THE BRAND EQUITY APROACH TO

MARKETING OF MALAYSIAN PALM

PRODUCTS

B. Kamaleswari

Bachelor of Applied Sciences (Biotechnology)

Universiti Sains Malaysia

2000

Submitted to the Faculty of Business and Accountancy,

University of Malaya, in partial fulfillment

of the requirement for the Degree of

Master of Business Administration

June 2009
“Branding adds spirit and a soul to what would otherwise be
a robotic, automated, generic price –value proposition. If
branding is ultimately about the creation of human meaning,
it follows logically that is the humans who must ultimately
provide it “– David Aaker

2
 (ABSTRACT)

Commodity business needs to tap onto the benefits of using branding as a driver

to differentiate its business and survive in the B2B sector, allowing firms to gain

substantial competitive advantage. The palm oil industry exporters need to begin

the process by identifying and managing, in a more systematic and structured

way, the associations that contribute to brand equity, which are critical to

enhancing brand value. This study will approach to measure brand equity, using

a model to help evaluate core elements required for firms to strategize their

brand management strategies.

3
 TABLE OF CONTENTS

PAGE
CHAPTER 1
INTRODUCTION
1.1 Branding by Malaysian companies 9
1.1.1 Malaysian palm oil industry and branding strategy 10
1.2 Objective of study 11
1.3 Significance of study 12
1.4 Scope of study 14
1.5 Limitations of study 15
1.6 Organization of the study 16

CHAPTER 2
MALAYSIAN PALM INDUSTRY
2.1 History 18
2.1.1 Oil palm (Tenera) basic facts 20
2.1.2 Infrastructure of the Malaysian oil palm industry 24
2.1.3 Food uses of palm oil and its downstream products 27
2.1.4 Production cost of palm oil 29
2.1.5 Oils and fats trade 31
2.1.6 Palm oil demand 35
2.1.7 Malaysian palm oil prices and sales mechanism 36
2.1.8 Trends and issues concerning palm industry 39
2.1.8.1 Environmental and cultural impact 40
2.1.8.2 Palm oil as bio-diesel 41
2.1.8.3 Palm oil and blood cholesterol 43
controversy

CHAPTER 3
BRAND AND BRAND EQUITY
3.1 Brand Building Model 46
3.2 Product branding 48
3.2.1 Corporate Branding 49
3.2.2 Challenges in corporate branding 50
3.2.3 Differences between product and 51
Corporate branding
3.2.4 Product branding strategy by Malaysian 53
palm oil
3.3 Brand asset management 55
3.3.1 Brand equity models and its measurement 59
3.3.2 Aaker‟s and Keller‟s model to brand equity
3.3.3 CBBE model 62
3.3.4 Customer based industrial brand equity 63
3.3.4.1 Antecedents of brand equity

4
 3.4 Dimensions of customer based brand equity 65
3.4.1 Brand awareness
3.4.2 Brand loyalty
3.4.3 Perceived quality
3.4.4 Brand associations
3.5 Summary of MPOC Strategic Plan 69
3.5.1 Summary of brand equity model for Malaysian 71
palm oil products

CHAPTER 4
4 RESEARCH METHODOLOGY
4.1 Hypotheses and conceptual framework 73
4.2 Research method and design 77
4.2.1 Research and statistical analysis on brand
equity approach
4.2.2 Questionnaire design
4.3 Data gathering method 85
4.4 Data analysis technique 86
4.5 Summary

CHAPTER 5
5 RESEARCH FINDINGS 87
5.1 Demographic data of respondents
5.2 Profile of Malaysian palm product purchasers 91
5.3 Descriptive analysis on brand equity attributes 97
5.4 Normality test of data 101
5.5 Coefficient 102
5.6 Hypothesis Testing 102
5.7 Summary 104

CHAPTER 6
6 CONCLUSIONS, RECOMMENDATIONS 107
6.1 Discussion of research results
6.2 Implication of study 109
6.3 Recommendations for future research 110
6.3.1 Brand Origin 111
6.3.2 Product Uniqueness
6.3.3 Malaysian palm oil brand equity in different
geography
6.4 Conclusion
REFERENCES
Appendix 1: Major players in the Malaysian palm oil supply chain
Appendix 2: Questionnaire
Appendix 3: Data Analysis

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 List of Figures

Page
Figure 1.1: Summary of the supply chain in exporting of Malaysian palm 16
products

Figure 2.1: Palm oil & palm kernel oil processing flow chart 24

Figure 2.2 : Location and breakdown of Malaysian palm plantation 26

Figure 2.3: Non-food application of palm products 31

Figure 2.4: World Production of oils and fats 34

Figure 2.5: World exports of oils and fats 35

Figure 2.6: World consumption of oils and fats 36

Figure 2.7: Malaysia's share of the global oils and fats trade 37

Figure 3.1: From Brand Assets to Brand Equity 48

Figure 3.2: Brand asset management process 58

Figure 3.3: Brand Equity 61

Figure 4.1: Conceptual Framework 76

Figure 5.1: The relationship between brand equity and overall 106
satisfaction of Malaysian palm products

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 List of Tables
Page
Table 2.1: Basic information on oil palm 22

Table 2.2: Oil palm yield compared to other major oils 23

Table 2.3: Number of palm oil mills, refineries, oleo-chemicals plants 27

and kernels crushers in Malaysian (2001)

Table 2.4: Summary of industry segments and companies 28

Table 2.5: Food uses of palm products 30

Table 2.6: Costs of production (selected oils and fats) 33

Table 3.1: The functions of the brand for the consumer 47

Table 3.2: Corporate Branding versus Product Branding 52

Table 3.3: The shift from traditional Brand Asset Management 56

Table 3.4: Summary of Brand equity dimension from Aaker and Keller 66
models

Table 3.5: Perception versus Reality 70

Table 4.1: Reliability comparison of two brand equity scales 78

Table 4.2: Results of factor analysis; factors, variances, loading and 79

statements, adapted from Atilgan (2005)

Table 4.3: Overall brand equity and overall satisfaction scale 81

Table 4.4: Questions developed for questionnaire, adapted from prior 84

research
Table 5.1: Demographic profile of respondents 90

Table 5.2: Country – Malaysian palm product purchaser by country 92

Table 5.3 : Profile of Malaysian palm product purchasers 94

Table 5.4: Descriptive analysis on brand equity attributes 99

Table 5.5: Descriptive analysis on overall brand equity attributes and 100
overall satisfaction

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Table 5.6: Summary of analysis 101

Table 5.7: Coefficient 102

Table 5.8: Summary of correlations of variables 103

Table 5.9: Summary of correlation for brand equity and overall 104
satisfaction

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 CHAPTER 1

INTRODUCTION

Brand creates value by shifting both the demand and supply curves. On the

demand side, it influences consumer behavior, leading to greater trial, improved

frequency of use, increased loyalty and willingness to pay a price premium. On

the supply side, strong brands can attract better talent, influence terms of trade,

and even reduce the cost of capital.

Brand management underlines the fact that brands are not born as brands, but

they are born as commodities. For example, more than a century ago, John

Pemberton set out to create a common tonic, not a global brand named Coca-

cola. In 1962, when Bill Bowerman and Phil Knight each chipped in dollars 550 to

set up Nike, their goal was to make running shoes for athletes, not create a

global brand empire.

A critical starting point towards better leveraging brand equity requires

understanding what associations contribute to it and how those associations tie

back to business results. The ability to optimize brand equity also requires

prioritizing those associations based on their impact on the brand and the

business, and then managing them aggressively across all customer touch-

points. Brand managers need to understand how brands influence consumer

9
perceptions and behavior in order to develop strategies that optimize market

performance and brand value.

1.1 Branding by Malaysian companies

Brands, branding and brand management are amongst the most frequently

discussed topics in the boardroom and business schools. Companies that can

master the science and art of branding stand in good stead to improve

shareholder value, since brands represent a sizeable portion of intangible assets.

If Malaysia wishes to compete effectively in the global economy, which is rapidly

shifting towards knowledge-based activities, it has to step up efforts to recognize

and invest in intangible assets (Brand Finance, 2008).

Brand Finance report also lists 50 top brands in Malaysia, indicating the

enterprise values and trademark values, benchmarking companies listed in the

Kuala Lumpur stock exchange. Findings by Brand Finance report (2008),

indicates Malaysia‟s 50 largest brands and brand portfolio are worth MYR 64.8

million (USD 19.4 billion). Comparatively, Singapore‟s top 50 brands amounts to

S$36.2 (USD 25 billion) and Australia‟s Top brands accounts for A$80 billion

(USD 69.6 billion). In Malaysia, PETRONAS Group has the most valuable brand

portfolio of all listed Bursa Malaysia companies, with a brand value of MYR 8.3

billion.

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There were only three oil palm based companies listed on the 50 top-brands list,

which are Sime Darby Berhad (ranked number six), IOI Corporation Bhd (ranked

number thirteen) and Kuala Lumpur Kepong Bhd (ranked number twenty six).

This report may not clearly state the case, but there is evidence Malaysian palm

oil companies in the agri-business sector, do not have primary focus on building

the intangible asset, through branding or trademark activities.

1.1.1 Malaysian palm oil industry and branding strategy

The Malaysian palm oil industry, has gone through several ups and downs, and

remains very resilient and will remain the darling of the plantations industry.

Malaysian palm products are competing with almost 20 types of oils and fats

globally. The Malaysian Palm oil Board (MPOB) has been in the forefront when it

concerns developing new products based on palm oil, facing international

challenges and has emerged as the world leader in palm oil research and

development. MPOB has registered more than 200 patents, about 30 percent

has been sold and are being commercially exploited (Basiron, 2005). Whilst, the

Malaysian Palm oil Council (MPOC) has been instrumental in opening up new

markets to export palm products. Both bodies work together with plantation,

millers, refiners and exporters in closely monitoring business changes.

It is important for the palm oil players to have price stability in the market place.

In the case of downstream products, price fluctuations is influenced by palm oil

supply, changes in regulations on import and export, oilseeds demand and

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supply, speculative activities but also global economic outlook. In order to have

sustainable pricing for products, the industry may consider strategizing marketing

activities to achieve higher brand consciousness.

Earlier, Malaysian has lost market leadership with natural rubber and should not

let it happen to palm oil (News Straits Times, 2005). Buyers view Malaysia as a

reliable supplier of palm oil products. The ‟Brand Malaysia‟ concept is applicable

to palm oil as it is an important export commodity and is expected that Malaysian

palm oil will be differentiated into a better „brand‟ to continue attracting customers

(Basiron, 2007). Countries like Indonesia and Thailand may have more oil palm

acreage than us, but leadership in downstream research product innovation is far

harder for the competition to emulate (News Straits Times, 2005). Combining

successful R&D background, reputation as pioneer marketer in palm based

products, adding value into downstream palm products should provide a suitable

formula into creating brand equity for palm products exported out of Malaysia.

Despite existing interests in the area of branding, existing literature on brand

equity relating the Malaysian palm oil industry is still sparse.

1.2 OBJECTIVES of STUDY

A critical understanding for the need of branding for Malaysian palm products,

helped in establishing the following objectives for this study;

 To identify brand equity for Malaysian palm products

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  To analyze and identify the core brand equity element, from customer

experience, contributing to brand equity

 To search for a suitable model to measure and evaluate brand equity for

Malaysian palm products

 To test a suitable model to measure and evaluate brand equity for

Malaysian palm products

1.3 SIGNIFICANCE of STUDY

Branding is applicable to all categories and industries, even applies to

commodities, because any product or service can be differentiated. Since any

differentiated product or service can be given a proper name to signal its

particular characteristics, branding is possible for Malaysian palm products.

The value of treating brands as assets and managing them as such is obvious,

strong brand demonstrates benefits of price premiums and market share

leadership that drive company bottom line. The challenge lies in understanding

how brand strategy enhances and enables business strategy (Micheal Leiser,

2003). A good starting point is a better understanding of brand equity and how it

drives brand value, in rigorous and structured way, crucial to enhancing both the

brand‟s value and its financial impact on business. In turn, this allows the

organization to leverage the brand‟s most business relevant aspects better to

help drive improved financial performance.

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Qualitative and quantitative research would enable palm product exporters to

uncover those associations which are not only most closely aligned with the

brand itself, its competitors and the category, but more importantly those which

are owned by the brand and critical to a customer‟s purchase decision. The

ability to optimize brand equity also requires prioritizing those associations based

on their impact on the brand and the business, and then managing them

aggressively across all customer touch-points. This sort of intelligence paves the

way for more informed business decisions involving everything from traditional

marketing communications to new product development.

At the end of the study, it is hoped that the significance of brand equity will be

well understood by downstream manufacturers in palm industry, as it affects

90% of Malaysia‟s palm oil business, which is export based and mainly sold to

industrial food manufacturers and distributors. It is hoped that, this study will

justify the reason for downstream palm manufacturer to re-look at how they

should create or enhance brand equity for a particular product line. This study

should close the gap on brand equity definition specific to Malaysian palm

products and its primary antecedents, to develop future strategies to marketing

and branding.

MPOB and MPOC has already developed strong international promotional

strategies focusing on the product attributes and benefits of Malaysian palm

products. Product attributes are strengthen through these promotional programs

14
to counter negative publicity on Malaysian palm oil. With further understanding

on brand equity elements, hopefully non-governmental organizations and private

organizations, will be able to develop promotional and marketing programs for

Malaysian palm products to create strong international brands. The objective of

these marketing program should be focused more on building brands and not just

reacting or countering negative publicity to Malaysian palm products.

1.4 SCOPE OF STUDY

This study focuses on few key players in the Malaysian oil palm industry. The

customer based equity model used will focus on industrial buyers and

distributors, located in Europe, Central Asia and the Middle East, to assess

Malaysian palm product brand equity. The downstream players encompass

manufacturers, whom are also exporters of Malaysian palm products. Target

respondents for this study are industrial manufacturers of food products,

distributors and traders of Malaysian palm products. These respondents are re-

distributing or using directly palm products as semi-finished or finished products.

Respondents will evaluate “Malaysian Palm Products”, based on four

antecedents of brand equity, derived from Aaker (1991) brand equity model.

Figure 1.1, shows the relations of the respondents, whom are part of this study

and their role in process of exporting Malaysian palm products.

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 REFINED, IMPORTERS
CRUDE PROCESSED, MALAYSIAN in EUROPE, MANUFACTURERS
MALAYSIAN PACKED in PALM CENTRAL
ASIA and OR
PALM OIL MALAYSIAN PRODUCTS
(downstream (downstream MIDDLE DISTRIBUTORS
industry) products) EAST

Figure 1.1 Summary of the supply chain in exporting of Malaysian palm products.

1.5 LIMITATIONS OF STUDY

The challenge marketers face is, identifying the key dimensions of brand equity,

profiling their brand against these dimensions and then modeling the core

strategies brand drivers. But the profiling process must be moved beyond the

expansive cataloging of a brand‟s associations. The focus must shift to those that

have real impact and draw correlations between strategic brand drivers and

business outcomes. This enables both the tangible and the higher order

intangible associations with the brand to be better leveraged and managed.

1.6 ORGANIZATION OF THE STUDY

To accomplish the above stated goals, this study is organized in the following

manner:

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Chapter One – Introduction

This chapter sketches the background of the study, formulates the problem and

objectives of the study and discusses the research method adapted.

Chapter Two - Introduction to Malaysian Palm Industry

In chapter two, the background of Malaysian palm industry is explained. The

focus of this chapter includes the main players in the industry and Malaysian

palm product competitions. Since the industry is developing at a rapid pace, this

chapter is based on information gathered until April 2009.

Chapter Three – Literature Review on branding and brand equity

This chapter examines the definitions relating to branding and brand equity, in

the area of conceptualization and measurement of customer based brand equity.

The main focus of this chapter is to identify the brand equity model and its

application for this study. The works of MPOB and MPOC relating to branding is

also examined.

Chapter Four - Research Methodology

The marketing research process is discussed in this chapter, as well as the

research approach adapted in the study and the type of secondary data

collected. The relationship among the variable are tested to determine, key

factors that build brand equity for Malaysian palm based products. The

17
respondents will be tested on the elements or dimensions of brand equity to

understand factors that influence customer decision process.

Chapter Five – Research Findings

The findings of the empirical research are presented in this chapter. The findings

will refer to the profile of the respondents and the brand equity dimensions

examined in the survey, which leads to the hypothesis testing.

Chapter Six – Conclusion and Recommendations

The findings in Chapter five are interpreted, conclusions are drawn,

recommendations are made and areas of future research will also be discussed.

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 CHAPTER 2

MALAYSIAN PALM INDUSTRY

Palm oil is one of the 17 major oils traded in the global edible oils and fats

market. It has been consumed as food, from as long as 5000 years ago and

today is found in one out of every ten food products worldwide. As one of the

worlds largest producers and exporters of palm oil and its products, the

Malaysian palm industry is the pride of the country. The Malaysian palm oil

industry is basically export-oriented owing to the country‟s small population base.

