Article

Marketing Mix Influence on Service

Brand Equity and Its Dimensions

Vision
20(1) 923
2016 MDI
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0972262916628936
http://vision.sagepub.com

Somnath Mukherjee1
Shradha Shivani2

Abstract
Service sector is growing across the globe including India. Despite the growing importance of the sector and services marketing, there
is a paucity of literature in the area in general and branding literature in particular.
This study is carried out in the retail banking sector with loans as the product category. Retail banking sector is increasingly seen
as an attractive market segment with opportunities for growth and profits. We have reviewed the service branding literature and it
is observed that most of the available brand equity models are for goods. Based on the research gap, a service branding model has
been proposed and empirically validated. The model represents service marketing mix influence on certain selected dimensions of
brand equity, namely, brand image(s) and perceived service quality and thereby on brand equity. Structural equation modelling is used
to test the hierarchical relationship.
The study has established significant relationships among the marketing mix elements and brand equity dimensions. It contributes
significantly to the literature on service branding and provides valuable insights to practicing managers.

Key Words
Services, Brand Equity, Brand Image, Perceived Service Quality, Advertising, Word of Mouth, Physical Evidence

Introduction
Service marketing has been different from goods marketing
and is said to be more challenging. As an area this is relatively new and there is a paucity of literature (Chernatony
& Riley, 1999). The development of the field started in a
structured manner during the 1990s though the starting was
made in the 1970s (Berry & Parashuraman, 1993).
There have been numerous studies on brands and brand
equity. Brands have been established to be a source of
competitive advantage and have been forwarded as valuable asset for any organization (Aaker, 1991; Gray, 2006).
The conventional fast-moving consumer goods approach
to branding needs to be adjusted for the services sector
(McDonald et al., 2001). All authors converge on the need
for a concerted effort to study brand and brand equity
in services.
The traditional marketing mix elements of product,
price, place and promotion are inadequate in achieving the
marketing objectives in services (Bitner, 1990). This study

1 Assistant

has examined the influence of marketing mix elements

of advertising, word of mouth (WOM), physical evidence
and employees on the brand equity dimensions of user
brand image, corporate brand image and service brand
image as well as perceived service quality and thereby on
brand equity in a hierarchical relationship.
Brand image has been considered as a single construct
in almost all studies but recently the realization that has
been gaining ground is that brand image is essentially a
composite of three sub-dimensions namely user, corporate
and service brand image. Though these three have been
forwarded by Biel (1992) and carried forward as a concept
by many, these have not been empirically tested as separate
and independent construct in any study in the context of
service brands.
The service brand equity study has been carried out
in the retail banking sector. Retail banking has a very high
growth rate in the country thus offering immense managerial benefits.

Professor, Department of Management, Birla Institute of Technology, Mesra (Ranchi City Campus-Lalpur), Ranchi, Jharkhand.
Department of Management, Birla Institute of Technology, Mesra, Ranchi, Jharkhand.

2 Professor,

Corresponding author:
Somnath Mukherjee, Assistant Professor, Department of Management, Birla Institute of Technology, Mesra (Ranchi City Campus-Lalpur), Ranchi,
Jharkhand, India.
E-mail: smukherjeebit@gmail.com

10

The Service Sector in the Country

With a compounded annual growth rate of 9 per cent for
20012012, the service sector plays an important role in
the progress and development of Indian economy. One of
the key indicators of growth of the services sector is its
contribution to the gross domestic product (GDP) of the
country. Services contribute about 56.9 per cent share in
GDP (2012). With share of services in employment being
28.1 per cent in 2012, share of services to total exports
in 2013 being 32.8 per cent and an export growth of
4.8 per cent (2013), our country is ranked 10th in terms of
overall GDP and 12th in terms of services GDP in 2012
(Economic Survey, 2014).

The Banking Sector

In services sector, banking service has emerged as a growth
area offering immense business opportunities. The Indian
commercial banking sector offers an enormous opportunity (Business Monitor International, 2011). The entry of
foreign banks and marketing-oriented approach of the
new private sector banks has intensified competition. This
has made the banking scene different in the country (Das,
2009). Claessens et al. (2001) have studied effect of the
presence of foreign banks in domestic markets and have
said that the banking market across the globe is becoming
increasingly internationalized and integrated. The retail
banking market is getting transformed from the buyers
market to the sellers market and thus marketing and
branding initiatives have become all the more relevant
(Gopinath, 1995). Faced with this kind of a situation, for
the domestic banks, the shift of focus to retail banking
operations is a business necessity.
In this study, we have picked up loan as product category in the retail banking sector to test assumptions regarding marketing mix elements, brand equity dimensions and
brand equity.

Vision 20(1)
We have traced a big gap regarding influence of extended
service marketing mix elements on the dimensions of
brand equity.
This study has considered two dimensions of brand
equity namely brand image and perceived quality in evaluating the role of marketing mix elements.
Biel (1992) has described brand image as consisting of
three contributing sub-images namely that of the product/
service, of the company (organization) and that of the user.
The concept that brand image is a composite of distinct
sub-dimensions and that these are of significant importance have been stated by Lasser et al. (2005), Pappu
et al. (2007), Hayes et al. (2008), Bravo et al. (2010), Kim
and Hyun (2011) etc. More recently, Chang et al. (2008)
and Sierra et al. (2010) have empirically validated the
impact of brand image on brand equity with these three
sub-dimensions of user, corporate and service brand
image in the service sector. Though there are studies that
have focused on the image sub-dimensions, as discussed
above, we could not trace literature where these dimensions have been considered as independent constructs. We
in this study have considered the three image dimensions
of user, corporate and service as independent latent constructs and have tried to evaluate the effect of these on
brand equity. We have also tried to evaluate the effect of
the marketing mix elements on each of these dimensions.
The effect of selected marketing mix elements like
advertising, WOM, physical evidence and people (employee)
on the dimensions of brand image and perceived quality
have been examined. The models of brand equity that have
been proposed by Aaker (1991) and Keller (1993) form the
basis of our study. Our study is inspired by the service marketing triangle concept proposed by Gronroos (1984) and is
an extension of the service branding model by Berry (2000).
In context of above, the following model is proposed
which has been empirically validated (Figure 1).

