Academy of Marketing Studies Journal (Print ISSN: 1095-6298; Online ISSN: 1528-2678)

Research Article: 2019 Vol: 23 Issue: 3

Factors Making up Word of Mouth and Brand Equity: A Study among Fashion Clothing Stores Customers

Mohamed Ismail Mujahid Hilal, South Eastern University of Sri Lanka

Abstract

The major objective of the study is to examine the contribution of fashion clothing stores attractiveness and service quality factors to the word of mouth. The second objective is to investigate the contribution of word of mouth to the brand equity of these fashion clothing stores. To achieve these objectives, a survey was conducted using questionnaires among 559 customers of fashion clothing stores. Data were analyzed using SMARTPLS3. Findings suggest that store attractiveness of the fashion clothing stores does not support significantly due to the cultural settings of the business location. However, the service quality of fashion clothing stores significantly contributes to the generation of brand equity. Further, the generated word of mouth positively contributes to the brand equity of fashion clothing stores.

Keywords

WoM, Brand Equity, Fashion Clothing Stores, Store Attractiveness, Service Quality.

Introduction

Word of mouth is defined as informal communications directed at other consumers about the ownership, usage, or characteristics of particular goods and services and/or their sellers (Westbrook, 1987). Retail marketers use word of mouth communication as a tool for promoting their retailing stores. Hence, word of mouth is considered as a form of marketing communication (Ennew & Banergee, 2000). Word of mouth is deemed to be influencing factor in selection and usage of the service (Ennew & Benergee, 2000). While new paradigm shift is in force and giving emphasis on service-dominant logic in the retailing industry (Kandampully, 2006). Organizations investing more on effective service management and promoting to the customers will get more benefits from word of mouth as it strengthens the message received from the marketing communication (Sweeney et al., 2008). Word of mouth is a very useful source for competitive advantage for retailers as it is one of the powerful sources of exchanging information given by customers (Keiningham et al., 2018). Besides, word of mouth is creating interest in purchasing and induces new purchase too (Kumar et al., 2016). It further influences consumers by way of making awareness and by giving assurance about opinions about product and services sold (Resselada et al., 2014).

Fashion clothing stores in Sri Lanka is one of the lucrative ventures and many establishments owning clothing stores are currently competing for their market share. Examining word of mouth and its contribution to the brand equity of their fashion clothing store caused by store attractiveness and service quality is vital for these stores in Sri Lanka as the word of mouth created is one of the important sources of information (Keinningham et al., 2018) and positively influence the consumer adoption (Resselada et al., 2014). Thus, it is significant to fashion clothing stores to investigate the brand equity caused by the word of mouth communication resulted from store attractiveness and service quality factors. This also because of the fact retail fashion clothing stores are mostly attracted by the factors related to attractiveness and service

quality as a study finds that word of mouth is antecedent to the quality and value of any stores (Jalilvand et al., 2017). Further, many fashion clothing stores invest more on store attractiveness factors and service quality which will induce the customers repeatedly visit the stores and make a purchase. Changes in the store attractiveness which comprises the creation of store atmosphere for the customers lead to better performance. This requires remodeling strategies for the stores that positively influence the clients and employees (Webber et al., 2018).

As many firms in the fashion clothing industry are competing in Sri Lanka, it is significant to study the creation of word of mouth and how it leads to the brand equity of fashion clothing stores. These firms spend huge money on promotion for displaying clothes, training employees and marketing communication. Further, due to competition among these stores, it necessitates differentiating the fashion store's brand which may provide a valid point of difference to the customers. It is also significant to fashion stores to examine the efficiency of marketing expenditures as these stores face intense competition. Therefore, the major objective of the study is to examine the contribution of fashion clothing stores attractiveness and service quality factors to the word of mouth. The second objective is to investigate the contribution of word of mouth to the brand equity of these fashion clothing stores. To achieve these stated objectives, this paper is designed in the following line. Firstly, the background of the study is explained under the introduction and theoretical framework is given. Thirdly, the results of the study are explained with the help of SMARTPLS and finally, conclusion and recommendations are provided.