The oil palm industry has been the backbone of Malaysia‟s social and economic

development. Since more than 90% of its production is exported, the industry is

one of the top earners for the country, contributing about RM 3.18 billion in

foreign exchange in 2006. This industry has not only improved the living

standards of farmers, but also provided employment to more than half a million

Malaysians. This sector is under the Ministry of Plantations Industries and

Commodities, under which two agencies are responsible for its progress and

promotion – the Malaysian Palm Oil Board (MPOB) and the Malaysian Palm Oil

Council (MPOC). These agencies undertake R&D, promotions and marketing,

regulatory and enforcement functions, as well as provide economic and technical

advisory services. This is done to ensure that the industry will continually achieve

higher yields, offer more products as well as increase its share of the global oils

and fats market.

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The industry can be divided into three levels; plantation, milling and refining,

represented by their respective association(s) to coordinate mutual and separate

interests. The Malaysian Palm Oil Association (MPOA) represents the planters or

growers and the Federation of Palm oil Miller‟s Associations of Malaysia (POMA)

speaks for the millers. The Refiners‟ Association of Malaysia (PORAM). The oil

palm industry is closely linked to its sister industry – the oleochemical sector –

represented by the Malaysian Oleochemicals Manufacturers‟ Group (MOMG).

To ensure that all the activities do not pose problems, the industry is subject to

several laws and regulations, making it one of the most regulated industries in

the world. Some of the laws and regulations include the Land Acquisition Act

1960, Protection of Wildlife Act 1972, Environmental Quality (Clean Air)

Regulations 1978, Pesticides Act 1974 (Pesticides Registration) Rules 1976,

Labour Law, Workers‟ Minimum Standard of Housing and Amenities Act, Hazard

Analysis & Critical Control Points (HACCP), and Occupational Safety and Health

Act 1977.

2.1 History

Archaeological evidence on palm oil consumption was found in an Egyptian tomb

in Abydos. As no palm oil was ever produced in the country, the evidence implied

that the oil was traded during the time of the Pharaohs, which is about 5000

years ago. Oil palm originated from West Africa in a belt from Angola to Senegal.

The Portuguese discovered the crop during their expeditions to West Africa in

20
15th century, and palm oil later became a basic part of the food on board of slave

ships. The industrial revolution created a much larger demand for palm oil, which

was used at the time to make candles and lubricants for machines.

Oil palm was introduced to the peninsula of Malaysia, then Malaya, as an

ornamental plant by the British in the 1870s. In 1917, Henri Fauconnier planted

the palm for its oil at Tennamaran Estate in Batang Berjuntai, Selangor,

Malaysia. Oil palm‟s economic potential was first realized in the 1960s when the

Malaysian government embarked on a poverty eradication program through

agricultural diversification by planting this crop and to diversify significantly away

from rubber, the principal export crop at that time. A principal agent of this

development was the government‟s Federal Land Development Agency (Felda)

which undertook forest clearance and settling of smallholders. Currently, the

Malaysian oil palm industry as a whole, including the downstream sectors,

employs 860,000 people, both directly and indirectly.

2.1.1 Oil palm (Tenera), basic facts

The oil palm first planted in Tennamaran Estate was Dura – the fruit type with a

thick shell. There are two other fruit types – Pisifera with no shell and Tenera with

a thinner shell. Obviously, the thicker the shell, the less would be the oil bearing

mesocarp and less the oil yield. Ideally, Pisifera should be planted, but it is

largely female sterile and produces very few bunches. In practise, Tenera is

planted as a compromise. At that time, the genetics of shell type was not known,

21
but it was later discovered that Tenera is just a hybrid between Dura and Pisifera

i.e Dura x Pisifera

Table 2.1: Basic information on oil palm

Origin West Africa

Average height increment (present palms) ~ 60cm/year
Trunk diameter ~ 60cm
No. of fronds produced per year ~ 24cm
Average length of frond 3 – 4m
Leaf colour Green
Colour of ripe fruit Usually yellowish red
Nursery period 12 – 18 months
1st harvesting ~ 30 months after field
planting
Harvesting cycle 2 – 3 weeks
No. of bunches produced per palm 10-15 per year
Average weight of bunch 10 – 20kg
No. of fruits per bunch 1000 - 3000
Shape of bunch Round or oval
Fruit size (1 x b) 5cm x 2cm
Fruit weight ~ 10g
Kernel content 3-8 % per fruitlet
Oil extraction rate 20%
Palm oil yield ~ 4 tonnes/ha/year
Planting density 136 – 160 palms/ha
Economic lifespan 20 – 30 years
Source: MPOC (1995)

Malaysia‟s humid tropical climate with a temperature range of 24 to 32 deg

Celsius throughout the year, ample sunshine, and annual rainfall of almost

2000mm that is evenly distributed, is ideal for the cultivation of oil palm. Unlike

other oil-bearing crops, the oil palm is unique crop in producing two oils from its

fruit, palm oil from mesocarp and palm kernel oil from the kernel. The oil palm is

more productive than other oil-bearing crops and Malaysian oil palm currently

22
yields an average 3.66t/ha of oil per year, which is 7 and 2.5 times more than

soybean and rapeseed respectively. An oil palm usually bear fruits from 30

months after field planting. Being a perennial crop, it can be harvested round the

year throughout its long productive lifespan (usually 25-30 years). This ensures

that the supply of palm oil is uninterrupted and oil palm remains the most efficient

oil-bearing crop in the world.

Table 2.2: Oil palm yield compared to other major oils

23
Figure 2.1: Palm oil and palm kernel oil processing flow chart

Source: MPOB

24
Figure 2.1 illustrates the process of collecting fresh fruit bunches (FFB) and

milling the FFB at the mills to extract crude palm oil (CPO). The CPO is then

transported to a local refinery for refining process. The refining process will

further remove unwanted residue from CPO and result in production of Refined

Bleached Deodorized Palm oil (RBD Palm Oil) which is fit for human

consumption. After refining of CPO, RBD palm oil is obtained, likewise for palm

kernel (the inner shell), RBD palm kernel is obtained. The RBD oils are products

of downstream processing. Further blending and packing of these oils produces

various types of downstream products. A refiner or manufacturer will then export

these products to various users. Malaysia is relatively a small population and is

unable to consume all the quantity processed locally, hence resulting in about 90

percent of export of Malaysian palm products.

2.1.2 Infrastructure of the Malaysian oil palm industry

Palm oil is known to be versatile and due to its technically superior properties, it

encourages wider use in a range of end-products, both in the food and non-food

sectors. In the 1960s and early 1970s, Malaysia has led the world in supplying

crude palm oil (CPO). Its fast expanding production has to find markets overseas

as there was no way the domestic market could absorb the exponential growth in

production. However in the mid 1970s, in line with the industrialization policy of

the government, the country undertook a bold step towards greater value

addition by making palm oil products available in various fractions and refined

25
forms to meet the specific needs of the market. The export of CPO fell inversely

to the rising export of processed palm oil from mid 1970s.

Currently, the refining sector in Malaysia is well established with 47 refineries

and 36 kernel crushers in operation, able to process 16.34 million tonnes of

CPO and 4.4 million tonnes of kernels. Ten other refineries with a combined

capacity of 3.24billion tonnes and 11 kernel crushers (42 million tonnes capacity)

are still under planning to cater for expected increase in CPO and kernel in the

future.

Figure 2.2: Location and breakdown of Malaysian palm plantations

26
Table 2.3: Number of palm oil mills, refineries, oleo-chemical plants and kernel
crushers in Malaysia (tabulated as at 2001)

Mills In Operation Refineries In Oleochemical Plants

Palm kernel
Operation in operation
crushers in
operation
Number Capacity Number Capacity Number Capacity Number Capacity
(tonnes/yr) (tonnes/yr) (tonnes/yr) (tonnes/yr)
352 67,744, 720 46 15, 479, 400 17 1, 957, 509 38 4, 312, 100

Source: MPOB

The Malaysian palm industry consist of few major players, whom can be

classified into 7 major categories.

i) Upstream Producers (plantation and mills)

ii) Downstream Producers (refiners and manufacturers)

iii) Exporters / importers (buyers, distributors and traders)

iv) Government Agencies (PORAM, MPOB, MPOC, FELDA)

v) Other players/ Support Industry (Certification body, laboratory, unions, NGOs)

vi) Industry Organizations (MPOA, MOMG)

vii) Customers (Consumers) (local and export-oriented customers)

This study focuses on two major players in the industry, the downstream

producers and export based customers. Customers consist of institutional

buyers, whom are manufacturers and distributors. In the context of this study, the

primary focus is on importers of Malaysian palm based products. Among

producers of specialized oils and fats, IOI Corporation Berhad is set to be one of

the major player following its acquisition of Loders Croklaan BV. Other producers

27
include PPB Oil Palms Berhad, Sime Darby Berhad, United Plantations Berhad,

Intercontinental Specialty Fats Berhad, Southern Edible Oil Industries (M) Sdn

Bhd and Cargill Speciality Oils and Fats Sdn Bhd. The largest and most

intergrated producer of olechemicals in Malaysia is Palmco Holdings Berhad, a

subsidiary of IOI Corporation Berhad. Multinationals have a presence in the

oleochemical sector through associate or subsidiary companies such as Akzo &

Nobel Oleochemical Sdn Bhd, Cognis Oleochemicals Sdn Bhd (joint venture

company between Cognis Oleochemicals of Germany and Golden Hope

Plantations Berhad), FPG Oleochemicals Sdn Bhd. Other local major producers

are Palm-Oleo Sdn Bhd, a subsidiary of KL Kepong Berhad an Southern Acids

(M) Berhad

Table 2.4: Summary of industry segments and companies in these segments

PLANTATION (UPSTREAM) REFINING AND PACKING
(DOWNSTREAM)
Felda Lam Soon (M) Berhad
PPB Oil Palm Bhd Intercontinental Speciality Fats (ISF)
Sime Darby (Synergy Drive) Mewah Oleo Industries
United Plantations Berhad Cargill Palm Products Sdn Bhd
Kuok Oils Southern Edible Oil Industries
IOI Plantations IOI Corporation Berhad (acquired
Loders Croklaan)
Kwantas

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2.1.3 Food uses of palm oil and its downstream products

The four main traditional uses of palm oil in food products are for cooking or

frying, shortenings, margarines and confectionary fats. Palm oil is popularly used

in both solid fat products as well as liquid form as cooking oil sector especially for

industrial frying applications. It offers several technical characteristics desirable in

food applications, such as resistance to oxidation, which contributes towards a

longer shelf-life of end products. Palm oil is ideally suited for use as an ingredient

in shortenings and margarines as it has 20-22 percent solid fat content at 20°C

which helps in the formulation of fat products with a variable range of

consistency.

Palm oil is the most versatile oil due to its various food applications without or

with only minimal modification, as well as in non-food products such as oleo-

chemicals, soaps and biodiesel.

Palm oil has many of the required characteristics suitable for food applications.

Being semi-solid at room temperature, it can be fractionated to produce

downstream products such as olein, stearin, super olein, and palm mid fraction,

which are used in various food products, summarized in Table 2.5 and non-food

application in Figure 2.3

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Table 2.5: Food uses of palm products

30
Figure 2.3: Non-food applications of palm products

2.1.4 Production cost of palm oil

Since 1998, Palm Oil Research Institute of Malaysia (PORLA) had jointly

embarked on an annual palm oil cost of production survey aimed at estimating

the national palm oil cost of production. The work has continued since then, but

now known as the Malaysian Palm Oil Board (MPOB), palm oil cost of production

survey.

Market forces have been and will continue to propel investments in Malaysia and

Indonesia, two palm oil producing countries. Being the most productive oil

31
bearing crop with a world average yield of 3.5 tonnes of oil per hectare,

producing 5-10 times more oil per hectare compared to other oils and fats crops,

so oil palm has shown to have highest economic advantage.

The cost to produce a tonne of palm oil either in Malaysian or Indonesia, is

cheaper (compared to oils from the annuals in the temperate countries) because

of the relatively cheaper factors of production. Indonesia for instance, managed

to produce palm oil at USD 165 per tonne and Malaysia at a cost of USD 239 per

tonne. It is two times more expansive for farmers in Europe to produce rapeseed

oil (USD400/tonne) and it costs USD 459.90 to produce one tonne of soybean oil

in USA. As the world economy liberalizes under the aegis of WTO, it is

envisaged that the reduction and eventual dismantling of domestic farm support

and other trade barriers will gradually eliminate inefficient producers.

Nevertheless, palm oil in Malaysia is expected to position itself in the next 15

years by leveraging on its inherent advantage through better planting materials

and management practices.

32
Table 2.6: Costs of production for selected oils from major producing counries

Country Oil USD/t

Indonesia Palm 165.20
Malaysia Palm 239.20
Colombia Palm 292.20
PNG Palm 215.80
USA Soybean 459.90
Canada Rapeseed 249.30
EU Rapeseed 400.60
China Soybean 400.60
Argentina Soybean 227.60
Brazil Soybean 228.30
Source: LMC(2001)

2.1.5 Oils and Fats Trade

Palm oil and palm kernel oil contributed the highest percentage (28 percent) of

the total global production of oils and fats in 2006. Four decades ago, the

production of palm oil was only 1.23 million tonnes compared to 3.43 million

tonnes of soybean oil and 12 million tonnes of animal oil. The production share of

palm oil was only 4 percent against 11 percent for soybean oil and 39 percent of

animal fats back then.

The four–decade performance of world palm oil is commendable and it is

projected, this track record will continue into the future. With continued expansion

and higher yield, world output of palm oil is expected to set a historic milestone in

2015, by overtaking the production of soybean oil about 0.26 million tonnes

(Basiron, 2005).

33
In the oils and fats market, the business cycle is very pronounced due to the

annual crop component of the oil-bearing crops such as soybeans, rapeseed,

sunflower seed, peanuts and etc. Their production is highly elastic due to the

flexibility of land usage. When prices are high, farmers tend to reallocate their

land resource to the oil crops rather than grains, and with oil palm, the change-

over is very slow. Once land is locked on oil palm, it would be difficult to turn the

land into other uses in the short-term, therefore constant supply of palm oil is

available.

Figure 2.4: World production of oils and fats

34
2) Palm oil and palm kernel oil were the most traded oils in the global oils and

fats market with a market share of 56 percent in 2006

Figure 2.5: World exports of oils and fats

35
3) Of the total 148.26 million tonnes of oils and fats consumed in 2006, palm oil

and palm kernel oil constituted the highest percentage (27 percent) of the total.

Figure 2.6: World consumption of oils and fats

36
4) A comparison of annual exports of palm oil between Malaysia and other

exporters from 2002 -2006 (million tonnes)

Figure 2.7: Malaysian Share of Global Oils and Fats Trade

2.1.6 Palm oil demand

Macroeconomic factors such as growth in population and disposable income will

continue to affect the demand for food items including palm oil. The population

increases will occur in Asia in particular China, India and Pakistan. Asia is also

experiencing income growth which is propelling the world economy. Although,

some major palm oil importing countries such as China and India will continue to

pursue self sufficiency in edible oil supply, it is more likely that they will continue

37
to be dependent on import to meet their edible oil deficits. Palm oil has the

potentials to bridge the demand deficits. Palm oil will the most preferred edible oil

of the world, with expected consumption of 43.2million tonnes in 2020 compared

to 41 million tonnes soybean oil (Basiron, 2005) Animals fats which used to be

the main source of vegetable oil supply in the past is expected to lose a lot of its

market share by 2020. Over the past 40 years, animal fats consumption has

declined by 0.86 percent per annum because of consumer concerns over its

health effects.

The combined use of oils and fats as bio-fuels is likely to be around 13 million

tonnes next year, up from around 9.0 million tonnes in 2005, an increase of more

that 40 percent. By December 2007, the total global capacity to make bio-fuels

could reach around 20 million tonnes. Though this capacity may not be fully

utilized immediately, the world‟s crude oil production has already peaked and

demand for bio-fuels has only just begun. Global population is increasing by 74

million annually, an important factor leading to higher demand for vegetable oils

to cook food. After accounting both fuel and food requirements, demand for oils

and fats is expected to rise by 8.6 million tonnes in the year to September 2007,

while production may gain 6.5 million tonnes.

38
2.1.7 Malaysian palm oil prices and sales mechanism

All oil buyers know that the price of oils and fats is decided by the law of supply

and demand. With very few exceptions, oils and fats are interchangeable or can

easily be made so. Users of oils and fats all over the world acknowledge that

palm oil and its fractions, always offer the best value for money. There are two

major basic factors that will determine the direction of the price movements,

which are:

1) Fundamental Factor
2) Technical Factor

2.1.7.1 Fundamental Factor

This is the most important basic factor that will influence the price of

commodities, which consist of supply and demand element. High supplies or

production of a commodity will have dampening effect on the market price and

vice-versa. Very good demand or off-take of a commodity will be a boost to the

market price and vice–versa. The production levels of other substitute vegetable

oils such as soybean oil, sunflower oil and rapeseed oil, will have influence on

palm prices.

