Brand Equity's Impact On Consumer Purchase: Lululemon Athletica Case Study (70 Characters)

Background of the Study

Discuss about the Report for Business Research Proposal of Brand Equity on Consumer Purchase.

The purpose of this research proposal is to ascertain and analyze the effects of various components of brand equity on the consumer purchase intention or behaviour. Consumer’s buying process is a decision making process that is concerned with how customers act before, during and aftermaking a purchase. Customer’s intention to purchase is determined by various factors and the role of marketer is to identify and amplify the magnitude of these factors in order to get the desired response from the customers. In this context, brand equity component plays an important role in influencing the customer buying behaviour. Brand image as well as the reputation of the brand (or the company)can be useful in creating a positive image of the brand and soliciting desired actions from the customers (Lavrence and Lozanski 2014). Moreover, with the effective employment of brand equity components a firm can help in creating a loyal and satisfied segment of customers. Further, as the business environment is getting more competitive, it is important to differentiate the brand from the competitors; and a well-planned and executed brand equity function can facilitate in creatingleveragefor the company to attract more customers towards the brand. The study, therefore, has selected the case study of LululemonAthletica for analysing this particular research topic. The company is facing branding issues not only in Canada but also in other countries (Wu et al. 2013). The study will discuss the problems of the company with respect to branding and its effect on consumer behaviour of its products. It has its impact on profitability.

Lululemon Athletica Inc. is an apparel company based on Canada. The company is focused on selling yoga inspired athletic clothes for people. It is also into manufacturing of technical athletic apparel. Apart from the yoga apparels, it also manufactures various types of sportswear (Delmas et al. 2013). However, it is seen that there are many controversies related to the branding, product quality and price issues of Lululemon Athletica in the American sub-continent. The study is focused on the consumer behaviour towards the brand. The brand loyalty, brand awareness and brand awareness in some parts of its business operations are not up to the mark (Thomas and Peters 2015). Apart from having issues in these aspects, the company is earning substantial profits. Regarding brand equity, Lululemon focus on niche segment of customers. The company is targeting very specific customer segments such as health conscious, high income, sophisticated couple and mid 30s (Larcker et al. 2014).  Branding of a company is vital aspect for the marketing of the company in its target market. Lululemon is committed to provide its customers with well-designed and high quality athletic apparel with a sense of authenticity. It is seen that the company has shown immense growth in adoption of new product category in the niche segment. However, rapid adoption has resulted in many downgraded branding issues (Rizzo 2015).

Explain the Significance

Customers of the brand are not finding the product of the brand worthy. Lululemon charge high for the yoga and other athletic clothes. In some areas, the customers are finding the clothes of the company overpriced. Here come the issues in brand equity and brand loyalty. Lululemon fails to maintain its image in the target market. Decrease in the magnitude of brand equity will lead to lower brand loyalty from the customers (Lavrence and Lozanski 2014). Lululemon is known for its high quality products in the market. The marketing strategy of the company is different from other companies of same category of product. Quality control issue in terms of the bottoms is a prevailing issue faced by the company. Many shoppers who are paying $100 for a yoga pant expects a good quality but the products are not meeting the expectation (Vredenburg et al. 2015). In the expansion strategy, Lululemon fails to maintain its brand awareness and brand image in the new target markets. The marketing strategy acts as a disaster. The strategies of increasing brand awareness fail to create a positive image in the minds of the customers (Smith et al. 2012). Controversies are there that are related to pricing issues, and misleading advertisements. However, it can be said that the company is improving the brand value in the market by fulfilling the commitment of the marketing goals. It will improve the brand loyalty of the customers of the company in buying different products from Lululemon. It is also focused into brand extensions of different categories of products (Wu et al. 2013).

The significance of the research topic is solving the issues of brand equity and brand loyalty of Lululemon in the market. The company is focused on selling its products to unique segments of customer. The nature of the products of Lululemon illustrates that the company is focused on niche strategy of marketing (Cousens and Bradish 2013). The background of the research topic explains different issues of brand equity faced by the company in the market. However, the research will help the company in solving issues related to the brand in gaining loyalty from the customers. To increase the sales, it is important to achieve trust of customers (Sirianni et al. 2013).

The questions will focus on the issue of the research that Lululemon is facing in terms of brand equity. The research questions of the study are as follows:

• What are the techniques followed by Lululemon Athletica in increasing brand awareness in the market?
• What are the sets of controversies faced by Lululemon in terms of branding of its products in the target market?
• How Lululemon will achieve the trust of the consumers in terms of increased profitability of the company?
• What are the steps Lululemon would take to change the existing marketing strategy of the company to attract customers?

Research Questions

The research objectives are formulated in the framework of SMART objectives in the following:

Specific: Lululemon must formulate the steps of marketing in a specific manner for achieving the trust of customers.

