THE IMPORTANCE OF BRAND AWARENESS IN CONSUMERS’ BUYING DECISION AND PERCEIVED RISK ASSESSMENT

Lecturer PhD Ovidiu I. MOISESCU Babeş-Bolyai University of Cluj-Napoca

Abstract: Brand awareness, as one of the fundamental dimensions of brand equity, is often considered to be a prerequisite of consumers’ buying decision, as it represents the main factor for including a brand in the consideration set. Brand awareness can also influence consumers’ perceived risk assessment and their confidence in the purchase decision, due to familiarity with the brand and its characteristics. On the other hand, brand awareness can be depicted into at least two facets – unaided (brand recall) and aided (brand recognition) – each of the two facets having its more or less effective influence on buying decision and perceived risk assessment. This paper tries to reveal, on one hand, the importance of unaided brand awareness when it comes to consumers’ buying decision and, on the other hand, the importance of aided brand awareness when assessing the perceived risk associated with the purchase. The analysis is conducted in a comparative manner, considering the case of durable versus non-durable products, and with focus on urban Romanian consumers.

Keywords: brand aided and unaided awareness, brand choice, perceived risk

Brief literature review knowledge on consumer response to Although the last decades’ the marketing of the brand”. specialized literature revealed and Farquhar (1989) considers that crystallized the concept of brand equity building a strong brand within (in relation to which brand awareness is consumers’ minds means creating a one of the fundamental dimensions) the positive brand evaluation, an accessible term has been and still is approached in brand attitude, and a consistent brand several manners in the specialized image, the accessible brand attitude literature. actually referring to what the others Aaker (1991) approaches brand term as awareness. equity as a set of fundamental As already mentioned, an dimensions grouped into a complex important dimension of brand equity is system comprising mainly: brand brand awareness, very often an awareness, brand perceived quality, undervalued component. Not only that brand loyalty and brand associations. awareness is almost a prerequisite for a He also suggests a “brand equity ten” brand to be included in the model for assessing brand equity consideration set (the brands that (Aaker, 1996), taking into consideration receive consideration for purchase), but several factors among which brand it also influences perceptions and awareness is fundamental. attitudes, and can be a driver for brand Kevin Lane Keller (1998, p.45) loyalty (Aaker, 1991). approaches brand equity from a Reflecting the salience of the customer based perspective defining it brand in the customers mind, as “the differential effect of brand awareness can be assessed at several levels such as recognition, recall, top of previously stored evaluation is mind, brand dominance (the only brand required). It was also proven (Farquhar, recalled), or, even more, brand 2000) that only high accessible attitudes knowledge (what the brand stands for is (brands with a high level of awareness) very well known by consumers) (Aaker, can be relevant when purchasing or 1996). repurchasing a brand. Brand awareness is the first and Other authors (Laurent, Kapferer prerequisite dimension of the entire and Roussel, 1995) suggest three brand knowledge system in consumers’ classical measures of brand awareness minds, reflecting their ability to identify in a given product category: the brand under different conditions: the spontaneous (unaided) awareness likelihood that a brand name will come (consumers are asked, without any to mind and the ease with which it does prompting, to name the brands they so (Keller, 1993). know in the product category – in this Brand awareness can be depicted case the unaided awareness of a brand into brand recognition (consumers’ is the percentage of interviewees ability to confirm prior exposure to the indicating they know that brand), top of brand when given the brand as cue) mind awareness (using the same and brand recall (consumers’ ability to question, the percentage of retrieve the brand when given the interviewees who name the brand first is product category, the needs fulfilled by considered) and, respectively, aided the category, or some other cues). awareness (brand names are presented Brand awareness is essential in to interviewees – in this case the aided buying decision-making as it is awareness of a brand is the percentage important that consumers recall the of interviewees who indicate they know brand in the context of a given specific that brand). product category, awareness increasing The outcome of any brand choice the probability that the brand will be a can only be known in the future, the member of the consideration set. consumer being thus forced to deal with Awareness also affects decisions about uncertainty. Brand choice could be brands in the consideration set, even in considered the central problem of the absence of any brand associations consumer behavior, while the perceived in consumers’ minds. In low risk associated to buying decisions is a involvement decision settings, a pivotal aspect of brand choice. Risk is minimum level of brand awareness may often perceived to be painful in that it be sufficient for the choice to be final. may produce anxiety, in which case it Awareness can also influence must be dealt in some manner by the consumer decision making by affecting consumer. brand associations that form the brand Among the main functions of a image (Keller, 1998). brand from the consumers’ perspective Considering Farquhar’s (1989) is considered to be the minimization of approach of brand equity, the perceived purchasing risk, which in turn accessible attitude he refers to is helps cultivate a trust-based related to how quickly a consumer can relationship. Brand awareness can retrieve brand elements stored in influence consumers’ perceived risk his/her memory (brand awareness). assessment and their confidence in the The attitude activation is purchase decision, due to familiarity sometimes “automatic” (it occurs with the brand and its characteristics. spontaneously upon the mere observation of the attitude object) and Methodology sometimes “controlled” (the active The aspects analyzed within this attention of the individual to retrieve paper are part of a larger study 104 conducted in order to generate a model The data collection had to be capable to explain the combined and conceived in such a way so that synergic influence of brand dimensions consumers could reveal their attitudes on consumer behavior. regarding the analyzed product