Literature Review
Two of the major benefits of brand equity are financial and
behavioural (Keller, 1993). The marketer should understand the antecedents of brand equity so that brand equity
can be built more effectively and the benefits are realized.
Studies relating to brand equity and its antecedents are
many. The notable studies in this regard are by George
and Barksdale (1974), Bharadwaj et al. (1993), Mc Enally
and Chernatony (1999), Yoo et al. (2000), Yoo and Donthu
(2000), Berry (2000), Chernatony et al. (2004), Shanker
and Fuller (2008), Chang et al. (2008), Chattopadhyay et al.
(2010), Ha et al. (2010), Mukherjee and Shivani (2013)
etc. Except for the study by Bharadwaj et al. (1993), Mc
Enally and Chernatony (1999), Berry (2000), Chernatony
(2004), Chang et al. (2008), Ha et al. (2010) and Mukherjee
and Shivani (2013), all of the above studies are focused on
goods. This leads to the identification of service branding
as an area where a significant gap in the literature exists.

Figure 1. The Proposed Marketing Mix Service Brand Equity

Model
Source: Authors own.
Note: WM = word of mouth, PEV = physical evidence, AD =
advertising, EMPL = employees/people mix, UB = user brand
image, CB = corporate brand image, SB = service brand image,
PQ = perceived service quality, BQ = brand equity.

Mukherjee and Shivani 11

The Constructs
Perceived Service Quality
Perceived quality as a determinant of brand equity has been
proposed by many, notably Gronroos (1982), Parashuraman
et al. (1985), Zeithaml (1988), Aaker (1991, 1996), Michell
et al. (2001) and more recently by Ching and Tseng (2010).
The quality dimension in an offering has been more
prevalent in the goods sector but quality in goods is
required to be looked up differently than in services.
Perceived quality is highly subjective in what the consumer
judges of the products overall superiority. The consumer
judgements are subjective and are influenced by personal
experience of the consumer, unique needs and consumption situations etc. (Zeithaml, 1988). The consumers experience is largely a function of the employee performance
and physical evidence or the environment in which the
service is delivered. Service quality and the factors that
influence it has been studied by Zeithaml and Berry (1993)
who have supported the proposition that WOM has an
influence in shaping it. Parashuraman et al. (1985) have
also highlighted certain factors instrumental in influencing consumer perception, namely, WOM, personal needs
and past experience of the consumer. Ching and Tseng
(2010) in their study of customer-based brand equity in airlines have empirically proved the proposition that perceived quality positively influences brand equity. Brand
acts as a heuristic cue that effectively reduces the discrepancies associated with all of the different perception and
delivery elements and thus largely homogenize the quality
perception to the benefit of the marketer (Gupta, 2011).
In measuring service quality, both the SERVQUAL
scale forwarded by Parashuraman et al. (1985) and the
SERVPERF approach forwarded by Cronin and Taylor
(1992) have been widely used. In this study, we have used
the SERVPERF approach. This approach is convenient to
administer and it reduces the measurement by half and has
thus received widespread acceptance by many notably
Babakus and Boller (1992), Finn and Lamb (1991),
Sureshchander et al. (2002) etc.
Advertising
Advertising is a very strong tool of external brand communication. It is a very strong element of the promotion
mix element and has definitive influence on brand equity
(Villarejo & Manuel, 2005). External brand communication or external marketing is one of the pillars of service
marketing and one of the three components of the service
marketing triangle (Gronroos, 1984).
Advertising and WOM both influence the consumers
attitude and aroused feelings. The advertisement that is perceived favourably leads to a positive feeling towards the
advertised brand and thus a positive service consumption
experience (O Cass et al., 2004). Advertising influences the
consumers perception towards products and trials and may
significantly minimize the negative feelings that consumers
have towards brand (Kempf & Smith, 1998). The role of

advertising in dissemination of realistic expectations has

been highlighted by Cobb et al. (1995) who, through their
study, forwarded that advertising disseminates realistic
expectations of the service experience to consumers in the
pre-purchase stage thereby inducing positive reactions
and feelings on consumption. The role of advertising in
shaping the expectation of consumers in the context of
service and in view of its intangibility dimension has also
been emphasized upon by Gotlieb et al. (2000).
Brand image encompassing brand personality is an
important factor that leads to brand associations and subsequently brand equity (Hayes et al., 2008). The authors have
stated that advertising is the most important factor that
shapes brand image and that brand image is an important
factor leading to brand associations and subsequently
brand equity. The impact of advertisement on perceived
quality and equity has been strongly forwarded by many
authors notably Aaker et al. (1994).
In measuring the influence of advertising, we have
adopted the scale used by O Cass et al. (2004) with minor
changes in the context of our study.
Word of Mouth
Word of mouth is a very powerful behaviour and purchase
influencer for goods and services (Bansal & Voyer, 2000;
File et al., 1994; Murray, 1991; OCass & Grace, 2004 etc.).
It is the most powerful communication channel that can
influence the consumers (Keller, 2007). In the context
of the banking sector, WOM has been vindicated to be
more important than advertising in shaping consumer
minds and influencing the image of the brands (OCass
& Grace, 2004).
The personal nature of WOM dissemination makes
it more effective in influencing the attitude, perception
and behavioural intentions of people. It is trusted by
people over advertising or other sponsored and marketercontrolled disseminations (Buttle, 1998). Similar opinion
has been expressed by Bansal and Voyer (2000) who have
said that WOM being a personal source commands greater
trust and influence over purchase decisions than advertising which is more of an organizational and formal source.
They have also said that higher the perceived risk, higher
is the relevance of WOM as the consumers would be
actively seeking information from personal and credible
sources. The unique service characteristics particularly
intangibility and heterogeneity makes WOM more important as a source of influence and in consumption of service,
the consumers seek more information from friends and
relatives than a sponsored and marketer controlled media
(Murray, 1991).
To examine the impact of WOM on the dimensions of
brand equity, we have adopted the scale used by OCass
and Grace (2004).
People (Employees)
The speed and efficiency of service may be very important when consumers are time stressed (Keller, 1993).