Theoretical Framework and Hypotheses Development

Store attractiveness is important for fashion clothing stores as it determines the number of the visit of customers in retail stores, customer spending time at stores and their retention (Anslamsson, 2006). According to EI-Adly (2007), the store attractiveness can be determined by the attributes such as comfort, entertainment, diversity, convenience and luxury. Further, customers do shopping leisurely irrespective of fashion stores or ordinary retail stores. Therefore, the place where customers do shopping should be a place for entertainment and socially interactive (Hernandez & Gomez, 2012). The attractive store environment is a competitive advantage for the stores, and it will positively influence customer satisfaction (Tandon et al., 2016). Shopping loyalty is also made up of the store attractiveness factors along with customer satisfaction (Wahlberg, 2016). Further, it was suggested that in the context of unfamiliar products to the customers, customers take judge the attractiveness to create the purchase intention (Schnurr et al., 2017).

With the discussion of the review of literature, it could be understood that store attractiveness is very much important for the fashion stores and it creates word of mouth communication for the fashion clothing stores as attractiveness factors positively affects word of mouth (Ahmad, 2012). Since store attractiveness is positively affecting the number of visits and customer retention (Anslamsson, 2006) and makes the customers satisfied (Tandon et al., 2016), store attractiveness is likely to positively influence the brand equity of fashion clothing stores. Therefore, the researcher hypotheses as follows;

H1: Store attractiveness of fashion clothing stores positively contribute to the word of mouth communication.

H1a: Store attractiveness of fashion clothing stores positively affects brand equity.

The other factor is considered for the study influencing the word of mouth is service quality. In the case of the retailing industry, service-dominant logic is most important for retailers. Therefore, service quality should be considered as one of the characters that influence the word of mouth communication and brand equity. Word of mouth to be generated, satisfaction, commitment, loyalty and quality are prerequisite (Harris & Khatami, 2017). Service quality at the stores mostly related to salespeople who work at the stores. Such service quality hugely impacts on loyalty (Sum & Hui, 2009; Omar et al., 2013). Service quality exerts a positive effect on the word of mouth (Hartline & Jones, 1996). This has further been confirmed by (Harrison-Walker, 2001). Even though service quality comprises attitude, competence, tangibles and convenience, the factor attitude is contributing to the word of mouth (Choudhury, 2014).

Since the quality of service and satisfaction at the stores is one of the antecedents of word of mouth (Harris & Khatami, 2017). And it also highly affects the customer loyalty, service quality influences brand equity too. Therefore, the researcher hypothesizes the followings.

H2: Service quality at the fashion clothing stores positively contributes to the word of mouth.

H2a: Service quality at fashion clothing stores positively affects brand equity.

Although store attractiveness and service quality generate the word of mouth according to the discussion of the review of literature, word of mouth generated via these two factors contributes to the brand equity of fashion clothing stores. Literature (for example see Murtiasih et al., 2013; Virvilaite et al., 2015) suggests that word of mouth impact positively on the brand equity and therefore significant inclusion to the brand equity. Murtiasih et al., (2014) explain that word of mouth substantially impacts brand equity through brand equity dimensions such as brand awareness, brand loyalty, brand association and perceived quality. This has also been confirmed by (Hanaysha, 2016). Therefore, the researcher hypothesizes that

H3: Word of mouth about fashion clothing stores positively contribute to the brand equity.

Methodology

The study is quantitative in nature as deductive approach has been followed. Questionnaire was used to collect data from the respondents. The questionnaire was adopted from the previous authors that has been given in Table 1. The researcher has developed hypotheses based on the discussion of review of literatures and thus it has further confirmed that the study adopted a deductive approach. The philosophy is positivism and survey methodology has been adopted for this study and the time horizon is cross-sectional.

Measurement Development

Scales items were adopted from previous researchers in order to achieve the research objectives. All constructs were measured using a seven-point Likert scale. The questionnaire had two parts which were about the demographical profile of respondents and the other was constructs covering service quality, store attractiveness, word of mouth and brand equity. Details about the questionnaires are given in Table 1.

Sample Selection and Data Collection

Customers visiting fashion clothing stores were the respondents for this study. The study was conducted in major cities in Sri Lanka such as Kalmunai, Ampara, Batticaloa and Colombo. The researcher received 559 duly filled questionnaires. It was cumbersome to figure out the number of customers and therefore, convenient sampling technique was adopted for this study. The researcher used google forms too. Questionnaires were also sent via email to the known contacts. Collected data were analyzed using SMARTPLS3.

Figure 1:Structural Model.

Results and Discussion

Demographical profile of the respondents are given in Table 1.

