3.5.4.1 Brand Equity and Positive Word of Mouth
Word of mouth is a naturally occurring phenomenon in the consumer behaviour (Kozinets, De Valck, Wojnicki, & Wilner, 2010). It refers to all types of positive or negative interpersonal communication about a firm, brand or product between a receiver and a communicator (Hutter et al., 2013). It includes “informal communication between private
102
defined as "informal, person-to-person communication between a perceived non-
commercial communicator and a receiver regarding a brand, a product, an organization or a service" (Harrison-Walker, 2001, p. 63). Moreover, it is described as a mechanism that
allows consumers to share information about certain products and brands with other consumers. This information influences the purchasing decision made by these consumers towards buying or not buying these products and brands (Wu & Wang, 2011). Thus, it is claimed that word of mouth is a major influencer of peoples’ knowledge, feelings and attitudes (Buttle, 1998).
Word of mouth conversations between consumers might include both cognitive and emotional elements (Sweeney, Soutar, & Mazzarol, 2012). The cognitive elements are related to the rational appeals, where consumers use practical benefits of brands to convince others to use these brands. On the other hand, the emotional or hedonic benefits of brands are sometimes used by consumers to arouse the purchase intention of others (Kotler et al., 2016). Usually, consumers engage in positive word of mouth about brands as a result of their satisfaction, identification or commitment to these brands (Bhattacharya & Sen, 2004; Brown, Barry, Dacin, & Gunst, 2005).
Many companies are trying to engage their customers in positive word of mouth about their products and services (Keller & Fay, 2016), where it is widely agreed that the word of mouth represents a strong drive for superior financial performance (Babić Rosario, Sotgiu, De Valck, & Bijmolt, 2016). This positive word of mouth is a good way for companies to get new customers through referral prospects (Hutter et al., 2013), which is considered a free promotion for brands (Harrison-Walker, 2001). Due to its interpersonal and informal nature, word of mouth is considered a credible communication source (Harrison-Walker, 2001). Consumers who receive positive recommendations from other customers are more likely to remain committed to brands (Villanueva et al., 2008). Word of mouth is perceived by consumers as more credible than paid advertisements (Asada & Ko., 2016). This is due to the fact that consumers speak about their consumption experiences with their families,
103
friends and social networks (Cheung & Lee, 2012). A piece of research by Word of Mouth Marketing Association in 2014 showed that one third of the sales are made as a result of word of mouth that supports paid advertising (Chen & Berger, 2016).
With the introduction of the social media, the capabilities of word of mouth have been amplified with its viral and interactive capabilities (Kozinets et al., 2010). The online and viral nature of conversations that takes place online (i.e. electronic word of mouth) can have a positive effect on consumers’ brand attitude, brand affection and purchase intention (Wu & Wang, 2011). Despite the importance of word of mouth as reported in the marketing literature, there is still a lack of knowledge of word of mouth in the context of online brand communities (Yeh & Choi, 2011).
The current study argues that the engagement of consumers on social media based brand communities will have a positive effect on eliciting their positive emotions towards brands, which will result in their engagement in positive conservations about these brands.
3.5.4.2 Brand Equity and Resistance to Negative Information
The concept of consumer resistance or resilience to negative information has been widely studied in the branding literature (Bhattacharya & Sen, 2003; Eisingerich et al., 2010; Japutra et al., 2014). Consumer resistance to negative information is defined as the extent to which consumers don’t allow negative information to change their views of an organisation; hence, it is considered one of the strongest indicators of the strength of relationship between consumers and organisations (Eisingerich et al., 2010). It occurs when identified customers tend to downplay or overlook negative information about companies or its brands, especially when the magnitude of this information is relatively minor by displaying forgiveness (Bhattacharya & Sen, 2003). Customer forgiveness has been defined as “customers’ internal act of relinquishing anger and the desire to seek
revenge against a firm that has caused harm as well as the enhancement of positive emotions and thoughts toward this harm-doing firm” (Joireman, Grégoire & Tripp, 2016,
104
p.76). This behaviour occurs when an organisation has established ‘a reservoir of goodwill’ and when consumers experience an increased fit with the firm’s identity (Skarmeas & Leonidou, 2013).
The extant literature shows that consumers who are attached to brands tend to forgive companies and to defend it if they hear any negative news about it from other consumers. Also, they are more willing to give these brands another chance (Japutra et al., 2014). Given the importance of the concept of resistance to negative information as an outcome of brand equity, one of the objectives of the current study is to investigate the effect of consumer engagement on social media based brand communities on its development.
3.5.4.3 Brand Equity and Willingness to Pay Price Premium
A brand is said to have a price premium when the amount of money the consumers are willing to pay for this brand is higher than the sum of money they are willing to pay for competitor brands (Aaker, 1996). Some authors consider consumers’ willingness to pay a price premium as one of the strongest indicators of high brand equity (Aaker, 1996; Anselmsson et al., 2014; Sethuraman, 2000). Also, consumer’s willingness to pay a price premium for specific brands is a strong sign of their loyalty to these brands (Aaker, 1996; Evanschitzky et al., 2012; Netemeyer et al., 2004). This is due to the fact that the more consumers value the brand, the more they are willing to pay a price premium for it (Aaker, 1991). Ailawadi, Lehmann, and Neslin (2003) supported that argument by indicating that consumers’ willingness to pay a price premium is relatively stable over time and is one of the factors that are responsible for high market share for companies and brands.
The extant literature provides a number of antecedents for consumers’ willingness to pay a price premium. For instance, Anselmsson et al. (2014) showed that three elements have a strong influence on it, including the brand’s uniqueness, social image and home country origin. Also, it was found that price premium is strongly linked to perceived quality (Netemeyer et al., 2004; Steenkamp, Van Heerde, & Geyskens, 2010).
105
The current study speculates that consumers’ engagement on social media based brand communities will have a positive effect on their willingness to pay a price premium for brands. It argues that consumers’ emotional attachment to brands, which is developed through consumers’ engagement, will influence consumers’ willingness to pay a price premium. Prior research has not explored the effect of online brand communities on willingness to pay a price premium for brands. Accordingly, this will be one of the objectives of the current study.
3.6 Summary
This chapter has presented and reviewed the extant literature related to the concept of consumer engagement. In addition, it has demonstrated the limitations in understanding it in the context of social media brand communities. Furthermore, it has presented an overview of three theories that are used in explaining consumers’ motivation to engage in brand communities, namely: social identity, uses and gratifications and critical mass theories. Finally, it has provided an overview of brand love and brand equity dimensions and outcomes. The next chapter outlines the proposed conceptual framework and the hypotheses that were developed based on the literature review.