12
The changing way of life and the consequent time crunch
for the consumers suggests that the perceived speed and
efficiency of service delivery which is largely a function of
the employees is very important. Attempts to link brands
with people have been done effectively by Keller (2003)
in a generalized manner. He presented the concept of secondary associations and linked people to brands presenting it as an important dimension of brand knowledge, an
important brand equity dimension. Chernatony et al. (2003)
have forwarded the positive role that employees/staff
play in service delivery and in shaping consumer perception. The interaction of the employees with the consumers
at the point of service delivery has a dominant impact on
the consumers perception or image of service brands
(Chernatony et al., 2004). The role of employees in service
delivery has also been highlighted by Ioanna Papasolomou
et al. (2006) and Constantinides (2006).
In measurement of the role of employees and employee
performance in services, we have picked up items relating
to employees from the scale used by Hightower (2010).
Physical Evidence
The general elements of physical evidence include all
aspects of an organizations physical facility that includes
servicescape and other forms of tangible communication
(Zeithaml & Bitner, 2000, p. 253). The existing literature
on servicescape does not explicitly present the influence of
servicescape on brand equity and the consequent consumer
choice decision. However, there have been references
made to atmospherics/physical environment in a number of
studies. One of the first studies relating to the influence of
atmospherics on brand equity has been carried out by
Kotler (1973). Atmospherics and its elements have been
later christened as servicescape by Bitner (1992).
Bitner (1990) evaluated the effect of physical surroundings on employee response and studied how the different
service marketing mix elements influence consumer satisfaction. Zeithaml et al. (1985) and Zeithaml and Berry
(1993) have also forwarded that physical environment has a
distinct impact on the behavioural outcome of consumers
and the image that it creates for the service organization.
The role of servicescape in image creation and perception
has also been supported by Levitt (1981). Lin (2004) arguing in favour of servicescape talks about the importance
of servicescape by saying that it helps in communicating
and formation of a complete image amongst consumers.
More the time people spend in a service premise, more
is the likelihood of the influence (Parish et al., 2008; Wall
& Berry, 2007). In the case of our study, the loan seekers
might be required to visit banks quite a number of times
and might have substantial waiting time and are therefore
likely to be strongly influenced by the servicescape elements. In context of studies in the country, Paninchukannath
(2009) validated the influence of physical evidence particularly the interior service settings in interpersonal service
organizations.

Vision 20(1)
Physical evidence could also have a positive relationship with WOM. In this regard, the study carried out by
Ezeh and Lloyd (2007) is notable. Their study has forwarded that the approach and avoidance towards the
service is influenced by the servicescape. They added that
in services which are high in credence quality, the dissonance is likely to be substantially reduced if there is a promising servicescape. This would be highly relevant because
this suggest a way through which the WOM communication can be influenced.
The influence of WOM on consumers has been established through numerous studies and if WOM could be
influenced purposefully and in a planned way, it could pay
substantial dividends to the service firm.
Physical evidence, though apparently a unified concept,
should for all practical reasons be looked as a composite of
different dimensions or levels. Hightower (2010) in extension of his previous work has forwarded that consumers
think of servicescape at three different levels, namely, the
overall level, the dimension level and the sub-dimension
level, and has broken them down as the ambient, social and
design factors as per these dimensions. In this study, we
have considered the above dimensions and framework in
measurement.
Brand Image(s)
Brand image has been defined as perceptions about a brand
as reflected by the brands associations held in the consumer memory. It is thus meaning of the brand as perceived
by the consumer that holds importance here.
Brand associations significantly contribute to brand
image formation. Brand associations help the consumer in
organizing and retrieving the information which influences
the purchase decision and is one of the major factors that
cause brand equity (Keller, 2003). The marketer could
create these associations through a planned use of the marketing mix elements. One of the strongest ways of creating
association is to focus on consumer experience. In a study
by Faircloth et al. (2001), different brand association variables were manipulated to find out the impact of association
on brand equity. The study revealed a positive relationship
of brand image and brand association to brand equity. They
have inferred that marketers should strategize to influence
the associations which will lead to a change in equity.
Biel (1992) has described brand image as consisting of
three contributing subimages, namely, that of the product/
service, that of the company (organization) and that of
the user. The concept of brand image and that it consists
of other dimensions within have also been stated by Lasser
et al. (2005) where they have emphasized on the social
image as the dominating component of brand image and
stated that it is an important dimension of brand equity. The
image dimension particularly the country image dimension
was studied by Pappu et al. (2007) where they have specifically considered perceived quality and brand image as
brand equity constructs. The role of corporate brand image

Mukherjee and Shivani 13

has been highlighted by Kim and Hyun (2011), where in a
study of the Korean IT software sector, corporate image
has been established to play a mediating role between the
marketing elements and the dimensions of brand equity.
Corporate brand image studies specific to the banking
sector have been carried out by Bravo et al. (2010), who
have expressed corporate brand image as what relates to
the image associated with an organizations name. They
have forwarded that corporate image contributes to loyalty
and perceptions of consumers and play a significant role
in the financial sector. The authors have included servicescape as an influencing dimension of corporate brand
image in their literature. The study by Biel (1992) has been
extended by Hayes et al. (2008), who in their experimental
study on sunglasses tried to assess the influence of three
types of brand associations namely corporate association,
product attributes and user imagery that cumulatively
result in brand personality. Sierra et al. (2010) and Chang
et al. (2008) have empirically validated the impact of brand
image on brand equity with these three sub-dimensions of
user, corporate and service brand image in the service
sector. Though there are studies which have focused on
these image sub-dimensions, as discussed above, we could
not trace literature regarding these dimensions being considered as independent constructs. We in this study have
considered the three image dimensions of user, corporate
and service as independent latent constructs and have tried
to evaluate the effect of these on brand equity as also have
tried to evaluate the effect of the marketing mix elements
on each of these dimensions.
In the measurement of brand image(s), the scale is the
one based on Biels proposition partially modified by
Chang et al. (2008) in their study.
Brand Equity
The scale for measuring this is adopted from the study by
Cheng and Tseng (2010).

