Abstract
City and place marketing is highly recognized in urban planning and management. As one of the brand marketing resources, the brand and brand equity of residential areas draws considerable attention. No attempt was made in previous studies to explore the components of brand equity, causality of components and measurement strategies of brand equity in residential areas. This study establishes a conceptual model to estimate the brand equity in residential areas and to identify a method for evaluating brand equity components with their relationships using modification of general goods and services through a brand equity evaluation model. The results indicate that brand awareness and brand personality have a direct influence on brand equity, while perceived quality has an indirect influence due to intermediation by reputation. In addition, brand awareness, perceived quality, and reputation in Bundang are higher than those in Ilsan. Keywords: brand equity; brand equity components; residential area 1. Introduction promotion strategies of a local residential area brand As a result of Korea's legitimate municipal with respect to existing impressions, facilities, system which began in 1995, most of the municipal environments and cultures are difficult to adopt and governments placed greater importance on promoting practice. local brands and stimulating local economies (Kim Two methods were used to measure brand equity in 2005; Oh, 2005; Kim 2006; Kang, 2006; Byeon, previous studies. The first method applies the financial 2009). Promoting the local brand of a city becomes value of brand equity to the business franchise and an important and effective strategy for better city measures the outcome of customer-based brand management and local economic development. equity (Aaker and David, 1991; Farquhar et al., 1991; A number of studies have explored the brand Simon and Sullivan, 1992). This accounting method equity strategy cases of the private industry and is effectively developed and tested for the appraisal of housing market (Boyle and Kiel, 2001; Pagourtzi et brand name equity value. The second method evaluates al., 2003; Jung, 2009; Lee, 2011). Hedonic pricing the responses of the customer with respect to the brand methods are commonly used to demonstrate housing name (Keller, 1993; Schocker et al., 1994). market valuation with respect to the changes in the In this study, the authors will focus on the first characteristics of property. However, only a few method, the financial value of brand equity, to identify empirical studies have investigated the competitiveness and measure the important components of brand equity effect by different forms of brand equity in large- in a residential area. There are four main objectives scale residential developments. Han and Lim (2003) in this study: 1) verify theoretical applicability of pointed out that the brand strategies of local residential the previous models, 2) identify the components areas should adopt different approaches than the conventionally developed in previous studies, used brand strategies used by companies. The conventional to measure the product and service brand equity, 3) develop a model for brand equity measurement in residential areas, and 4) investigate correlations among *Contact Author: Jeasun Lee, Professor, Department of Urban the brand equity components and their effects on equity Planning & Engineering, College of Engineering, establishment based on empirical results. Yonsei University, 262 Seongsanno, Seodaemun-gu, Seoul, 120-749 Korea 2. Methods Tel: +82-2-2123-5894 Fax: +82-2-393-6298 2.1 Procedure E-mail: jeasunlee@yonsei.ac.kr New towns located on the outskirts of Seoul in ( Received April 18, 2011 ; accepted January 23, 2012 ) Journal of Asian Architecture and Building Engineering/May 2012/54 47 Table 1. General Characteristics of the Study Area Name Bundang Ilsan - Formation of a garden city with artistic - Construction of a self-sufficient new town by and cultural facilities CBD for the Gangnam region in Seoul and the - Formation of the central city of the Characteristics Metropolitan Area western Metropolitan Area with self- - Development of a fresh outskirt residential area sufficiency for the middle-class - Formation of an advance base for the unification of North and South Korea - 25km away from Seoul to the South East - 20km away from Seoul to the North West Location - Seoungnam City, Gyounggido - Goyang City, Gyounggido Total 1,894 1,573 Residential Area 614.1 528.3 Area (ha) Commercial Area 85.5 45.7 Business Area 72.5 106.3 Infra Structure 380.4 304.7 Population (Thousand) 390 276 Household (Thousand) 97.5 69 Korea are considered as the study areas. The authors structural equation modeling analysis was carried out considered two conditions for the site selection and to using AMOS 5 to verify the study model. Two-way measure brand equity. The first condition is that the ANOVA was utilized to verify the significance of the area should have a high level