) communication
tools (social media marketing and traditional media marketing), (2) customer equity,
comprises of value equity, brand equity and relationship equity and (3) purchase intention.
The first component, communication tools are viewed as independent variables, it
influences the customer equity. While the second component, customer equity, is on the one
hand a dependent variable of the first component, but on the other hand an independent
variable of the last component, i.e. purchase intention of customers.
The last component of the framework is the major and important dependent variable
of the framework, because we understand that social media has a very strong power in terms
of conveying brand image and message to consumers, but we also want to know whether it
has the effect on influencing customers purchase intention at the end. To examine this,

32

social media marketing and traditional media marketing are proposed as the determinant of
value equity, brand equity and relationship equity, which in turn affect customers purchase
intention.
In addition, comparison between social media marketing and traditional media
marketing on the effect of final customers purchase intention is also studied. This gives a
very useful insight to companies in the fashion industry whether it is worthwhile to invest
more resources in social media. All in all, all the hypothesized relationships among the
constructs from this framework are summarized in Table 2-4,Table 2-5 and Table 2-6
respectively.

33

Figure 2-2: The proposed generic framework for social media marketing (SMM) in this
study

34

Figure 2-3: The proposed generic framework for traditional media marketing (TMM) in
this study

35

Table 2-4: Summarize of hypothesized relationships for social media marketing

Table 2-5: Summarize of hypothesized relationships in for traditional marketing media

36

Table 2-6: Summarize of hypothesized relationships comparing customers purchase
intention influenced by social media marketing and traditional media marketing on value,
brand and relationship equity

-The end of Chapter Two-

37

Chapter 3. Research Methodology

Introduction

Chapter two has reviewed the literature related to the importance and recent trend of
SMM in China, background of SMM in luxury business, customer equity, its main key
drivers value equity, brand equity and relationship equity. Also, the past research gap is
studied and a generic framework is set up.
This chapter includes three sections, it explains the qualitative and quantitative
research methods and the data analysis tools employed in this study. The first section outlines
the research methods used in the study (Section 3.1). The second section describes the
qualitative method used in this study interview group discussion (Section 3.2). The third
section explains the quantitative research method online questionnaire survey employed to
test the propositions (Section 3.3).

3.1 Research method outline

In this study, both qualitative (interview group discussion) and quantitative (online
questionnaire survey) research methods are employed to test the set of propositions
established from a foundation of extensive literature review in last chapter.
Firstly, for the qualitative method, a group discussion was conducted in London with
Chinese students from mainland china and Hong Kong at the initial stage of the study in May,
2012. The aim of the discussion was to get some initial insights of social network usage

38

behavior of Chinese customers, to provide additional insights to the topic and to offer a
contextual basis for the survey questionnaire design.
The quantitative method was employed at the second stage of the study. An online
questionnaire was conducted to examine the relationship between social, traditional media
marketing and customer equity, together with purchase intention. There involves many
reasons and advantages for using online questionnaire in this study. Researchers in a variety
of disciplines find the Internet a fruitful area for conducting survey research, as the cost of
computer hardware and software continues to decrease and the popularity of the Internet
increases (Fox et al., 2001; Nie et al., 2002). Also, it can save time in finding target
respondents and it is convenient for respondents because they can answer questions on their
schedule and at their pace. Moreover, it is a more environmental friendly way to conduct the
survey because no paper has been used. Lewis and Thornhill (2003) stated that questionnaire
is used to explore and examine the relationships between variables. Moreover, using the
method of filling out questionnaire, respondents is less likely to answer in a socially desirable
way to please the researchers, when compared to other data collection methods, like
interviews. Questionnaire, therefore, is adopted to collect accurate data within limited time
and costs.
Twenty six statements were all constructed on a seven-point Likert type scale with
responses ranging from 1 - disagree at all, 4 - natural/ no feeling to 7 - totally agree.
Respondents in the survey were asked to indicate their level of agreement with the statements.
The overview research process of this study is illustrated in Figure 3-1: The research process

39

of this studyFigure 3-1.

Figure 3-1: The research process of this study

3.2 Qualitative method - Group discussion

There are two main reasons for using a group discussion in this study. Firstly,
discussion through interview is one of the most common methods employed to generate ideas
and insights that would be helpful in developing questionnaires in consumer-related research
(Churchill, 1996). Secondly, during the discussion, one members response will spark
comments and opinions from other members and generate spontaneous interplay among the
other participants (Hair et al., 2003). It is more likely to facilitate the identification of new
ideas and important issues.

40

3.2.1 Group discussion strategy

Sample frame

The interviewees selected in the interview group must be at least 18 years old,
fashion-conscious and owns an account in any of the popular social media networks used in
Chinese community, which includes Facebook, Twitter, Renren.com, SinaWeibo, Douban
and Kaixin.com etc. Gender and citizenship is not taken into consideration but they must be
Chinese nationalities.
Sampling method Non- probability sampling

Non-probability sampling was adopted in this research in light of time and resources
limitation. Malhotra (2010) suggested four methods using non-probability sampling. They
are convenience, judgmental, quota and snowball. In this study, convenience, snowball and
quota sampling methods were employed.
1. Convenience sampling
Convenience sampling refers to sampling by getting conveniently available people or
Units (Malhotra, 2010). Due to limited resources and time for this research, this method is
employed. Chinese students studying in London College of Fashion and Inbound exchange
students from Mainland China studying Institute of Textiles & Clothing in the Hong Kong
Polytechnic University are selected as interviewees in the discussion group.
2. Snowball sampling
Snowball sampling is a non-probability sampling technique where existing study
subjects recruit future subjects from among their acquaintances. Thus the sample group

41

appears to grow like a rolling snowball (Browne, 2005). In this case, the selected Mainland
Chinese student was asked to invite another qualified respondent in his/her social network to
participate in the interview group discussion. Thus, it saves time in locating respondents and
acquiring suitable participants in the discussion group.
3. Quota sampling
Quota sampling is a non-probability sampling technique wherein the researcher
ensures equal or proportionate representation of subjects depending on which trait is
considered as basis of the quota (Joan Joseph Castillo, 2009). In our study, all the
respondents selected must be fashion-conscious, and must own at least one account in any of
the popular social media platforms used in Hong Kong and China. People are considered to
be fashion-conscious if they know the following brands, Louis Vuitton, Gucci, Burberry and
Dolce & Gabbana (Digital IQ Ranking by Scott Galloway, NYU Stern, L2 ThinkTank, 2010).

3.2.2 Group discussion in London, United Kingdom

The group discussion was conducted on 15th May, 2012 in London so as to gain
more insight of the research topic and also used as a preliminary data to confirm the result of
the survey questionnaire.
As six to twelve is the suggested optimal number of participants in a group discussion
(Hair et al., 2003), there were seven participants involved in our group discussion, the sample
size is considered both sufficient and representative. Five of them were full-time Chinese
students studying Fashion Management in London College of Fashion, one is Hong Kong
exchange student from the Hong Kong Polytechnic University studying Textiles and

42

Clothing, and the last one is a Hong Kong Chinese working in a department store selling
luxury goods in London.
Initial contact was made by researcher through face to face contact, sending e-mail to
persons, or through recommendations by the participants. Also, prior to the discussion, the
researcher introduced the study objectives and asked for participants permission to record
the discussion for accurate transcription. During the discussion, group members expressed
their opinions and discussed their responses to open-ended questions based on the literatures
related to how social media marketing and traditional marketing tools affecting the customer
equity and purchase intention. Discussion topics included their daily social media usage
behavior and how social media platform and traditional marketing tools affect their opinions
towards luxury brands, with the assistance of showing some of the samples of e-
advertisements done by Burberry on social media and Louis Vuitton, Prada, Guccis
advertisements in printed and other electronic media platforms, such as Vogue magazine, e-
mail, poster etc.
The discussion group was taken place in the meeting room of the London College of
Fashion, and it took approximately one hour to finish, the frequency of certain key words or
ideas was measured and the intensity of participants expression was examined. At the end
thank you letters were given to each participant.
The purpose of conducting the discussion was to explore the Chinese usage behavior
on social media, understand their interest and opinions on receiving information from the
social network platform, particularly the marketing information posted by different high-end
fashion companies. It helped clarify the difference between social network used in China and

43

the ones used in the rest of the world. The results from the discussion provided a contextual
basis and preliminary data for the questionnaire survey.

44

3.3 Quantitative method - Questionnaire survey

3.3.1 Questionnaire strategy

Sample size
According to (Malhotra, 2010), the sample size 200 is large and reliable enough to
draw an accurate result. In this study, a total number of 304 questionnaires were collected,
302 questionnaires were regarded as usable, and two of them were counted unusable because
the respondents failed answering two of the initial screening questions, which meant he/she
did not know the famous luxury fashion brands a fashion-conscious person should know or
he/she did not have an account of any social media platform used in Hong Kong and China.
Therefore, 302 respondent results represented a valid target sample in this study.

Sampling method

This study used non-probability sampling method to find respondents owing to the
time constraint and budge restraint. Questionnaires were distributed to a random sample
group of people on the internet. The target respondent population in this study was anyone
who is keen to use Chinese and Hong Kong social network, they were asked to fill in the
questionnaires on a Chinese survey website, the instructions and questions were both written
in Chinese and English. For the target respondents, there was no restriction on gender,
income level, occupation and ethnics, as long as the individual had fashion instinct or owned
an account in at least one of the famous social media platforms used in China or Hong Kong,
such as Facebook, Twitter, SinaWeibo, Renren.com, Kaixin.com, and Douban etc.

