The effect of customer-base reputation on brand equity

Abstract

Among the most important sectors of Iranian economy is banking, an industry which has become more competitive over the recent decade. An objective of banks marketing is to increase brand equity. Since reputation is an important factor in improvement of brand equity, the present research evaluated the impact of bank customer-based reputation on total brand equity. A survey was conducted in Tehran metropolitan area, with the sample size of 246 people. Findings showed the positive impact of bank customer-based reputation on total brand equity (t=6.16, β=0.56). Effect of» trust in brand« on» bank customer-based reputation« (t=8.93, β=0.80) is much stronger than that of word of mouth (WOM) (t=3.19, β=0.22). It is concluded that WOM is not much effective in persuading customer to make use of banks’ services. The paper proposes the necessity of developing a local scale for bank customer-based reputation. An innovative aspect of the research is offering four constructs, instead of one, in order to conceptualize WOM. These four constructs are described by the matrix of nature – content of communication.

Keywords

• customer-based reputation
• brand equity
• trust in brand
• other’s word of mouth