Measurable: The techniques that are to be taken by the company must be measurable in terms of its applicability.

Attainable: To formulate attainable techniques that fill the gap created by the marketing strategies of Lululemon.

Realistic: To find the realistic controversies faced by companies in terms of pricing, advertising and branding issues.

Timely: To achieve all the research objectives in a stipulated time so that the effectiveness can be measured in terms of the increased profitability.

Literature Review

Brand equity is one of the most crucial concepts of marketing. It is an intangible asset for an organization and depends on the associations created by the customers with the brand itself. Brand equity plays an important role in ensuring long term success of the organization (Khan et al. 2015). However, it takes time and great deal of strategic planning and implementation of business functions to build positive brand equity.

Brand quality:

The American Marketing Association (AMA) defines brand quality as “value of the brand (Parkvithee and Miranda 2012). From a consumer perspective, brand equity is based on consumer attitudes about positive brand attributes and favourable consequence of the brand use.”

Brand equity components:

Brand Loyalty:

It helps in reducing marketing costs as customers are loyal to the brand and require little external stimuli for initiating the desired action by the firm (i.e. buying company’s products and services). It also provides added advantage for the company in trading as strong brand equity also affects (positively) the decisions of suppliers and other stakeholders (Huang et al. 2014). Further it also aids in attracting new customers by assuring them about the superiority of the brand and brand offerings. In addition, it also helps company to respond to the competitive or market threats such introduction better products by the competitors and case of change in consumer preferences or market trends respectively.

Brand Awareness

Brand awareness is another component of brand equity. It provides a common platform or anchorage onto which other branding functions or associations can be attached. Moreover, familiarity with the brand only leads to enhanced liking and positive image of the brand in the mind of the customers (Hutter et al. 2013). Increasing visibility of the brand helps the customers about the utilities of the brand and assists in brand recall at the time of making purchase decision.

Research Objectives and Framework

Brand Associations

It helps in communicating relevant information to the targeted audiences and provides differentiation or positioning of the brand from the similar categories of products and services (Reza Jalilvand and Samiei 2012). Further, it creates positive attitude about the brand in the mind of the customers and presents reason to buy.

There are different perspectives of understanding the concept of brand equity such as:

Financial: Brand equity of a firm can be determined by the price premium that a brand commands over a generic or “me too” product. In other words, brand equity can be understood as a premium price that a customer is willing to pay for a particular brand’s products or services over the same but unbranded products and services (Dehghani and Tumer 2015).  This premium provides crucial information about the value of brand; however, costs incurred by the organization such as promotional costs must be taken into consideration while using this method to calculate brand equity.

Brand extensions: One of the characteristics of a good brand is that it provides the platform to launch related products under the well established brand name that the company already have. Brand equity therefore, can be measured in terms of the brand’s capability to launch (establish) new products into the market by taking advantage of the existing brand awareness; thereby, reducing the promotional cost and risk elements associated from the perspective of customers (Son et al. 2013). However, this method is subjective in nature and difficult to quantify the brand equity.

Consumer based: Brand equity can also be measured in terms of customer’s attitude towards the products associated with the brand. Customer’s attitude towards the brand is built when customers actually experiences the product and is generally more effective in building brand equity than promotional and advertising campaigns undertaken by the organization. Thus, customer’s perspective of brand equity enhances the perceived quality of the brand’s products and services, and eventually leads to brand loyalty.

Strong brand equity provides a distinctive competitive advantage to the company over the other players in the market. It also helps in ensuring a loyal customer base and thereby a steady stream of income for the firm. In addition, it also helps in cash flow to the organization by increasing market share, reducing promotional expenses and allows company to implement premium pricing strategy. Moreover, brand equity is an asset for the company that can be utilized by the organization to gain both financially and strategically (Lu et al. 2014). From perspective of accounting, brand equity is considered as the difference between an organization’s total work the book value of its assets. Some great benefits of bran equity are here by mentioned below,

Literature Review

Loyal customers

Having loyal customers is the biggest competitive advantage that an organization can have. Loyal customers will pay more and will go out of their way to buy the same product from your company. High brand equity is responsible for creating brand equity among the customers. For example, some well-renowned business organizations such as Gucci handbags and Apple have developed a huge base of loyal customers through the strengths of their brand which are known for exclusive quality, innovative design and creative leadership.

Bigger profits

Another definition of brand equity states that a product having brand equity means it includes a greater value with the name and logo on it that it would with a general or unidentified label. It will put the manufacturing organization in a position from where they can attain high price points in the market place while upholding or improving demand (Horng et al. 2012). It is obvious that when customers will be ready to pay extra amount of money for a name that they trust or value, gross profit of those organizations should become strong comparative to general alternatives.