45

Data collection method

Questionnaires were distributed on a Chinese online survey website called sojump
(http://www.sojump.com/), the website provider would let the targeted respondents
to do the survey by providing voucher lucky draw as a motivation. In addition, other internet
platforms were also used, such as using direct mail and posting the link of the questionnaire
on social networks, like Renren.com and SinaWeibo. All questionnaires were distributed and
collected within two weeks in February, 2013.
Pilot study

Just before conducting the online questionnaire, it was first viewed by the supervisor
of this study to ensure the wording and format was appropriate. Then, a pilot study with four
two Hong Kong Chinese, one mainland Chinese and one Malaysian Chinese was performed
to test their understanding of the questionnaire.
A pilot survey is a strategy used to test the questionnaire using a smaller sample
compared to the planned sample size. It is used to test the correctness of the instructions and
to provide better information on whether the type of survey is effective in fulfilling the
purpose of the study. There would be a lesser chance of unreliable results if errors are found
early on, otherwise we might need to start over again after conducting the survey.
Different aspects of the questionnaire were highlighted in the pilot study, such as the
wording, instruction, translation, layout and content. Each question was asked at least once to
the respondents in Chinese and English to make sure everyone understands the meaning of
the question. After the pilot test, they were also asked to explain why they answered certain
questions as they did. Most respondents completed the questionnaire within 5 minutes. In

46

order to enhance data accuracy and reliability, the respondents were asked if they faced any
difficulties in answering the questions, most replied there was no difficulty answering the
questions as set. For the length of the questionnaire, all respondents feel comfortable with it.
Lastly, some modifications, mainly about the wording and format were made to the
questionnaire according to the opinions and suggestions given by the respondents.

3.3.2 Questionnaire design

Screening

To ensure the target respondent is fashion conscious, first of all they were asked with
the following question, Have you heard of the following brands before? (1.) Louis Vuitton
(2.) Gucci (3.) Burberry and (4.) Dolce & Gabbana.
According to Digital IQ Ranking developed by Scott Galloway, NYU Stern (L2
ThinkTank, 2010), Louis Vuitton was ranked number one among luxury fashion brands.
Gucci, Burberry, and Dolce & Gabbana followed after. Digital IQ of luxury brands were
rated based upon four categories; (1) effectiveness of brand site, (2) marketing efforts and
off-site brand presence and visibility on search engines, (3) brand presence, following,
content, and influence on major social media platforms and (4) compatibility and marketing
on smart phones and other mobile devices. If the respondent does not know any of the given
luxury brand names, they will be excluded from the survey.

47

Contents

The questionnaire consisted of three sections: (1) introduction and screening process,
(2) customer equity and purchase intention, and (3) personal information. The first part
consisted of introduction, background of study and instructions. The first question in this part
asked the respondent whether they have heard some of the well-known luxury brands such as
Louis Vuitton, Gucci, Burberry and Dolce & Gabbana. The second question asked if they
have an account in any of the famous social media platforms used in Hong Kong and China.
If either one of these two questions the respondent answered No, the survey would end and
they could not proceed to the next part.

The second part was the core part of the survey, there were 26 questions in total,
which were connected with customer equity, consisted of 20 questions, and purchase
intention, consisted of 6 questions.
In terms of customer equity, value equity contained 8 questions, brand equity
contained 6 questions, and relationship equity contained 6 questions, each question
represented one sub-proposition of the generic framework. Moreover, all the questions were
divided into two parts, as one part was related to social media marketing, the other part
related to traditional media marketing, which meant for example, 4 questions related to value
equity were about social media marketing, the other 4 same questions asked were about
traditional media marketing, this allowed comparison in the later study.

48

The final part of the questionnaire included 5 nominal-scaled questions concerning
the subjects demographic profile as a reference, i.e. gender, age, highest education, monthly
household income and city of residence. The full questionnaire is listed in Appendix I.

Likert scale

Seven-level Likert scale was employed in the questionnaire, because it was easy to
use, simple to understand and it was the most widely used approach to scaling responses in
survey research.
The seven-point scale has been shown to reach the upper limits of the scales
reliability. As a general rule, Likert and others recommend that it is best to use as wide a
scale as possible (Jum C. Nunnally, 1978).Therefore, seven-level instead of five-level was
used in this study because scale with more points was considered more reliable and it
prevented people from being too neutral in their responses.
Questionnaire language

The questionnaire was first drafted in English, then translated into traditional Chinese,
from the discussion group we knew that Chinese from mainland China found no problem in
reading traditional Chinese, simplified Chinese was not included so as to make the research
process easier and more consistent. Final version of questionnaires were first screened by one
professional in the Institute of Textiles and Clothing of the Hong Kong Polytechnic
University and then proof-read by one bilingual teacher in the English department of the
Hong Kong Polytechnic University to ensure the content was appropriate and that similar

49

meaning was derived between the English and Chinese versions.

3.4 Data analysis tools

After finishing the online questionnaire, all the responses from each question were
coded and the data were entered into Statistical Package for Social Science 21.0 (SPSS) for
analysis. In order to ensure the data were accurately transcribed, frequencies were computed
before performing the data analysis to check the range of responses and account for missing
data. Descriptive data analysis, Reliability Test, One-Sample T-test and Paired-Samples T-
test were performed for statistical analyzing the survey results more extensively. All the
findings were useful to evaluate whether social media marketing is an effective tool to
increase customer equity and their purchase intention, compared to the traditional marketing
methods. Therefore, fashion companies can decide whether they want to invest more on
social media or not in their long-term business plan.

3.4.1 Descriptive data analysis

Frequency was used to show the demographic profile of the respondents. All the
descriptive data is presented by table, pie chart and bar chart to give a straight-forward,
comprehensive review. Demographic data presented in the study include gender, age,
education level, monthly household income, city of residence, degree of fashion
consciousness of respondents and types of social media platforms that our survey
respondents usually use.

50

3.4.2 Reliability test

Tests of internal consistency using Cronbachs standardized alpha were conducted in
assessing the reliability level of the measures used in the online questionnaire. Reliability test
was adopted to measure the consistency and validity of statements and their measurement
scales, high values for Cronbachs alpha coefficients indicate the construct had high internal
consistency. Generally, alpha values greater than 0.7 are considered satisfactory (Peterson,
1994). However, the reliability level could have been relatively lower when the construct
included only a few items (Kim and Mueller, 1978) and when the items were newly
developed.
Therefore, an alpha value of 0.6 or above was adopted as Churchill (2005) stated that
the Crorbachs coefficient alpha was acceptable if it was at least 0.6. When the statements
were accepted, they could be grouped together to simplify the analysis process.
3.4.3 One-Sample T-Test

One sample t-test was carried out to test all the 26 propositions in our study, which
includes how social media marketing and traditional media marketing affects value equity,
brand equity, relationship equity and purchase intention.
The test investigated the difference between a sample mean and the significant
difference, the test value is set at 4, which is the neutral point in the 7-point Likert Scale, and
the critical significance level is set at 0.05. If the significance is smaller than 0.05, the null
hypothesis will be rejected (George & Mallery, 2009).

51

3.4.4 Paired-Samples T-Test

The Paired-Samples T Test procedure is used to test the hypothesis of no difference
between two variables. The data may consist of two measurements taken on the same subject
or one measurement taken on a matched pair of subjects.
In our study, we will test whether social media marketing is better than traditional
media marketing in boosting customers purchase intention by means of the Paired-Samples
T-Test.

Summary
This chapter has discussed and justified the research methods, data analysis
techniques and measurement scales employed in the study. Both qualitative and quantitative
methods were used as the research strategy to collect the data, a discussion group held in
London and an online questionnaire survey were conducted. Seven-level Likert scale was
used as the measurement scales in the development of survey instruments. Four major
statistical techniques, descriptive data analysis, reliability test, One-Sample T-test and
Paired-Samples T-test were performed by using SPSS 21.0 to analyze the data collected from
the survey.

-The end of Chapter Three-

52

Chapter 4. Results

Introduction

This chapter aims to report and analyze the findings of the qualitative and quantitative
data in four sections. Section 4.1 shows the findings of the quantitative data, i.e. the online
questionnaire. In which section 4.1.1 summarizes the response rate and valid sample size,
section 4.1.2 shows the descriptive statistics of the online questionnaire. Then, Reliability
Test results are shown in section 4.1.3, also, One-Sample T-Test results and analyzes is
included in section 4.1.4. Lastly, section 4.1.5 shows the Paired Sample T-Test results and
analyzes which compare how the traditional and social media marketing differ in affecting
customers purchase intention.
In section 4.2, the interpretive results of the interview discussion are covered to
compare if the opinions and ideas obtained from the focus group support the findings of the
online questionnaire. Finally, a summary of the chapter is drawn at the end of the chapter.