Hypotheses
Based on the review of literature, the following hypotheses
are proposed and tested through an empirical study.
H 1: 
Perceived service quality significantly influences brand equity in retail banking services.
H 2: Favourability towards advertising is positively
related to and significantly contributes to perceived service quality.
H 3: Word of mouth (WOM) is positively related to
perceived service quality and significantly contributes to it.
H 4: People (employees) have a positive relationship
with perceived service quality and significantly
contribute to it.

H 5: Physical evidence/servicescape/atmospherics has

a positive relationship with perceived service
quality and significantly contributes to it.
H 6: User brand image is positively related to and significantly contributes to brand equity.
H 7: Corporate brand image is positively related to
and significantly contributes to brand equity.
H 8: Service brand image is positively related to and
significantly contributes to brand equity.
H 9: 
Advertising favourability is positively related
and significantly contributes to user brand image.
H 10: 
Advertising favourability is positively related
and significantly contributes to corporate brand
image.
H 11: Advertising favourability is positively related and
significantly contributes to service brand image.
H 12: WOM is positively related to and significantly
contributes to user brand image.
H 13: WOM is positively related to and significantly
contributes to corporate brand image.
H 14: WOM is positively related to and significantly
contributes to service brand image.
H 15: People (employees) are positively related to and
significantly contribute to user brand image.
H 16: People (employees) are positively related to and
significantly contribute to corporate brand image.
H 17: People (employees) are positively related to and
significantly contribute to service brand image.
H 18: Physical evidence/servicescape/atmospherics has
a positive relationship and significantly contributes to user brand image.
H 19: Physical evidence/servicescape/atmospherics has
a positive relationship and significantly contributes to corporate brand image.
H 20: Physical evidence/servicescape/atmospherics has
a positive relationship and significantly contributes to service brand image.

Research Methodology
In our study we have considered State Bank of India,
a public sector bank, which has the largest network of
branches and has the largest spread/presence across the
country. In all circles and states, it has a very diverse user
portfolio from different demographic groups and thus any
circle or state is a true representative of the retail consumer
sample universe.
In retail banking products, loan involves a reasonable
degree of risk perception in its consumption and this makes
it an ideal choice of product category to test our hypothesized relationships.
The bank officially categorizes its branches as urban,
semi-urban, rural and metro. The criterion for such categorization is the population within the area as per the
Government of India, 2001 census. We have used this categorization and considered only the urban and semi-urban

14
branches in our sample design. The state does not have any
metro branch. Rural branches were not considered part of
the study because during the pilot study respondents in the
rural category were finding it extremely difficult to understand the questions and the concepts related to the study in
the questionnaire. Attempts to translate the questions and
explain the concepts were proving to be leading and influencing the respondents opinion.
The quotas or strata in our study have been created on
the basis of whether the bank branch is urban or semiurban. From the strata thus created, proportional allocation
technique has been adopted in picking up the number of
branches from each stratum from the list of branches
in districts. The branches are our sample units and loan
seekers our sample elements. Within the different strata,
20 per cent of branches have been picked up from the total
number of branches per district, decimals rounded off to
nearest integers. This percentage arrived at is based on
suggestions by different managers of the branches in districts. After the number of branches per category and district was arrived at, the selection of the specific branches
has been done as per our convenience and judgement.
The criterion herein was the ease of approach to the bank
branches. Based on inputs from managers of different
branches, 20 consumers (loan seekers) were decided to
be connected per branch which cumulated to a targeted
sample size of 900. In our study, we tried to connect with
900 respondents across 28 semi-urban branches and 17
urban branches, a total of 45 bank branches. Out of 900
potential respondents who were tried to be connected, 564
people agreed to respond which translated to a response
rate of 62.66 per cent. Of the valid response from 564
people, only 348 data points were usable. The data have
been collected through a single structured questionnaire
which has been prepared on the basis of literature study
and insights from the pilot study. The constructs identified
form the basis of the proposed model, and questionnaire
is based on the constructs and the hypothesized relationships. The questionnaire has been administered on loan
seekers and the mall intercept survey technique was
adopted. We have used the five-point Likert scale against
which response has been sought from the respondents
with response values ranging from 1 to 5. The scales used
in the study are standard scales, which have been accepted
and used previously. The scales have, however, been tested
for validity and reliability to ascertain its effectiveness in
the context of the study. Based on Cronbachs alpha, the
scale items have been retained or removed and the final
refined scale arrived at.

Approach to Data Analysis

This study focuses on examining the causal relationships between different constructs. The effort is to find the
influence of the marketing mix elements on service brand
equity and its dimensions. In carrying out the research,

Vision 20(1)
data entry and descriptive analysis of data as well as test
of reliability have been done with SPSS 20, statistical
package. For analysis and establishment of causal relationship, structural equation modelling has been adopted. The
specific package used is LISREL 8.80 (Karl Joreskog
and Dag Sorbom; Scientific Software International Inc.,
July 2006).
The data have been tested for skewness and kurtosis and
both are within the acceptable range of +2 to 2 (George &
Mallery, 2008, p. 99) and suggest that the data are normally
distributed.

Response Character
The demographic details of the sample have revealed
certain distinct trends.