Table 1: Constructs Used For The Study
Variables Number of items Sources
Store attractiveness 10 Adly (2007)
Service quality 10 Parasuraman (1985)
Word of mouth 5 Brown et al. (2005)
Brand equity 5 Kim et al. (2005)

As this is a reflective measurement model in Table 2, it is important to evaluate the measurement model using internal consistency, individual indicator reliability and average variance extracted. It is also important to evaluate the discriminant validity of the measurement model using Fornell-Larcker criterion, cross-loadings and the heterotrait-monotrait (HTMT) ratio of the correlation.

Table 2: Respondents’ Demographical Profile
Characteristics No of respondents %
Sex    
Male 358 64
Female 201 36
Age    
16-25 74 13.5
26-35 145 26
36-45 192 34
46-55 123 22
Above 55 25 4.5
Income (Monthly)    
Income Below Rs. 50,000 128 23
Income Between Rs. 50,000 ? Rs. 100,000 223 40
Income Above Rs. 100,000 208 37
Qualifications    
Less than GCE OL 103 18
Between GCE OL ? GCE AL 227 41
Degree 100 18
Postgraduate 78 14
Other 51 9

In the case of internal consistency Table 3, Cronbatch’s Alpha is more than 0.70 is acceptable and exhibit internal consistency. This can also be confirmed with composite reliability which is also greater than 0.70 and not more than 0.90 (Hair et al., 2017).

Table 3: Constructs Reliability And Validity
Cronbach's Alpha rho_A Composite Reliability Average Variance Extracted (AVE)
Brand equity 0.758 0.761 0.861 0.673
Service quality 0.846 0.927 0.882 0.528
Store attractiveness 0.910 0.925 0.892 0.698
WoM 0.816 0.853 0.873 0.635

Right after evaluating internal consistency, the researcher wants to evaluate the convergent validity of the reflective measurement model. In order to evaluate the convergent validity, outer loadings of the indicators and average variance extracted (AVG) are taken into consideration. When examining the outer loadings of the constructs, all constructs are greater than 0.70 which indicate that convergent validity exists. Table 4 provides outer loadings of the constructs.

Table 4: Outer Loadings
Brand equity Service quality Store attractiveness WoM
BE2 0.807
BE3 0.832
BE5 0.821
SQ2   0.874  
SQ4   0.740  
SQ5   0.882  
SQ6   0.853  
SQ7   0.565  
SQ8   0.511  
SQ9   0.545    
SA1     0.795  
SA10     0.849
SA3     0.925
SA4     0.876
SA5     0.903
SA9     0.630
WOM1     0.839
WOM2     0.661
WOM4       0.810
WOM5       0.863

Although outer loadings greater than 0.40 has to be looked in terms of removing while doing analysis in SMARTPLS, content validity should also be considered (Hair et al., 2017). Due to the content validity, some of the constructs with less than 0.70 are retained. Indicators with less than 0.40. In order to further confirm the convergent validity, the average variance extracted is also examined. All value of AVE in Table 3 is greater than 0.50 and thus, there is no lack of convergent validity. Once the convergent validity is confirmed, the researcher needs to focus on the discriminant validity of the measurement model. Table 5 provides the cross-loading of the constructs.

Table 5: Cross Loadings
Constructs Brand equity Service quality Store attractiveness WoM
BE2 0.807 0.206 -0.422 0.500
BE3 0.832 0.228 -0.311 0.490
BE5 0.821 0.275 -0.228 0.417
SA1 -0.298 0.474 0.795 -0.345
SA10 -0.381 0.229 0.849 -0.475
SA3 -0.422 0.394 0.925 -0.488
SA4 -0.361 0.488 0.876 -0.421
SA5 -0.289 0.574 0.903 -0.407
SA9 -0.199 0.099 0.630 -0.340
SQ2 0.216 0.874 0.476 0.250
SQ4 0.183 0.740 0.351 0.131
SQ5 0.186 0.882 0.384 0.159
SQ6 0.259 0.853 0.376 0.154
SQ7 0.183 0.565 0.232 0.071
SQ8 0.247 0.511 0.154 0.136
SQ9 0.226 0.545 0.137 0.070
WOM1 0.442 0.170 -0.388 0.839
WOM2 0.088 0.015 -0.315 0.661
WOM4 0.649 0.179 -0.439 0.810
WOM5 0.448 0.240 -0.430 0.863

The researcher uses cross loading to assess discriminant validity as their first step. According to Table 5, indicators' cross-loadings are higher than the other constructs and thus, there is no evidence of lacking discriminant validity. To confirm further the discriminant validity, Fornel – Larcker criterion can also be used. Table 6 shows Fornel – Larcker criterion.