53

4.1 Findings of quantitative data Online questionnaire

4.1.1 Response rate & valid sample size

The final questionnaires were distributed to 400 respondents on the internet. Among
500 questionnaires, 304 were returned, yielding a response rate of 75.5%. The response rate
is considered to be very good because for a short length survey, the acceptable response rate
lies between 55% and 75% (Kurt Knapton, Executive Vice President, e-Rewards Market
Research 2012) (See Table 4-1 below). Usually, for an online survey, people are prone to
skip or ignore any voluntary survey without any rewards and benefits. In this study, a strong
motivation statement was made to encourage people to do the survey. Also, direct individual
invitations were sent to each target respondent so as to yield a higher response rate.
In addition, of the returned 304 questionnaires, 302 provided usable responses (99%),
of which 2 data are considered to be unusable because they are filtered out from the
screening process in the first part. They either do not know all the luxury fashion brands they
should know, nor do they have any account of common social media platforms used in Hong
Kong and China. All data, no matter online softcopy or hardcopy were collected in February,
2013 to ensure time comparability.

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Table 4-1: Acceptable response rate of online survey

4.1.2 Descriptive statistic

Demographic data such as gender, age, education level, monthly household income
and city of residence were presented in descriptive statistic, all the data will be presented in
bar chart or pie chart to give a comprehensive and easy-to-read illustration. Mean and
standard deviation among items are also included in this part.

55

Gender

Figure 4-1: Gender distribution of respondents
The pie chart above (Figure 4-1) indicates that the proportion of male and female of
the respondents are nearly evenly distributed, with 46% of them are male (139 respondents),
and 54% are female (165respondents).

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Age

Figure 4-2: Age distribution of respondents

The distribution of respondents age is shown in terms of percentage. Figure
4-2indicates the age of most respondents ranges between 20 and 29, with 86% (265
respondents), this is probably due to the users of social media are mostly young users. 7% of
overall respondents aged below 20 (20 respondents), 6% aged between 30 -39 (17
respondents), and 1% aged over 40 (2 respondents).

57

Education level

Figure 4-3: Education level distribution of respondents

Figure 4-3shows that most of the respondents in the study are undergraduate degree
holder, with 65.13% (198 respondents), followed by diploma/ certificate/ college level, with
26.64% (81 respondents), and secondary level is 4.93% (15 respondents), the least proportion
is postgraduate degree or above, which takes 3.29% (10 respondents), no respondent is in
primary school level.

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Monthly household income

Figure 4-4: Monthly household income distribution of respondents

Figure 4-4indicates that 8.5% of respondents have under $5,000HKD monthly
household income per month (26 respondents), 35% have between $5,001-20,000HKD (107
respondents), 44% have between $20,001-50,000 HKD(132 respondents), 3% have between
$40,001-60,000HKD (10 respondents), 3% have between $60,001-100,000HKD (9
respondents), 5% have between $100,001-150,000HKD (14 respondents), 2% have between
$150,001 300,000HKD(5 respondents) and less than1% have between $300,001 HKD or
above (1 respondent).

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City of residence

Figure 4-5: Monthly household income distribution of respondents

The city of residence of respondents is indicated in Figure 4-5. Most of our
respondents are from Hong Kong & Macau, which accounts for 71.38% (217 respondents),
5.92% comes from mainland China (18 respondents), 0.33% comes from Taiwan (1
respondent), and the rest 22.37% come from other countries (68 respondents).

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Screening questions
As mentioned in chapter 3 before, all respondents were first asked two questions at
the beginning of the survey as a screening process to eliminate unsuitable target respondents.
Figure 4-7 shows the result of the first question and figure 4-8 shows the result of the second
question.

Figure 4-6: First screening question: Have you heard of the following brands? Louis Vuitton,
Gucci, Burberry and Dolce & Gabbana
The first question (Figure 4-6) asked respondents whether they have heard of the
following four popular luxury fashion brands, i.e. Louis Vuitton, Gucci, Burberry and Dolce
& Gabbana, they are set as a standard to test if the respondent is fashion-conscious or not.
The result shows that 99% respondents have heard of the brands (302 respondents), and there
is only 1% who do now know all these four brands (2 respondents).

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Table 4-2: Have you set up an account in any of the following social media platforms?

The second question (Table 4-2) asked respondents if they have set up an account in
any of the popular social media platforms, the result shows that 100% of them have at least
one account of the social media platforms mentioned in the survey. The bar chart above
shows the proportion of which social media platform our respondents use in daily life. 97%
of our respondents have used Facebook (297 respondents), 36% have used Twitter (112
respondents), 56% have used Instagram (174 respondents), 10% have used Renren.com (30
respondents), 25% have used SinaWeibo (78 respondents), 1% have used Pengyou.com (4
respondents), 0.65% have used Kaixin001.com (2 respondents), 6% have used Touban (17
respondents), 4% have used Sohu (11 respondents), 6% have used Baidu space (17
respondents).

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4.1.3 Reliability test

In chapter 2, we mentioned three different equities of customer equity has different
components, for example, quality, convenience, aesthetics and price belongs to value
equity, brand awareness, brand loyalty and brand image/association belongs to brand
equity, and trust, commitment and overall quality belongs to relationship equity. In order
to test whether these components really belong to the corresponding equity as suggested by
different scholars, and also to test if the questions drafted in the questionnaire can truly
represent each component of the equity, reliability test of SPSS is carried out. Churchill
(1995) stated that the Crorbachs coefficient alpha was acceptable if it was at least 0.6. If the
alpha is close to 1.00, it means high internal consistency of items is proved.

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Table 4-3: Reliability test on value equity components with regards of social media
marketing

Table 4-4: Reliability test on value equity components with regards of traditional media
marketing

Table 4-5: Reliability test on brand equity components with regards of social media
marketing

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Table 4-6: Reliability test on brand equity components with regards of traditional media
marketing

Table 4-7: Reliability test on brand equity components with regards of social media
marketing

Table 4-8: Reliability test on brand equity components with regards of traditional media
marketing

Table 4-3,Table 4-4, Table 4-5, Table 4-6, Table 4-7 & Table 4-8 show that the
Cronbachs Alpha is 0.629, 0.850, 0.747, 0.837 and 0.865 respectively, which are higher than
the acceptable level 0.6.The results show that there are positive internal consistencies of the
components in all value equity, brand equity and relationship equity. That is, for example,
the components of value equity - quality, convenience, aesthetics and price obtain a high
positive internal consistency result, no matter whether we asked the questions with regards to
social media marketing or traditional media marketing, and so it makes sense to keep all the

65

variables in our study because they are adequately reliable. Therefore, the questions on the
online questionnaire 1 to 4, 14 to 17 will be used for hypothesis testing (Propositions 1
a
1
b
1
c
1
d
, 2, 7
a
7
b
7
c
7
d
& 8), questions 6-8, 19-21 will be used for hypothesis testing (Propositions
3
a
3
b
3
c
, 4, 9
a
9
b
9
c
& 10) and questions 10-12, 23-26 will be used for hypothesis testing
(Propositions 5
a
5
b
5
c
, 6, 11
a
11
b
11
c
&12).

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4.1.4 One-Sample T-Test

Hypothesis testing - Social media marketing affects value equity (a)
P
0a
: SMM does not influence quality.
P
1a
: SMM significantly influences quality.
In our questionnaire, question1: Luxury fashion brands setting up social media page,
its contentscan influence my impression towards the product and service quality of the
brand. was set to test the level of respondents agreement to the statement by means of a 7-
point Likert scale.
In here, One-Sample T Test is used to test the mean value of a distribution. Referring
to Table 4-9, the mean value of question 1 is 4.38 out of 7.00. This shows that there is a
slight positive relationship between social media marketing and customers perceived quality
of the brand, which refers to one of the value equity components.
Moreover, when the test value is set to 4, the neutral point in the 7-point Likert scale,
the p-values of the test becomes .000, which is much smaller than the level of significance
0.05, therefore, our null hypothesis, SMM does not influence quality. is rejected. In the
meantime, the positive t score 6.695 also implies the sample proportion is greater than 4, in
other words, we can conclude that social media marketing significantly influences
customers perceived quality of the brand.

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Table 4-9: Result of One-Sample T Test on the first component of value equity quality

68

Hypothesis testing - Social media marketing affects value equity (b)
P
0b
: SMM does not influence convenience.
P
1b
: SMM significantly influences convenience.
its contentscan help me find the store information more easily. was set to test the level of
respondents agreement to the statement by means of a 7-point Likert scale.
slight positive relationship between social media marketing and customers perceived
convenience in assessing information of the brand.
Moreover, when the test value is set to 4, which is the neutral point in the 7-point
Likert scale, the p-values of the test becomes .000, which is much smaller than the level of
significance 0.05, therefore, our null hypothesis, SMM does not influence aesthetics. is
rejected. In the meantime, the positive t score 20.533 also implies the sample proportion is
greater than 4, in other words, we can conclude that social media marketing significantly
influences customers perceived convenience of the brand.

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Table 4-10: Result of One-Sample T Test on the second component of value equity
convenience

70

Hypothesis testing - Social media marketing affects value equity (c)
P
0c
: SMM does not influence aesthetics.
P
1c
: SMM significantly influences aesthetics.
In our questionnaire, question 3: Luxury fashion brands setting up social media page,
its contentsmake me think the brand image is attractive and nice. was set to test the level
of respondents agreement to the statement by means of a 7-point Likert scale.
positive relationship between social media marketing and customers perceived aesthetics of
the brand.
significance 0.05, therefore, our null hypothesis, SMM does not influence convenience. is
greater than 4, in other words, we can conclude that social media marketing significantly

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Table 4-11: Result of One-Sample T Test on the third component of value equity aesthetics

72

Hypothesis testing - Social media marketing affects value equity (d)
P
0d
: SMM does not influence price.
P
1d
: SMM significantly influences price.
its contentsmake me think the brand has good money value for its products. was set to
test the level of respondents agreement to the statement by means of a 7-point Likert scale.
slight negative relationship between social media marketing and customers perceived price
level of the brand.
Likert scale, the p-values of the test becomes .014, which is larger than the level of
significance 0.05, therefore, our null hypothesis, SMM does not influence price. is
supported. In the meantime, the negative t score -3.274 also implies the sample proportion is
smaller than 4, in other words, we can conclude that social media marketing does not
influence customers perceived price level of the brand.