2.1.7.2 Technical Factor

Various charts are used before a marketing strategy or decisions to purchase

are made. Charts will usually show price trend in the past and will indicate future

trend based on various factors and formulation. Chart reading and forecasting

39
requires specialized skill and experience and do not always guarantee right

pricing decision. In an effect to maximize the accuracy of price forecasting of the

commodities, both the technical factor and the fundamental factor should be

used to compliment each other that could give better positive results.

2.1.7.3 Palm Oil Pricing and Sales

Due to the ever changing situational factors and conditions affecting price

movements, strategy made must be very flexible in an effort to maximize the

returns. Basically, there are three main sales mechanism in pricing CPO:

1) Spot Sales

Most conservative and is done based on the availability of the product from

the production units at each particular time. Sales are made based on the

availability of current stock level of CPO.

2) Forward Sales

This is the most dynamic and aggressive sales mechanism, which requires

forecasting power in order to maximize profitability in the marketing of palm

products. Before a marketing or sales decision is made on the forward selling,

various factors which will influence price movement have to be carefully

analyzed. Major risks are minimized by doing hedging on the Kuala Lumpur

Stock Exchange (via Malaysian Derivative Exchange). Hedging is a marketing

40
 tool whereby positions are taken on the „paper‟ market in order to minimize

the loss on the physical market .

The major players whom decide the pricing structure of the CPO are the

plantations, millers (crushers), refineries and speculators. The Malaysian

Derivative Exchange (MDEX) is used as a hedging tool for pricing futures

contract. Launched in October 1980, Crude Palm Oil Futures is the most

successful commodity futures contract in Malaysia. The main users of the futures

market include the refiners, plantations, millers, brokers and dealers.

In the case of palm oil, price changes are highly correlated with those oils and

fats in general because of the considerable extent to which these products are

interchangeable (Fatimah Arshad, 1991). Short term oils and fats price

movements reflect factors such as weather conditions, inventory levels (stock

level), exchange rates and the price of substitutes.

2.1.8 Trends and issues concerning palm industry

2.1.8.1 Globalization and Trade Liberalization Waves

Undoubtedly, agriculture is very much a proceed and subsidized sector

compared to other sectors. the concerns over inter alia, food security and support

for the farming community in both developed and developing countries have led

to support and subsidies both in terms of production subsidy, export subsidy and

tariff and non-tariff measures to protect their agricultural sector. Hence it was

41
only in the Uruguay rounds of multilateral trade negotiations that a serious effort

was made to effectively eliminate the adverse trade distorting effects of

protectionism and allow comparative advantage and production efficiency to

prevail under the trade rules that are fair, equitable and enforceable. These

concerns continue to be addressed in the new WTO rounds of negotiations, an

avenue opened to address the shortcomings of the Uruguay Rounds.

The world is moving into an era of globalization and trade liberalization. Aside

from the WTO negotiations, there are several initiatives through Free Trade

Areas (FTAs) to foster greater economic co-operation. In the context of oils and

fats complex, palm oil is the only oil that is produced on a competitive basis.

hence, Malaysia and other palm oil producing countries will have to leverage on

the multilateral trade negotiations and FTA initiative to seek greater access for

palm oil. The future holds bright for palm oil as countries are unlikely to maintain

high levels of support for their local agriculture industry. It will be taxing on their

financial resources as enhanced by agricultural reform initiated by countries such

as the European Union often ends up with huge agricultural subsidies.

2.1.8.1 Environmental and cultural impact

Demand for palm oil is rising and is expected to climb further, particularly for use

in bio-diesel. Bio-diesel is promoted as a form of renewable energy that greatly

reduces net emissions of carbon dioxide into atmosphere, and therefore its use is

42
being touted as a way to decrease the impact of the greenhouse effect and also

the possibility of peak oil.

However, there is increasing concern from the environmental an other NGOs

about the social and environmental impacts of the palm oil industry. Rainforests

are being cleared to make room for the plantations, thus reducing the habitat for

some threatened species, such as the orang utan (or Borneo and Sumatra). The

resulting plantations are often run by agribusiness, and locals in places such as

West Papua and Kalimantan are missing out on jobs to migrant workers.

Orang utan experts around the world have unified to recognize that continued

unsustainable development of the palm oil sector is the single greatest threat to

the future of orang utan in the wild. The best professional estimates state that if

the industry is not regulated then within 12 years, we may witness the

disappearance of orang utan from the wild.

2.1.8.2 Palm oil as bio-diesel

The Malaysian government is refocusing the use of palm oil to the production of

bio-diesel to cater for the huge demands from European countries and has

encouraged the building of bio-diesel plants locally. This is due to the higher

prices of fuel and increasing demand for alternatives sources of energy in the

Western world. These bio-diesel plants, which will start operating middle of next

year and expected to produce 100,000 tonnes of bio-diesel annually. Strong

43
demand for bio-diesel from Europe as well as Colombia, India, South Korea and

Turkey is fuelling the industry‟s growth, as more countries sought to reduce their

reliance on mineral oil.

Malaysia has already begun preparations to change from diesel to bio-fuel by

2008, including drafting legislation that will make the switch mandatory. From

2007, all diesel sold in Malaysia must contain 5% palm oil. Being the world‟s

largest producer of crude palm oil, Malaysia intends to take advantage of the

rush in finding cleaner fuels.

With the growth of emphasis on bio-diesels presenting a sustainable alternative

to fossil fuels its important to recognize that these benefits are partly negated

when forest is cleared to make room for bio-diesel crops such as oil palm. NGOs

are now alerting the international arena, that despite millions of hectares of land

standing unplanted in Indonesia, there is still substantial clearance of tropical

hardwood forest for palm oil plantations. Furthermore, as the remaining

unprotected lowland forest dwindles, developers are looking to peat swamp for

conversions, which causes a draining of the peat and this not only unlocks the

carbon in the surface covering of trees, but begins an oxidation process of the

carbon in the peat reserves which can be between 5,000 to 10,000 years worth

of carbon locked into the ground. Drained peat is also at very high risk of forest

fire, and there is a clear record of fire being used to clear vegetation for palm oil

development in Indonesia.

44
2.1.8.3 Blood Cholesterol Controversy and Trans Fat Issues

For many years now, it has been established that the primary cholesterol-

elevating fatty acids are the saturated fatty acids with C-12 (lauric acid), C-14

(myristic acid) and C-16 (palmitic acid) carbon atoms with a concomitant increase

in the risk of coronary heart disease. Monosaturated fatty acids such as oleic

acid is as effective in reducing serum total and low-density lipoprotein (LDL)

cholesterol levels as polyunsaturated fatty acids such as alpha-linoleic acid. the

World Health Organization in its report states there is convincing evidence that

palmitic oil consumption contributes to an increased risk of developing of

cardiovascular diseases. A study by a group of researchers in China comparing

palm, soybean, peanut oils and lard showed that palm oil actually increased the

levels of good cholesterol and reduced the levels of bad cholesterol in the blood.

Polyunsaturated edible oils are liquid and would need to be first “hardened” by

hydrogenation in order to maintain semi-solid nature for manufacturing of food

products such as margarines, shortenings, vegetable ghee, confectionery and

bakery products. During the hydrogenation process the fatty acids in these oils

are transformed into the trans fatty acids (TFAs), which are harmful to health.

Such hydrogenation fats containing TFA, are also referred to as “ trans fat”. In

the case of palm oil, since it is semi solid in ambient, its application for

manufacturing does not require much hydrogenation, compared to oils like

soybean and sunflower. Currently, palm oil has been a preferred fat due to this

property for those whom are concerned about TFA.

45
 Chapter 3

BRAND AND BRAND EQUITY

The American Marketing Association defines, brand as: a name, term, sign,

symbol, or design, or combination of them, intended to identify the goods or

services of one seller of group sellers and to differentiate them from those

competitors.” A brand can be an asset that does not have physical existence and

the value of which cannot be determined exactly unless it becomes the subject of

a specific business transaction of sale and acquisition.

Branding and brand management can no longer be considered the exclusive

domain of consumer marketing. The modern concept of branding can be applied

to anything “from product and services to companies and even countries

(Clifton,2004:1). Kotler (2000:404) regards branding as “a major issue of product

strategy”.

3.1 Brand Building Model

Kapferer (1997) mentions that before the 1980s there was a different approach

towards brands. “Companies wished to buy a producer of chocolate or pasta,

after 1980, they wanted to buy Kit Kat or Buitoni. This distinction is very

important; in the first case firms wish to buy production capacity and in the

second case they want to buy a place in the mind of the consumer.” Brands have

started becoming more than mere identifiers and have gained higher focus and

46
value in companies. According to Kapferer (1997), brand serve eight functions

shown in Table 3.1. The first two are mechanical and concern the essence of the

brand, “to function as a recognized symbol in order to facilitate choice and to gain

time.” The next three are for reducing the perceived risk and the final three

concern the pleasure side of brand. Kapferer (1997), add that the value of the

brand comes from the ability to gain an exclusive, positive and prominent

meaning in the minds of large number of consumers.

Table 3.1: The functions of the brand for the consumer

Function Consumer Benefit

Identification To be clearly seen, to make sense of the offer, to quickly

identify the sough-after products.

Practicality To allow savings of time and energy through identical

repurchasing and loyalty.

Guarantee To be sure of finding the same quality no mater where or

when you buy the product or service

Optimization To be sure of buying the best product in its category, the

best performer for a particular purpose.

Characterization To have confirmation of your self-image or the image that

you present to others.

Continuity Satisfaction brought about through familiarity and intimacy

with the brand that you have been consuming for years.

Hedonistic Satisfaction linked to the attractiveness of the brand, to its

logo, to its communication.

Ethical Satisfaction linked to the responsible behaviour of the brand

in its relationship towards society.
Source: Adapted from Kapferer (1997)

47
Hence, branding and brand building should focus on developing brand value,

whereby Kapferer‟s view of brand value is monetary and includes intangible

assets. Four factors combine in the mind of the consumer to determine, the

perceived value of the brand; brand awareness; the level of perceived compared

to competitors; the level of confidence, of significance, of empathy , of liking; and

the richness and attractiveness of the images conjured up by the brand. Figure

3.1, show a summary of the relationship between the different concept of brand

analysis, (Kapferer, 1997).

Figure 3.1: From Brand Assets to Brand Equity

Brand Awareness
+ Image
+ Perceived quality
+ Evocations
+ Familiarity, liking

= Brand Assets Brand added value

Perceived by customers
- Cost of branding
- Cost of invested capital
-
Brand financial value
(BRAND EQUITY)
Source: Kapferer, 1997, p.37

3.2 Product Branding

The concept of the brand can be traced back to product marketing where the role

of branding and brand management has been primarily to create differentiation

and preference for a product or service in the mind of the customer. The

development of product branding over the past 30 years is characterized by

48
layers of added value built around the core functionality of the product or service

to create and maintain distinction in a particular market (Knox, 2003). The

increase sophistication of product branding management techniques and these

refinements reflect both responses to changes in the business environment and

the development of deeper insights into the nature and influence of the

organizations as an intangible element in the marketing mix. A product brand is

also flexible, allowing firms to position and appeal to different segments in

different markets.

3.2.1 Corporate Branding

On the contrary, corporate branding draws on the traditions of product branding,

but requires a holistic approach to brand management, in which all members of

an organization behave in accordance with the desired brand identity (Harris,

2001). Following the International Corporate Identity Group‟s statement on

corporate identity (van Riel and Balmer, 1997), corporate identity is interpreted

as an organization‟s ethos, aims and values that create a sense of individuality,

which differentiates a brand. Organizational values, core values and added

values are the foundation of a corporate brand. The interaction among them form

the value-creating process of the corporate brand (Urde, 2003). The linkage

between core values and corporate brand is decisive for a firm‟s brand equity

and competitive position. Management and organization wide support is crucial in

this process (Urde,2003).

49
3.2.2 Challenges in Corporate Branding

Corporate branding has been hailed by some as a way of circumventing the

problem of escalating media costs, which have to be shouldered by corporations

launching new brands. Unfortunately, this has erroneously led some

organizations to treat it almost like a giant-size product brand (Schultz, 2002).

The creation of a corporate brand entails that branding shifts from solely being

considered from a marketing discipline to a more strategic perspective, implying

that the brand becomes the responsibility of the whole company, led by the CEO

of the organization. No single internal department can claim to control or own the

brand as their internal turf. Instead, all departments will have to engage in

company-wide, cross-functional relations, where different departments

contribute to the building of the brand.

Capitalizing on corporate branding, blends thinking from diverse disciplines such

as marketing, organization theory, strategy and corporate communications,

changing corporate branding from a marketing-communication activity into a

strategic framework. This gives companies a clear sense of direction and

provides the basis for competitive advantage.

Companies pursuing corporate brand strategies are much more dependant on

their employees delivering their brand promises than companies engaged in arm-

length product branding strategies (Schultz, 2002).

50
One of the implications of corporate branding is that the relations between

branding and corporate strategy becomes much more intimate. Integrating

corporate brand strategy is not easy task and requires that companies are able to

re-think their decision-processes in ways that ensure the business is driven by

corporate brand.

3.2.3 Differences between Product and Corporate Branding

One of the key differences between line and corporate branding is that the latter

requires greater focus within the organization. King (1991) points out that

audiences for the corporate brand go beyond customers to include all

stakeholders, and that these audiences exercise a wider range of discriminators,

including both intangible and accepted tangible product or service elements.

One of the implications of this is that corporate marketing necessitates not only a

planning perspective which addresses the matching of external opportunities with

core competencies, but also considers the integration of internal activities to

ensure cohesion and therefore consistency in delivery (Harris, 2001). In this

case, employees need to be recognized as brand‟s ambassadors. Employees

represent a source of customer information and action needs to be taken to

ensure this is compatible with the way senior management wishes the

organization to be perceived (Kennedy, 1977).

51
Corporate branding acts as a mechanism to align organizational subcultures

across functional and geographic boundaries, enabling companies to better

balance issues of global recognition and local adaptation (Shultz, 2002). Table

3.2, summarizes the difference between corporate and product branding, listing

difference from the perspective of method, execution, measure and strategies.

Table 3.2: Corporate Branding versus Product Branding

Subject Corporate Branding Product Branding

Method and Provides management with holistic
mechanism framework for conceptualizing and
aligning the many different activities
by which companies express who
they are and what they stand for
(Schultz, 2002)
Product branding is flexible, allowing
firms to position and appeal to
different segments in different
markets.
Normally controlled by marketing
department

Execution At the levels of the firm. The attitudes
and behaviour of employees play a
central role in brand delivery and
need to be more aware of their
brand‟s values. Combines corporate
strategy, corporate communications
and corporate culture.
It is a long-term strategy and has
strategic approach. More complex
and demands greater attention. Need
to have coherence between internal
and external dimensions.
Measure Market share, customer loyalty, price
differentials. The overall image of the
firm is therefore expected to generate
brand equity at corporate level
At the level of product/ services,
reaches customers.
Employees are often regarded as
executors of brand communication.
It is a short-term strategy and has
functional approach
Simpler and requires focused
attention of a single department,
normally marketing
Market share, customer loyalty, price
differentials. The overall image of the
firm is to generate brand equity at
product level.

Differentiation and Corporate Values and Images, Focuses on product uniqueness.

preference differentiating firm from its
strategies competitors, Hatch and Schults
(2001). Use vision and culture of the
whole organization explicitly as part of
its uniqueness.

52
3.2.4 Product Branding Strategy for Malaysian Palm Products

As sophistication of customers and competitors increase, all players in the

Malaysian palm production chain must finds ways to collaborate to meet the new

challenges. Collectively the industry has to take major steps to safeguard growth

and sustainability for its export based products. Most of the world vegetable oils

producers are increasingly differentiating themselves and, in the process, many

are repositioning their marketing strategies. A world competitive index for 4 major

vegetable oils, palm, soy, canola and sunflower has been developed by MPOB.

The index is based on 10 attributes; price, image, supply, assurance, quality

functionality, customer support services, cost of production yield, R&D and

subsidy (Amiruddin, 2005). Based on the index, palm oil is the most competitive

at 79.44%, followed by canola oil (58.69 percent), soy oil (56.74 percent) and

sunflower oil (54.14percent).

Companies that produce and export, must find ways to achieve secured market

share and able to dislodge negative campaigns against palm oil. MPOC is

already making plenty of effort in safeguarding the Malaysian palm industry by

strategizing a brand strategy. A step further would be for local manufacturers to

also brand their products to their consumer or industrial based buyers. Local

manufacturers already have the ingredients to start creating a suitable marketing

program to brand their products. Part of the competitive strategy of palm industry

should focus upon its product differentiation.