of awareness and specific scored class difference in the brand equity between impression regarding recognition by the general public. Bundang and Ilsan. The second condition is that the selected areas should 2.2 Research Frame share similar physical, geological and functional 2.2.1 Conceptual Model and Research Questions characteristics. Based on these two conditions, the To estimate the brand equity in residential areas and Bundang and Ilsan areas are selected for the analysis in to identify the components for brand equity evaluation, this study. These areas are among the initial major new a conceptual model was established, as shown in towns in the Seoul Metropolitan Area (SMA). Table Fig.1. This conceptual model was designed following 1. summarizes the general characteristics of these two the results of Aaker (1996) and Lee (2006), in an study areas. effort to measure the brand equity of residential areas 1) Sample and Data Collection and investigate the effects of the components. The The survey was conducted using online panelists components, which are the sources of brand equity, from the Gallup Korea institution. The samples are were divided into brand recognition, brand personality selected among 80,000 panelists and proportionally (impression), and perceived quality (Aaker, 1996). stratified to consider gender, age and location (4 zones in Seoul). The selected samples are between the ages of 20 and 59 who are currently residing in Seoul with similar distance to the study areas. They are assumed to visit the study areas a number of times. After pre-test and modification of the questionnaires, the survey was conducted online from October 28, 2011 to October 30, 2011. Of the 535 survey responses collected, 512 responses have valid data for the analysis. Fig.1. A Conceptual Model for Research 2) Analysis Method First, to investigate the general characteristics of Brand loyalty was not included in the category of the samples, a frequency analysis and a descriptive brand equity, because it was recognized as a dependent analysis were conducted. A t-test was used to analyze variable of the brand equity. This was done because the the significance of the difference in the evaluation brand equity components of awareness and impression results for each investigation item of the study influence brand loyalty. Acker (1991) and Yoo and areas. Secondly, an exploratory factor analysis and Donthu (2000) reported that the brand loyalty is a a confirmatory factor analysis were carried out to core of brand equity and is partially influenced by verify the reliability and validity of the measurement impressions. Lee (2006) added that the reputation variables. The reliability was analyzed using the could be influenced by advertisements and/or Cronbach's Alpha values to examine the internal recommendations by experts and other local elements, reliability of the extracted factors. A correlation such as high price and involvement of residential analysis was also performed to investigate the products. correlations among the input variables. Thirdly, Therefore, the research questions the authors seek to 48 JAABE vol.11 no.1 May 2012 Sungki Hong answer are as follows: 3) Perceived Quality 1. Establishment of a model for the measurement In the previous studies, detailed items were derived of residential area brand equity: Is it possible and measured for the perceived quality. A preliminary to measure the brand equity of the special study is conducted for the assessment of satisfaction product, which in this case is a residential area, and quality of life in a new town residential area. The using conventional brand equity measurement items to represent perceived quality are measured on a models? seven-point Likert scale. 2. Investigation of the effects of the individual 4) Reputation components: In what ways and to what extent Information leading to the reputation of a residential do the individual components influence the area is an important factor concerning housing formation of brand equity? purchase and residential area choice. The source of 3. Me a sure m e nt a nd c om pa ri son of bra nd information may be obtained via the mass media, equity: How different are the types of brand advertisement, personal (friend) recommendation, equity of Bundang and Ilsan as measured by and expert recommendation. Therefore, reputation is an established model? Is there a significant included as one of the brand equity components and difference in the variables of residential measured on a seven-point Likert scale. location, age and income level of the residents? 