Table 6: Fornel-Larcker Criterion
Brand equity Service quality Store attractiveness WoM
Brand equity 0.820
Service quality 0.286 0.726
Store attractiveness -0.398 0.451 0.835
WoM 0.575 0.214 -0.501 0.797

According to Table 6, discriminant validity is established as the Fornel-Larcker criterion shows the values not more than the square root of AVE. This is also further confirmed with Heterotrait-Monotrait ratio (HTMT). All values are less than the more conservative threshold value of 0.85, discriminant validity is confirmed. This is given in Table 7.

Table 7: Heterotrait-Monostrait Ratio
Brand equity Service quality Store attractiveness
Brand equity
Service quality 0.375
Store attractiveness 0.463 0.481
WoM 0.655 0.226 0.564

Once internal consistency, convergent validity and discriminant validity have been confirmed, the researcher needs to concentrate on assessing PLS-SEM structural model results. As the first step of evaluating the structural model, VIF values of all predictor constructs. Table 8 provides all VIF values of constructs.

According to Table 8, all VIF values are less than the threshold value of 5 and there are no collinearity issues among predictors. Thus, there is no critical issue in the structural model. After collinearity issues being evaluated, researcher evaluates the direct effects of the variables.

Table 8: Inner Vif Values
  BE SQ SA WoM
BE        
SQ       1.255
SA       1.255
WoM 1.000      

Table 9 gives details about the direct effect of store attractiveness and service quality on word of mouth and brand equity. Service quality positively affects the word of mouth (Path Coefficient=0.552, t>1.96) and also positively affects brand equity (Path Coefficient=0.317, t > 1.96, p< 0.05). In the case of store attractiveness, it negatively impact the word of mouth (Path Coefficient = -0.749, t >1.96, p< 0.05) impacts negatively too on brand equity (Path Coefficient =-0.431, t>1.96, p<0.05). All effect sizes (f2) are greater than 0.02 which means that latent variables such as store attractiveness and service quality have effects on word of mouth. Further, Table 8 shows that the model is significant as 49.3% of the variation of the word of mouth of fashion clothing stores is explained by store both service quality and store attractiveness. This is also confirmed with the f2 which shows how the exogenous variables contribute to the R2 values. Q2 of model 1 is 0.271 which is greater than zero and therefore, model accuracy is also accepted. In addition, other q2 values for two variables given in Table 10 also effect sizes of Q2 value. Thus, analysis support H2 and does not support H2.

Table 9: Direct Effects
  Model 1 Model 2
  WoM Brand Equity
Variable Coefficient t ? value f2 Coefficient t ? value
Store attractiveness -0.749 25.071 0.884 -0.431 20.044
Service quality 0.552 18.543 0.479 0.317 14.735
R2 0.493   0.331
Adj. R2 0.491   0.330
f2 for WoMà Brand equity     0.495    

According to Table 9, all q2 values are more than 0.02 and the constructs have predictive relevance endogenous constructs. Model 2 given in Table 8 explains the direct effect of service quality and store attractiveness on brand equity. Except the store attractiveness, service quality positively impacts on brand equity (Path Coefficient=0.317, t>1.96, p>0.05). 33.1% of the variance of brand equity explains by word of mouth created through store attractiveness and service quality. Q2 value of model 2 is 0.200 which is also greater than zero, therefore the model is accepted. Thus, H2a is supported and H1a is not supported.

Table 10: Q2 Values Of Latent Variables
Latent variables q2
Brand equity 0.337
Service quality 0.374
Store attractiveness 0.542
WoM 0.388

Mediating Effect of Word of Mouth

Analyzing the indirect effect of variables is important in order to investigate the effects of mediation between factors creating word of mouth and brand equity. Table 11 shows the total indirect effect.

According to Table 11, service quality positively influences the word of mouth generation of fashion clothing outlets and influence on brand equity. Hence, it can be concluded that word of mouth is playing the role of complementary mediation. In contrast, even though store attractiveness is with negative path coefficient, it is significant but not positive. Therefore, word of mouth is playing as competitive mediation between store attractiveness and brand equity. Thus, H1b is not supported and H2b is supported.