Opportunities for business expansion

Any business looks to achieve long-term growth so that it can stay in the market. Brand equity is a component that allows an organization to acquire driver’s seat for long-term development. If an organization can control the value of its brand, it will be able to expand to new markets and extend its brand with new store concepts (Huang and Sarigöllü 2014). It will definitely enhance revenue streams of that organization. For example, Apple has influenced its band equity in the mobile technology in order to introduce multiple tech devices in the market. Upgraded versions of thos tech devices are also released by the organization in every few years.

Marketing

Another significant advantage of brand equity is it allows organizations to spend less amount of money on marketing. If an organization has a great reputation among the customers then through word of mouth marketing will be done (Hwang and Choi 2013). Compared to a lesser known competitor, an organization that has strong brand equity has minimum needs to use marketing channels such as social media, television and search engine marketing to spread its message as customers will do that for them for free.

Bargaining power

Bargaining power of an organization, especially with its manufacturers and distributors must be high enough. Otherwise an organization will be forced to take decisions by the norms of its distributors. Brand equity provides this advantage to an organization and allows it to have a superior position while negotiation with distributors and manufacturers. When vendors will find out that consumers are screeching for anything that carries name of an organization, they will want to work with that organization (Das 2014). In this situation, that organization will be in control and will have a position of strength while negotiating since its name is essential to long-term success of that product. One of the biggest examples of this scenario is Walmart and Target. Both companies are dominating the retail industries and customers buy anything and everything once they see the names of those organizations written on a product (Horng et al. 2012). This allows those companies to carry a significant amount of bargaining power with its suppliers.

Brand equity perspectives:

Brand purchase intention is means plan of customers to make a real purchase in certain period of time. However, Dehghani and Tumer (2015) stated that, it can be defined as urge or motivation that arises among the customers’ mind to purchase a certain brand after they have evaluated its good and bad characteristics. In marketing, it is highly important to understand and predict the consumer behaviour. Results from previous research works clearly states that buying behaviour of customers acts as a crucial factor that influences actual final purchase. Most of the times, it leads to repeat buying in the future. According to Son et al. (2013), brand equity is considered as a condition for brand predilection and that is why; it affects purchase intention of the consumers. From a number of studies, it is understood that brand equity and purchase intentions are connected to each other. It is also found that once a customer has purchased a particular brand, it will increase his proneness that improves the probability of buying that brand once again in the future. Further it is also evident that all the brand equity components that are mentioned above can significantly influence purchase decision of consumers. In fact from previous researches it is found that brand equity can be considered as the main component that directly influences purchasing of products. However, according to Parkvithee and Miranda (2012), brand equity and purchase intentions are not connected with each other directly. Subjective norm works as a mediator between them.

Subjective norm means “professed social pressure to accomplish or not to accomplish the behaviour.” It also helps to understand purchase intentions. It is known as the level of social force felt with regard to an exact performance. Subjective norm is a feeling of an individual on social force that comes from other group or people (Khan 2015). From previous researches it is found that subjective norms and purchase intentions are positively connected to each other; however, the same literature lacks unity to subjective norms.

A purchase intention is known as an important consequence of brand equity which is already proved by several previous results. As mentioned by Horng et al. (2012), two elements of brand equity that are brand awareness and brand associations are connected to each other. This connection develops a constructive attitude for a brand. This improves the chances that a consumer will buy that product regularly. On the other hand, brand loyalty descries customer’s loyalty towards a brand. This can be created by providing favourable attitude towards a brand and the intention to buy. Definition of perceived quality is similar to attitude. It is also known as subjective assessment or decision of consumers about product that whether it is superior to other products or not (Hutter et al. 2013). Therefore, it can be said that perceived quality is capable to establish a positive attitude about the brand that in turn leads to purchase intention. Those four dimensions are responsible for creating positive attitude towards a brand. However, it is also true that only positive attitude towards a brand is not enough to understand and predict behavioural intention of consumers.

As mentioned by Das (2014), Theory of Reasoned Action individuals’ purposes would be prognosticators of their behaviour and individuals’ attitudes towards behaviour and subjective norms are Backgrounds of behavioural intentions. Subjective norms are the important component of this theory. It is highly possible that perceptions of family members, friends or other important person put significant impact on a customer and influences his purchase intentions. For example, a consumer is willing to buy a product. Let us assume that the product is X. Before buying, it is possible that he will consult with his family members and friends about it
(Parkvithee and Miranda 2012). The chances are high that his family members will ask him to buy the other product which is Y. It is also possible that his friends will suggest him to buy another product which is Z. Now that consumer will listen to either his family or his friends and will buy either Y product or Z product. It is also possible that after consulting, he will stick to product X and will buy it.