53
Malaysia has to continue striving to differentiate and diversify its products to take

them out of the commodity trap where the emphasis is entirely on price. In the

case of palm products, it should be differentiated from its competition through

value-added products, marketing and branding. The general message that

Malaysian products should convey would be that they are sustainable, healthy,

safe and clean (Dato Sabri,2005). With continued efforts to ensure customer

satisfaction through the customization of products and ensuring of food safety

and quality, will be factors to allow the industry to pull away from the pack. The

adoption of sustainable palm oil practices is no longer a novelty, but a necessity

and the good progress made should be relentlessly pursued and improved upon.

The target would be for Malaysian palm oil to be unquestionably accepted by its

global customers to be sustainable; a status that would only be achieved with

sufficient science–based proof being at hand.

Only recently, MPOC released press statement on plans to start branding

Malaysian palm oil with an aim to boost sales and certify that virgin forests aren‟t

destroyed to grow oil palm trees (Dow Jones, 2008). MPOC branding exercise

comes amid allegations that South Asia palm growers are increasing through

deforestation. The European Union plans to put in place strict regulations on

using vegetable oils for making bio-fuels. MPOC proposed the concept of „Brand

Malaysia‟ is needed to ensure its credibility in the global market. Yusof Basiron

(CEO of MPOC), mentioned one possible brand name “MALAYSIA PALM”. This

brand will give an assurance that palm oil produced under this program comes

54
from plantations grown on legally approved agricultural land in Malaysia.

Possibly, a logo will differentiate branded palm oil from non-branded volumes.

This plan is part of MPOC‟s strategic plan for 2007.

3.3 Brand Asset Management

Davis (2000) defines Brand Asset Management as balanced investment

approach for building the meaning of the brand, communicating it internally and

externally, and leveraging it to increase brand profitability, brand asset value, and

brand returns over time “ (p.12). Davis (2002) also talks about new way of

managing brands and argues that brands, along with people, are a company‟s

most valuable asset. This becomes relevant given that the top three strategic

goals for brand strategy nowadays are increasing customer loyalty, differentiating

from the competition, and establishing market leadership (Davis and Dunn,

2002). Some of the shifts from traditional brand management to this new idea

are highlighted in Table 3.3.

55
Table 3.3: The shift from traditional Brand Asset Management

Traditional Brand Management Brand Asset Management

Brand management
→ Brand
strategy
asset management

Brand managers
→ Brand
ambassadors
champions and

Retention
→ Deep loyalty

One time transactions

→ Lifetime relationship

Customer satisfaction
→ Customer commitment

Product-driven revenues
→ Brand-driven revenues

Three-month focus
→ Three-year focus

Market share gains

→ Stock price gains

Marketing manages the brand

→ All functional areas manage the
brand
Awareness and recall metrics
→ Sophistication brand metrics

Brand is driven internally

→ Brand is driven externally

Source: Davis et. al (2002)

Davis (2002) has developed the Brand Asset management process, as shown in

Figure 3.2, involves four phases and eleven steps. The first phase is to develop a

brand vision, which consists of a single step, developing the elements of brand

vision. The basic objective of this step is to clearly state what the branding efforts

must do to meet corporate goals.

The second phase is to determine the company‟s “Brand Picture” by

understanding consumer perceptions about the brand and of competitor brands.

56
This phase consists of three steps, determining the brand‟s image, creating the

brand‟s contract and crafting a brand-based customer model, which allows for

understanding how consumers act and think.

The third phase is to develop a brand asset management strategy, in order to

determine the correct strategies for achieving goals according to the brand

vision. This phase consists of five steps, positioning the brand, extending the

brand, communicating the brand‟s positioning, leveraging the brand and pricing

the brand.

Finally, the fourth phase is to support a brand asset management culture. This

final phase consists of two steps, creating a measure of the return on brand

investment, and establishing a brand-based culture.

57
Figure 3.2: Brand asset management process

PHASE 1 - Developing a brand vision

STEP 1
Elements of a
brand vision

PHASE 2 – Determining Brand Picture

STEP 2 STEP 3 STEP 4

Determining Creating Brand-based
brand image brand contract customer
model

PHASE 3 – Developing a brand asset management strategy

STEP 5 STEP 6 STEP 7 STEP 8 STEP 9

Positioning the Extending the Communicating Leveraging Pricing the
brand brand brand‟s the brand brand
positioning
Elements of a
brand vision

PHASE 4 – Supporting a brand management culture

STEP 10 STEP 5
Measuring return on Establishing a
brand investment brand-based culture

58
3.3.1 Brand Equity Models and its Measurement

One method of assessing the success of a brand is through brand equity, which

is the sum of all different values people attach to the brand. Brand equity can

include the monetary value, the intangible value, and the perceived quality

attributed to the product independent of its features. Brand equity was defined

by Farquhar (1989), as “ the added value with which a given brand name endows

a product” (p.24). Aaker and Joachimsthaler (2000:17) define brand equity as

“brand assets and liabilities connected to the brand that add to, or detract from its

value to the customer and to the business”. There are two perspectives to brand

equity, from financial value to the firm and customer-based value which comes

from marketing decision-making context.

3.3.2 Aaker’s and Keller’s Model to Brand Equity

Aaker (2004) refer to the elements of brand equity as brand awareness, brand

reputation, brand differentiation, brand relevance and brand loyalty. When

marketing practitioners use the term “brand equity”, they tend to mean brand

description or brand strength, referred to as “customer brand equity” to

distinguish it from the asset valuation meaning. The customer based brand

equity, definitions approach the subject from the perspective of the customer –

whether it is an individual or organization. They contend that for a brand to have

value it must be valued by consumers. Then, the power of a brand lies in what

customers have learned, felt, seen, and heard about the brand as a result of their

experiences over time (Keller, 2003:59). A customer-based definition of brand

59
equity is given by Keller, as „differential effect that brand knowledge has on

consumer response to the marketing of that brand.‟

Customer based brand equity measurement studies are constructed mainly on

conceptual constructs proposed by management gurus. Brand description (or

identity or image) is tailored to the needs and wants of a target market using the

marketing mix of product, price, place and promotion. The success or otherwise

of this process determines brand strength or the degree of brand loyalty. A brand

value is determined by the degree of brand loyalty, as this implies a guarantee of

future cash flows.

Among several brand equity model, the most commonly cited which is shown in

Figure 3.4, Aaker and Joachimsthaler (2000) define brand equity as brand assets

linked to a brand‟s name and symbol that add to, or subtract from, a product or

service.

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 Figure 3.3: Brand Equity

Brand Equity

Brand Perceived Brand Brand Loyalty

Awareness Quality Associations

Source: Aaker and Joachimsthaler (2000)

Keller (1993) also takes the consumer-based brand strength approach to brand

equity, suggesting that brand equity represents a condition in which the

consumer is familiar with the brand and recalls some favourable, strong and

unique brand associations. Hence, there is differential effect of brand knowledge

on consumer response to the marketing of a brand. The customer based brand

equity (CBBE) model is based on the premise, that the power of a brand lies in

what customer have learned, felt, seen, and heard about the brand as result of

their experience over time (Keller, 2003). Keller‟s model is derived from brand

awareness and brand image. Two questions often arise regarding brands, “ What

make a brand strong ?” and “How do you build s strong brand?.” To help answer

both these questions, Keller‟s model provides a unique point of view as to what

brand equity is and how it should best be built, measured and managed

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3.3.3 Customer Based Brand Equity (CBBE) Model

CBBE model approaches brand equity from the perspective of the consumer –

whether and individual or an organization. Understanding the needs and wants of

consumers and devising products and programs to satisfy them are at the heart

of successful marketing.

The basic premise of the CBBE model is that the power of a brand lies in what

customers have learned, felt, seen, and heard about the brand as a result of their

experiences over time. In other words, the power of a brand lies in what resides

in the minds of customers. The challenge for marketers in building strong brand

is ensuring that customers have the right type of experience with products and

services and their accompanying marketing programs so that the desired

thoughts, feelings, images, beliefs, perceptions, opinions, and so on become

linked to the brand.

Customer based brand equity is formally defined as the differential effect that

brand knowledge has on consumer response to the marketing of that brand. A

brand is said to have positive customer-based brand equity when consumers

react more favourably to a product and why it is marketed when the brand is

identified than when it is not (e.g. when the product is attributed to a fictitious

name or is unnamed). Thus, a brand with positive customer-based brand equity

might result in consumers being more accepting of a new extension, less

sensitive to price increases and withdrawal of advertising support, or more willing

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to seek the brand in a new distribution channel. On the other hand, a brand is

said to have negative customer-based brand equity if consumers are less

favourably to marketing activity for the brand compared with an unnamed or

fictitiously named version of the product.

3.3.4 Customer Based Industrial Brand Equity

Little agreement exists as to the conceptualization of industrial brand equity in

consumer marketing literature, brand equity is generally defined as the added

value endowed to a product as a result of past investment in the marketing of the

brand (Keller, 1998). Added value of a brand is created in the mind of

consumers, as a result of perceived performance on various marketing

dimensions. Consequently, it has been argued that industrial brand equity could

be conceptualized and measured from the perspective of the industrial buyer.

Buyer- based brand equity seems a good starting point to assess industrial brand

equity. Therefore, a customer-based method developed in consumer research

will adapted to the specific situation of the industrial buyer.

3.3.4.1 Antecedents of Brand Equity

In consumer research, brand equity has been related to expenditures in the

dimensions of the marketing mix. In the present study relevance of several

marketing mix dimensions for the creation of industrial brand equity will be

investigated. Antecedents of the two distinct components of industrial brand

equity (product and corporate) need to be identified. In previous studies, quality

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or more specifically performance components have been identified as the main

drivers of industrial brand equity. That is, assessments of the product, the

supplier of the product, and any other variables involved in the purchase and use

of the product. Drivers identified in previous studies were: physical attributes,

distribution services (ordering delivery), and support services. Because the

performance and perceived quality of products are crucial in an industrial context,

overall satisfaction with product will be the main driver of product brand equity.

Differences exist between and consumers and industrial buyers, in terms of the

process leading to buying decisions. On one hand, industrial buyers are thought

to be more rationally concerned with determinants like product performance,

product quality, delivery, service and price, than end consumers. On the other

hand, conditions are said to exist under which industrial buyers appear to make a

purchase decision on the basis of the brand name instead of price, or other

factors. This may occur when failure of the purchased product would have dire

consequences for the buyer‟s organization, or for the buyer personally; when the

product requires substantial service or support; when the product is complex or

when the buyer is under time and/or resource constraints. Although procurement

in industrial markets is often rational and calculative, brands could play a

significant role in this process under conditions of risk. Also, more and more

industrial products are purchased online through specifically designed website. In

such situations, brands could be important in establishing a consideration set of

potential suppliers in the mind of the buyer.

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Company manufacturing the product will have built a corporate reputation and

associated corporate brand equity. This is partially driven by factors independent

of specific individual products, such as stock performance, corporate governance

corporate promotional efforts) and partially driven by individual product brand

equity. Corporate brand equity will directly influence repeat purchase intentions

as a purchasing risk reducer. At the same time, product brand equity will also

affect repeat purchasing intentions indirectly, through its effect on corporate

brand equity.

3.4 Dimensions of CBBE (summary)

After comparing the model presented by Aaker and Keller, a combination of the

brand equity dimension was done and a model was selected to suit the purpose

of this study.

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Table 3.4: Summary of Brand equity dimension from Aaker and Keller models

Source Dimension Definition

Aaker (1991) Brand Loyalty Aaker(1991) defines brand loyalty as a
situation which reflects how likely a
customer will be to switch to another
brand, especially when that brand makes
a change , either in price or in product
features.
Aaker (1991,2002) Brand Awareness Aaker defines brand awareness as “the
ability of the potential buyer to recognize
and recall that a brand is a member of a
certain product category” Customer
based brand equity occurs when the
customer has a high level of awareness
and familiarity with the brand and holds
some strong, favourable , and unique
brand associations in memory
Aaker (1991) Perceived Quality Perceived quality is defined as “the
customer‟s perception of the overall
quality or superiority of a product or
service with respect to its intended
purpose, relative to alternatives.
Aaker (1991) Brand Associations Aaker defines, brand association as
“anything linked in memory to a brand”.
Brand associations may be seen in all
forms and reflect characteristics of the
product or aspects independent of the
product itself.
Keller (2003) Brand resonance Keller examines brand loyalty under the
term “brand resonance “ which refers to
the nature of customer-brand relationship
and the extent to which customers feel
that they are “in sync” with the brand.
Aaker (2002) Brand Reputation Tangible and intangible perception of
what it is „good at‟.

3.4.1 Brand Awareness

Brand awareness is a very important element in the branding process.

Customers should be aware about the product. Consumers will choose only the

recognized item if there are two items to select. The demand on a certain brand

increases when more awareness and acceptance of the brand are created

among customers.

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There are four different levels of awareness, namely, dominant, top-of-mind,

recall and recognition. Dominant brand means the customers can think of the

product category. For examples, Klenex, Jell-O and Al steak sauce. the second

one is “top of mind” which means the customers can think of the first brand: for

examples, Pepsi and Coca Cola. The third level is recalling brands, which are all

the brand names easier to recall after you, have mentioned the “top-of-mind”

brand. A consumer can recall all different types of laundry like Downey Surf and

Cheer. A brand that is merely recognized is the weakest form of awareness, if

asked to name car brands, a consumer may be able to recall ten to 15 different

brands while the others lack brand awareness.

3.4.2 Brand Loyalty

Brand loyalty of customers is classified in five categories. First, is “non-

customers‟ also called “non users”, which means these customers use different

type of products. Second, “price switchers “ which are consumers who always

buy the cheapest product, tend to look for the cheapest product and have a

higher satisfaction. For them, a branded product is costly and not much different.

Third, is “passively loyal” these consumers buy the product because of habit and

not for a reason. These customers can change any time if there is a good

reason. The next category is “fence sitters‟. These customers are interested in

convenience and price; that is, they like the cheaper product but must be a

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convenient situation to purchase a product. Finally, „committed clients‟ like to buy

a particular product in any place at any time.

3.4.3 Perceived Quality

Perceived quality is defined as the consumer‟s judgement about a product‟s

overall excellence or superiority (zeitaml, 1988; Aaker and Jacobsen, 1994). The

perceived quality of products and services is central to the theory that strong

brands add value to consumer‟s purchase evaluations. Consumers are willing to

pay the price premium for the product and services but they perceive higher

quality. A product has to live up to certain quality standards, which may or may

not be tests of true quality. One example is how consumers like to kick tires just

to classify the quality of a car. This shows the difference from the tests of true

quality.

3.4.4 Brand Associations

Consumers have a positive level of brand equity when they are familiar with a

brand and it evokes strong, unique favourable associations. The more deeply a

person thinks about product information and relates it to existing brand

knowledge, the stronger the resulting brand associations will be. Two factors that

strengthen association to any piece of information are its personal relevance and

the consistency with which it is presented over time. The particular associations

we recall and their salience will depend not only on the strength of associations,

but also on the retrieval cues present and the context in which we consider the

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brand. The background to brand equity consists of consumers‟ prior experience

of the brand, either as a result of marketing or direct contact.

3.5 Summary of MPOC Strategic Plan (MPOC, 2007)

The challenges faced by the Malaysian palm industry have increasingly become

more sophisticated and demanding. In order to meet these challenges, in 2006

the management of MPOC embarked on its newly defined mission namely, to

promote the market expansion of Malaysian Palm Oil (MPO) and its products by

enhancing their image and creating better acceptance through awareness of

various techno-economic advantages and environmental sustainability of palm

oil.”

MPOC has set up the Promotions and Branding Division, to work on projects

pertaining to Malaysian palm oil promotions. Promotional activities include

educational programs, Palm Oil Trade Fair and Seminars (POTS), public

relations initiatives, palm oil wildlife conservation fund (POWCF), program for the

rehabilitation and improvement of Malaysian Palm Oil Exports (Prime).

MPOC believes that poor brand building exist in the industry, although palm oil

enjoys a high generic awareness, it‟ not in the same category as other edible oils

owing to poor brand-building. MPOC believes in the need to inculcate this feature

in palm oil marketing and the first step is to dispel the negative image and trigger

acceptability and a better perception of palm oil.

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Table 3.5: Perception versus Reality

Perception
Commodities can‟t be branded
Every commodity is similar
Every customer is the same
Lowest price is the King
Source: MPOC, 2007
Reality
Commodities can be branded
Pricing differs
Customers can be segmented
Prices differ & can be raised

MPOC‟s Promotions and Branding Division‟s goals are:

a) To capitalize on the continued build-up of the health and nutritional

benefits of palm oil in gaining wider acceptance of the oil with the view

to widening the acceptance of palm oil as the best option

b) Clear doubts about palm oil which is generally caused by

misinformation and the lack of accurate information in order to correct

the current perception on palm oil both on health and environment

front.