Age Group of Respondents

Majority of the respondents are from the age group 3039
years, closely followed by the 2029 years age groups (refer
Table 1). Collectively both of these age groups comprise
about 55 per cent of the total respondents, which is an interesting finding. This in a way reflects the appetite of a specific population age group towards retail loan consumption.
The demographic trends of the country and the huge young
Indian population suggest a huge potential that lies in this
segment. A key aspect driving the growth of major sectors
in the country is favourable population demographics50
per cent of the population is less than 25 years (Ernst &
Young, 2010). The power of youth today is evident in its
large numbers, tendency to consume and in its ability to
influence larger household decisions. Indias population is
also urbanizing at a rapid pace with the urban Indian population projected to increase from 28 per cent to 40 per cent
of the total population by 2020 (NielsonCII, 2012).

Age and Loan Cross-tabulation

The age and loan cross-tabulation was carried out to determine how preference for loan type is distributed among
the different age groups. With a huge population of the
country categorized as young, it is worth exploring if there
exists any specific relation between age and preference for
Table 1. Sample Characteristic as Per Age
Age Group of
Respondents (years)

Frequency

Per cent

21
120
127
28
52
348

6.0
34.5
36.5
8.0
14.9
100.0

Less than 20
2029
3039
4049
50 and above
Total
Source: Primary data analysis output.

Mukherjee and Shivani 15

Table 2. Age and Loan Cross-tabulation
Loan Type
Age (years)
Age (years) Less than 20
2029
3039
4049
50 and above
Total

Car
Loan

Personal
Loan

Housing
Loan

Gold
Loan

0
23
54
2
1
80

0
10
24
1
8
43

0
8
37
22
17
84

0
0
1
2
5
8

Pensioners Against Twowheeler

Loan
LIC Policy
Loan
0
0
0
0
1
1

0
0
0
0
6
6

3
64
11
0
0
78

Student
Loan

Total

18
15
0
1
14
48

21
120
127
28
52
348

Source: Primary data analysis output.

Table 3. Gender and Loan type Cross-tabulation

Loan Type

Sex
Total

Male
Female

Car
Loan

Personal
Loan

Housing
Loan

Gold
Loan

Pensioners
Loan

Loan against
LIC Policy

Two-wheeler
Loan

Student
Loan

Total

50
30
80

28
15
43

80
4
84

1
7
8

1
0
1

6
0
6

57
21
78

46
2
48

269
79
348

Source: Primary data analysis output.

specific loan types. The cross-tabulation has forwarded

some distinct revelations. It suggests that the highest aspiration for loans is among the youth in the age group of
2039 years and the most sought after loan is for cars and
two wheelers (refer Table 2). The growing appetite for consumption among the younger population has resulted in
many companies positioning their products targeted at this
demographic segment (Kotler et al., 2011. p. 192). Thus
specific positioning and segmentation exercise targeted at
this group should be attempted.

Gender and Loan Type Cross-tabulation

Car, housing and two wheeler loans are the most sought
by men. For the women, a nearly similar trend is seen.
The women also have a reasonable appetite for car, two
wheeler and personal loans. Thirty-eight per cent of the
total car loans and 35 per cent of the total personal loan
sought are from the women (refer Table 3). This reflects
their consumption appetite and independent decisionmaking mindset. We consider this to be reasonably high
particularly in reference to a state like Jharkhand which still
has a lot to move ahead in gender equality.
Women mostly are still not the sole decision makers in
the households, yet their contribution to decision making
in purchases is increasing (NielsonCII, 2012). The
Nielson survey reveals that women are equal participants
to decision making alongside men and are key influencers
in purchases involving high amounts. The Nielson survey
specifically points to the need for marketing companies to
address this trend and accordingly structure their marketing strategies. We infer that this is a major trend evolving
towards consumption and retail lending has to rise up to
this new trend.

Measure of Scale Reliability

The scale has been subjected to reliability test based on the
pilot study carried out. Cronbachs alpha score has been
used to assess the suitability of the constructs and the items.
The final Cronbachs alpha score of the items and the
constructs show an acceptable value.
The Cronbachs alpha score for all constructs reveal a
high internal consistency as all the scores are above the
threshold level of 0.60 (Malhotra & Dash, 2010, p. 279).
Coefficient alpha values of our constructs have a range of
0.64 and 0.84. (Refer Table 4) Values above 0.6 indicate an
Table 4. Reliability (Cronbachs alpha) of Constructs
Construct
Brand equity
Perceived quality
Tangibility
Reliability
Responsiveness
Assurance
Empathy
User brand image
Corporate brand image
Service brand image
Advertisement
Word of mouth
Physical evidence
Physical evidence ambience
Physical evidence social
Physical evidence design
Employee
Source: Primary data analysis output.

No. of
Items

Cronbachs
Alpha

0.847

4
5
4
4
5
3
2
2
3
5

0.853
0.830
0.854
0.851
0.820
0.816
0.738
0.680
0.727
0.845

3
5
2
3

0.651
0.760
0.642
0.648

16

Vision 20(1)

Table 5. Construct Reliability

Constructs
Brand equity
User brand image
Corporate brand image
Service brand image
Advertisement
Word of mouth
Physical evidence
Perceived service quality
Employees

Construct Reliability
0.86
0.81
0.82
0.86
0.78
0.88
0.88
0.91
0.74

Source: Primary data analysis output.

acceptable level of scale reliability for theory testing

research (Nunnally & Bernstein, 1994).

Construct Reliability
Cronbachs alpha value alone does not reflect unidimensionality. Unidimensional measures mean that a set of
variables/indicators have only one underlying construct
and it becomes particularly important when more than two
constructs are involved, as in the present case.
The construct reliability values calculated through
confirmatory factor analysis (CFA) values from the measurement model in SEM (refer Table 5) meet the recommended criteria of 0.7 (Fornell & Larcker, 1981) and thus
the consistency and reliability of the measured variables
are established.