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Table 4-12: Result of One-Sample T Test on the fourth component of value equity price

74

Hypothesis testing - Social media marketing affects value equity and thus purchase intention
P
0
: Value equity influenced by SMM does not influence purchase intention.
P
2
: Value equity influenced by SMM exerts significant influence on purchase intention.
In our questionnaire, question 5: The aforementioned factors in questions 1-4,
including brand quality, convenience, aesthetics and price, have an impact on my purchase
intention of the brand I like. was set to test the level of respondents agreement to the
statement by means of a 7-point Likert scale.
slight positive relationship between value equity influenced by social media marketing and
purchase intention.
significance 0.05, therefore, our null hypothesis, Value equity influenced by SMM does not
influence purchase intention. is rejected. In the meantime, the positive t score 8.922 also
implies the sample proportion is greater than 4, in other words, we can conclude that value
equity influenced by SMM exerts significant influence on purchase intention.

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Table 4-13: Result of One-Sample T Test on customers purchase intention influenced by
SMM value equity

76

Hypothesis testing - Social media marketing affects brand equity (a)
P
0a
: SMM does not brand awareness.
P
3a
: SMM significantly influences brand awareness.
its contentsmake me more aware of the brand. was set to test the level of respondents
agreement to the statement by means of a 7-point Likert scale.
positive relationship between social media marketing and customers perceived brand
awareness.
significance 0.05, therefore, our null hypothesis, SMM does not influence brand
awareness. is rejected. In the meantime, the positive t score 20.301 also implies the sample
proportion is greater than 4, in other words, we can conclude that social media marketing
significantly influences customers perceived brand awareness.

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Table 4-14: Result of One-Sample T Test on the first component of brand equity brand
awareness

78

Hypothesis testing - Social media marketing affects brand equity (b)
P
0b
: SMM does not influence brand loyalty.
P
3b
: SMM significantly influences brand loyalty.
its contents make me feel more attached and loyal to the brand. was set to test the level of
neutral relationship between social media marketing and customers perceived brand loyalty.
Likert scale, the p-values of the test becomes .288, which is higher than the level of
significance 0.05, therefore, our null hypothesis, SMM does not influence brand loyalty. is
supported. In the meantime, the positive t score 1.063implies the sample proportion is greater
than 4, but the proportion is too little that does not tell any significant relationship of the
statement, in other words, we can conclude that social media marketing does not influence
brand loyalty.

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Table 4-15: Result of One-Sample T Test on the second component of brand equity brand
loyalty

80

Hypothesis testing - Social media marketing affects brand equity (c)
P
0c
: SMM does not influence brand image/ association.
P
3c
: SMM significantly influences brand image/ association.
its contentscan strengthen the brand image. was set to test the level of respondents
slight positive relationship between social media marketing and customers perceived brand
image and association.
significance 0.05, therefore, our null hypothesis, SMM does not influence brand image/
association. is rejected. In the meantime, the positive t score 13.904 also implies the sample
proportion is greater than 4, in other words, we can conclude that social media marketing
significantly influences customers perceived brand image and association.

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image/association

82

Hypothesis testing - Social media marketing affects brand equity and thus purchase intention
P
0
: Brand equity influenced by SMM does not influence purchase intention.
P
4
: Brand equity influenced by SMM exerts significant influence on purchase intention.
including brand awareness, brand loyalty and brand image, have an impact on my purchase
intention of the brand I like.
was set to test the level of respondents agreement to the statement by means of a 7-point
Likert scale.
very slight positive relationship between brand equity influenced by social media marketing
and purchase intention.
significance 0.05, therefore, our null hypothesis, Brand equity influenced by SMM does not
implies the sample proportion is greater than 4, in other words, we can conclude that brand
equity influenced by SMM exerts significant influence on purchase intention.

83

SMM brand equity

84

Hypothesis testing - Social media marketing affects relationship equity (a)
P
0a
: SMM does not influence trust.
P
5a
: SMM significantly influences trust.
In our questionnaire, question 10: Luxury fashion brands setting up social media
page, its contents such as corporate social responsibilities and community programs, make
me think the brand is trustworthy and treat their customers fairly. was set to test the level of
very slight positive relationship between social media marketing and customers trust to the
brand.
significance 0.05, therefore, our null hypothesis, SMM does not influence trust. is rejected.
In the meantime, the positive t score 6.721 also implies the sample proportion is greater than
4, in other words, we can conclude that social media marketing significantly influences
customers trust to the brand.

85

Table 4-18: Result of One-Sample T Test on the first component of relationship equity
trust

86

Hypothesis testing - Social media marketing affects relationship equity (b)
P
0b
: SMM does not influence commitment.
P
5b
: SMM significantly influences commitment.
In our questionnaire, question11: Luxury fashion brands setting up social media
page, its contentsmake me feel being associated with and emotionally attached to the
brand. was set to test the level of respondents agreement to the statement by means of a 7-
point Likert scale.
neutral relationship between social media marketing and customers commitment to the
brand.
Likert scale, the p-values of the test becomes .123, which is higher than the level of
significance 0.05, therefore, our null hypothesis, SMM does not influence commitment. is
supported In the meantime, the positive t score 1.547 implies the sample proportion is greater
than 4, but the proportion is too little that does not tell any significant relationship of the
statement, in other words, we can conclude that social media marketing does not influence
customers commitment to the brand.

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commitment

88

Hypothesis testing - Social media marketing affects relationship equity (c)
P
0c
: SMM does not influence overall quality.
P
5c
: SMM significantly influences overall quality.
In our questionnaire, question 12: Luxury fashion brands setting up social media
page, its contents make me feel satisfied and happy with brand performance. was set to
neutral relationship between social media marketing and customers perceived overall quality
of the brand.
Likert scale, the p-values of the test becomes 0.260, which is higher than the level of
significance 0.05, therefore, our null hypothesis, SMM does not influence overall quality.
is supported. In the meantime, the negative t score also implies the sample proportion is
smaller than 4, in other words, we can conclude that social media marketing does not
influence overall quality of the brand.

89

Table 4-20: Result of One-Sample T Test on the third component of relationship equity
overall quality

90

Hypothesis testing - Social media marketing affects relationship equity and thus purchase
intention
P
0
: Relationship equity influenced by SMM does not influence purchase intention.
P
6
: Relationship equity influenced by SMM exerts significant influence on purchase
intention.
including trust, commitment to the brand and overall brand quality, have an impact on my
purchase intention of the brand I like. was set to test the level of respondents agreement to
the statement by means of a 7-point Likert scale.
very slight positive relationship between relationship equity influenced by social media
marketing and purchase intention.
Likert scale, the p-values of the test becomes .001, which is smaller than the level of
significance 0.05, therefore, our null hypothesis, Relationship equity influenced by SMM
exerts significant influence on purchase intention. is rejected. In the meantime, the positive t
score 3.258 also implies the sample proportion is greater than 4, in other words, we can
conclude that relationship equity influenced by social media marketing exerts significant
influence on purchase intention.

91

SMM relationship equity

92

Hypothesis testing Traditional media marketing affects value equity (a)
P
0a
: TMM does not influence quality.
P
7a
: TMM significantly influences quality.
In our questionnaire, question 14: Luxury fashion brands published information on
magazines, newspapers, leaflets, posters, billboard, website and e-mail, its contentscan
influence my impression towards the product and service quality of the brand. was set to
slight positive relationship between traditional media marketing and customers perceived
quality of the brand.
significance 0.05, therefore, our null hypothesis, TMM does not influence quality. is
rejected. In the meantime, the positive t score13.537 also implies the sample proportion is
greater than 4, in other words, we can conclude that traditional media marketing significantly
influences customers perceived quality of the brand.

93

Table 4-22: Result of One-Sample T Test on the first component of value equity quality

94

Hypothesis testing Traditional media marketing affects value equity (b)
P
0b
: TMM does not influence convenience.
P
7b
: TMM significantly influences convenience.
magazines, newspapers, leaflets, posters, billboard, website and e-mail, its contentscan
help me find the store information more easily. was set to test the level of respondents
positive relationship between traditional media marketing and customers perceived
convenience in assessing information of the brand.
significance 0.05, therefore, our null hypothesis, TMM does not influence convenience. is

95

Table 4-23: Result of One-Sample T Test on the second component of value equity
convenience

96

Hypothesis testing Traditional media marketing affects value equity (c)
P
0c
: TMM does not influence aesthetics.
P
7c
: TMM significantly influences aesthetics.
magazines, newspapers, leaflets, posters, billboard, website and e-mail, its contents make
me think the brand image is attractive and nice. was set to test the level of respondents
aesthetics of the brand.
significance 0.05, therefore, our null hypothesis, TMM does not influence aesthetics. is
influences customers perceived aesthetics of the brand.