MPOC‟s Promotions and Branding Divisions objectives are:

a) To create consumer awareness and acceptance of, and eventually

preference, for palm oil to sustain the existing levels of imports from

Malaysia in the short term.

b) To improve the perception and increase the demand in the long term;

and

c) To defeat and neutralize the negative perceptions of palm oil or palm

products.

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MPOC‟s target audiences are food processors and manufacturers, research and

scientific community, medical health professionals, policy makers, general

consumers and media. MPOC believes in the need to differentiate Malaysian

palm oil from its competitors and a need to establish a Malaysian palm oil brand.

Example; adding Malaysia to generic palm oil, could be an inspired route for

them. The reason for branding palm oil is to add credibility to claims made,

easier for consumers to remember the differentiator, enables more efficient and

effective communicator, makes it easier to express its values and provide

sustainable advantage as it differentiates products and services that appear

similar in features and attributes for various types of oil.

3.5.1 Summary of Brand Equity Model For Malaysian Palm Products

This chapter summarizes the definition of brand, brand building model and brand

equity. In exploring brand building model, it was critical to compare product

branding and corporate branding in the literature review. This allowed a deeper

understanding as to why product branding was selected for this research model.

The MPOC strategic plans also showed that product branding was the key area

of development since year 2006 and to create a brand called “Malaysia Palm” .

Understanding of brand asset management process, allows us to the develop

and measure brand equity from customer perspective. After comparing both

Aaker and Kellers models, Aaker‟s model for brand equity was adapted, since it

was widely accepted found suitable to measure the brand equity for Malaysian

palm products and the dimensions of brand equity are summarized as follows:

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  Brand awareness – the ability to recognize or recall Malaysian palm oil

products by direct users or distributors

 Brand associations – anything linked to the direct users or distributors

memory of Malaysian Palm oil products

 Perceived Quality – the buyer‟s judgment about Malaysian palm product‟s

overall excellence or superiority

 Brand loyalty – The tendency to be loyal to a supplier of Malaysian palm

oil, as demonstrated by the intention to purchase from the Malaysian palm

product supplier as a primary choice.

The above definitions of dimension, adapted for Malaysian palm products will

enable the development of conceptual framework in the next chapter, leading to

the study‟s hypotheses development.

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 CHAPTER 4

RESEARCH METHODOLOGY

This chapter will outline the sequence of stages by which the research will be

developed and will also outline the theoretical framework. The research

hypothesis will be tested in this study and full description on the relationship

between brand equity and Malaysian palm oil products, will then be explained in

Chapter 5. The research design, data collection methods and details of

instrumentation and scales will then be explained at the end of the chapter.

4.1 Hypotheses and Conceptual Framework

This study will identify, if positive brand equity exist for Malaysian palm oil

products. Second, it will explore which dimension is the strongest in forming

brand equity for Malaysian palm products. Hence, we are able to determine if

Malaysian palm oil manufacturers and exporter can create a framework and

strategize what elements most matter, where their weaknesses and strengths are

placed in the brand equity model. How are various customer-based measures of

brand equity related to each other (i.e. do they have convergent validity at both

the individual and aggregate level)? How well do the customer-based measures

of brand equity estimate choice at the individual level? What is the role of brand

equity in industrial purchasing?

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Customer based brand equity (CBBE) model approaches brand equity from the

perspective of the customer, whether an individual or organization. The basic

premise of the CBBE model is that the power of a brand lies in what customers

have learned, felt, seen and heard about the brand as a result of their

experiences over time. A brand is said to have positive customer-based brand

equity when consumers react more favorably to a product. In the case of

Malaysian palm products, preference to use palm products from Malaysian

origin, by customers, creates brand equity to the exporters of downstream

producers whom refine, pack and export finished products out of Malaysia.

Hence, the customer based brand equity model by Aaker (1991) and its

dimensions were chosen, because it is the most commonly cited and has been

probed for a number of empirical investigations (Washburn and

Plank,2002;Atilgan,2005), and the most critical parts of which involve the

verification of the dimensions, on which brand equity is based. Based on the

above points and definitions of dimensions and suggested relationships in the

literature, the following hypothesis is formulated:

H1 – Brand awareness has positive direct effect on brand equity of Malaysian

palm products

H2 – Brand associations has positive direct effect on brand equity of Malaysian

palm products

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H3 – Brand loyalty has positive direct effect on brand equity of Malaysian palm

products

H4 – Perceived quality has positive direct effect on brand equity of Malaysian

palm products

H5 – Malaysian palm products have positive brand equity since customers have

preference for Malaysian palm products

H0 – Malaysian palm products have no brand equity

A conceptual research framework is designed to test the above hypothesis

relationships for Malaysian palm product marketing, for export based market. The

hypothesis will be tested and results explained upon completion of survey and

statistical data analysis. Figure 4.1 maps the relationship between the

dimensions of brand equity, to customer preference to purchase Malaysian palm

products. Every dimension is adapted from Aaker‟s (1991) model. Malaysian

palm producers whom are exporting products internationally, will need to win the

preference of consumer in order to sustain business. Preference for Malaysian

palm products, compared to products from other origins, is an asset to exporters,

hence this translates to brand equity for Malaysian palm producers and

exporters.

75
 H1 +ve
Brand Awareness

H2 +ve
Brand Associations Preference
for
Brand Equity
Malaysian
H5+ve
H3 +ve palm
Brand Loyalty products

Perceived Quality H4 +ve

Awareness

Figure 4.1: Conceptual Framework

4.2 Research Methods and Design

The research design selected is descriptive study where detailed descriptions

and analysis on the relationship between both independent and dependent

variable will be analyzed since the objective is to explain the relationship

between brand equity and Malaysian palm products.

The topic of brand equity approach for Malaysian palm products is relatively new.

Even though MPOC has drafted specific product brand strategy in year 2007, no

specific reference has been made to customer-based customer based brand

equity and the use of a model to measure or evaluate brand equity. The

availability of past data specific to brand equity study on Malaysia palm products

and test method is very limited, hence in this study, survey technique to collect

primary data will be conducted.

4.2.1 Research and Statistical Analysis on Brand Equity Approach

The definitions of dimensions, adapted for Malaysian palm products were

adapted from studies done by Yoo (2000) and Atilgan (2005). Atilgan (2005)

used Aaker‟s (1991) brand equity model. Since, beverages are very common

retail product, and need high level of differentiation in order to compete, the

measurements employed to study beverages were found suitable for adaptation

for Malaysian palm products. The statistical results and methods in measuring

77
customer-based brand equity was appropriate to be adapted for this study on

Malaysian palm products and support the conceptual framework of this study.

The reliability comparison of the original scale developed by Yoo (2000) and the

scale used by Atilgan (2005) is depicted in Table 4.1. Yoo (2000) used five-point

scale in the original study, and Atilgan (2005) is using ten-point scale of

agreement to disagreement. A ten-point scale is used in this study to develop the

questionnaire.

Table 4.1: Reliability comparison of two brand equity scales

Brand Equity Dimensions Scale by Yoo (2000) Scale by Atilgan(2005)

Perceived quality (QL) 0.93 0.89

Brand Loyalty (LO) 0.90 0.85

Brand Associations (ASSC) 0.94 0.62

Brand Awareness (AW) 0.74

Brand Equity 0.93 0.87

Overall scale - 0.91

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Table 4.2: Results of the factor analysis; factors, variances, loading and
statements, adapted from Atilgan (2005)

Factor Interpretation Loading Brand Equity attribute

(% variance explained)
Perceived quality (49 per cent)
0.820 X is of high quality

0.820 The likely quality of X is extremely

high
0.780 The likelihood that X is reliable is
very high

0.700 X must be of very good quality

0.660 I am aware of X

Brand awareness (11 percent)

0.786 I can recognize X among competing
brands
0.756 Some characteristics of X come to
my mind quickly
0.739 I know what X looks like

Brand loyalty (8 per cent)

0.866 I would not buy other brands, if X is
available at the store

0.851 X would be my first choice

0.856 I consider myself to be loyal to X

Brand associations (6 per cent)

0.874 I have difficulty in imagining X in my
mind
0.602 I can quickly recall the logo X

Table 4.2, lists the factors in the order in which it was extracted from the data ,

derived from the survey employed by Atilgan (2005) to measure the brand

equity for Product X in the beverage industry, in Turkey. Results of the survey is

listed in the table. Similar questions will be developed, replacing Product X as

Malaysian palm products.

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Overall brand equity and overall satisfaction scale

Yoo (2000) have developed the overall brand equity scale and four items from

this scale were adopted to measure the consumer-based brand equity and

identifying preference for Malaysian palm products. The four item items measure

the difference in the consumer choice between the focal branded product and an

unbranded product given the same level of product features. In line with this

study, this definition relies on brand knowledge structures in the minds of

consumers as a foundation of brand equity. The measure is done on a Likert-

scale. These questions were also found suitable, since it is designed to test the

preference of Malaysian palm products, compared to other sources of palm

products.

In line with Anderson (1994), overall satisfaction is defined as an overall

evaluation based on the total purchase and consumption experience with a

product or service over time. Therefore, in this study an overall satisfaction

measure was used as a summary evaluation of the entire Malaysian palm

product use experience from customer perspective. In Table 4.3, the measure is

described with results adapted from Ballester (2005). It involves not only the

valence (positive) and (negative) but also the intensity and it is represented by

three items measured on a five-point scale (Oliver, 1997). In Table 4.3,

information about reliability and convergent validity of the different measures is

also reported.

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Table 4.3: Overall brand equity and overall satisfaction scale

Item description Standardized t-value Reliability

Loading
SCRª AVEb Alpha

Overall Brand Equity 0.88 0.66 0.85

It makes sense to buy (X) 0.81 15.77

instead of any other brand,
even if they are the same

Even if another brand has the

same features as (X), I would 0.74 13.84
prefer to buy (X)

If there is another brand as

good as (X), I prefer to buy
(X) 0.81 15.86

If another brand is not

different from (X) in any way,
it seems smarter to purchase 0.88 18.05
(X)

Overall Satisfaction

Considering all my
consumption experience with 0.91 19.09 0.85 0.66 0.77
(X) I am ….
a) Very satisfied…

Source: Ballester (2005)

4.2.2 The Questionnaire Design

A questionnaire survey, containing 13 items rates on a ten-point scale of

agreement-disagreement, rating Malaysian palm products. The rating indicates

how well Malaysian palm products perform on the attributes tested. The

advantage of using interval scale is that it permits the researchers to use variety

81
of statistical techniques which can be applied to nominal and ordinal scale data in

addition to the arithmetic mean, standard deviation, product-moment correlations,

and other statistics commonly used in marketing research (Malhotra,1999).

The questionnaire was developed, adapted from a prior research done by

Altilgan (2005), using 13 questions on 10-point scale of disagreement-

agreement, to measure brand equity dimensions. Overall brand equity and

satisfaction scales are also used to measure customer brand knowledge and

consumption preference towards Malaysian palm products.

There are 3 parts to the questionnaire:

i) PART A – each variable is tested, based on four dimensions adopted

from Aaker (1991), with 13 questions were used. Dimensions are as

follows:

a. Dimension One – Perceived Quality

Perceived quality is defined as the consumer‟s judgment about a

product‟s overall excellence or superiority, Aaker (1991). The

perceived quality of products and services is central to the theory

that strong brands add value to consumer‟s purchase evaluations.

Consumers are willing to pay the price premium for the product

and services but they perceive higher quality.

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b. Dimension Two - Brand awareness

Brand awareness is a very important element in the branding

process. Customers should be aware about the product.

Consumers will choose only the recognized item if there are two

items to select. The demand on a certain brand increases when

more awareness and acceptance of the brand are created among

customers.

c. Dimension Three – Brand Loyalty

Aaker (1991) defines brand loyalty as a situation which reflects

howl likely a customer will be to switch to another brand, especially

when a brand makes a change, either in price or product features.

d. Dimension Four - Brand associations

Consumers have a positive level of brand equity when they are

familiar with a brand and it evokes strong, unique favorable

associations. The more deeply a person thinks about product

information and relates it to existing brand knowledge, the stronger

the resulting brand associations will be. Two factors that strengthen

association to any piece of information are its personal relevance

and the consistency with which it is presented over time. The

background to brand equity consists of consumers‟ prior experience

of the brand, either as a result of marketing or direct contact.

83
Table 4.4: Questions developed for questionnaire, adapted from prior research

Factor Interpretation and attributes Source Modification to attributes

Perceived quality
1) X is of high quality Yoo (2000) Product x was replaced with
2) The likely quality of X is extremely high Atilgan(2005) “Malaysian palm products”
3) The likelihood that X is reliable is very high
4) X must be of very good quality
5) I am aware of X

Brand awareness
6) I can recognize X among competing brands Yoo (2000) Product x was replaced with
7) Some characteristics of X come to my mind quickly Atilgan(2005) “Malaysian palm products”
8) I know what X looks like

Brand loyalty
9) I would not buy other brands, if X is available at the Yoo (2000) Product x was replaced with
store Atilgan(2005) “Malaysian palm products”
10) X would be my first choice
11) I consider myself to be loyal to X

Brand associations
12) I have difficulty in imagining X in my mind Yoo (2000) Product x was replaced with
13) I can quickly recall the logo X Atilgan(2005) “Malaysian palm products”

Overall brand equity

14) It makes sense to buy (X) instead of any other Yoo (2000) Product x was replaced with
brand, even if they are the same Ballester (2005) “Malaysian palm products”

15) Even if another brand has the same features as

(X), I would prefer to buy (X)

16) If there is another brand as good as (X), I prefer to

buy (X)

17) If another brand is not different from (X) in any way,

it seems smarter to purchase (X)

Overall satisfaction
18) Considering all my consumption experience with Ballester (2005) Product x was replaced with
(X) I am …. “Malaysian palm products”
Fully adopted
a) Very satisfied…

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 ii) PART B – The profile of respondent companies are gathered by asking

questions related to, company size, nature of business, purpose of

Malaysian palm oil purchase and sources of supply. At the same time

the questions are designed to select and profile, only those whom have

knowledge purchasing/using Malaysian palm oil products.

iii) PART C – Data on respondents profile are collected. Variables

measured are age, gender, level of education, job function and

experience level in the use or purchase of Malaysian palm products.

4.3 Data Gathering Method

A combination of both primary and secondary data collection method will be used

for this study. The primary data will consist of questionnaire which will then be

distributed to buyers of Malaysian palm oil products based in Europe, Central

Asia and the Middle East. Secondary data will also be collected for this study.

This will include all related publications, industry related publications from

government and non-government bodies. Readily data from market databases

will also be included in this secondary data gathering methods, covered a period

of 4 weeks. The secondary data source was also used to develop the

questionnaire design, which was used in this study.

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4.4 Data Analysis Technique

The questionnaire used for data collection contains scales to measure the

various constructs depicted in the conceptual framework. Respondents are

asked to express agreement or disagreement of a ten-point scale for brand

dimension scale. For overall brand equity and satisfaction measure, the Likert-

type scale is used to measure respondents response towards Malaysian palm

products. Thus a numerical value can be calculated from all the responses.

Responses will be coded based on questionnaire items. The final inputs then

transferred to SPSS v.11 to generate various statistical analyses. The analyses

will comprise four parts:

1) Respondent demographic profile using frequencies and percentage

2) Company purchase profile using frequencies and percentage

3) Correlation between independent and dependent variable

4.5 Summary

The results obtained will reflect on the brand equity value relationship of

Malaysian palm products using the customer based brand equity model, adapted

from Aaker (1991). Study should reflect the preference for Malaysian palm

products, which translates to brand equity for Malaysian palm product exporters.

Correlation will identify which dimension for Malaysian palm products are

positive and dimensions that form the strongest path to brand equity for

Malaysian palm products.

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 CHAPTER 5

RESEARCH FINDINGS

In this chapter the results of the survey are reported and analyzed. The

structured survey questionnaires were distributed to respondents either in person

or through the internet. Respondents were selected based on their experience

and involvement with Malaysian palm products. A total of 72 survey

questionnaires were received from the respondents, which were then analyzed

with the aid of SPSS software, a statistical tool. As mentioned in Chapter 4, the

survey form distributed has three main components, Section A, B and C. Section

A focuses on the measurements for brand equity model. Section B and C, tests

on the demographic data of respondents and the profile of company purchasing ,

using and distributing Malaysian palm products. Findings are presented first for

Section B and C. Section A is used for hypothesis testing, using correlation

analysis.

5.1 Demographic Data of Respondents

Table 5.1, indicates the output based on 72 respondents. The ratio of male

respondents is 63.9 percent and female respondent is 36.1 percent. The industry

is more dominated by males in regions like Middle East and Pakistan. In

European country, the gender participation in the commodity and food related

industry is equal. Major group of respondents fall in the age group of 20-35 years

old, representing 52.8 percent. Balance 33.3 percent, belong to the age group of

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“36 to 45 years”. This shows major group of respondents are still young and in

the early stages of their career in this industry. Some of the respondents are

second generation managing the family business.