Within this paper, the specific categories and corresponding brands, objectives of the research were to as easily and correctly as possible. reveal, on one hand, the importance of Therefore, the particular product unaided brand awareness when it categories chosen for the research comes to consumers’ buying decision consisted in tooth-paste, as being and, on the other hand, the importance representative for non-durables, and of aided brand awareness when television sets as being representative assessing the perceived risk associated for durables, selected this way because with the purchase, in a comparative they are different in usage duration, not manner (the case of durable versus too technical and have a large rate of non-durable products) and with focus on penetration into households usage urban Romanian consumers. (thus, most of the respondents were In order to meet the research able to express their attitudes towards specific objectives, several particular those products). indicators were used to measure brand In order to collect the needed data, recall, brand choice share and the a questionnaire based survey was perceived risk associated with the conducted among a representative purchase of an unknown brand. sample of the investigated population. Furthermore, the influence of The indicators designed in order to brand unaided awareness level on reflect the necessary information for the brand choice share and of brand aided study were computed as it follows: awareness level on perceived risk • each respondent had to mention assessment were statistically tested and the first three brands of tooth-paste and analyzed, considering two particular television sets that came to his/her product categories from durables and mind, finally unaided awareness of non-durables market types, and taking each brand being reflected by the into consideration several consumer percentage of respondents that recalled demographic characteristics like age, that brand; income level, education level and • each respondent had to mention gender. the most recent purchased brand in The needed information in order to each of the two selected product study the above mentioned issues categories, each brand choice share basically consisted in: being finally reflected by the percentage • the consumers’ ability to retrieve of respondents that mentioned that the brand when given the product brand as being the most recent category (unaided brand awareness for purchased one; each durable and non-durable brand), • each respondent had to evaluate • the most recent purchased brand his/her perceived risk associated to in each product category (brand choice buying a brand with no aided share for each durable and non-durable awareness (when it came to buying a brand), brand he/she had never heard of • the perceived risk associated to before), both in the case of tooth-paste buying a brand with no aided brand and television sets; the data collection awareness (also considering each instrument was designed using a product category) symmetric scale with six answering • demographic characteristics (age, options from 1="Strongly disagree" to income, education and gender). 6=“Strongly agree” (so that neutral responses be avoided and either 105 positive or negative attitudes be answers. The interview operators revealed) associated to the statement “I identified as trying to mislead the consider buying a brand I have never research through providing non-valid heard of before as being very risky”; questionnaires were fully verified. finally, perceived risk assessment for At the end of the data collection each brand was reflected through the process, from the total of 595 assumed statistical mean of all answers completed interviews, only 551 were considering that brand. validated, therefore, the research The investigated population was having, considering a statistical limited to the urban consumers of Cluj- confidence level of 95%, an estimation Napoca, one of the largest cities of error of ±4,2% Romania, although the intention of the ( e = 1,96 ⋅ 0,5⋅ 0,5 551 ),. research was to analyze the urban Romanian consumers as a whole. Nevertheless, the research could Results still be considered, with certain Analyzing the general situation, limitations, as being representative for without considering specific product the entire urban Romanian population categories or brands, according to the as Cluj-Napoca is the second largest collected data, almost a third (29,67%) higher education center of Romania of the investigated consumers associate and, excepting the capital of the country a very high level of risk to buying a (Bucharest), the second largest city of brand with no aided brand awareness, Romania, representing almost 3% of the while the cumulative percent of those Romanian urban population. who are more likely to confirm the fact The questionnaire based that they consider buying a brand they interviews were conducted “face-to- have never heard of as being very risky face”, at the household’s residence of is nearly 60% (the consumers that the respondents, by a group of 119 chose 4, 5 or 6 on the answering scale students, each student completing a set represented 58,35% of the investigated of five interviews. sample). The sampling method used for the This finding is compatible with the survey consisted in a mixture of general assumption that most of the classical probabilistic and non- consumers would prefer buying brands probabilistic methods. Firstly, the that are familiar to them, brands which population was geographically clustered they have heard of (aided brand considering the 474 postal areas of awareness). Cluj-Napoca. Afterwards, 119 clusters Furthermore, the perceived risk were extracted through systematic associated to buying a brand with no random sampling. The 119 clusters aided awareness (an unknown brand) (postal areas) were assigned to the 119 was measured using the previously interview operators (one cluster to each described six option scale, taking into operator), and each operator had to consideration potential significant complete five questionnaire based differences between product categories interviews on the basis of an itinerary – durables versus non-durables (Figure sampling method (5 consumers from 1). different households, located into five In order to identify any statistically consecutive buildings from the assigned significant differences between durables cluster – postal area). The data and non-durables in the perceived risk, collected was afterwards verified and both parametric Student (T) and non- validated by contacting (via phone parametric Mann-Whitney (Z) tests were and/or email) a random sample of run considering the following respondents in order to confirm his/her hypothesis:

106 H1: The perceived risk associated awareness varies between durables to buying a brand with no aided and non-durables.

Figure 1. Perceived risk associated to buying a brand with no aided brand awareness (Mean of “I consider buying a brand I have never heard of before as being very risky” with answers from 1 = "Strongly disagree" to 6 = “Strongly agree”)

The tests’ results (T=–2,633 with starting from the following statistical p=0,009; Z=–2,712 with p=0,007) hypothesis: confirmed the hypothesis with a H1: The perceived risk associated confidence level of 99% and, therefore, to buying a brand with no aided the perceived risk associated to buying awareness varies among age / a brand with no aided awareness could education / income / gender categories. be considered significantly higher in the According to the tests’ results (see case of durables (Mean=4,07) than in Table 1), the hypothesis was rejected the case of non-durables (Mean=3,79). with a confidence level of 95% and, Furthermore, using the same tests therefore, it was statistically proven that as before and the parametric Anova (F) the perceived risk associated to buying and non-parametric Kruskal-Wallis (H) a brand with no aided awareness could tests, potential significant differences in be considered similarly high, no matter the perceived risk among demographic the age, education, income or gender of market segments were investigated, consumers. Table 1 Perceived risk associated to buying a brand with no aided awareness in relation to consumers’ demographics Non-durables Durables F=1,490 (p=0,204>0,05) F=0,195 (p=0,941>0,05) Age H=5,213 (p=0,266>0,05) H=0,521 (p=0,971>0,05) F=1,080 (p=0,370>0,05) F=0,723 (p=0,606>0,05) Education H=5,090 (p=0,405>0,05) H=2,708 (p=0,745>0,05) F=1,713 (p=0,146>0,05) F=1,086 (p=0,363>0,05) Income H=7,082 (p=0,132>0,05) H=4,830 (p=0,305>0,05) T=-0,596 (p=0,551>0,05) T=-0,530 (p=0,596>0,05) Gender Z=-0,601 (p=0,548>0,05) Z=-0,351 (p=0,726>0,05) 107