Structural Equation Modelling

Measurement Model
The measurement theory can be represented with a model
that shows how the measured variables come together to

represent constructs. Through confirmatory factor analysis,

we have tried to test how well the measured variables
represent the constructs.
The study has a total of nine latent constructs. The constructs like perceived service quality and physical evidence
are highly diversified. We have considered the standard
classification of Parashuraman et al. (1991) in adopting
the five dimensions of service quality, namely, tangibility,
reliability, responsiveness, assurance and empathy.
Similarly, the physical evidence construct consisting
of three subdimensions of ambience, social and design
have been considered in the study. The constructs are
diversified and have quite a large number of items. In view
of this diversity, second order factor analysis was carried
out to determine the strength of the items in describing variance. Item parcelling has been done during the
formulation of the measurement model (Refer Table 7).
When the items are many and diversified in nature item
parcelling is a suitable approach (Cattell, 1956). These
parcels can then be used as indicators when the total
number of items pertaining to a specific area is too many
(Bandalos, 2002).
We have adopted the second-order CFA results and considered physical evidence as a latent construct with three
summated or parcelled items. The results (refer Table 6)
point to the acceptance of the second-order factor approach.
The approach also has a strong theoretical base. Item parcelling has also been adopted in the case of perceived
service quality.
Five first-order factors and one second-order factor
have a strong theory base, and the calculated statistics also
are within the recommended values (Bagozzi, 1988;
Browne & Cudeck, 1993; Hair et al., 2006, p. 775; Hooper
et al., 2008). We thus adopt the model to be part of the
overall measurement model.

Table 6. Competing CFA Models for Physical Evidence

Model

One first-order factors

Three first-order factors
Three first-order factors and one
second-order factor

Chi-square (df)

Chi-square (df)

GFI

AGFI

RMSEA

142(35)
112.64(32)
112.64(32)

4.057
3.52
3.52

0.92
0.94
0.94

0.88
0.90
0.90

0.094
0.085

0.085

Source: Primary data analysis output.

Table 7. Competing CFA Models for Perceived Quality

Model
One first-order factor
Five first-order factors
Five first-order and one
second-order factor
Source: Primary data analysis output.

Chi-square (df)

Chi-square (df)

GFI

AGFI

RMSEA

1708.78
(209)
389.96
(199)
411.91
(204)

8.17

0.69

0.63

0.144

1.95

0.91

0.88

0.053

2.01

0.90

0.88

0.054

Mukherjee and Shivani 17

Parameter Estimates for the Measurement Model

Fit Statistics for the Measurement Model

The analysis results for this study indicate that all items
were loaded highly on their corresponding construct and
the t-value of those items was greater than 2.0 which is an
acceptable statistic (Segars & Grover, 1993). The analysis
of the squared multiple correlations (refer Table 8) demonstrate that, except for a few items, most of the items met the
recommended criteria of 0.40. This means, overall, that the
items shared substantial variance with their hypothesized
constructs (Taylor & Todd, 1995).

The measurement model is supported based on the statistics except the chi-square value (refer Table 9). However,
the higher chi-square value criteria is not accepted as a
suitable criterion particularly in research studies and data
analysis where the sample size is large (Browne & Cudeck,
1993). Normed Fit Index (NFI) value of 0.96 is also above
the recommended value of 0.90. Therefore, it could be
articulated that the measurement model of this study has an
acceptable level of fitness. Other fitness indices met the

Table 8. Parameter Estimates of Measurement Model*

Constructs

Items

Brand equity

Brand equity 1
Brand equity 2
Brand equity 3
Brand equity 4
Brand equity 5
User image 1
User image 2
User image 3
Corporate image 1
Corporate image 2
Service image 1
Service image 2
Items parcelled
Ambience 1
Ambience 2
Ambience 3
Social 1
Social 2
Social 3
Social 4
Social 5
Design 1
Design 2

User brand image

Corporate brand image

Service brand image
Physical evidence
(Ambience)
(Social)

(Design)
Perceived service quality
Tangibility

Reliability

Responsiveness

Assurance

Empathy

Standardized Loadings

T-values

0.70
0.80
0.71
0.75
0.66
0.87
0.72
0.66
0.77
0.79
0.88
0.82

14.20
17.07
14.50
15.63
13.00
19.23
14.88
13.21
15.14
15.70
18.48
16.84

0.60

12.20

0.36

0.98

24.71

0.95

0.63

12.91

0.39

0.82

17.83

0.67

0.81

17.78

0.66

Squared Multiple Correlations

0.49

0.64
0.51
0.57
0.43

0.76
0.56
0.44
0.59
0.63

0.77
0.67

Items parcelled
Perceived quality 1
Perceived quality 2
Perceived quality 3
Perceived quality 4
Perceived quality 5
Perceived quality 6
Perceived quality 7
Perceived quality 8
Perceived quality 9
Perceived quality 10
Perceived quality11
Perceived quality12
Perceived quality13
Perceived quality14
Perceived quality15
Perceived quality16
Perceived quality17
Perceived quality 18
Perceived quality 19
Perceived quality 20
Perceived quality 21
Perceived quality 22

0.47
0.69

13.96

0.62

12.17

0.38

0.70

14.44

0.50
(Table 8 continued)

18

Vision 20(1)

(Table 8 continued)
Constructs

Items

Employees

Employee 1
Employee 2
Employee 3
Advertising 1
Advertising 2
Advertising 3
WOM 1
WOM 2
WOM 3
WOM 4
WOM 5

Advertising

Word of mouth

Standardized Loadings

T-values

Squared Multiple Correlations

0.62
0.67
0.56
0.73
0.66
0.67
0.74
0.75
0.72
0.74
0.66

13.37
14.46
12.23
13.70
12.23
12.49
15.25
15.43
14.75
15.26
13.12

0.39
0.45
0.32
0.53
0.44
0.45
0.55
0.56
0.52
0.55
0.44

Source: Primary data analysis output.

