Building retailer equity

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CHAPTER 1

INTRODUCTION

1.1 An Overview

Building retailer equity is of beneficial and strategic importance for retailers. Equity can generate numerous benefits such as the ability to power the retailers’ name by launching private label brands and increase revenue and profitability by distancing them from rivals (Ailawadi and Keller, 2004). With the impact of globalization on the GCC countries and specifically Kuwait, the retailer market has opened the door for many competitors to enter this attractive market.

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Therefore, it is an essential task for retail brands to be identified from competitors and establish equity in their different customers’ base. According to Feuer (2005) retailers have recognized the power of branding and have focused on brand building. For example Al-Ostora and Sultan Center are very well known local brands of retailers in Kuwait. In the case of Sultan Center it has started its own private label.

Regardless of the increased focus on retail branding, the existing marketing literature offers little insight about the determinant factors of retailer equity except for some recent research by Jinfeng and Zhilong (2009) and Chaudhuri and Ligas (2009). The latter looked at the effect of merchandise value on both attitudinal and repurchase loyalty on retailer equity. Hartman and Spiro (2005) indicated that retailers need to know how a company’s marketing strategies might improve, modify, or negatively alter their customers’ based retailer equity. Moreover, Yoo et al. (2000) confirmed with empirical evidence that marketing activities have considerable effects on the dimensions of brand equity.

Brand equity is defined as value added by a brand name to a product (Farquhar, 1989) On this basis Keller (1998) suggested that retailer brands also possess equity and this concept has been adopted by many researchers to measure retailer equity among customers (Badldauf et-al., 2009; Arentt et.al., 2003; Pappu and Quester, 2009; Yoo and Donthu, 2001; Hartman and Spiro, 2005) and more recently at business to business levels (Espallardo and Bailón, 2008).

Retailer equity, according to Aaker (1991), consists of four dimensions: store loyalty, name awareness, service quality, and retailer associations. Arentt et al (2003) has developed the retailer equity index using the Partial Least Squares (PLS), focusing on the retailer association dimension as it is the most changing feature from one retailer to another.

Ailawadi and Keller (2004) propose that one way to conceptualize retailer equity is to think of "resource premium, distance travelled, brand or size preference compromised, or service forgone" (p.340) any of these suggestions are considered to be a measure for retailer equity.

Retailer loyalty is defined as “a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behavior”

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