Table 11: Total Indirect Effect
Path Coefficient T Statistics (|O/STDEV|) P Values
Service quality -> Brand equity 0.317 14.735 0.000
Service quality -> WoM 0.552 18.543 0.000
Store attractiveness -> Brand equity -0.431 20.044 0.000
Store attractiveness -> WoM -0.749 25.071 0.000
WoM -> Brand equity 0.575 20.984 0.000

T statistics and probability values of each construct are significant which is given in Table 12.

Table 12: T Statistics And Probability Values
Original Sample (O) Sample Mean (M) Standard Deviation (STDEV) T Statistics (|O/STDEV|) P Values
BE2 <- Brand equity 0.807 0.807 0.016 49.332 0.000
BE3 <- Brand equity 0.832 0.832 0.019 44.438 0.000
BE5 <- Brand equity 0.821 0.822 0.02 41.764 0.000
SA1 <- Store attractiveness 0.795 0.795 0.014 57.440 0.000
SA10 <- Store attractiveness 0.849 0.849 0.012 73.782 0.000
SA3 <- Store attractiveness 0.925 0.925 0.006 167.941 0.000
SA4 <- Store attractiveness 0.876 0.876 0.01 83.452 0.000
SA5 <- Store attractiveness 0.903 0.903 0.007 126.276 0.000
SA9 <- Store attractiveness 0.630 0.631 0.03 20.719 0.000
SQ2 <- Service quality 0.874 0.870 0.026 34.029 0.000
SQ4 <- Service quality 0.740 0.729 0.051 14.593 0.000
SQ5 <- Service quality 0.882 0.873 0.029 29.911 0.000
SQ6 <- Service quality 0.853 0.847 0.028 30.440 0.000
SQ7 <- Service quality 0.565 0.553 0.07 8.038 0.000
SQ8 <- Service quality 0.511 0.513 0.075 6.811 0.000
SQ9 <- Service quality 0.545 0.539 0.072 7.593 0.000
WOM1 <- WoM 0.839 0.838 0.015 56.777 0.000
WOM2 <- WoM 0.661 0.656 0.036 18.209 0.000
WOM4 <- WoM 0.810 0.811 0.016 51.326 0.000
WOM5 <- WoM 0.863 0.863 0.013 64.995 0.000

Conclusion and Recommendations

The major objective of the study was to examine the contribution of fashion clothing stores attractiveness and service quality factors to the word of mouth. The second objective is to investigate the contribution of word of mouth to the brand equity of these fashion clothing stores. Findings suggest that store attractiveness of the fashion clothing stores does not support the generation of word of mouth. However, the service quality of fashion clothing stores significantly contributes to the generation of brand equity. Further, the generated word of mouth positively contributes to the brand equity of fashion clothing stores.

Although store attractiveness is most important for retail stores, it does not positively contribute to the word of mouth in the context of fashion clothing stores. This may be due to cultural settings of the place where data were collected. These fashion clothing stores need focus on a place for fun for the kids, cleanliness of the fashion clothing stores, entertainment at the stores, the external appearance of the stores and operational hours beyond the normal working hours. In the case of service quality of the fashion clothing stores in Sri Lanka, it positively contributes to the brand equity of fashion clothing stores. Importantly, customer service at the stores with complaint handling, sales assistants’ responses to the customers at the stores, courteous nature of the employees and usage of modern equipment at the stores are factors that make service quality at the fashion clothing stores.

Despite a latent variable store attractiveness does not support to the generation of word of mouth, it is obvious that the structural model is significant and therefore generated word of mouth about the fashion clothing significantly contributing to the brand equity of fashion clothing stores in Sri Lanka. Therefore, it is recommended that investing in store attractiveness and service quality of the fashion clothing stores will pave the way to the competitive advantage of fashion clothing stores in Sri Lanka.

This study further contributes to the literature by delineating that service quality contributes to the word of mouth and supporting to the study of Hartline & Jones (1996) and of Harrison-Walker (2001). This study further support to Murtiasih et al., (2014) and Hanaysha (2016) by addressing that word of mouth also contributes to the brand equity in the context of fashion clothing stores.

This study also has limitations in collecting the data. Respondents were not corporative in filling questionnaires as language and cultural differences. Some of the respondents have not returned their questionnaires after completing it. It is important to have a countrywide study so that researchers will be able to avoid biased results. Future studies can also be conducted by including other factors such as stores’ convenience, store image and store environment and how these factors create word of mouth in fashion clothing stores. This will help the industry in developing retail strategies for fashion clothing stores.

References