Customer-Based Brand Equity and Improvement Strategy for Mobile Phone Brands: Foreign versus Local in the Chinese Market

[Abstract] Brand equity practically boils down to the word of mouth and purchase behavior of customers. Brand-knowledge structures in the minds of customers are the source or foundation of brand equity. Customer-level brand equity can be captured by five aspects: awareness, associations, attitude, attachment, and activity. In this article, we measure the brand equity of six major mobile phone brands in the Chinese market, which include four foreign and two local ones. A total of 174 respondents from one major university in Beijing were surveyed for data collection. The survey was conducted to obtain insights on how consumers form attitudes towards different mobile phone brands. In the study, we attempt to understand the attributes to which customers give greater focus. Furthermore, we create the brand perceptual map and the ideal line in order to understand the advantages and disadvantages of different brands. The data analysis results show that international brands outperform local brands in terms of customer-based brand equity in the Chinese market. Based on the two studies, we further explore and discuss how local brands should improve their brand equities to compete with international brands. [Keywords] Brand equity; brand improvement; mobile phone; Chinese market Introduction Since China's accession to the World Trade Organization (WTO) in 2001, many localbrands have been facing mounting challenges from foreign competition. This is most obvious in the industries that the government has entirely opened to foreign participation, such as the mineral water industry and the mobile phone industry. In this research, we focus on the mobile phone industry. In the Chinese mobile phone market, an interesting phenomenon is worth examination: as a result of fierce competition, the landscape of market share ranking has been dramatically changing amongst competitors. For a long period in the 1990s, three foreign mobile phone brands, namely, Motorola, Nokia, and Ericsson, nearly dominated the whole Chinese market. This situation changed soon after the local brands, including Bird and TCL, started to size up. However, the situation has been undergoing another flip since 2005 when foreign brands have adjusted their competition strategies. Both foreign and local brands take turns capitalizing their competitive position in the Chinese mobile phone market. Essentially, this entails the need for both local and foreign brands to gain a clear understanding of their customers' preferences in terms of mobile phone features and their competitive position in customers' perceptions so that they can establish their own brand improvement strategies and take full competitive advantage. The major purpose of this research is twofold: (1) to compare local and foreign mobile phone brands in the Chinese market with respect to customers' perceptions, and (2) to formulate brand improvement strategies for mobile phone brands, both foreign and local, that are in a disadvantageous competitive positions in all aspects of customers' perceptions. Theoretical Background Building and properly managing brand equity has become essential for most companies. More and more companies have already realized that brand equity is one of their most valuable intangible assets. Maintaining and enhancing the strength of company brands has therefore become an important management imperative (Keller & Lehmann, 2006). In relation to this, Keller (1993) defined the term customer-based brand equity (CBBE) as "the differential effect of brand knowledge on customer response to the marketing of the brand." Brand equity is widely accepted as a multidimensional concept that consists of brand loyally, brand awareness, perceived quality, brand associations, and other proprietary assets (Aaker, 1996). The rewards for building strong brand equity are obvious. However, the problem lies in the fact that only a few managers are able to objectively assess the strengths and weaknesses of their brands. …