97

Table 4-24: Result of One-Sample T Test on the third component of value equity aesthetics

98

Hypothesis testing Traditional media marketing affects value equity (d)
P
0d
: TMM does not influence price.
P
7d
: TMM significantly influences price.
magazines, newspapers, leaflets, posters, billboard, website and e-mail, its contents make
me think the brand has good money value for its products. was set to test the level of
slight negative relationship between traditional media marketing and customers perceived
price level of the brand.
significance 0.05, therefore, our null hypothesis, TMM does not influence price. is rejected.
In the meantime, the negative t score -3.274 also implies the sample proportion is smaller
than 4, in other words, we can conclude that traditional media marketing significantly
influences customers perceived price level of the brand.

99

Table 4-25: Result of One-Sample T Test on the fourth component of value equity price

100

Hypothesis testing - Traditional media marketing affects value equity and thus purchase
intention
P
0
: Value equity influenced by TMM does not influence purchase intention.
P
8
: Value equity influenced by TMM exerts significant influence on purchase intention.
including brand quality, convenience, aesthetics and price, have an impact on my purchase
slight positive relationship between value equity influenced by traditional media marketing
significance 0.05, therefore, our null hypothesis, Value equity influenced by TMM does not
implies the sample proportion is greater than 4, in other words, we can conclude that value
equity influenced by TMM exerts significant influence on purchase intention.

101

TMM value equity

102

Hypothesis testing Traditional media marketing affects brand equity (a)
P
0a
: TMM does not influence brand awareness.
P
9a
: TMM significantly influences brand awareness.
magazines, newspapers, leaflets, posters, billboard, website and e-mail, its contentsmake
me more aware of the brand. was set to test the level of respondents agreement to the
positive relationship between traditional media marketing and customers perceived brand
awareness.
significance 0.05, therefore, our null hypothesis, TMM does not influence brand
awareness. is rejected. In the meantime, the positive t score 23.211 also implies the sample
proportion is greater than 4, in other words, we can conclude that traditional media marketing
significantly influences brand awareness.

103

Table 4-27: Result of One-Sample T Test on the first component of brand equity brand
awareness

104

Hypothesis testing Traditional media marketing affects brand equity (b)
P
0b
: TMM does not influence brand loyalty.
P
9b
: TMM significantly influences brand loyalty.
magazines, newspapers, leaflets, posters, billboard, website and e-mail, its contents. make
me feel more attached and loyal to the brand. was set to test the level of respondents
neutral relationship between traditional media marketing and customers perceived brand
loyalty.
Likert scale, the p-values of the test becomes .869, which is much higher than the level of
significance 0.05, therefore, our null hypothesis, TMM does not influence brand loyalty. is
strongly supported. In the meantime, the positive t score .165 also implies the sample
proportion is almost neutral, in other words, we can conclude that traditional media
marketing does not influence brand loyalty.

105

Table 4-28: Result of One-Sample T Test on the second component of brand equity brand
loyalty

106

Hypothesis testing Traditional media marketing affects brand equity (c)
P
0c
: TMM does not influence brand image/association.
P
9c
: TMM significantly influences brand image/association.
magazines, newspapers, leaflets, posters, billboard, website and e-mail, its contents. can
strengthen the brand image. was set to test the level of respondents agreement to the
brand image/ association.
significance 0.05, therefore, our null hypothesis, TMM does not influence brand loyalty. is
influences brand image/association.

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image/ association

108

Hypothesis testing - Traditional media marketing affects brand equity and thus purchase
intention
P
0
: Brand equity influenced by TMM does not influence purchase intention.
P
10
: Brand equity influenced by TMM exerts significant influence on purchase intention.
including brand awareness, brand loyalty and brand image, have an impact on my purchase
slight positive relationship between value equity influenced by traditional media marketing
significance 0.05, therefore, our null hypothesis, Brand equity influenced by TMM does not
implies the sample proportion is greater than 4, in other words, we can conclude that brand
equity influenced by TMM exerts significant influence on purchase intention.

109

TMM brand equity

110

Hypothesis testing - Traditional media marketing affects relationship equity (a)
P
0a
: TMM does not influence trust
P
11a
: TMM significantly influences trust.
magazines, newspapers, leaflets, posters, billboard, website and e-mail, its contents such as
corporate social responsibilities and community programs, make me think the brand is
trustworthy and treat their customers fairly. was set to test the level of respondents
slight positive relationship between traditional media marketing and customers trust to the
brand.
significance 0.05, therefore, our null hypothesis, TMM does not influence trust. is rejected.
In the meantime, the positive t score 5.702 also implies the sample proportion is greater than
4, in other words, we can conclude that traditional media marketing significantly influences
customers trust to the brand.

111

Table 4-31: Result of One-Sample T Test on the first component of relationship equity
trust

112

Hypothesis testing - Traditional media marketing affects relationship equity (b)
P
0b
: TMM does not influence commitment.
P
11b
: TMM significantly influences commitment.
me feel being associated with and emotionally attached to the brand. was set to test the level
of respondents agreement to the statement by means of a 7-point Likert scale.
neutral relationship between traditional media marketing and customers perceived
commitment to the brand.
Likert scale, the p-values of the test becomes .648, which is much greater than the level of
significance 0.05, therefore, our null hypothesis, TMM does not influence commitment. is
strongly supported. In the meantime, the positive t score .457 also implies the sample
proportion is greater than 4. We can conclude that traditional media marketing does not
influence commitment.

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commitment

114

Hypothesis testing - Traditional media marketing affects relationship equity (c)
P
0c
: TMM does not influence overall quality.
P
11c
: TMM significantly influences overall quality.
me feel satisfied and happy with brand performance. was set to test the level of respondents
neutral relationship between traditional media marketing and customers perceived overall
quality of the brand.
Likert scale, the p-values of the test becomes .640, which is much greater than the level of
significance 0.05, therefore, our null hypothesis, TMM does not influence overall quality.
is supported. In the meantime, the positive t score .459 also implies the sample proportion is
greater than 4, but the proportion is too little that does not tell any significant relationship of
the statement, in other words, We can conclude that traditional media marketing does not
influence overall quality.

115

Table 4-33: Result of One-Sample T Test on the third component of relationship equity
overall quality

116

Hypothesis testing - Traditional media marketing affects relationship equity and thus
purchase intention
P
0
: Relationship equity influenced by TMM does not influence purchase intention.
p
12
: Relationship equity influenced by TMM exerts significant influence on purchase
intention.
including trust, commitment to the brand and overall brand quality, have an impact on my
purchase intention of the brand I like. was set to test the level of respondents agreement to
the statement by means of a 7-point Likert scale.
neutral relationship between value equity influenced by traditional media marketing and
purchase intention.
Likert scale, the p-values of the test becomes .001, which is smaller than the level of
significance 0.05, therefore, our null hypothesis, Relationship equity influenced by TMM
does not influence purchase intention. is rejected. In the meantime, the positive t score
3.479 implies the sample proportion is greater than 4, in other words, we can conclude that
relationship equity influenced by traditional media marketing exerts significant influence on
purchase intention.

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TMM relationship equity

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The summary of all the hypothesized relationships results of One-Sample T- Test is shown in
Table 4-35.
Table 4-35: Summary of the hypothesized relationships results

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4.1.5 Paired Samples T-Test

Hypothesis testing Paired samples T-Test was applied to test whether social media
marketing (SMM) is better than traditional media marketing (TMM) in boosting customers
purchase intention by means of influencing value equity, brand equity and relationship equity
H
0
: SMM is better than TMM in affecting customers purchase intention in terms of value
equity
P
13
: SMM is not better than TMM in affecting customers purchase intention in terms of
value equity

P
0
: SMM is better than TMM in affecting customers purchase intention in terms of brand
equity
P
14
brand equity

P
0
: SMM is better than TMM in affecting customers purchase intention in terms of
relationship equity
P
15
relationship equity
Referring to Table 4-36, we can see that across all 302 respondents result, the mean
of value equity influenced by social media marketing is 0.08 higher than the traditional
media marketing; the mean of brand equity influenced by social media marketing is 0.19

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higher than the traditional media marketing, and the mean of relationship equity influenced
by social media marketing is 0.02 lower than the traditional media marketing.
The standard deviations reveal that respondents were more variable with respect to
relationship equity, then value equity, and finally brand equity.
On the other hand, the Pearson correlation of all paired samples, i.e. value equity,
brand equity and relationship equity are .649, .595 and .787 respectively, which implies that
there is some difference between SMM and TMM in each variable, the next table helps us
examine the difference.
The significance value for the first pair sample comparing the value equity influenced
by SMM & TMM, the second pair sample comparing the brand equity influenced by SMM
& TMM, and the third pair sample comparing the relationship equity influenced by SMM
and TMM are all .000, which are much smaller than the level of significance 0.05, therefore,
our null hypothesis is rejected, in other words, iy can conclude that social media marketing
SMM is better than traditional media marketing TMM in affecting customers purchase
intention in terms of value equity, brand equity and relationship equity.
The significance value for the first pair sample comparing the relationship equity
influenced by SMM and TMM is .000, which is much smaller than the level of significance
0.05, therefore, our null hypothesis is rejected, in other words, we can conclude that social
media marketing is better than traditional media marketing in affecting customers purchase
intention in terms of relationship equity.