5) Brand Loyalty 2.3 Measurement Details of Brand Equity Brand loyalty is an attitudinal and behavioral According to Asker (1991), brand equity is a component and can be defined as the level of general multidimensional concept that consists of brand fondness for an area. It represents the intention awareness, perceived quality, brand association, and of residents and their consistent recommendation other proprietary assets. For the purpose of this study, to others. A seven-point Likert scale was used for brand equity consists of brand awareness, brand measurement of the three items representing brand personality, perceived quality, reputation and brand loyalty. loyalty. Three items for brand awareness were adopted from measures developed by Yoo and Donthu (2000) 3. Results and Discussions and Aaker (2001). Twelve items for brand personality 3.1 Descriptive statistics were drawn from previous studies and modified Frequent and descriptive analysis is performed to by adding the items used by Kim (2005). Twenty investigate the general characteristic of the samples perceived quality items were drawn from the Gyeonggi from 512 survey respondents. A t-test is used to Research Institute (2001). Three reputation items were observe the significance of the evaluation results for drawn from the Gyoungnam Development Institute each investigation item between Bundang and Ilsan. (2005) and Lee (2006). Three brand loyalty items were The respondents' initial brand image as a new town adopted from measures developed by Yoo et al. (2000). in SMA for Bundang is 49.6% and for Ilsan 20.9%. Table 2. presents a detailed summary of the multiple This shows that there is a large difference in brand item scales. image between these two areas. The total brand 1) Brand Awareness unaided recall from added four instances for Bundang Awareness is divided into top of mind, unaided, is 77.0% and for Ilsan 72.9%, which shows similar and aided awareness. Top of mind awareness of the recall rates. The awareness level of residential areas participant is assessed with open questions. Unaided showed that the positive response rate of Bundang is recall is then measured with additional questions. 39.5% (an average rating of 3.16) and Ilsan 36.1% The measurement of understanding is replaced by the (an average rate of 3.12), which also shows similar measurement of knowledge about two study areas evaluation results. with respect to the residential environment. Brand As for the measurement of general fondness in awareness is then modified into first impression, brand the overall impression, the brand awareness of the remembrances and brand understanding on a five-point respondents showed that the positive response rate Likert scale. for Bundang is 59.6% (an average rating of 4.77) and 2) Brand Personality for Ilsan 52.5% (an average rating of 4.57), which The recognition of competing brands by consumers showed that Bundang has a more positive impression is different depending on their brand personality. In this than Ilsan. As for perceived quality, Bundang showed respect, a new measurement method is needed in urban a relatively higher rate of positive evaluation than planning to measure the brand personality. The Brand Ilsan. The total of nine items is positively evaluated Personality Scale (BPS) used by Aaker (2001) and for Bundang with a ratio of 60% or higher, while measurement items used by Kim (2005) are employed, only four items for Ilsan are positively evaluated with some modification, for the brand personality with a ratio of 60% or higher. The evaluation scores measurement in this paper. Twelve items on a seven- for the educational environment, living environment, point Likert scale represent brand personality ranging and housing price are higher in Bundang than Ilsan. from 1 (strongly disagree) to 7 (strongly agree). However, Ilsan is evaluated more positively than JAABE vol.11 no.1 May 2012 Sungki Hong 49 Table 2. Variables and Measurement Dimension Items Scale First Impression Free Association Brand Awareness Brand Remembrance Free Association Brand Understanding (Knowledge on Residential Area) Likert (5 Points) Enjoyable Vibrant Modern Bright and Clean International Luxurious Friendly Brand Personality Likert (7 Points) Beautiful Abundant Feeling Proud Individual Feeling Safe Using Public Transportation in the Inner City Using Public Transportation between Cities Transportation Environment Likert (7 Points) Traffic Movement within the City Traffic Movement between Cities Elementary and Middle school Education Environment High School Private Education Institute Residential Facilities Living Environment Wholesale Commercial Facilities Perceived quality Air Conditioning Natural Environment Green Space Likert (7 Points) Performance Facilities Culture and Welfare Environment Social Welfare Facilities Leisure Facilities General Hospital Public Facilities and Services Library Sport Facilities Current Housing Price Housing Prices Future Investment Value Reputation from Mass Media Reputation Acquaintance's Recommendation Likert (7 Points) Profession's Recommendation General Fondness Brand Loyalty Residence Intention Likert (7 Points) Recommendation Intention Gender Age Address Marriage Socio-demographic characteristics Occupation Income Housing Type Housing Ownership Bundang concerning its natural, cultural and social professionals or real estate agents. welfare environment. This result showed that these two Bundang also has higher brand loyalty than Ilsan. areas make very different impressions. 