Note: *All values significant at level 1.

recommended minimum values as well: chi-square (|2)/df

of 1.91, GFI of 0.92, AGFI of 0.87, CFI of 0.98, RMR of
0.033 and RMSEA of 0.051 (refer Table 9).

Table 9. Fit Statistics for the Measurement Model*

Fit Statistic
Chi-square

Testing the Structural Model

The causal relationships stated in the form of hypothesis
have been tested with structural equation modelling and
the summary of the estimates and t-values are as given
in Table 10.

Testing of the Hypotheses

Each of the hypotheses was tested by using an analysis of
indirect effects of marketing mix variables on brand equity

Chi-square/df
GFI
AGFI
NFI
CFI
RMR
RMSEA

Recommended
Value

Value
Calculated

P >= 0.05
<=3
>=0.9
>=0.8
>=0.9
>=0.9
<=0.9
<=0.1

761.14(p = 0.00)
761.14/398 = 1.91
0.92
0.87
0.96
0.98
0.033
0.051

Conclusion
Not fit
Fit
Fit
Fit
Fit
Fit
Fit

Fit

Source: Primary data analysis output.

Note: *All *Values significant at level 1.

Table 10. Results of Hypotheses Testing

Hypothesis

From

To

H1
H2
H3
H4
H5
H6
H7
H8
H9
H10
H11
H12
H13
H14
H15
H16
H17
H18
H19
H20

Perceived service quality

Advertising
Word of mouth
Employee
Physical evidence
User brand image
Corporate brand image
Service brand Image
Advertising
Advertising
Advertising
Word of mouth
Word of mouth
Word of mouth
Employees
Employees
Employees
Physical evidence
Physical evidence
Physical evidence

Brand equity
Perceived service quality
Perceived service quality
Perceived service quality
Perceived service quality
Brand equity
Brand equity
Brand equity
User brand image
Corporate brand image
Service brand image
User brand image
Corporate brand image
Service brand image
User brand image
Corporate brand image
Service brand image
User brand image
Corporate brand image
Service brand image

Source: Primary data analysis output.

Standardized
Coefficient

T-value

0.19
0.18
0.29
0.09
0.39
0.29
0.0059
0.29
0.32
0.18
0.22
0.24
0.41
0.30
0.03
0.37
0.08
0.38
0.25
0.20

2.30
2.46
4.20
2.52
6.32
3.18
0.07
4.00
4.38
2.00
2.58
3.51
4.76
3.62
0.95
0.92
2.02
6.23
3.39
2.81

Result
Supported
Supported
Supported
Supported
Supported
Supported
Not supported
Supported
Supported
Supported
Supported
Supported
Supported
Supported
Not supported
Not Supported
Supported
Supported
Supported
Supported

Mukherjee and Shivani 19

(Bollen, 1991; Yoo et al., 2000). In the structural model, no
direct path between the marketing mix variables and brand
equity was specified. Instead, brand equity was conceptualized to be indirectly affected through the mediating brand
equity dimensions. The assumed relationships were tested
using LISREL 8.

Findings and Managerial Significance

As with the measurement model, the fit indices (refer
Table 11) suggest a fit for the structural model with all fit
statistics complying with the recommended criterion
except the chi-square value. The misfit and noncompliance
of the chi-square value to the recommended standard value
is explained on the basis of the large sample size.
The standard coefficient values and the corresponding
t-values suggest a validation of the conceptual model that
we have proposed.
Our proposition that perceived service quality significantly and positively influences brand equity has been
proved correct. The standardized coefficient value between
perceived quality and brand equity is 0.19 with a t-value
of 2.30 (refer Table 10). Most of the studies relating
Perceived Service Quality (PSQ) to brand equity have been
carried out in the goods sector. Our study empirically validates the existing propositions of PSQ to brand equity
relationship in the context of retail banking service in
India. Perceived service quality as a composite of five
dimensions of tangibility, reliability, responsiveness, assurance and empathy proposed by Parashuraman (1991) is
proved true and highly relevant in the context of our country
and retail banking.
The coefficient value of advertising to perceived service
quality is 0.18 with a t-value of 2.46 (refer Table 10). Thus,
our proposition that assumes a positive and significant
relationship of advertising with perceived quality is supported. The findings here is in line with the finding of
Villarejo and Manuel (2005) and Moorthy and Zhao
(2000), where they have empirically established the direct
relationship of advertising with brand equity dimensions
Table 11. Parameter Estimates of the Structural Model*
Fit
Statistic
Chi-square

Chi-square/df
GFI
AGFI
NFI
CFI
RMR
RMSEA

Recommended
Value

Value
Calculated

P >= 0.05
<=3
>=0.9
>=0.8
>=0.9
>=0.9
<=0.9
<=0.1

845.51/p = 0.00
845.51/408 = 2.07
0.90
0.87
0.96
0.98
0.036
0.056

Source: Primary data analysis output.

Note: *All values significant at level 1.

