The Importance of Brand Cues in Intangible Service Industries: An Application to Investment Services By: Michael K. Brady, Brian L. Bourdeau, and Julia Heskel

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The Importance of Brand Cues in Intangible
Service Industries An Application to Investment
ServicesBy Michael K. Brady, Brian L.
Bourdeau, and Julia Heskel

• Presented by Brett Brown

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Objective

• To empirically test the suggestion that branding
  is more important for services than for physical
  goods and that there is a direct relationship
  between the level of intangibility and the
  importance of branding.

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Previous Research

• Berry (1995), Bharadwaj et al (1993), and Mitra
  et al (1999)
• Literature that suggests brand cues are more
  important for products high in credence
  properties than for products dominated by search
  or experience properties.

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Previous Research

• Krishnan and Hartline (2001)
• Empirical work on the importance of branding
  across product types.
• They found that consumers tend to rely more
  heavily on brand equity evaluations for physical
  goods than services.

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Intrinsic Hypotheses

• H1. Intrinsic cues are more important in the
  purchase decisions of mutual funds than for hotel
  accommodations and computers purchases.
• H1a. National reputation is a more important cue
  in the purchase decisions of mutual funds than
  for hotel accommodations and computers purchases.
• H1b. Objective product rankings are a more
  important cue in the purchase decisions of mutual
  funds than for hotel accommodations and computers
  purchases.
• H1c. Good media reviews are a more important cue
  in the purchase decisions of mutual funds than
  for hotel accommodations and computers purchases.

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Extrinsic Hypotheses

• H2. Extrinsic cues are less important in the
  purchase decisions of mutual funds than for hotel
  accommodations and computers purchases.
• H2a. Personal referrals are a less important cue
  in the purchase decisions of mutual funds than
  for hotel accommodations and computers purchases.
• H2b. Price is a less important cue in the
  purchase decisions of mutual funds than for hotel
  accommodations and computers purchases.
• H2c. Advertising is a less important cue in the
  purchase decisions of mutual funds than for hotel
  accommodations and computers purchases.

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Methodology

• A survey was administered to determine the
  relative importance of brand cues on consumers
  purchase decisions across three products. (Mutual
  Funds, Hotel Accommodations, and Computers)
• 101 part-time and full-time graduate business
  students from a medium sized university were
  given the survey.

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Methodology

• 66 of the participants were male
• 16 were between the age of 18 and 25
• 76 were between 26 and 35
• 8 were over 35
• 70 were recent undergrads in grad school
• 30 completed grad school

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Survey

• Participants were placed in the position of
  purchasing three products that varied in
  tangibility.
• Computers- Very Tangible
• Hotel Accommodations- Less Tangible
• Mutual Funds- Very Intangible

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Survey

• Respondents role played the purchasing process
  for each of the three products.
• They were asked to indicate the importance of the
  brand cues (national reputation, rakings, media
  reviews, referrals, price, and advertising)
• Brand cues were presented on an 11-point scale
  ranging from Not Very Important to The Most
  Important Factor

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Results

• Each of the 8 hypotheses were tested using a
  repeated measures ANOVA design.
• Plt0.05 (Mauchlys test)
• This test was used because it is a powerful way
  to detect the effects of experimental
  manipulation and it also reduces unsystematic
  variability for the design.
• It was also used because it is easy to graph the
  results from an ANOVA design.

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Results
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Results
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Intrinsic Cues

• The profile plot suggests that individuals place
  most emphasis on intrinsic cues when purchasing
  mutual funds followed by computers and then
  hotels.
• Contrasts indicated that each of these
  differences was significant (plt0.001)
• National Reputation
• Most important for mutual funds, followed by
  computers and hotels
• Contrasts indicated that only the hotels/mutual
  funds comparison was significant (plt0.001)

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Intrinsic Cues

• Objective Product Rankings
• The mean scores supported that objective product
  rankings were more important for mutual fund
  purchases than hotels and computers.
• Contrasts indicated that all mean differences are
  significant (plt.001)
• Media Reviews
• The means supported the expected direction
• Contrasts indicate that only the difference
  between mutual funds and hotels was significant
  (plt.026)

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Extrinsic Cues

• Extrinsic Cues are less important in the purchase
  decision of mutual funds than hotels and
  computers.
• Contrasts indicated that each difference was
  significant (plt0.001)
• Personal Referrals
• Least important for mutual funds purchase
  decisions compared to hotels and computers.
• Advertising
• The means support the prediction that advertising
  has less of an impact on purchase decisions for
  mutual funds.
• Contrasts indicated that only the difference
  between mutual funds and hotels was significant
  (plt0.001)

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Conclusion

• Intrinsic cues are more important for mutual fund
  purchase decision than for hotels and computers
  purchases
• Extrinsic cues are less important for mutual fund
  purchases than hotel and computer purchases.
• All the means were in the expected direction.
• 6 out of 8 ANOVA were significant at plt.05, and
  all 8 were significant at plt.10
• 12 out of the 16 contrasts were significant.

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Need For More Research

• Future research is needed that expands this study
  to other industries and other respondents.
• More research is also needed that applies to
  investment services.
• Future research should also examine the
  importance of brand cues in other intangible
  service industries.