In measuring the academic qualification required to be in this industry, the

minimum entry level tested is high school, contributing to only 1.4 percent.

Majority of the respondents are degree holders (68.1 percent) and rest have

master degree (23.6 percent). This shows personnel whom are involved in this

industry are expected to have at least a degree as basic qualification to work or

be involved in this industry. It is important to note this, as any programs

developed to market Malaysian palm oil, would have to cater to this group

academically qualified and highly knowledgeable.

Respondents were selected based on their background and involvement in the

supply chain of importing Malaysian Palm products. From the reply received, 41

out of 72 respondents are working in the sales and marketing department in

current organization. The second highest, 27 respondents, are involved in

purchasing or sourcing of Malaysian palm products for their current company.

In this research, the level of experience in using and purchasing Malaysian palm

products was also tested. This is important to understand how much of

experience and exposure respondents have in buying or using Malaysian palm

products. Such experiences could have been from previous or current work

88
experience. Only 3 respondents have less than one year experience. 40

respondents have experience of minimum 1 year to 5 years and the mean value

is 4.22 years. The rest, 29 respondents have above 5 years of experience in

handling Malaysian palm products. The length of exposure time, these

respondents have is a measure of how long ago Malaysian palm products were

able to reach out to these group of people. Malaysian palm products were

commercially developed in Malaysian since 1960, but downstream products were

only exported in mid 1970s, in line with industrialization policy of the Malaysian

government. Malaysian palm products have been in the market for the past 30

years and probably did not get immediate acceptance as a substitute for animal

based fats and soy based cooking oil, which was popular then. The younger

generation of respondent whom are in age group of 20-35 years are exposed to

palm products and have started accepting Malaysian palm products more

proactively. The continued promotional programs by MPOC has generated global

awareness of the benefits of Malaysian palm products in various regions,

especially where respondents are located.

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Table 5.1: Demographic profile of respondents

Profile N (%) Profile N (%)

Gender Age

Male 46 (63.9) 20 to 35 years old 38 (52.8)

Female 26 (36.1) 36 to 45 years old 24 (33.3)

Total 72 (100) 46 to 55 years old 9 (12.5)

56 years old 1(1.4)

Total 72 (100)

Highest level of education Current Job function

High school 1 (1.4) Purchasing /Sourcing 27 (37.5)

Diploma 5 (6.9) Research and development 4 (5.6)

Degree 49 (68.1) Sales and Marketing 41 (56.9)

Master degree 17 (23.6) Production None

Total 72 (100) Logistics and supply chain None

Total 72 (100)
Years of experience in
use/purchase of Malaysian
palm oils products
0-1 year 3 (4.2)

1-2 years 5 (6.9)

2 -3 years 14 (19.4)

3 -4 years 5 (6.9)

4 -5 years 16 (22.2)

Above 5 year 29 (40.3)

Total 72 (100)

Mean value 4.22

90
5.2 Profile of Malaysian Palm Product Purchasers

Profile of companies using, trading or distributing Malaysian palm products was

tested in Section B of the survey. Table 5.2 lists purchasers of Malaysian palm

products by country. This study tried to explore as many purchasers from

different regions. Europe is represented by Bulgaria, Romania, Lithuania,

Ukraine and these countries are members of EU, except Ukraine. Middle East is

represented by Lebanon, Iran, UAE (Dubai) and Saudi Arabia. Central Asia

and Asia is represented by Russian, Uzbekistan, Vietnam, Philippines and

Pakistan. Major group of companies, represented by 12 out of 72 respondents,

are located in Russia. This is in line with the Malaysian government trade

agreement with Russia. Russia takes part is bartering machineries with crude or

refined palm oil, to meet its high local consumption of oils and fats. Such trades

are mediated by local ministry with assistance from MPOB. Second largest

group, 16 out of 72 respondents are equally located in Romania and Bulgaria.

These countries have local production of corn and sunflower production, however

it does not meet their population consumption requirement, hence palm products

are imported, since it a cheaper alternative versus soy bean oil. Middle East is

represented by 18 out of 72 respondents. Middle East purchasers are heavy oils

user due to their food preparation style and preference to use Malaysian based

products, due to its HALAL certification. Heavy promotional activity by HALAL

food exhibitions in Malaysia and also efforts by MPOC, reaching to Muslim

states has resulted in high acceptance of Malaysian based products and the

largest being palm oil.

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Table 5.2: Malaysian palm product purchasers by country

Profile by Country N (%)

Lebanon 3 (4.2)
Bulgaria 8 (11.1)
Iran 6 (8.3)
Russia 12 (16.7)
UAE (Dubai) 4 (5.6)
Vietnam 2 (2.8)
Philippines 5 (6.9)
Romania 8 (11.1)
Lithuania 4 (5.6)
Ukraine 3 (4.2)
Uzbekistan 7 (9.7)
Pakistan 5 (6.9)
Saudi Arabia 5 (6.9)
Total 72 (100)

Table 5.3, shows the summary of company profiles, used to understand the

company size, nature of business, experience, purchase size and countries palm

products are sourced from. Number of employees were used to measure the

company size. Apart from testing the brand equity, this study wanted to know

the purchase behavior of companies relative to the size and experience with

Malaysian palm products. Most companies represented in this study, have 11 to

30 employees. Only, 4 out of 72 respondent, have more than 51 employees.

These companies are medium sized, and are mainly focused on trading (47

respondents) and distributing palm based products (25 respondents). Such

organizations, normally have less overhead compared to manufacturing facilities.

It was critical to know where exactly these companies were located in the supply

chain of palm product imports. These findings show that, primarily Malaysian

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palm products are dependant on traders and distributors to market palm products

in the local market. The companies are critical in the supply chain of exporting

Malaysian palm products, especially in importing downstream products such as

cooking oil, shortening, vegetable ghee and ole0-chemicals.

This research survey also tested, the use or purpose of importing Malaysian

palm products by the respondent companies was tested. Summarized results

show, the use of Malaysian palm products are for food and non-food application.

Only 38 respondents are focused in food industry and 31 respondents are focus

on both. Only 3 respondents are focused in non-food application only. Hence, in

the supply chain of marketing palm products, to survive, companies position

their focus on marketing products to food industry only or serve both food and

non-food industry. Non-food industry are normally oleo-chemical based soap and

cosmetic producers. Food industry is constantly growing, especially in newly

developing countries like Romania, Bulgaria and Saudi Arabia.

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Table 5.3: Profile of Malaysian palm product purchasers

Profile N (%) Profile N (%)

Company size (by number of
Nature of business
employees)
Trading of palm products 47 (65.3) 1 -10 5 (6.9)
Distribution of palm products 25 (34.7) 11-20 27 (37.5)
Food manufacturing None 21-30 32 (44.4)
Oleo chemicals None 31-40 4 (5.6)
Total 72 (100) 51 and above 4 (5.6)
Total 72 (100)

Company’s years of
Use of Malaysian palm
experience in use/purchase of
products
Malaysian palm oils products
1 -5 years 22 (30.6) Food application 38 (52.8)
6 – 10 years 35 (48.6) Non- food application 3 ( 4.2)
11 -15 years 12 (16.7) Both 31 (43.1)
21 years and above 1 (1.4) Total 72 (100)
Total 72 (100)

Percentage of Malaysian
Sources of palm products palm products used from
total purchase/usage
Indonesia 36 (50) 11-20 1 (1.4)
Europe 4 (5.6) 21-30 3 (4.2)
Egypt 3 (4.2) 31 -40 6 (8.3)
Germany 5 (6.9) 41 -50 7 (9.7)
Malaysia only 23(31.9) 51 -60 11 (15.3)
Total 72 (100) 61 -70 11 (15.3)
71 -80 3 (4.2)
81-90 5 (6.9)
91-100 25 (34.7)
Total 72 (100)

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Most important factor, Size of total purchase of
influencing the purchase of N (%) Malaysian palm products ( in N (%)
Malaysian palm products metric tones) in a year
Product quality 17 (23.6) 1 -2,000 8 (11.1)
Product price 40 (55.6) 2,001-4,000 15 (20.8)
Delivery 3 (4.2) 4,001-6,000 12 (16.7)
Supplier reliability 4 (5.6) 6,001-8,000 11 915.3)
Supplier relationship 8 (11.1) 8,001-10,000 11 (15.3)
Product brand name None Above 10,000 15 (20.8)
Total 72 (100) Total 72 (100)

In this study, it was important to know where purchaser are getting their palm

products from, apart from Malaysia. Other sources or origin of palm products are

in direct competition with Malaysia as an exporter. Major competition is seen

from Indonesia, representing 36 respondents whom have stated preference to

buy palm products from this origin. It was comforting to know, 23 respondent are

purchasing only Malaysian products. This is consistent with the findings on the

total volume of Malaysian palm products purchased, 25 respondents have

indicated purchase ratio of 91 to 100 percent, from total palm purchase. Europe,

Egypt and Germany have palm refineries and purchase in bulk vessels, crude

palm oil. These crude palm oil is refined in the these refineries and downstream

products are distributed within the country or to the neighboring countries. As

more refineries are built in Europe and the Middle East, Malaysian downstream

products, such as cooking oil, shortening, oleo-chemical product and vegetable

ghee, will face more competition in the long term.

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This is why, it is critical for Malaysian downstream products to have a strong

brand strategy to market its products. Developing a brand strategy allows

Malaysian downstream producers to focus on key areas to counter competition

and secure market shares.

Apart from knowing where purchaser buy their products from, it was important to

know how many years of experience they have in purchasing Malaysian palm

products. The major group of companies (35 respondents) have been using

Malaysian palm products, 6 to 10 years. The second highest group (22

respondents) has been using Malaysian palm product about 1 to 5 years. The

results shows that most companies are relatively new to Malaysian palm

products, despite efforts by Malaysian industrialization policy and MPOB to

promote Malaysian palm usage, since mid 1970s. Only one respondent out of 72,

has indicated experience of above 21 years. It has been 3 decades, since

Malaysian palm product were introduced to the world and only in the last 5 to 10

years, producers and governmental organizations have been more aggressive in

marketing abroad.

It was also very critical to test, what was the most important element when

decisions were made to purchase Malaysian palm products. Product price was

the most important factor, selected by 40 respondents and 17 respondents

choose product quality. Collectively, supplier reliability and relationship was

selected by 12 respondents. The findings coincide with the fact that Malaysian

crude palm oil production cost is the much cheaper versus soy bean in United

96
States and rapeseed in Europe, based on survey conducted by MPOB.

Competitive production will result in cheaper downstream product to compete in

regions like Europe. None of the purchasers or respondents choose product

brand name as an important element. Most purchaser are still driven by product

price in making final purchase decision, however some importance is also given

to product quality and supplier relationship.

5.3 Descriptive Analysis on Brand Equity Attributes

Table 5.3 presents the summary on the descriptive statistics of the thirteen (13)

brand equity attributes for Malaysian palm products. All variables are measured

using the 10-point scale, from Disagreement (1) to Agreement (10). The higher

the mean score, the greater respondents agree to the stated attribute. Overall

brand equity and satisfaction scales are also used to measure customer brand

knowledge and consumption experience. The mean score ranged from the

lowest 7.01, to the highest 9.18. The standard deviation ranges from 0.793 (the

lowest) to the highest at 2.126, (Question 12 from the survey is a reverse

questions, and it was recorded to be analyzed together with other attributes).

The question with highest agreement mean score, is on product quality. This is

an indication, respondents perceive well the quality of Malaysian palm products.

Questions on brand loyalty ranged between, mean of 7.47 and 7.72, showing

respondents do not have, extremely high level of loyalty towards Malaysian

product, consistent with earlier findings in company purchase behavior,

suggesting multiple source of palm products and preference to product price as

97
key decision making factors. Besides that, there is lack of loyalty for commodity

type products due to little product differentiation. Brand associations attribute test

on respondents ability to recall images and logo of Malaysian palm products. The

mean score indicates logo recall is weak. This probably is an indication that

Malaysian products do not carry very memorable and prominent logos on their

packing or labels.

Table 5.4 presents the summary on the descriptive statistics for the overall brand

equity attributes and overall satisfaction for Malaysian palm products. All

variables are measured using the five-point Likert type scale, from Strongly

Disagree (1) to Strongly Agree (5).Overall brand equity and satisfaction scales

were also used to measure customer brand knowledge and preference to use

Malaysian palm products. The mean scored ranged from lowest 3.63 to the

highest at 3.97, which shows preference to use Malaysian palm products. The

standard deviation ranged from 0.740 (lowest) to 0.934 (highest).

Overall brand equity attributes summarize overall consumer experience towards

Malaysian palm products. Mean towards the value of 5 is agreement, and highest

mean score is for overall satisfaction at 3.97. Respondents have generally

encountered positive consumption experience towards Malaysian palm products.

The primary reason could be the fine balance of acceptable product quality and

competitive pricing

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Table 5.4: Descriptive analysis of brand equity attributes

Statements used for Brand

Dimension Mean Standard
Equity attribute for Malaysian
Palm products (N=72) Deviation
Perceived Malaysian palm products is of
high quality 9.18 0.793
quality
The likely quality of Malaysian
palm products is extremely high 8.82 0.969

The likelihood that Malaysian

palm products is reliable is very 8.74 0.805
high

Malaysian palm products must be

of very good quality
9.18 0.793

I am aware of Malaysian palm

products 8.90 1.503

I can recognize Malaysian palm

products among competing 8.06 1.609
Brand awareness brands
Some characteristics of
Malaysian palm products come to 7.32 2.122
my mind quickly
I know what Malaysian palm
products look like 7.39 2.046
Brand I would not buy other brands, if
loyalty Malaysian palm products is
7.72 1.475
available at the store

Malaysian palm products would 7.71 1.467

be my first choice
I consider myself to be loyal to
Malaysian palm products
7.47 2.096

Brand associations I have difficulty in imagining

Malaysian palm products in my 8.60 1.725
mind
I can quickly recall the logo
Malaysian palm products 7.01 2.126

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Table 5.5: Descriptive analysis of overall brand equity attributes and overall
satisfaction.
Statements used for overall brand
Dimension Mean
equity attribute and overall Standard Deviation
(N=72)
satisfaction
Overall
brand It makes sense to buy Malaysian palm
products instead of any other palm 3.81 0.816
equity products, even if they are the same

Even if another brand has the same

features as Malaysian palm products,
3.78 0.791
I would prefer to buy Malaysian palm
products

If there is another brand of palm

product as good as Malaysian palm
3.65 0.858
products, I prefer to buy Malaysian
palm products

If another brand of palm product is not

different from Malaysian palm
3.63 0.740
products in any way, it seems smarter
to purchase Malaysian palm products

Overall
satisfaction Considering all my consumption
experience with Malaysian palm
3.97 0.934
products I am ….
a) Very satisfied…

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5.4 Normality Test of Data

Normality tests are conducted to ensure there are no-outliers and no errors
during the coding process and to ensure that the assumptions for the subsequent
tests are met. Skewness is a measure of how symmetrical the data are; a
skewed variable is one whose mean is not in the middle of the distribution.
Skewness should be in the range +2 to -2. For 72 respondents as we can see the
Skewness is within range. So, the data are normally distributed.

Kurtosis has to do with how peaked the distribution is, either too peaked or too
flat. Extreme values for kurtosis are within +3 to -3. As for brand loyalty, Kurtosis
range is extremely high at 4.583.

Table 5.6: Summary of analysis

Factor Skewness Kurtosis
Std. Std. Std
Mean Statistics Statistics
Deviation Error Error
Perceived
8.9792 0.65768 -0.676 0.283 0.792 0.559
Quality
Brand
7.6343 1.21304 -1.132 0.283 4.583 0.559
Loyalty
Brand
7.9167 1.14814 -1.080 0.283 0.997 0.559
Awareness
Brand
7.8056 1.06780 -0.778 0.283 0.238 0.559
Associations
Brand
3.7153 0.67436 -0.446 0.283 0.656 0.559
Equity
Overall
3.97 0.934 -0.904 0.283 -0.104 0.559
Satisfaction
** N= 72

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5.5 Cooefficient

For Model one (1), the Beta value for brand awareness is the highest among the

all the independent variables. The beta value for perceived quality indicates, the

highest effect on the dependent variable, which is brand equity.

Table 5.7: Coefficients

Unstandardized Standardized
t Sig.
Model Coefficients Coefficients
B Std. Error Beta

(Constant) 0.729 1.385 0.526 0.600

Brand
-0.102 0.054 -0.243 -1.867 0.066
Associations
1 Perceived
0.209 0.132 0.182 1.589 0.117
Quality
Brand
0.097 0.073 0.165 1.326 0.189
Awareness
Brand Loyalty
0.148 0.072 0.257 2.063 0.043
Dependant Variable = Brand Equity

5.6 Hypothesis Testing

Correlation analyses are conducted to show the strength and direction of the

relationships between two variables. This analysis technique shows an indication

of both the positive and negative directions. The Pearson correlation coefficient

(r) ranges between - 1 to + 1. The minus or plus sign merely shows the direction

of the two variables and does not indicate the strength of the relationship. The

strength is indicated by the size of the value. Perfect correlation is observed at +

1 or – 1 while at 0 there is no correlations.