Conclusion
Not fit
Fit
Fit
Fit
Fit
Fit
Fit

Fit

including perceived quality. The impact of advertisement

on perceived quality and brand equity has also been highlighted by Aaker et al. (1994). Positive and significant relationship of advertisement with perceived quality holds a
lot of significance for the marketer as advertising is within
the control of the marketer.
Values from structural analysis regarding our assumption of a strong positive and direct relationship between
WOM and perceived quality are also proved correct.
The coefficient value is 0.29 and the t-value is 4.20 (refer
Table 10). WOM is an element that is not entirely within
the control of the marketer but its importance suggests that
marketers should find ways through which it can be effectively influenced. The study carried out with the antecedents of WOM by De Matos & Rossi (2008) where the
different antecedents of WOM were empirically examined
could form a basis on which the marketers could focus their
attention. A comparison between the influence of advertising and the influence of WOM on perceived quality suggests that WOM has a greater influence on PSQ compared
to advertising. The advertising to PSQ coefficient value is
0.18 compared to 0.29 for WOM to PSQ (refer Table 10).
The findings are similar to the study by O Cass and Grace
(2004), where they have stated that in case of banking services, WOM is more important than advertising.
Assumption regarding employee to perceived service
quality relationship is supported with a coefficient value
of 0.09 and t-value of 2.52 (refer Table 10). Though the
relationship is not very strong but being supported is in
line with general findings of most researchers in this area.
The findings are in line with the study by Hays and Hill
(2001) wherein it is suggested that employees have a positive and significant relationship with PSQ, particularly in
services because of the interaction of the customer with the
frontline service firm employee.
The assumption regarding the positive influence of
physical evidence (servicescape) on perceived quality
has been proved correct with a coefficient estimate of
0.39 and t-value of 6.32 (refer Table 10). Thus, the positive
relationship between physical evidence and perceived
quality is strongly established. We take this as a significant
finding because this again is an area that is within the
control of the marketer.
The dimensions of brand image, namely, user brand
image, corporate brand image and service brand image,
have been suggested to be validated in past research by a
number of researchers notably Chang et al. (2008) and
Biel (1992) etc., but existing literature does not reveal any
such validation in the retail banking sector. In this study,
we have primarily attempted to address this gap. In our
study, user brand image and service brand image have
emerged as having a positive relationship with brand
equity with a coefficient value of 0.29 and t-value of 3.18
and 4.00, respectively. The relationship of corporate
brand image to brand equity with a coefficient value of
0.0059 and a t-value of 0.07 has not been established

20
(refer Table 10). This is in contrast to what has been forwarded by a number of authors notably Kim and Hyun
(2011), Onkvisit & Shaw(1989), Riley and De Chernatony
(2000), McDonald et al. (2001) etc. We understand that this
is an immense opportunity for the marketers where they
may correct themselves by not being excessively focussed
on building corporate brand image. Compared to advertising relation to user brand image, WOM has a stronger relationship with user brand image (refer Table 10). This is in
contrast to the popular perception that corporate brand
image can be built most effectively through advertising.
We consider this as a significant finding.
Bravo et al. (2010) have expressed corporate brand
image as the image associated with an organizations name.
Though the relationship of advertising, WOM and physical evidence to corporate brand image is validated, the
relation of corporate brand image to brand equity is not
established (refer Table 10). The positive and significant
relationship of user and service brand image to brand
equity and the positive relationship of advertising, WOM
and physical evidence to user brand image has been established and is a notable finding. Similarly, the relationships
of advertising, WOM, physical evidence and employees to
service brand image have also been established. In fact,
compared to advertising relation to corporate brand image
WOM has a stronger relationship with corporate brand
image (refer Table 10). This is in contrast to the popular
perception that corporate brand image can be built most
effectively through advertising. We consider this as a significant finding. it is thus inferred that since the marketing
mix elements positively influence user and service brand
image and since these two image constructs positively
and reasonably strongly influence brand equity, marketers
have the suggestion of a new way through which they can
create strong and positive image and brand equity.
Physical evidence has a positive and significant influence on all brand image dimensions and perceived quality
thus revealing an enormous opportunity for the service
marketers because this is what the marketers can effectively control. Another noticeable finding is the positive
and significant relationship of WOM with the brand image
dimensions and perceived quality. WOM thus emerges as
a very strong marketing element and forwards the need
for understanding and finding ways through which
WOM could be influenced.
Though not strongly supported, the employee to service
brand image positive relationship suggests an opportunity
for the marketer because employee is the element that the
service firms can control and improve through monitoring
and training.

Limitations and Future Scope

Though the proposed model is validated, the study is not
without its limitations. Loan as a product category has been
picked up in retail banking because of our assumption that

Vision 20(1)
it is high in risk perception and experience quality.
However, if the tangibility spectrum of services is considered, there are many other sectors where there is higher
degree of abstractness and where the service is higher in
credence quality and risk perception. The appropriateness
of the study in other sectors and other category of service
products could be examined in future studies.
We have considered the countrys largest public sector
bank the State Bank of India. However, there are numerous
other foreign, public sector and private banks in the country
and the study could be extended to these.
The sample population was restricted to the state of
Jharkhand. Though state bank offers a great variability in its
user base, there could still be a high discrepancy in demographics across the regions of the country and to effectively
address these, the study very well could be extended to
include a sample drawn from across the country.
Regarding the marketing mix elements that act as key
influence on dimensions of brand equity, process as an
element could be evaluated further.
It was lately suggested and also observed that the
outcome of a loan application, that is, its approval or
rejection, could have a strong influence on the respondents
opinion and perception about the service and this as a
factor could be included in future studies.
WOM has emerged as a key antecedent of service brand
equity and future studies should be directed at trying to
examine the specific influence pattern of WOM on dimensions of brand equity. The study carried out by Celso and
Rossi (2008) focused on the antecedents of WOM could
prove to be a reference point regarding this.
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Authors bio-sketch
Somnath Mukherjee is an assistant professor in Department of Management, Birla Institute of Technology, Mesra
(City Campus, Ranchi). A PhD from Birla Institute of
Technology, Mesra, he has a number of publications in
national and International journals. He has nearly 15 years
of experience which includes industry, exclusive research
in the area of IT localization and e-governance and teaching. Special interest areas include services and industrial

brand management, behavioural dynamics of organizations

and individuals, management of medium and small
businesses.
Shradha Shivani is a professor in Department of Management, Birla Institute of Technology, Mesra. A PhD from
Birla Institute of Technology, Mesra, she has nearly 22
years of experience (both teaching and Industry combined).
She has a number of publications in national and International journals and has successfully completed a number of
sponsored projects and is actively associated with the
development of women and techno entrepreneurship in the
state. She has also carried out different training and faculty
development programmes. Her key area of interest is brand
management, marketing communication and pedagogy for
outcome-based education.

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