62.9% of Seoul residents rated Bundang positively and The reputation for Bundang is significantly higher 53.7% rated Ilsan positively. Also while 54.9% of the than Ilsan based on three evaluation items: reputation respondents desired to live in Bundang in the future, from the mass media, recommendation by friends, only 45.1% wanted to live in Ilsan. As for another and recommendation by construction company behavioral variable of brand loyalty, the intent to 50 JAABE vol.11 no.1 May 2012 Sungki Hong recommend Bundang to others is 53.5% and for Ilsan to the reputation are combined into one factor. The 44.1%, which indicates that there is a higher brand factor of brand loyalty, composed of general fondness, loyalty in Bundang than Ilsan. residence intention and recommendation intention, 3.2 Factor analysis and reliability test showed the greater descriptive power of the variance. The exploratory factor analysis and confirmative 2) Confirmative factor analysis factor analysis are carried out with SPSS V.12.0 to The confirmative factor analysis examines whether identity the primary factors and to verify the reliability the items extracted by the exploratory factor analysis and validity of the measurement. Cronbach's Alpha and the reliability analysis are appropriate to measure is used to estimate the consistency of respondents' the brand equity of residential areas. The brand response to the items. The reliability was analyzed awareness is excluded from the analysis, because it using Cronbach's Alpha values to examine the internal includes two measurement variables and the path of the reliability of the extracted factors. Moreover, an factors is well verified using four variables that showed analysis was conducted to investigate the correlations sufficiently high GFIs (Goodness of Fit Index). The among the input variables. Adjusted GFI (AGFI) values are also sufficiently high, 1) Exploratory factor analysis except brand loyalty. An exploratory analysis evaluates the feasibility 3) Correlation analysis among the variables of the constitution of the questionnaire items. The The overall characteristics of the variables and the varimax otation of principal component analysis strength of the relationships among the main variables is used, and the inner consistency is verified using are investigated using Pearson's correlation analysis. Cronbach's Alpha values. The results showed that the variables are correlated (1) Brand personality because a positive correlation coefficient exceeding The first factor, named 'smartness,' consists of the significance level was found between all of the 'individual,' 'feeling proud,' 'friendly,' 'feeling safe,' variables. 'beautiful,' and 'international.' The second factor, 3.3 Path analysis for the verification of the research named 'dignity,' consists of 'modern,' 'bright and clean,' subject 'luxurious,' and 'abundant.' The third factor, named In order to verify the conceptual model, a path 'dynamics,' is composed of 'enjoyable' and 'vibrant.' analysis is conducted using the Amos 5.0. Structural 'Feeling proud' and 'abundant' in the second factor of equation model analysis is also carried out using the individual measurement variable are eliminated AMOS 5.0 to verify the study model. Two-way because the factor accumulation values of both ANOVA was performed to verify the significance exceeded 0.4. of the scored hierarchical difference in brand equity (2) Perceived quality between Bundang and Ilsan. The first factor consists of 11 items related to the 1) First and second research objectives verification educational and living environment. The second factor The GFI and path coefficient verification showed is composed of five items related to the natural, cultural that brand awareness, brand personality and reputation and welfare environment. The third factor consists have a direct effect on the formation of brand equity. of four items for the transportation environment. The perceived quality, on the other hand, did not have Applying the same criterion as in the brand personality, a direct effect on brand equity. Thus, a modified model, a total of eight individual variables are eliminated. based on the assumption that perceived quality can After eliminating the factors, the individual factors are affect brand equity formation indirectly through the named 'living,' 'nature' and 'transportation.' reputation, is prepared and re-verification is carried (3) Reputation and brand loyalty out. A cause-and-effect relationship analysis with Three individual variables measured with respect the modified model showed that the path coefficient Table 3. Result of the Exploratory Factor Analysis for Brand Personality Factor Eigen Communality Factor Variable Cronbach's Alpha Loading -value (Accumulated Ratio) Individual .772 Feeling proud (eliminated) .698 Friendly .694 31.73 Smartness 3.807 .875 Feeling safe .684 (31.73) Beautiful .677 International .642 Brand Personality Modern .794 Bright and clean .789 25.00 Dignity 3.000 .863 Luxurious .729 (56.73) Abundant (eliminated) .642 Enjoyable .807 18.41 Dynamics 2.209 .862 Vibrant .793 (75.14) JAABE vol.11 no.1 May 2012 Sungki Hong 51 Table 4. Result of the Exploratory Factor Analysis for Perceived Quality Factor Eigen Communality Factor Variable Cronbach's Alpha Loading -value (Accumulated Ratio) Private educational institutes .832 High schools .806 Elementary and middle school .770 Wholesale .719 Commercial facilities (eliminated) .704 Living Residential facilities (eliminated) .671 6.507 32.54(32.54) .922 General hospital .661 Library (eliminated) .648 Current housing price .647 Public sport facilities (eliminated) .631 Perceived Future investment value .599 Quality Green space .805 Air environment .789 20.84 Nature Leisure facilities (eliminated)) .721 4.168 .848 (53.38) Performance facilities (eliminated) .643 Social welfare facilities (eliminated) .604 Inter-city public transportation .822 Inter-city traffic flow .803 17.39 Transportation 3.478 .880 Intra-city public transportation .760 (70.77) Traffic flow within the city .704 Table 5. Result of the Exploratory Factor Analysis for Reputation and Brand Loyalty Factor Eigen Communality Factor Variable Cronbach's Alpha Loading -value (Accumulated Ratio) Expert's recommendation .934 81.4 Reputation Friend's recommendation .911 2.443 .885 (81.4) Reputation from mass media .861 General fondness .928 88.5 Brand Loyalty Residence intention .944 2.655 .934 (88.5) Recommendation intention .950 and critical ratio of perceived quality is 0.829 and measured on the basis of a five-point Likert scale. 8.206, respectively. Both of these values exceed the These points are then re-converted into points with a reference value of 1.960. Therefore, it is accepted full score of 100. The standardized mean scores are that modified hypothesis of perceived quality has a then calculated by applying the weight to each factor significantly positive effect on brand equity formation value and converted to the points based on the full and reputation. Brand awareness and brand personality, score of 100. on the other hand, do not have a significant influence on reputation and have only a direct effect on brand equity. Based on these analyses, a model to measure residential brand equity is established, as shown in Fig.2., which is the first objective of this study. 2) Third research objective verification In order to utilize the measurements obtained from the survey questionnaire in the established brand equity measurement model, the following standardization procedures are conducted. First, among the four brand equity components, the scores for brand personality, perceived quality and reputation measured on the basis of a seven-point Likert scale are converted to points by setting the full score at 100. Second, brand awareness Fig.2. The Model for the Measurement of Residential Area is converted to points with the full score set at 5. It Brand Equity is adjusted with reference to the brand knowledge Table 6. Results of the Confirmative Factor Analysis x p GFI AGFI RMR NFI Brand personality 368.144 0.000 0.936 0.890 0.056 0.944 Perceived Quality 724.282 0.000 0.901 0.847 0.067 0.929 Reputation 24.827 0.000 0.985 0.907 0.036 0.987 Brand Loyalty 75.073 0.000 0.956 0.737 0.057 0.972 52 JAABE vol.11 no.1 May 2012 Sungki Hong Table 7. Cause-and-Effect Relationship of the Modified Model – Analysis of the Indirect Effects Path Coefficient Standard Error Name Path C.R. (T) p (Estimate) (Standardized Estimate) Brand Awareness → Reputation 0.287 0.172 1.664 0.096 Brand Personality → Reputation 0.059 0.096 0.616 0.538 Perceived Quality → Reputation 0.829 0.101 8.206 *** 0.000 * p <0.1, **p <0.05, ***p <0.01. (1) Total brand equity hand, the brand equity of Bundang is higher than Ilsan The total brand equity scores of Bundang and for the high-income respondents (more than 5 million I l sa n a r e c a l c u l a t e d b y m u l t i p l y i n g t h e we i g h t s. KRW per month). The weights are from the conversion of the effects of individual components calculated in the second 4. Discussion research objective, which is fully comparable with Recently, there is a growing interest in marketing the previously standardized brand equity scores of the tools for local brand equity. Conventionally, brand individual components. Based on a full score of 100, marketing and equity strategies are performed by the the final brand equity score for Bundang is 58.6 and private companies that a number of previous studies for Ilsan 56.0. This statistically significant result shows focused on in this respect. However, there are only a that the brand equity of Bundang is slightly higher than few studies that focused on the components that can Ilsan by 2.6 points. constitute the local brand equity on the community level. To build an effective local brand equity strategy, Table 8. The Brand Equity Weight it is important