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Table 4-36: Result of Paired-Samples T-Test on customers purchase intention influenced by
SMM/ TMM value equity, brand equity and relationship equity

Paired Samples Correlations

N Correlat
ion
Sig.
Pair 1
SMM Value Equity ->
Purchase Intention &
TMM Value Equity ->
Purchase Intention
302 .649 .000

Pair 2
SMM Brand Equity ->
Purchase Intention&
TMM Brand Equity ->
Purchase Intention
302 .595 .000
Pair 3
SMM Relationship Equity ->
Purchase Intention& TMM
Relationship Equity ->
Purchase Intention
302 .787 .000

Paired Samples Test

Paired Differences t df Sig.
(2-
tailed)
Mean Std.
Deviation
Std.
Error
Mean
95%
Confidence
Interval of the
Difference
Lower Upper
Pair
1
SMM Value Equity -> Purchase
Intention & TMM Value Equity
-> Purchase Intention
.076 1.092 .063 -.048 .200 1.211 301 .227
Pair
2
SMM Brand Equity -> Purchase
Intention & TMM Brand Equity -
> Purchase Intention
.195 1.068 .061 .074 .316 3.178 301 .002
Pair
3
SMM Relationship Equity ->
Purchase Intention &TMM
Relationship Equity -> Purchase
Intention
-.017 .920 .053 -.121 .088 -.313 301 .755

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The summary of all the hypothesized relationships results of Paired-Samples T- Test is
shown in Table 4-37.
Table 4-37: Summary of the hypothesized relationships results
Hypothesized relationships Result
(P13) SMM > TMM -> Purchase intention (Value equity) Supported
(P14) SMM > TMM -> Purchase intention (Brand equity) Supported
(P15) SMM > TMM -> Purchase intention (Relationship equity) Supported

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4.2 Findings of qualitative data Discussion group

From the discussion, a variety of themes and ideas concerning whether luxury fashion
brands posting advertisements and information on social media platform are good way to
deliver their message were covered. At the beginning of the meeting, the Facebook page,
renren.com page and SinaWeibo page of Burberry was shown as an example to the
interviewees. Burberry is well-known for its successful use of high-technology and vivid use
of social media platform to deliver their brand message, such as fashion show peek view, up-
to-date trend of the season, details of products, models selection and latest advertisements etc.
Although we know that not every luxury fashion brands use social media as a platform in
their marketing strategy, Burberry is considered as a pioneer in this aspect, all seven
interviewees were asked to use Burberry as an example and think about other luxury brands
cases, then they were guided to discuss various topics related to different hypothesis in our
study, indeed, some academic terms such as customer equity, value equity, brand equity and
relationship equity will not be used directly in the discussion, but they will be covered
indirectly.
Below extracted some of the useful quotes from the conversation, they are useful to
compare the findings we collected in the online questionnaire.

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Information related to value equity& its purchase intention

Yes, thats true, I feel like both social media and magazines can make me understand the
brand personality more, I do think that Burberry is a younger luxury brand compared to
other brands like LV, Gucci, they sound too classy and formal to me, perhaps they mostly put
their advertisement on magazines, billboard, and their homepage (Sabrina, 22)

I agree too, somehow I would be attracted to the brands when I see beautiful clothes and
good looking models in the ads. (Erin, 31)

True, but I think for some brands, if they have set up Sina Weibo account, I feel more close
to the brand, and yes, the brands which have advertisements on social media and billboard
would give me a good impression, and of course, I can find the store information more easily,
because I remember usually the address of the store is also printed at the bottom of the
advertisement, and I get more detailed information of the products and trend on their website
or social media platform. (Phoebe, 21)

I personally do not think that luxury brands should set up a social media account, this
would just cheapen the price level and brand value. I would not think the brand is exclusive
and luxury anymore. Also, I think customers of luxury brands will not use Facebook or
renren.com very much, but on the other hand, I think magazines and billboard can show that
the brand is rich and luxury (Zhi, 34)

Both social and traditional media would boost my purchase intention a bit, because I feel
like the brand is of high value when they put the right materials on Sina Weibo or
Facebook. (Jason, 35)

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I agree, I would like to visit the store at least if not buying, I remember I tried to purchase a
purse online from D&G because I saw my friend sharing it on Facebook, I could not resist to
purchase it, is it called impulse purchase? (Kellie, 26)

Information related to brand equity & its purchase intention

I would definitely be more aware to those brands which have advertisements on magazines,
billboard, or any social media websites, the higher the frequency I saw those ads, the more I
aware those brands. (Phoebe, 21)

I think mass advertisements on both social and traditional media are very effective to let
people recognize the brands, especially for those new brands, people will keep talking about
it by words of mouth (Sabrina, 22)

I agree, also, both media can strengthen their brand image with their page layout design,
models selection, content posted on social media and tone of language they use. (Jason, 35)

It is true that luxury fashion brands advertisements, no matter in printed form or digital
form, are effective in catching our attention to their brand and understand more about their
brand personality and image, however I would not be attached to the brand unless I have
walked-in the store (Kellie, 26)

Me neither, how would I be loyal and attached to the brand without visiting the store and
experiencing their customer service with the staff, I agree we can get more information of the
brand from social media or leaflets, magazines, newspapers etc. but these things not

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concrete enough to me, and there is not enough interactions between us and brands. (Zhi,
34)

Unless it is my favorite brand, I would not suddenly turn loyal when I see other brands
posting their stuff on Facebook or Twitter. (Kei, 28)

Information related to relationship equity & its purchase intention

Yes, sometimes when I see brands doing something good for society, I would trust that
brand more. (Phoebe, 21)

A socially responsible company is trustworthy and I believe they will not treat their
employees or customers too bad, but I hope they would not increase their price level because
of that. (Kei, 28)

I remember COS had a concept related to Green Fashion long time ago, I like that idea
and I feel better for the brand since thenand yes, I will trust the brand more (Jason, 35)
I do not think the information they put on social media and other traditional media can
trigger my emotions that much, usually it is just a short term feeling (Kellie, 26)

I agree, usually the focus of those advertisements is the products, some brands like Cartier
have created some micro-films, but I think the storyline is boring, it is more for the brand to
show off rather than really telling you a story. (Zhi, 34)

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How would I feel satisfied and happy with the brand performance with just viewing their
ads on social media and magazines? No, I am not affected by that.(Erin, 31)

It is difficult for me to link the information they posted on renren.com and SinaWeibo with
their actual brand performance, maybe I can judge it after I have been shopping in the
store. (Sabrina, 22)

Conclusion

The interview discussion provides some interesting and more detailed facts about
what people think of luxury fashion brands using social and traditional media marketing to
build up the customer equity and to boost customers purchase intention. In general,
interviewees opinions tended to support all the findings we have drawn from the online
questionnaire, this gives a good reference to supporting the quantitative research part of our
study.
Topics related to value equity were discussed in the first part of the interview.
Interviewees agree that fashion brands use both social and traditional marketing media can
improve their understanding of the brand, and they will have a better impression when they
see the advertisements, some of them said the extra information provided in the
advertisements such as store location and product information provides them convenience in
purchasing the products. However, the majority agreed that when luxury brands setting up

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account and putting information on social media platforms, they would feel the brands are
less exclusive and had lower price level. All these interviewees opinions coincide with our
online questionnaire results. For social media marketing, there is a positive relationship
between SMM and quality, convenience and aesthetics, but not price level. While for
traditional media marketing, there is a positive relationship between TMM and quality,
convenience and aesthetics, but the relationship with price level of the brand is neural.
Topics in the second part of the interview were related to brand equity. Every
interviewee agreed that when brands posting information in both social and traditional
marketing media, this would increase their awareness to the brand, and had a stronger feeling
of the brand image. However, no one agreed that the information luxury fashion brands
posted on social and traditional media could make them become loyal to the brand suddenly,
because they had never been to the store, and some said there was not enough interaction
between the brand and customers without experiencing any customer service, so it was
difficult to become loyal to the brand. Again, all these interviewees opinions match our
online questionnaire results. For social media marketing, there is a positive relationship
between SMM and brand awareness, brand image/ association but not brand loyalty. While
for traditional media marketing, there is a positive relationship between TMM and brand
awareness, brand image/ association but not brand loyalty.

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The third part of the interview was related to the topics about relationship equity. The
majority agreed that they would trust the brands more if they posted something related to
corporate social responsibility on social or traditional media, they felt the brand would treat
their customers and employees well if they did something good society. However, they
tended to disagree that this would increase their commitment to their brand or made them
feel that the overall performance of the brand is good. Again, all these interviewees opinions
are similar to our online questionnaire results. For social media marketing, there is a positive
relationship between SMM and trust to the brand, but not commitment and overall quality of
the brand. While for traditional media marketing, there is a positive relationship between
TMM and trust to the brand, but not commitment and overall quality of the brand.
Summary

In this chapter, the relationship between social media marketing, traditional media
marketing and customer equity (value, brand, and relationship equity), and also customers
purchase intention is being analyzed by means of quantitative and qualitative method. The
quantitative method online questionnaire, provided the answer about the relationship of the
hypothesis. Surprisingly, the qualitative method interview discussion, matched perfectly
with our findings in our online questionnaire, this showed that the findings of this study were
relatively reliable.

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In terms of SMM, there is a positive relationship between SMM and quality,
convenience and aesthetics, brand image/ association, trust and purchase intention, but there
is no relationship between SMM and price, brand loyalty, commitment and overall quality
(See Error! Reference source not found.).
In terms of TMM, there is a positive relationship between TMM and quality,
convenience, aesthetics, price, brand awareness, brand image/ association trust and purchase
intention, but there is no relationship between TMM and brand loyalty, commitment and
overall quality (See
Figure 4-8).

