The importance of brand cues in intangible service industries By: Brady, M.K and Bourdeau, BL Presented by: David Kang

Topics of the article Why was the test conducted Why was the test conducted What is a cue and why it is used What is a cue and why it is used What is the importance of brand cues in intangible service industries What is the importance of brand cues in intangible service industries Hypothesis & Conclusion of the research Hypothesis & Conclusion of the research

Why was the test conducted Purpose of this study is to test that whether branding is more important for services or for physical goods Purpose of this study is to test that whether branding is more important for services or for physical goods There is a direct relationship between the level of intangibility and the importance of branding There is a direct relationship between the level of intangibility and the importance of branding

What is a cue and why it is used "a characteristic event, quality, or object that is external to the consumer that is encoded and used to categorize a stimulus object" (Crane and Clarke, 1988) "a characteristic event, quality, or object that is external to the consumer that is encoded and used to categorize a stimulus object" (Crane and Clarke, 1988) Dawar and Parker (1994) suggest five reasons for the use of cues: Dawar and Parker (1994) suggest five reasons for the use of cues: 1. the consumer wants to reduce perceived risk (Olson, 1977) 1. the consumer wants to reduce perceived risk (Olson, 1977) 2. the consumer lacks expertise (Rao and Monroe, 1988) 2. the consumer lacks expertise (Rao and Monroe, 1988) 3. consumer involvement is low (Celsi and Olson, 1988) 3. consumer involvement is low (Celsi and Olson, 1988) 4. objective quality is too complex to assess or the customer is not accustomed to spending much time doing such assessments (Allison and UhI, 1964; Hoch and Ha, 1986) 4. objective quality is too complex to assess or the customer is not accustomed to spending much time doing such assessments (Allison and UhI, 1964; Hoch and Ha, 1986) 5. an information search preference exists (Nelson, 1970, 1974) 5. an information search preference exists (Nelson, 1970, 1974)

What is a cue and why it is used (cont.) Price is important for cue and quality Price is important for cue and quality Intangible services & Tangible services Intangible services & Tangible services Price is least important cues for highly intangible services Price is least important cues for highly intangible services Price is most important cues for more tangible services Price is most important cues for more tangible services Two types of cues: Two types of cues: Intrinsic cues Intrinsic cues Example: media reviews, objective product rankings Example: media reviews, objective product rankings Extrinsic cues Extrinsic cues Example: personal referrals, price, and advertising Example: personal referrals, price, and advertising

What is the importance of brand cues in intangible service industries Customers use cues for external events, qualities or objects when deciding on services or products Customers use cues for external events, qualities or objects when deciding on services or products Using Intrinsic and Extrinsic cue, consumers engage in a two-step cue utilization process before making a purchase decision Using Intrinsic and Extrinsic cue, consumers engage in a two-step cue utilization process before making a purchase decision 1. consumer selects and stores information about cues 1. consumer selects and stores information about cues 2. cognitive processing of these cues to evaluate the product 2. cognitive processing of these cues to evaluate the product

Hypothesis & Conclusion of the research Hypothesis: Hypothesis: the researchers believed that since services vary greatly in intangibility, the impact of cues on purchase decisions should vary as well. the researchers believed that since services vary greatly in intangibility, the impact of cues on purchase decisions should vary as well. cues should be important for purchase decisions because of highly intangible products, as well as providing tangible evidence of quality cues should be important for purchase decisions because of highly intangible products, as well as providing tangible evidence of quality reputation, objective product rankings, and media reviews will be more important for intangible services, then tangible services reputation, objective product rankings, and media reviews will be more important for intangible services, then tangible services

Hypothesis & Conclusion of the research (cont.) 8 Hypothesis: 8 Hypothesis: H1. Intrinsic cues are more important in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. 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. 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. 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. H1c. Good media reviews are a more important cue in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. H2. Extrinsic cues are less important in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. 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. 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. 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. H2c. Advertising is a less important cue in the purchase decisions of mutual funds than for hotel accommodations and computers purchases.

Hypothesis & Conclusion of the research (cont.) Tests and results: Hypothesis was tested using an repeated measures ANOVA design Tests and results: Hypothesis was tested using an repeated measures ANOVA design Found that first four hypothesis on intrinsic cues were correct. Found that first four hypothesis on intrinsic cues were correct. Found that last four hypothesis on extrinsic cues were correct Found that last four hypothesis on extrinsic cues were correct Results were that the importance of intrinsic cues were intangible services and extrinsic cues were important in tangible services Results were that the importance of intrinsic cues were intangible services and extrinsic cues were important in tangible services

Conclusion This article is important in service marketing because it offers more study on service branding and what consumers are using This article is important in service marketing because it offers more study on service branding and what consumers are using Extra information: Extra information: Krishnan and Hartline in their article, "Brand equity: is it more important in services?“ testing the brand cues will show which cue effects specific consumer's purchase decisions Krishnan and Hartline in their article, "Brand equity: is it more important in services?“ testing the brand cues will show which cue effects specific consumer's purchase decisions