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In this section as per the objective of our research, the strength and direction of

the relationships between each of the independent variables against the

dependent variable will be analyzed.

Table 5.8: Summary of correlations for variables

Brand Brand Brand Perceived Brand

Awareness Associations Loyalty Quality Equity
Brand
1.000 0.382 0.290 -0.049 0.138
Awareness
Brand
0.382 1.000 0.384 -0.145 -0.108
Associations
Brand
0.290 0.384 1.000 -0.027 0.207
Loyalty
Perceived
-0.049 -0.145 -0.027 1.000 0.203
Quality

Brand Equity 0.138 -0.108 0.207 0.203 1.000

N=72

As from the above analysis, there is positive relationship between the

independent variable brand awareness, brand loyalty and perceived quality.

Hence, this supports the three hypothesis, which are:

H1 - Brand awareness has positive direct effect on brand equity of Malaysian

Palm products

H3 – Brand loyalty has a positive direct effect on brand equity of Malaysian palm

products

H4 – Perceived quality has a positive direct effect on brand equity of Malaysian

palm product

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The is a negative relationship between the independent variable brand

association and brand equity, hence H2 is not accepted;

H2 – Brand associations has positive direct effect on brand equity of Malaysian

palm product

Table 5.9: Summary of correlations for Brand Equity and overall satisfaction

Overall satisfaction

Pearson Correlation 0.535

Brand Equity
Sig. (2 tailed)
0.000
N=72

As from the above analysis, there is a positive relationship between the brand

equity and the dependent variable overall satisfaction. This confirms the

hypothesis, H5 which is, Malaysian palm products have positive brand equity,

since customers show preference for Malaysian palm product, and leads to

overall customer satisfaction, hence H5 is accepted. The null hypothesis (H0),

which is Malaysian palm product have no brand equity is not accepted, since

there is positive correlation for having preference, which translates to brand

equity.

5.7 Summary

This study was set out to explore and analyze, core brand equity elements from

customer experience. A total of 72 respondents represent in this study, shared

their knowledge and experience on Malaysian palm product. In identifying these

core elements of brand equity, companies‟ purchase behavior was also

104
analyzed. Respondents come from the functional background of purchasing and

sourcing and sales and marketing. 29 out of 72 respondents have more than 5

years of experience in handling Malaysian palm products.

Most companies tested are small to medium sized organizations with 11 to 30

employees, because the primary business activity is trading or distribution of

palm products. It was confirmed that, Malaysian palm products face major

competition from Indonesia for downstream products and the key decision

making is based on product price during purchase. Malaysia and Indonesia have

low production cost and equally compete in exporting palm products.

In testing the brand equity model by Aaker (1991), 3 dimensions showed positive

relationship to brand equity, except brand associations, which has negative

relationship with brand equity. Brand equity and overall satisfaction show positive

relationship. The strongest path is shared by brand loyalty and perceived quality.

The summary of correlation results is shown in Figure 5.4, to map the

relationship between the dimensions of brand equity with preference for

Malaysian palm products and brand equity.

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 H1 +ve (0.138)
Brand Awareness

H2 +ve (0.108)
Brand Associations Preference
for
Brand Equity
Malaysian
H3 +ve (0.207) palm H5+ve (0.535)
Brand Loyalty
products

Perceived Quality
Awareness H4 +ve (0.203)

Figure 5.1: The relationship between dimensions of brand equity, with preference for Malaysian palm products
and brand equity
 CHAPTER 6

CONCLUSION AND RECOMENDATIONS

This chapter primarily focuses on discussing the findings and recommendations

of this research. The first section will begin with the discussion of the research

results with regards to the brand equity measurement for Malaysian palm

products. This will be followed by implications of this study and thereafter,

recommendations for future research in this area.

6.1 Discussion of Research Results

This study has taken a fresh look at a familiar phenomenon, branding, which

receives continuous attention from academic researchers, managers and media

commentators. In this study, the main focus has been to identify brand equity for

Malaysian palm products, analyze and identify core brand equity element, based

on customer experience. The finding off this study will help us determine if

Malaysian palm manufacturers and exporters can create a framework and

strategize what elements most matter, where product weakness and strengths

are placed in the brand equity model.

Strategic, financial, and customer implications of brand equity have resulted in

the emergence of different definitions. However, the most comprehensive and

widely accepted definition has come over from Aaker (1991) who defined it as

„set of brand assets and liabilities linked to a brand, its name and symbol that add

107
to or subtract from the value provided by a product or service to a firm and/or to

that firm‟s customers”. This study therefore aimed to test the applicability of the

Aaker‟s brand equity model, as the most common conceptual framework among

several. It also set out to verify the findings of a previous study Yoo et all (2000),

Atilgan (2005) and Ballester (2005), but this time in a different country and

industrial context. Measurement scales were adapted to search and test for a

suitable model to measure and evaluate brand equity for Malaysian palm

products.

Even though our findings do not completely support all of Aaker‟s brand equity

dimensions, perceived quality and brand loyalty was found to have a dominant

effect on brand equity for Malaysian palm products. On the contrary to prior

research, brand association formed positive relationship with brand equity, but in

this study negative relationship was obtained. This can be due to the attributes or

statements used that may not be appropriate for Malaysian palm products. There

is opportunity to explore this further in future research. Overall satisfaction and

brand equity has positive relationship, indicating Malaysian palm products have

managed to garner equity and translate it to customer satisfaction. This will

eventually form a foundation for future marketing projects.

When taking the findings into consideration, it is important to remember that this

study has focused specifically on product level brand equity. If one assumes that

it is easier to copy specific product attributes than intangible brand associations,

108
the strength of brands grounded on product attributes will consequently be more

difficult to sustain than brands based on intangible brand associations. In the

case of Malaysian palm products, findings shows, product attribute is believe to

be of high quality at reasonable price for customer, which translates to repeat

purchase and product loyalty.

6.2 Implications of the Study

Across product categories, consumers face the task of searching for, evaluating

and differentiating among a plethora of comparable products that may be

capable of satisfying the consumers‟ needs to greater or lesser degree. Keller

(2005) stated that while positive customer based brand equity can lead to

greater revenue, lower costs and higher profit, it has direct implications for the

firms‟ ability to command higher prices, customer‟s willingness to seek out new

distribution channels, the effectiveness of marketing communications, and the

success of brand extensions and licensing opportunities. In other words, the level

of customer-based brand equity contributes to the effectiveness of the firms

marketing mix. Customer based brand equity scale give Malaysian palm industry

a structured approach to formulating their branding strategies.

One of the implications derived is, marketing managers should concentrate their

efforts primarily on perceived quality and brand loyalty, which if increased, will

contribute positively to their firm‟s brand equity. Perceived quality has several

important strategic benefits to the firms, such as gaining high market share and

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new customers, supporting brand extensions, reducing marketing costs, and

strengthening brand to the competitive threats. Another point that might be

considered is inter-correlations between the constructs. Especially the relation

between brand loyalty, brand awareness, perceived quality and brand

associations. As a result, it is suggested that on concentrating marketing

strategies on perceived quality, managers should not undervalue the effects of

brand awareness, brand associations and brand loyalty, and should continue to

build on it. The second implication is tangiblizing the intangible. The commodity

industry is partially service oriented and sales are performance based on

relationships, so marketing managers have to formulate strategies based on the

feedback from customers. Part of the scales used in this study depict what

customer value and perceived about product quality, hence this will help form

tactics to winning new customers and keeping the existing ones. In order to make

a beneficial choice in strategy, there is of course a continuous need for

information about the marketplace and consumer perceptions.

6.3 Recommendations for Future Research

Brand orientation is a choice of strategy, in many companies determining their

competitive strength and thereby also their prospects of survival in the long term.

Increased awareness of brands and their potential is important to meet future

competition. Competence in the area of strategic brand management should

therefore be further developed to enable successful brand orientation. This study

has used Aaker‟s model in a simplified approach without introducing other

110
possible elements that may influence brand equity for Malaysian palm products.

Recommendations for future studies revolve mostly around the questions that

were raised or left unanswered or in areas that has relevance to this study.

Issues that might interest future research are brand origin, product uniqueness,

comparison of brand equity measure in geography in different destination market

and compare brand equity of other sources palm products.

6.3.1 Brand Origin

In addition to traditional concepts identified as brand equity influencers, brand

origin must also be considered (Thakor and Kohli, 1996). They define brand

origin as „the place, region or country to which the brand is perceived to belong

by its customers”. Brand origin can be more or less salient for some brands or

others, and therefore, the use of origin cues should be subtle and implicit when

the brand concept relies more on symbolism, while more explicit when the brand

concept relies more on features. In a later article, Thakor anf Lavack (2003) state

that even more important than the brand origin itself is the perceived brand origin

as a source of brand appeal. In their study the authors show, that country of

corporate ownership is a strong determinant of brand origin perceptions. Further

more, country of perceived corporate ownership may also be a stronger influence

than actual country of corporate ownership. It is similarly important, that less

concern be given to the place where brands manufacture their products, and

more to the place where people perceive the brand‟s country of origin to be.

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The image of a country that consumers perceive is one of the factors that

consumers consider in making their purchase decision particularly in the

purchase of consumer durables. As such country of origin image would have had

an impact on the equity of such goods. It would be essentially good to investigate

the relationship between country-of origin image and brand equity.

In addition, the conceptual framework of the present study does not take into

considerations factors that moderate the influence of antecedent of brand equity

on brand equity. Thus, future research should expand the present model by

incorporating moderating factors such as culture and consumer demographics,

which may have significant influence on consumers‟ perception.

6.3.2 Product Uniqueness

It would be essential to test, to what extent the brand and its products are

different from competitor in the mind of consumer. The brand or its products may

have a unique combination of feature and uniqueness. Palm products are highly

commoditized and face stiff competition. Exploring and understanding what

makes Malaysian palm products unique and well accepted is important. This is

could an essential contributing element to creating value to product brand and

contributing to brand equity of the brand itself. The perceived uniqueness of

product may differ based on culture and consumer demographics. In this study,

Malaysian palm products are seen to have unique combination of high product

quality, coupled with reasonable prices, which translates to loyalty from buyers. It

112
would be interesting to explore if Indonesian and European palm product share

similar attributes.

6.3.3 Malaysian Palm Oil Brand Equity in Different Geography

In the last two decades , Malaysian palm product have gone under attack by anti

palm oil campaigns. The effect of this campaigns can be traced in different

geographic regions. In countries were the campaign have high negative impact,

there is a likelihood that brand equity for Malaysian palm product is damaged.

Organizations like MPOB and MPOC has resources and may be keen to

investigate such phenomenon. This would assist in developing campaigns

focused on creating or enhancing brand equity for Malaysian palm products.

6.3.4 Brand equity of Competing Palm Producers, versus Brand Equity of

Malaysian Palm Products

This study has gathered data from respondent on other sources of palm product.

Indonesia has emerged as Malaysia‟s biggest competitor. What makes

Indonesian palm products well accepted? What different product or features are

offered by Indonesian palm producers to have such influence on buyers and

user? The measured scale used in this study can be applied to Indonesian palm

products. Likewise, similar approach can be used for European producers.

Knowing and understanding our competition, allows us a step forward in better

brand orientation and management.

113
6.4 Conclusion

The brand orientation represents the choice of strategy providing a company with

competitive power and ensure the company‟s long-term survival. Product brand

gives products additional value, so they can be sold at a “premium”, thus

increasing the company‟s profitability and enabling its further growth and

development. The basis for the market brand value is the consumers‟ memory

and experience. If the consumers react more positively to the elements of the

marketing mix of a particular brand in comparison to the elements of the

marketing mix of another brand, that means that the product brand has a higher

market value which represents something additional, i.e. it represents a positive

status in the consciousness of the consumers.

In this research, it was found that perceived quality and brand loyalty for

Malaysian palm product has the strongest positive correlation in the brand equity

measure. This can be used as focal point to synchronize activities and

communication and put them in accordance with brand vision. This allows a key

sense of focus in brand management as an asset, development, allocation and

use because the brand is a very valuable asset for a company. These results

have important implications for researchers and the management of international

companies exporting, Malaysian palm products.

114
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 Appendix 1

Major Players in the palm oil supply chain in Malaysia

Small- PK
holders crushers
Govt Refiners
Schemes Oleochem
FELDA proucers

Plantation Palm-based products

companies manufacturers
Upstream Downstream
Producer Producers
Speciality Fats
producers

Retail

Institutional
MPOAELD
A Customers
Exporters/
Importers
Investors

Major Players in
the palm oil
supply chain MPOB
LDA
MPOA
EMPA ELDA
ELDA
Govt.
Agencies
ISP Industry MPOPC
Organizations OAELDA
tion
companies
MOMG POMA NREB ECD
A ELDA A
MEOMA PORAM

Other players
MPOA
ELDA
NGOs
OAELD NASH
A
Unions MAPA
MPOA AELDA
ELDA 120
 Appendix 2

Questionnaire

121
 UNIVERSITY OF MALAYA
Faculty of Business and Accountancy
Graduate School of Business
Master of Business Administration

Survey On

The Brand Equity Approach To Marketing Of Malaysian Palm oil Products

This survey is conducted as part of a research project, which shall be submitted

in completion of the Master of Business Administration degree from the
University of Malaya.

All information will be kept confidential

Prepared by,
Kamaleswari Balakrishnan
CGA 030028
University of Malaya

122
 The Questionnaire

SECTION A:

Item I

Below are some statements about Malaysian Palm Oil products. Please circle the number that best fits your opinion. There is no right
or wrong answer.
1 = Strongly Disagree and 10 = Strongly Agree.

Brand Equity attributes for Malaysian palm products Disagreement Agreement

1 Malaysian palm products is of high quality 1 2 3 4 5 6 7 8 9 1

0
2 The likely quality of Malaysian palm products is 1 2 3 4 5 6 7 8 9 1
extremely high 0

3 The likelihood that Malaysian palm products is reliable 1 2 3 4 5 6 7 8 9 1

is very high 0
4 Malaysian palm products must be of very good quality 1 2 3 4 5 6 7 8 9 1
0
5 I am aware of Malaysian palm products 1 2 3 4 5 6 7 8 9 1
0
6 I can recognize Malaysian palm products among 1 2 3 4 5 6 7 8 9 1
competing brands 0

7 Some characteristics of Malaysian palm products come 1 2 3 4 5 6 7 8 9 1

to my mind quickly 0

8 I know what Malaysian palm products look like 1 2 3 4 5 6 7 8 9 1

0
9 I would not buy other brands, if Malaysian palm 1 2 3 4 5 6 7 8 9 1
products is available at the store 0

10 Malaysian palm products would be my first choice 1 2 3 4 5 6 7 8 9 1

0
11 I consider myself to be loyal to Malaysian palm 1 2 3 4 5 6 7 8 9 1
products 0

12 I have difficulty in imagining Malaysian palm products in 1 2 3 4 5 6 7 8 9 1

my mind 0

13 I can quickly recall the logo Malaysian palm products 1 2 3 4 5 6 7 8 9 1

0

123
 Item II

Below are some statements about Malaysian Palm Oil products. Please circle the number that best fits your opinion. There is no right
or wrong answer.
1 = Strongly Disagree and 5 = Strongly Agree.

Overall brand equity and satisfaction attribute for Malaysian palm products

Disagree

Disagree
Strongly

Strongly
Neutral

Agree

Agree
14 It makes sense to buy Malaysian palm products instead of any other palm
products, even if they are the same 1 2 3 4 5

15 Even if another brand has the same features as Malaysian palm products,
1 2 3 4 5
I would prefer to buy Malaysian palm products
16
If there is another brand of palm product as good as Malaysian palm
1 2 3 4 5
products, I prefer to buy Malaysian palm products

17 If another brand of palm product is not different from Malaysian palm

products in any way, it seems smarter to purchase Malaysian palm
1 2 3 4 5
products

Considering all my consumption/purchase experience with Malaysian palm

products I am …..….

18 Very satisfied… 1 2 3 4 5

SECTION B: Company Profile

This section will identify background of the company you are currently attached too.
Please tick (X) in the appropriate box.

(19) Please state the number of employees in your company

Estimated number of employees: _________________

124
(20) What is the nature of you company’s business

Trading of palm products

Distribution of palm products
Food manufacturing
Oleo Chemicals

(21) My company buys Malaysian palm products, for:

FOOD application
NON-FOOD application
BOTH

(22) How long has your current company been using Malaysian palm products?