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Figure 4-7: Summary of SMM generic framework hypothesis results

Figure 4-8: Summary of TMM generic framework hypothesis results

-The end of Chapter Four-

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Chapter 5. Discussion and Conclusion

Introduction

The previous chapter reported the results of the online questionnaire surveys and
group discussion. This chapter aims to discuss the findings and provide a conclusion with
consideration of the theoretical and practical implications of this study. The first section
discusses the findings of this study (Section 5.1). The second section describes the
implications and some managerial insights derived from this study (Section 5.2). Then, a
discussion of the limitations, together with recommendations for further research are given
(Section 5.3).

5.1 Discussion

The study presents here examines the relationship between SMM and customer equity,
together with customers purchase intention, also, to compare the effects of TMM on
customers purchase intention.
Our study finds that the information posted on Hong Kong and Chinese social media
platforms by luxury fashion brands were significantly efficacious in enhancing customer
equity and their purchase intention at some degree. The findings of the study support the
following conclusions.
First off, in terms of value equity, luxury fashion brands uses of SMM has
significant positive relationship with customers perception of products and services
quality, convenience in obtaining brands information and aesthetics of the brand, but no

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effect on the perceived price level of the brand. The findings match with Angella et al.,
(2011)s study result, which she found there is a positive relationship between SMM
activities and value equity. In our study, three out of four value equity components were
statistically proved to be positively related to SMM, this also coincided with the findings
from the discussion group, which they thought social media is effective in presenting the
brand value, for example, for magazines and catalogs issued by luxury brands, if they see a
nice promotional advertisements using professional models and sophisticated photography or
video-recording skills, they would think the brand is a high quality brand selling at a lofty
price point and that can better present the brand personality to customers. We can reconfirm
SMM has strong power in enhancing customers value equity to the brand.
On the other hand, for TMM, also has significant positive relationship with
customers perception of products and services quality, convenience in obtaining brands
information, aesthetics and price level of the brand. The only difference with SMM here is
the perceived price level of the brand, the possible reasons suggested by the discussion group
include, social media contents sometimes might cheapen the price level and brand value
because everybody can assess to the brand page and get the information easily without any
filtration of the target customers, thus some customers would think the brand is not exclusive
and luxury anymore.
Secondly for brand equity, our study found out both SMM and TMM have significant
positive relationship with customers brand awareness and brand image/ association, but not
with brand loyalty. Possible reasons for the results are as follows. From the information we
obtained in group discussion, customers would not easily become loyal to the brand without
entering the store and experience the customer service provided to them, interaction between

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sales assistants and customers is a key factor in developing customers brand loyalty. In this
case, two out of three brand equity components were statistically proved to be positively
related to SMM, and in Angella et al., (2011)s and Lemon et al. (2011) study, she also found
out there is a positive relationship between SMM and brand s equity, this reveals social
media has a strong impact in arousing peoples awareness of the brand and its brand equity,
this is particularly important for the brands that would like to expand their business in new
market like China, SMM is proved to be a successful and important marketing tool to
increase brand awareness in a new market territory within a short period of time. We can also
reconfirm SMM and TMM play an important role in shaping brand equity to the brand.
Thirdly for relationship equity, both SMM and TMM can enhance customers trust to
the brand according to the study findings, interviewees in our discussion group mentioned
that they would trust the brand more if they have posted materials related to corporate social
responsibility on social media, in which they also think the company would treat their
employees and customers good as well. However, there is no evidence showing SMM and
TMM have a significant relationship with customers commitment and overall quality to the
brand. Our interviewees in the discussion group mentioned SMM only brings a short-term
emotional feeling to them, by viewing the information on social media platform also cannot
tell the brands overall quality is good or not. In Angella et al., (2011) study, relationship
equity is positively related to SMM activities, but in our study, we just partially SMM and
TMM have a significant positive relationship with relationship equity, since only one out of
three components was proved to have effect in the study.
In addition, our study findings from both online questionnaire and discussion group
also agree with Angella et al, (2001)s study about the relationship between value equity,

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brand equity, relationship equity and purchase intention. Although in our findings, SMM
only has partial relationship with some of our components of value, brand and relationship
equity, but interestingly our study found that all these three equities have significant positive
relationship with customers purchase intention. Our interviewees explained that social
media has a strong influence on them because they spend a long time on internet every day,
and all of them browse different social media platforms at least once per day, and sometimes
when they are very fond with a particular products, they would buy it online with their credit
card immediately.
With strong demand in luxury goods in China, many international luxury fashion
brands have already expanded their business there, but not all of them are successful in
targeting and approaching Chinese customers. Social media is considered to be one of the
most effective ways to interact with customers nowadays, this study findings and other
scholars also agree that SMM should be used more widely by luxury brands because this can
significantly increase customer equity and purchase intention.
One of the important insights provided in this study is the comparison between social
media marketing (SMM) and traditional media marketing (TMM), such as magazines,
newspapers, leaflets, billboard, website, e-mail etc. The comparison mainly focuses on the
relationship between SMM & TMM on the customer equity drivers and customers purchase
intention, which indirectly tells us whether SMM is a good marketing tool to increase
companys operating profit and gives companies an insight whether or not to invest more
money on SMM.
In comparison, TMM yields very similar results as SMM in affecting customer equity.
The only difference is that TMM has a positive relationship with the perceived price level of

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the brand which SMM does not, this is understandable because some of our interviewees
explained it has long been a tradition for luxury brands to use billboards, magazines and
newspapers to promote their products and brand image, and in marketing it is called
institutional advertising.
Moreover, SMM and TMM both have a significant positive relationship with
customers purchase intention through affecting the customer equity drivers, this relationship
again supports what has been already been researched in Angela et al. (2011) and EunjuKo
(2012)s study, but in the study we found that SMM is actually better than TMM in affecting
customers purchase intention. The brands social media platform offers venues for
customers to engage in sincere communications with the brand and also provide them the
most updated information of the brand, all these brands intended actions on social media
were positively affecting customers final purchase intention.
We can conclude that with the growing interest of luxury fashion brands in providing
extra values to their customers in every way possible, SMM contributes as effective
marketing communication methods to attract luxury consumers attention and purchase
intention. Therefore, luxury brands should continuously put their efforts to improve value
equity, brand equity and relationship equity because all these equities affect customers
purchase intention. As SMM and TMM both affect these equities, and SMM is stronger than
TMM in influencing customers purchase intention, engage more in social media can be a
possible solution, luxury brands should not worry too much about social media would harm
the brands prestigious and exclusive image, instead, a mixture of SMM and TMM is the best
solution to effectively enhance customer equity and customers purchase intention.

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5.2 Study implications

China is one of the most lucrative markets for the luxury brands in the world, and
according to L2 Think Tank, a New York research organization focused on digital innovation,
assessed 27 luxury fashion brands
2
digital performance in China in 2012, it found that the
digital performance is still immature in the China market. For example, more than half of
them do not offer e-commerce. When it comes to social media platform, although more than
half of them (59%) maintain a presence on two or more Chinese social media platforms,
where only four brands actually have active accounts there, and the most popular one is Sina
Weibo.
Since the social media in China differs greatly from the rest of the world, some
fashion marketers might find it difficult to select the appropriate social media platforms.
Therefore, some of the popular Chinese social media platform will be mentioned in this
section.
The first one is Sina Weibo, Weibo means microblog in Chinese, started in 2009,
counts today more than 370 million users. The early adopters of digital push in China are
Louis Vuitton and Burberry; they have set up an account in Weibo in early 2011, the Chinese
equivalent of Twitter. Their Weibo accounts became very popular, as you can see Burberry
Weibo has now more than 300 thousand fans, and afterwards some more brands such as
Chanel, Gucci and DVF also jump on the bandwagon to create a Weibo account in success.
Also, SinaWeibo is a microblog that surpasses Twitter in functionality at some degree, it

2
Top 10 out of 27 luxury brands include Burberry, Louis Vuitton, Chanel, Coach, Gucci, Armani, Dior, Dolce &
Gabbana, Hugo Boss and Alfred Dunhill.

138

includes extra functions like threaded comments, audio messages, direct video uploads and
social gaming. Many popular fashion brands, Chinese and Hong Kong celebrities already
have an account in SinaWeibo, their news will be widely spread and retweeted by the users
in a viral way, which helps deliver companies message effectively. All these features lead us
to think that SinaWeibo is the right place where to structure the brand communication with
high possibilities of success in terms of engagement.
The second one is Renren.com, Renren, literally means everyone in Chinese, it is
sometimes being referred as Chinese Facebook. Anything that Facebook releases, Renren
copies immediately, such as the functions of Connect, Like, Check-in, Groups chatting, etc.
The tailor-made brand campaign page on Renren.com are sold to companies for about
600,000 RMB (around 100,000 USD), while setting up a brand page is free on Facebook, but
it may be considered worthwhile to invest in Renren.com considering 100 million young
active users there. However, starting from late 2012 Renren.com is experiencing drop in
traffic, and only nine prestige brands still have a presence there. While Este Lauder is the
largest presence on the platform, Renren still has the smallest average community sizes and
engagement rates compared to similar sites.
The third one is Youku, people called the youtube of China, YouTube has been
blocked in China since 23 March, 2009. Youku soon became China's leading Internet
television company which enables users to search, view and share high-quality video content
quickly. Successful case like Burberry which launched video advertisements in 2009 and a
full branded channel in 2011 as an attempt to engage with Chinese consumers, they also
streamed a live webcast of its Milan Fashion Show on Youku, which reached 8 million views
within a year.