 

Figure 1: Conceptual Framework of Brand Equity and Purchase Decision

(Source: Reza Jalilvand and Samiei 2012)

Research Methodology and Design

It has been found that there were two types of research philosophies in which a research work can be conducted. They are such as positivism philosophy and interpretivism philosophy (Bell 2014). It had been analysed that the positivism philosophy helps to investigate a research problem depending on real facts and truths (Billig and Waterman 2014). On the other hand, interpretivism helps to develop a research work, depending on the perception of people about a specific situation (Cleary et al. 2014).

After analysing both types of research philosophies, positivism has been selected as the most appropriate one for this research work. This research philosophy will help to make logical and critical investigation of the research topic “the effect of brand equity components on purchase intention” depending on sustainable facts and evidences. Interpretivism will not be used in this research work as human perception can lead to an inappropriate outcome for this research work.

After close exploration, it has been found that there are two types of research approaches can be used for research works. They are such as inductive approach and deductive approach (Meeker and Escobar 2014). It has been analysed that deductive approach can be beneficial as it helps to gather knowledge about the research topic. In this approach, research hypothesis has been developed for the research work, after reviewing existing literatures and existing theories related with the research topic. On the contrary inductive research approach is related with development of new theories related with the research topic. 

After closely investigating both the research approaches, it has been found that deductive research approach is most appropriate one for this research work as it helps to develop the research work depending on existing theories. On the other hand, as the research work has to be developed in a shorter time span, there is not ample time to develop new theory related with the research topic. Hence, inductive research approach will not be used for this research work.     

Bauer (2014) stated that, there are mainly two types of data sources available for a research work. They are such as primary data source and secondary data source. Primary data can be obtained directly from those people who have ample knowledge about the research topic. On the contrary, secondary data can be collected from various theoretical underpinnings related with the topic of the research. (Mertens 2014) mentioned that relevant secondary data can be gathered from updated books and journals related with the research topic.

The topic of this research work is to find out the effect of brand equity components on purchase intention. It has been found that the research topic is directly related with customers. Hence, it can be beneficial to collect primary data from customers and managers with the help of survey and interviews.   

Gast and Ledford (2014) stated that, there are mainly two types data collection methods available for a research work. They are such as quantitative data collection method and qualitative data collection methods. Gelman et al. (2014) mentioned that quantitative data collection method is related with collecting numerical data and represents them in graphs and tabular form. On the other hand, Panneerselvam (2014) depicted that qualitative data collation method helps to gather enriched amount of knowledge about the research topic depending on human perceptions and personal experiences. In order to gather quantitative data, survey analysis has been conducted with the help of questionnaires. Here some close ended questions are asked to the respondents, After collecting data from the respondents, they are analysed with the help of MS Excel and represented in the form of graphs and charts (Panneerselvam 2014). On the contrary, qualitative data can be collected by interviewing those people who have ample knowledge about the research topic (Brinkmann 2014). In this, research works both quantitative and qualitative data will be gathered from customers and respondents of company Lululemon Athletica.     

As mentioned previously, both quantitative and qualitative type of data will be collected for this research work. Quantitative data will be gathered by conducting a survey with customers of company Lululemon Athletica. 60 customers from the company will be selected as respondents. All close ended and neutral (non-influential) questions will be asked to the respondents. This data will help to find out the impact of different equity components on purchasing decisions of customers. On the other hand, qualitative data will be collected with the help of face-to-face interview with the 3 managers of company Lululemon Athletica. All open ended questions will be asked to the managers. 

It has been found that, it is required to follow certain ethical considerations when the research takes place. Bauer (2014) stated that, according to the Data Protection Act 1998, it is required to make sure that none of the respondents are forced to take participation in the research work. According to this act every candidate has the authority to withdraw his or her participation as any time of the survey (Schobel et al. 2014). Every candidate has the right to take part in the survey process if all the neseaary criteria are fulfilled. In addition, the collected data cannot be used in any other purpose rather than works related with academic purpose. Moreover, it is required to make sure that none of the survey or interview questions is influential.

This research methodology section would help to follow an appropriate research method so that the research problems related with the topic “the effect of brand equity components on purchase intention” can be addressed carefully. It would help to collect extensive and augmented data about the research topic, which might become helpful to conduct this research work in appropriate manner.

Task And Time	1st week	(2nd-4th) week	(5th-7th)Week	(8th-10th) week	(11th -16th) week	(17th -20th)week	(21th-23th) week	24th week	25th week	26th Week
Introduction and Search for Data	ü
Literature Review		ü
Research Methodology			ü
Design of Data Collection and Methods				ü
Data Collection					ü
Data Analysis and Presentation						ü
Conclusion and Recommendations							ü
Proof- Reading								ü
Sending First Draft to Supervisor									ü
Printing, Binding and Submission										ü

Table 1: Gantt chart

(Source: Created by Author) 

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