In order to investigate the order to test the relation, the null importance of unaided brand awareness hypothesis of “no relation” was rejected in consumers’ buying decision, bivariate depending on the value of the statistical regression models were tested (linear indicator p, with a statistical confidence Y=a+b·X, logarithmic Y=a+b·ln(X) and level of 95% if p<0,05, or with a exponential Y=a·eb·X) with the statistical confidence level of 99% if independent variable (predictor) p<0,01), then the intensity of the represented by unaided awareness, and relation was evaluated, according to the the dependent (predicted) variable tested model (considering the bivariate represented by choice share: correlation coefficient R and the 2 H1: Brand choice share is determination coefficient R , indicating positively correlated with brand unaided the proportion of the dependent awareness, both in the case of durables variable’s variation explained by the and non-durables. predictor’s variation), and, finally, the In order to analyze the above regression coefficients were determined described relation and to select the according to the tested model, along most appropriate model to explain the with an appropriate mathematical relation, the existence of a relation function to reflect the relation (Figure 2). between variables was firstly tested (in

Figure 2. The importance of unaided brand awareness in consumers’ buying decision

The bivariate regression case of non-durables, and 96,8%, in the coefficients proved, with a confidence case of durables). level of 99% (p<0,01), that there was a The model suggests that there is positive exponential relation between an upper limit for brand choice share, as brand unaided awareness and brand unaided awareness grows, limitation choice share (88,5% of the variation given by the durable/non-durable nature being explained by the model, in the of the product (according to the identified models, considering 100% 108 unaided awareness, the value of brand Although the research results choice share is 66,81% for non- should be adjusted considering other durables, and 100% for durables). factors which could impact consumers’ buying decision, they suggest that in the Conclusions case of non-durables there is a stronger Brand awareness, as one of the limitation to brand choice share growth fundamental dimensions of brand as brand unaided awareness grows, in equity, is a prerequisite for the market comparison to the case of durables. success of both durables and non- Actually, if to be considered, an unaided durables brands. It represents a main brand awareness based monopoly factor for a brand to be included in the could be generated only in the case of buying decision process consideration durables. set, as most of the consumers prefer Even though brand choice share buying brands they are aware of can not be exclusively caused by the (brands they are familiar with or, at level brand unaided awareness, the least, they have heard of). depicted exponential model suggests Brand awareness influences that, both in the case of durables and consumers’ perceived risk assessment non-durables, as unaided brand and their confidence in the purchase awareness modifies, the brand’s choice decision, both in the case of durables share also has a tendency to modify in and non-durables. Still, the importance the same direction, but at a higher of brand awareness in perceived risk variation rate. Therefore, the elasticity of assessment is significantly higher in the brand choice share in relation to case of durables, which suggests that, unaided awareness is higher as the in order to reduce the perceived risk brand’s market leadership has a higher associated to brand choice, it is level. Unaided awareness growth has a essential for brand awareness to be stronger impact on choice share when generated (at least at the unaided the brand already has a high brand level), especially in the case of unaided awareness. durables. In order to create, maintain and Moreover, considering the fact that expand own brands’ choice share, the perceived risk associated to buying companies must understand the a brand with no aided awareness is importance of growing and leveraging similarly high, no matter the age, brands’ aided and unaided awareness education, income or gender of and act accordingly. Marketing consumers, there is no sense in market integrated communication must be segmentation (considering the above implemented, with special emphasis on mentioned demographics) in order to advertising and customer relationship identify consumer categories for which management, which play fundamental brand awareness does not influence roles in this direction. perceived risk assessment.

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