139

The fourth one is Xiaozhan, it is similar to Tumblr. Currently they have 10 million
users and Xiaozhan allows them to join groups and share media. So far none of the major
brands that L2 studied are using the site, but an unofficial Chanel page boasts 62,000
followers.
Next one is Meilishuo & Mogujie, it is Chinese version of Pinterest, and members
can make virtual collections of their favorite items on Meilishuo & Mogujie. Brands like
Lancome and Yue-Sai already have been quick to see the value of these sorts of websites.
Finally, P1.cn is recommended to luxury fashion marketers as well, P1 numbers are
still small compared to other Chinese social networks (while the exact number of active users
is not disclosed to public). Only the right people who dress stylishly enough or make enough
money are invited to join the P1 network, which bills itself as China's premier private social
network with members who share an international lifestyle, common values and interests.
The P stands for "privileged, premium people" together with the number one in the logo
looks like the Chinese character for door, a door which not everyone can pass through."
(Wang, CEO of P1.CN, 2011). New members are invited to join at VIP events by special
P1.CN ambassadors or photographers, the new members invited are usually cool, hot or rich
people at some special events. These high-end members are given exclusive invitations to the
events and parties with companies like Versace, Aston Martin, A&F etc., enabling brands to
identify target demographics who likely to buy their products. P1.CN is forging partnerships
with fashion brands and luxury automakers to encourage their already big-spending members
to spend even more in China (Peoples Daily Online, 2011).
Finally, a table listing the number of social media active users as updated for April,
2013 is listed below. Refer to Table 5-1 (Craig Smith, 2013).

140

Table 5-1: Summary of popular social media active users number, April, 2013
Social Media Number of active users
Badoo (China) 172 million
Douban (China) 100 million
Facebook 1.06 billion
Instagram 100 million
Meilishuo & Mogujie (China) 32 million
P1.cn N/L
Renren (China) 100 million
Sina Weibo (China) 503 million
Tumblr 170 million
Twitter 500 million
Xiao Zhang (China) 10 million
Youtube 1 billion
Youku 200 million

141

5.3 Limitations and future research

The limitations and future research directions are as follows. First, the findings in the
study may not represent the whole entire Chinese population because the scope of study is
limited to Chinese living or study in Hong Kong and London mainly, we may have ignored
other Chinese living in the local mainland Chinese territory, and the results obtained from the
online questionnaire may not be true in representing all the target customers of luxury
fashion brands, because we believe not every of these customers would use social network.
Also, our respondents who finished the online questionnaire may be considered as tech-savvy,
they might also have bias and have preference towards technology and so, such as social
media. However, since consumers who live in first tier cities tend to act as opinion leaders
for consumers in other parts of the country, they are the most representative sample in this
nation (Papadopoulos et al., 1987, Hu, 1994). Further study can find more respondents living
in Beijing, Shanghai, Guangzhou these first tier Chinese cities so as to get an even more
representative result.

142

In addition, although using probability sampling can strengthen the predictive power
of the findings, the study is delimited in its use of non-probability sampling due to time and
cost restraints. However, given the large sample size at this level and the high respond rate in
this study, the results derived from this study is able to be generalized, to a certain extent. In
order to improve the capacity to this study to be generalized, further research can reach a
higher number of sample size, and with wider geographic distribution, especially in mainland
China. The way of distributing the online questionnaire should be in a more random basis,
instead of relying on only the sharing power within the friends circle and the words of mouth
online, the use of a probability sampling strategy to collect primary data is highly
recommended.
5.4 Conclusion

The purpose of this study is to investigate the relationship between SMM, TMM and
customer equity, as well as purchase intention. Fifteen propositions, all together twenty six
sub-propositions were set to analyze the above relationship. From the qualitative and
quantitative research methods, our findings show that SMM and TMM partially supported
customer equity, except for the perceived price level, brand loyalty, commitment and overall
quality to the brand. Furthermore, our research findings also show SMM and TMM have a
significant impact on customer purchase intention, thus this gives companies some insights
about investing in SMM can also help companies generate more business revenue. It can be
concluded that the current study has arrived at a better understanding of how social media
marketing affects customer equity, and more importantly, customer purchase intention, in
comparison to traditional media marketing. To conclude, SMM is not a replacement for other

143

marketing tactics but it becomes a critical component of an effective marketing strategy
nowadays. In fact, we believe TMM is still an essential part in the marketing mix and SMM
works best when it combines with TMM.

-The end of Chapter Five-

144

Appendix I: Survey instrument
Questionnaire

I am an undergraduate student in the Institute of Textiles and Clothing of Hong Kong
Polytechnic University. Currently, I am conducting a research relating to how Chinese social
media and traditional media marketing would affect customers value and purchase intention
in the luxury fashion market.
I would be grateful if you can spend around 3-5 minutes to complete the following
questions. All the provided information will be kept confidential and only used for academic
purpose. Thank you for your valuable assistance.

,
3-5

Part 1 Introduction

1. Have you ever heard of the following brands before?
?
Louis Vuitton , Gucci, Burberry, Dolce & Gabbana
Yes, all of them No, not all of them

2. Have you set up an account in any of the following social media platforms? (Can
choose more than one option.)
? ()

FacebookTwitterInstagram Renren.comSinaWeibo
Pengyou.comKaixin001.comTouban51.com
SohuBaidu spaceNone of the above

3. If the answer no is selected in any of the above questions, the questionnaire ends,
thank you.

145

Part 2 Survey

In this part, 23 statements related to social media and traditional marketing are listed in the
following. Please circle the number which best denotes how you think in each statement.
1 represents disagree at all, 4 represents natural/ no feeling, and 7 represents totally
agree.
1 - 23
1 4 / 7

Luxury fashion brands setting up social media page, its contents

1. can influence my impression towards the product and service quality of the brand.

1 2 3 4 5 6 7
2. can help me find the store information more easily.

1 2 3 4 5 6 7
3. make me think the brand image is attractive and nice.

1 2 3 4 5 6 7
4. make me think the brand has good money value for its products.

1 2 3 4 5 6 7
5. The aforementioned factors in questions 1-4, including brand quality, convenience,
aesthetics and price, have an impact on my purchase intention of the brand I like.
1 4

1 2 3 4 5 6 7
6. make me more aware of the brand.

1 2 3 4 5 6 7
7. make me feel more attached and loyal to the brand.

1 2 3 4 5 6 7
8. can strengthen the brand image.

1 2 3 4 5 6 7
9. The aforementioned factors in questions 6-8, including brand awareness, brand
loyalty and brand image, have an impact on my purchase intention of the brand I like.

146

6 8

1 2 3 4 5 6 7
10. such as corporate social responsibilities and community programs, make me think
the brand is trustworthy and treat their customers fairly.
,

1 2 3 4 5 6 7
11. make me feel being associated with and emotionally attached to the brand.

1 2 3 4 5 6 7
12. make me feel satisfied and happy with brand performance.

1 2 3 4 5 6 7
13. The aforementioned factors in questions 10-12, including trust, commitment to the
brand and overall brand quality, have an impact on my purchase intention of the
brand I like.
10 12

1 2 3 4 5 6 7

Similarly, luxury fashion brands published information on magazines, newspapers, leaflets,
posters, billboard, website and e-mail, its contents

14. can influence my impression towards the product and service quality of the brand.

1 2 3 4 5 6 7
15. can help me find the store information more easily.

1 2 3 4 5 6 7
16. make me think the brand image is attractive and nice.

1 2 3 4 5 6 7
17. make me think the brand has good money value for its products.

1 2 3 4 5 6 7

147

18. The aforementioned factors in questions 14-17, including brand quality, convenience,
aesthetics and price, have an impact on my purchase intention of the brand I like.
14 17

1 2 3 4 5 6 7
19. make me more aware of the brand.

1 2 3 4 5 6 7
20. make me feel more attached and loyal to the brand.

1 2 3 4 5 6 7
21. can strengthen the brand image.

1 2 3 4 5 6 7
22. The aforementioned factors in questions 19-21, including brand awareness, brand
loyalty and brand image, have an impact on my purchase intention of the brand I like.
19 21

23. such as corporate social responsibilities and community programs, make me think
the brand is trustworthy and treat their customers fairly.
,

1 2 3 4 5 6 7
24. make me feel being associated with and emotionally attached to the brand.

1 2 3 4 5 6 7
25. make me feel satisfied and happy with brand performance.

1 2 3 4 5 6 7
26. The aforementioned factors in questions 23-25, including trust, commitment to the
brand and overall brand quality, have an impact on my purchase intention of the
brand I like.
23 25

148

Part 3 Personal information

Please tick one answer in each of the following questions

1. Gender: Male Female
:

2. Age: Below 20 20 29 30 39 40 or above
: 20 20 - 29 30 - 39 40

3. Highest education: Primary or below Secondary Diploma/ Certificate/
College
Undergraduate degree Postgraduate degree or above
://

4. Monthly Household Income (HKD):
($):
5,000 or below 5,001 20,000 20,001 40,000
40,001 60,000 60,001 100,000 100,001 150,000 150,001
300,000
300,001 or above

5. City of residence
Hong Kong & Macau Mainland China
Taiwan Others

149

<The End>
<>

150

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