to understand the cause-and-effect Brand Brand Perceived Reputation relationships among the related components and how Factor Awareness Personality Quality (Q) (R) the brand equity is measured. Although a great amount (A) (P) of literature exists for brand and equity marketing Direct .593 .314 - .543 strategies, no studies have been conducted on the brand Effect Indirect equity specific to a single residential area. Therefore, in - - .450 - Effect this study, the authors established a model to measure Converted the brand equity of a residential area. A general brand 40.9(α) 21.5(β) 31.2(γ1) 6.4(γ2) Weight (%) equity measurement model for products and services is used and modified according to clarification of the Table 9. The Final Brand Equity brand equity components and their effects. Descriptive Statistical Values T-Test Two new town residential areas (Bundang and Brand Ilsan) are chosen for the analysis. An on-line survey is Equity conducted by residents of the Seoul Metropolitan Area. (points, Area No. of Standard based on t-value Sig. (2-tailed) Using the information and data collected by the survey, Cases Deviation the full a brand equity measurement model is established. This point of model is then used to analyze the cause-and-effect 100) relationships and the effects of individual brand equity Bundang 512 58.6 14.7430 components, as well as comparing the results of two 2.832 .005*** Ilsan 512 56.0 13.6043 study areas. ***p<0.01 The results of this study showed that the brand (2) Brand equity for each class awareness and brand personality have a direct effect on To analyze whether the brand equity is related to brand equity formation and does not have an indirect the geographical proximity of Bundang and Ilsan, the effect on reputation. The perceived quality, on the residential areas of Seoul are divided into four zones other hand, has an indirect effect on reputation, but (Northwest, Northeast, Southeast, and Southwest) . does not have a direct effect on brand equity formation. The result showed that the brand equity of Ilsan was Since the reputation is directly influenced by perceived higher in the Northwest zone and Bundang was higher quality and not by brand awareness and personality, it in Southeast zone. The rest of the zones showed no has a direct effect on brand equity formation. differences. Therefore, geographical proximity is also Based on the results of the analysis, useful policy related to the brand equity. recommendations can be provided to enhance the local A difference in the brand equity of Bundang and brand competitiveness. Local governments should Ilsan is also found among different income levels. promote their local brand awareness by organizing Among the low-income level respondents (less than l oc a l fe st i va l s, e ve nt s a nd a c t i vi t i e s. In orde r t o 3 million KRW per month), the brand equity of Ilsan improve local brand awareness, the government should is relatively high compared to Bundang. On the other employ various efforts and strategies to vitalize their JAABE vol.11 no.1 May 2012 Sungki Hong 53 communities and places. The attraction of more livable of quantitative evaluations but also to the area of communities can also heighten the brand personality. qualitative investigations. In such case, the causes The brand equity scores of Bundang and Ilsan are implied in the evaluation results can be clearly measured using an established measurement model determined. with the structural formation of residential area Note brand equity. The measurements of four components Southwest zone (Yangcheon-gu, Gangseo-gu, Guro-gu, are converted to points, based on a full 100 point Geumcheon-gu, Youngdeungpo-gu, Dongjak-gu, Gwanak- standardized score. The brand equity of the individual gu), Southeast zone (Gangdong-gu, Seocho-gu, Kangnam-gu, Songpa-gu), Northwest zone (Jongro-gu, Jung-gu, Yongsan-gu, components is measured by applying the score weights Seodaemun-gu, Eunpyoung-gu, Mapo-gu) and Northeast zone (the to each component, however, arithmetic mean points rest). are not used in the measurement. The results showed that the brand equity of Bundang is slightly higher with References 1) Byeon, J. S. (2009) An Analysis of Korea Cities' Strategy on the score value of 58.6 compared to 56.0 in Ilsan. City Images and City Brand Slogans, Journal of Korea Planners This is the first study to apply brand equity in new Association, 44 (2), pp.105-121. towns. This is necessary because of the complex 2) Jung, S.Y et al. 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New Jersey: Research Center for Urban and in establishing specific improvement methods if Environmental Planning, School of Architecture and Urban future research is extended not only into the area Planning, Princeton University. 54 JAABE vol.11 no.1 May 2012 Sungki Hong
Journal
Journal of Asian Architecture and Building Engineering
– Taylor & Francis
Published: May 1, 2012
Keywords: brand equity; brand equity components; residential area