Estimated number of years: _________________

(23) Please indicate which other sources, does your company buy palm products from?

Please indicate country: _________________

(24) Please indicate, percentage of Malaysian palm products from total purchase of palm
products

Please indicate percentage: _________________

(25) Please indicate, in volume (metric tones) how much of Malaysian Palm products your
company
purchase in a year

Please indicate metric tone: _________________

(26) In selecting to purchase Malaysian palm product, which of the following factors are
most important
to your company (please select one answer only)

a) Product Quality
b) Product Price
c) Delivery
d) Supplier reliability

125
 e) Supplier relationship
f) Product Brand name

SECTION C: Respondent Profile

This study requires the profiling of our respondents. Kindly indicate your details, in appropriate
columns.
Please tick (X) in the appropriate box

(27) Age

20 to 35 years old
36 to 45 years old
46 to 55 years old
56 years old and above

(28) Gender

Male
Female

(29) Highest level of education

High school
Diploma
Degree
Master Degree
Doctorate

(30) What is your job function, in your current position

Purchasing/sourcing
Research and development
Sales and marketing
Production
Logistics/ supply chain

(31) How long have you been involved in the use/purchase of Malaysian palm products

Estimated number of years: _________________

-THE END -

126
 Appendix 3
Data Analysis

Demographic Data:

Statistics

COUNTRY
N Valid 72
Missing 0

Descriptive Statistics

N Range Minimum Maximum Mean Std. Deviation Variance

A1 72 3 7 10 9.18 .793 .629
A2 72 4 6 10 8.82 .969 .939
A3 72 3 7 10 8.74 .805 .648
A4 72 3 7 10 9.18 .793 .629
A5 72 7 3 10 8.90 1.503 2.258
A6 72 8 2 10 8.06 1.609 2.588
A7 72 9 1 10 7.32 2.122 4.502
A8 72 9 1 10 7.39 2.046 4.185
A9 72 8 2 10 7.72 1.475 2.175
A10 72 8 2 10 7.71 1.467 2.153
A11 72 9 1 10 7.47 2.096 4.394
A12 72 9 1 10 8.60 1.725 2.976
A13 72 8 2 10 7.01 2.126 4.521
A14 72 4 2 6 3.81 .816 .666
A15 72 3 2 5 3.78 .791 .626
A16 72 3 2 5 3.65 .858 .737
A17 72 3 2 5 3.63 .740 .548
A18 72 4 1 5 3.97 .934 .872
Valid N (listwise) 72

127
 COUNTRY

Cumulative
Frequency Percent Valid Percent Percent
Valid Lebanon 3 4.2 4.2 4.2
Bulgaria 8 11.1 11.1 15.3
Iran 6 8.3 8.3 23.6
Russia 12 16.7 16.7 40.3
Dubai 4 5.6 5.6 45.8
Vietnam 2 2.8 2.8 48.6
Philliphines 5 6.9 6.9 55.6
Romania 8 11.1 11.1 66.7
Lithuania 4 5.6 5.6 72.2
Ukraine 3 4.2 4.2 76.4
Uzbekistan 7 9.7 9.7 86.1
Pakistan 5 6.9 6.9 93.1
Saudi Arabia 5 6.9 6.9 100.0
Total 72 100.0 100.0

B19

Cumulative
Frequency Percent Valid Percent Percent
Valid 1-10 5 6.9 6.9 6.9
11-20 27 37.5 37.5 44.4
21-30 32 44.4 44.4 88.9
31-40 4 5.6 5.6 94.4
51 and above 4 5.6 5.6 100.0
Total 72 100.0 100.0

B20

Cumulative
Frequency Percent Valid Percent Percent
Valid "Trading of palm product" 47 65.3 65.3 65.3
'Distribution of palm
25 34.7 34.7 100.0
products"
Total 72 100.0 100.0

B21

Cumulative
Frequency Percent Valid Percent Percent
Valid "Food application" 38 52.8 52.8 52.8
"Non-Food application" 3 4.2 4.2 56.9
"Both" 31 43.1 43.1 100.0
Total 72 100.0 100.0

128
 B22

Cumulative
Frequency Percent Valid Percent Percent
Valid 1-5 22 30.6 30.6 30.6
6-10 35 48.6 48.6 79.2
11-15 12 16.7 16.7 95.8
16-20 2 2.8 2.8 98.6
21 years above 1 1.4 1.4 100.0
Total 72 100.0 100.0

B23

Cumulative
Frequency Percent Valid Percent Percent
Valid Indonesia 36 50.0 50.0 50.0
Europe 4 5.6 5.6 55.6
Egypt 3 4.2 4.2 59.7
Germany 5 6.9 6.9 66.7
Belgium 1 1.4 1.4 68.1
Others 23 31.9 31.9 100.0
Total 72 100.0 100.0

B24

Cumulative
Frequency Percent Valid Percent Percent
Valid 11-20 1 1.4 1.4 1.4
21-30 3 4.2 4.2 5.6
31-40 6 8.3 8.3 13.9
41-50 7 9.7 9.7 23.6
51-60 11 15.3 15.3 38.9
61-70 11 15.3 15.3 54.2
71-80 3 4.2 4.2 58.3
81-90 5 6.9 6.9 65.3
91-100 25 34.7 34.7 100.0
Total 72 100.0 100.0

B25

Cumulative
Frequency Percent Valid Percent Percent
Valid 1-2000mt 8 11.1 11.1 11.1
2001-4000mt 15 20.8 20.8 31.9
4001-6000mt 12 16.7 16.7 48.6
6001-8000mt 11 15.3 15.3 63.9
8001-10000mt 11 15.3 15.3 79.2
Above 10000mt 15 20.8 20.8 100.0
Total 72 100.0 100.0

129
 B26

Cumulative
Frequency Percent Valid Percent Percent
Valid Product Quality 17 23.6 23.6 23.6
Product Price 40 55.6 55.6 79.2
Delivery 3 4.2 4.2 83.3
Supplier reliability 4 5.6 5.6 88.9
Supplier relationship 8 11.1 11.1 100.0
Total 72 100.0 100.0

B31

Cumulative
Frequency Percent Valid Percent Percent
Valid 0-1 year 3 4.2 4.2 4.2
1-2 year 5 6.9 6.9 11.1
2-3 year 14 19.4 19.4 30.6
3-4 year 5 6.9 6.9 37.5
4-5 year 16 22.2 22.2 59.7
Above 5 yrear 29 40.3 40.3 100.0
Total 72 100.0 100.0

AGE

Cumulative
Frequency Percent Valid Percent Percent
Valid "20 to 35 years old" 38 52.8 52.8 52.8
"36 to 45 years old" 24 33.3 33.3 86.1
"46 to 45 years old" 9 12.5 12.5 98.6
"56 years old and above" 1 1.4 1.4 100.0
Total 72 100.0 100.0

GENDER

Cumulative
Frequency Percent Valid Percent Percent
Valid "Male" 46 63.9 63.9 63.9
"Female" 26 36.1 36.1 100.0
Total 72 100.0 100.0

EDUCATIO

Cumulative
Frequency Percent Valid Percent Percent
Valid "High School" 1 1.4 1.4 1.4
"Diploma" 5 6.9 6.9 8.3
"Degree" 49 68.1 68.1 76.4
"Master Degree" 17 23.6 23.6 100.0
Total 72 100.0 100.0

130
 POSITION

Cumulative
Frequency Percent Valid Percent Percent
Valid "Purchasing/Sourcing" 27 37.5 37.5 37.5
"Research and
4 5.6 5.6 43.1
development"
"Sales and marketing" 41 56.9 56.9 100.0
Total 72 100.0 100.0

Correlation for Brand Equity

(Regression)
Descriptive Statistics

Mean Std. Deviation N

BEQUITY 3.7153 .67436 72
PQLTY 8.9792 .58705 72
AWR 7.9167 1.14372 72
LOYALTY 7.6343 1.17106 72
ASSC 7.8056 1.61541 72

Correlations

BEQUITY PQLTY AWR LOYALTY ASSC

Pearson Correlation BEQUITY 1.000 .203 .138 .207 -.108
PQLTY .203 1.000 -.049 -.027 -.145
AWR .138 -.049 1.000 .290 .382
LOYALTY .207 -.027 .290 1.000 .384
ASSC -.108 -.145 .382 .384 1.000
Sig. (1-tailed) BEQUITY . .044 .124 .041 .183
PQLTY .044 . .343 .412 .111
AWR .124 .343 . .007 .000
LOYALTY .041 .412 .007 . .000
ASSC .183 .111 .000 .000 .
N BEQUITY 72 72 72 72 72
PQLTY 72 72 72 72 72
AWR 72 72 72 72 72
LOYALTY 72 72 72 72 72
ASSC 72 72 72 72 72

131
 Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) .729 1.385 .526 .600
PQLTY .209 .132 .182 1.589 .117
AWR .097 .073 .165 1.326 .189
LOYALTY .148 .072 .257 2.063 .043
ASSC -.102 .054 -.243 -1.867 .066
a. Dependent Variable: BEQUITY

Residuals Statisticsa

Minimum Maximum Mean Std. Deviation N

Predicted Value 2.9680 4.3368 3.7153 .25146 72
Std. Predicted Value -2.972 2.471 .000 1.000 72
Standard Error of
.09191 .39284 .16194 .05122 72
Predicted Value
Adjusted Predicted Value 2.9490 4.9259 3.7276 .27793 72
Residual -1.5868 1.5408 .0000 .62572 72
Std. Residual -2.463 2.392 .000 .971 72
Stud. Residual -2.885 2.484 -.009 1.020 72
Deleted Residual -2.1759 1.6613 -.0124 .69167 72
Stud. Deleted Residual -3.059 2.587 -.009 1.043 72
Mahal. Distance .459 25.422 3.944 3.760 72
Cook's Distance .000 .618 .022 .076 72
Centered Leverage Value .006 .358 .056 .053 72
a. Dependent Variable: BEQUITY

Charts
Histogram
Dependent Variable: BEQUITY
12

10

4
Frequency

Std. Dev = .97

2
Mean = 0.00
0 N = 72.00
-2

-2

-1

-1

0.

1.

1.

2.

2.
-.5

.5
.5

.0

.5

.0

00

00

50

00

50
0
0
0

Regression Standardized Residual

132
 Normal P-P Plot of Regression Standardized Residual
Dependent Variable: BEQUITY
1.00

.75
Expected Cum Prob

.50

.25

0.00
0.00 .25 .50 .75 1.00

Observed Cum Prob

Scatterplot
Dependent Variable: BEQUITY
2

-1

-2

-3
-3 -2 -1 0 1 2 3

Regression Standardized Residual

Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 1.219 .528 2.308 .024
BEQUITY .741 .140 .535 5.299 .000
a. Dependent Variable: A18

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 Casewise Diagnosticsa

Case Number Std. Residual A18

3 -3.306 1
a. Dependent Variable: A18

Residuals Statisticsa

Minimum Maximum Mean Std. Deviation N

Predicted Value 2.70 4.92 3.97 .500 72
Std. Predicted Value -2.544 1.905 .000 1.000 72
Standard Error of
.094 .258 .125 .043 72
Predicted Value
Adjusted Predicted Value 2.55 4.99 3.98 .500 72
Residual -2.63 1.37 .00 .789 72
Std. Residual -3.306 1.727 .000 .993 72
Stud. Residual -3.341 1.745 -.002 1.008 72
Deleted Residual -2.68 1.45 .00 .813 72
Stud. Deleted Residual -3.618 1.772 -.006 1.027 72
Mahal. Distance .003 6.470 .986 1.604 72
Cook's Distance .000 .175 .015 .028 72
Centered Leverage Value .000 .091 .014 .023 72
a. Dependent Variable: A18

Charts
Histogram
Dependent Variable: A18
20

10
Frequency

Std. Dev = .99

Mean = 0.00

0 N = 72.00
-3.50 -2.50 -1.50 -.50 .50 1.50
-3.00 -2.00 -1.00 0.00 1.00

Regression Standardized Residual

134
 Normal P-P Plot of Regression Standardized Residual
Dependent Variable: A18
1.00

.75
Expected Cum Prob

.50

.25

0.00
0.00 .25 .50 .75 1.00

Observed Cum Prob

Scatterplot
Dependent Variable: A18
2

-1

-2

-3
-4 -3 -2 -1 0 1 2

Regression Standardized Residual

Normality test (Frequencies)

Statistics

BEQUITY PQLTY AWR LOYALTY ASSC A18

N Valid 72 72 72 72 72 72
Missing 0 0 0 0 0 0
Std. Deviation .67436 .58705 1.14372 1.17106 1.61541 .934
Variance .45476 .34463 1.30810 1.37139 2.60955 .872
Skewness -.446 -.676 -1.080 -1.132 -.778 -.904
Std. Error of Skewness .283 .283 .283 .283 .283 .283
Kurtosis .743 .792 .997 4.583 .238 .656
Std. Error of Kurtosis .559 .559 .559 .559 .559 .559

135
Frequency Table – Individual Variable
BEQUITY

Cumulative
Frequency Percent Valid Percent Percent
Valid 2.00 4 5.6 5.6 5.6
2.75 1 1.4 1.4 6.9
3.00 4 5.6 5.6 12.5
3.25 11 15.3 15.3 27.8
3.50 10 13.9 13.9 41.7
3.75 16 22.2 22.2 63.9
4.00 8 11.1 11.1 75.0
4.25 6 8.3 8.3 83.3
4.50 5 6.9 6.9 90.3
4.75 4 5.6 5.6 95.8
5.00 3 4.2 4.2 100.0
Total 72 100.0 100.0

PQLTY

Cumulative
Frequency Percent Valid Percent Percent
Valid 7.25 2 2.8 2.8 2.8
7.75 1 1.4 1.4 4.2
8.00 3 4.2 4.2 8.3
8.25 3 4.2 4.2 12.5
8.50 7 9.7 9.7 22.2
8.75 12 16.7 16.7 38.9
9.00 16 22.2 22.2 61.1
9.25 8 11.1 11.1 72.2
9.50 11 15.3 15.3 87.5
9.75 6 8.3 8.3 95.8
10.00 3 4.2 4.2 100.0
Total 72 100.0 100.0

136
 AWR

Cumulative
Frequency Percent Valid Percent Percent
Valid 4.25 1 1.4 1.4 1.4
5.25 4 5.6 5.6 6.9
6.25 2 2.8 2.8 9.7
6.50 1 1.4 1.4 11.1
6.75 5 6.9 6.9 18.1
7.00 2 2.8 2.8 20.8
7.25 4 5.6 5.6 26.4
7.50 5 6.9 6.9 33.3
7.75 5 6.9 6.9 40.3
8.00 7 9.7 9.7 50.0
8.25 2 2.8 2.8 52.8
8.50 10 13.9 13.9 66.7
8.75 12 16.7 16.7 83.3
9.00 7 9.7 9.7 93.1
9.25 2 2.8 2.8 95.8
9.50 2 2.8 2.8 98.6
9.75 1 1.4 1.4 100.0
Total 72 100.0 100.0

LOYALTY

Cumulative
Frequency Percent Valid Percent Percent
Valid 2.33 1 1.4 1.4 1.4
5.67 1 1.4 1.4 2.8
6.00 2 2.8 2.8 5.6
6.33 4 5.6 5.6 11.1
6.67 11 15.3 15.3 26.4
7.00 6 8.3 8.3 34.7
7.33 7 9.7 9.7 44.4
7.67 7 9.7 9.7 54.2
8.00 7 9.7 9.7 63.9
8.33 9 12.5 12.5 76.4
8.67 7 9.7 9.7 86.1
9.00 7 9.7 9.7 95.8
9.33 1 1.4 1.4 97.2
10.00 2 2.8 2.8 100.0
Total 72 100.0 100.0

137
 ASSC

Cumulative
Frequency Percent Valid Percent Percent
Valid 3.00 1 1.4 1.4 1.4
4.00 2 2.8 2.8 4.2
5.00 2 2.8 2.8 6.9
5.50 6 8.3 8.3 15.3
6.50 4 5.6 5.6 20.8
7.00 9 12.5 12.5 33.3
7.50 7 9.7 9.7 43.1
8.00 10 13.9 13.9 56.9
8.50 6 8.3 8.3 65.3
9.00 10 13.9 13.9 79.2
9.50 9 12.5 12.5 91.7
10.00 6 8.3 8.3 100.0
Total 72 100.0 100.0

A18

Cumulative
Frequency Percent Valid Percent Percent
Valid Stronly Disagree 1 1.4 1.4 1.4
Disagree 5 6.9 6.9 8.3
Neutral 11 15.3 15.3 23.6
Agree 33 45.8 45.8 69.4
Strongly Agree 22 30.6 30.6 100.0
Total 72 100.0 100.0

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling
Adequacy. .610

Bartlett's Test of Approx. Chi-Square 650.499

Sphericity df 153
Sig. .000

138