Research leader Associate Professor Deon Nel

Research team
Janine Ashwell	Owen Covick	Graham Jones	Peter Lenz	Ludek Seda

A. Inaugural research activity: March – July 2010

The Marketing/Accountability Interface - The combination of value, brand and relationship strategies to acquire and retain customers has been described as customer equity management. This study used a multinomial logistic model to investigate the economic utility gained by switching brands, as driven by the value offering, brand building efforts and fostering relationships. A total of 1600 online questionnaires were administered to an Australian consumer panel. Customers from four mobile telephony networks returned 409 eligible questionnaires. The results confirmed larger logistic regression coefficients for value equity. As expected, value delivered was more important to customers locked in by long-term airtime contracts. The managerial implication is that network providers need to constantly revisit the value offering in postpaid markets to counter the shift from long-term contracts to prepayment plans. Brand and relationship elements are significant drivers predicting probability of brand choice, but remain secondary to value equity, especially in prepaid markets. Efforts to build loyalty in prepaid markets are not easily gained by only offering deep discounts. Telephony network providers seeking prepaid loyalty will need to rethink demographic segmentation sensitivity. Networks with higher loyalty in prepaid markets can expect a higher predicted probability of choice with customers over 40 years of age. Marketing strategies targeting age cohorts below 40 found it difficult to foster loyalty in prepaid markets.

B. Research activity: August – December 2010

Studies of the Literature - The research involved qualitative work using content analysis of the inputs and outputs in a services marketing scholarly journal. The research informed the contribution of the services marketing literature to the fast growing body of knowledge regarding customer equity management.  Our principal interest was to inform our own individual research plans for the next five years. The analysis revealed the topics of new emerging theoretical debate, practical application studies and the use of increasingly sophisticated statistical analysis techniques employed by leading authors. Single authored papers were in consistent decline during the past fifteen years, in favour of two- to four-authored papers.  It was interesting to notice that this trend is gaining popularity, similar to the natural sciences where 20-30 authors on one paper are not uncommon.  The latest paper on challenging Einstein’s theory of E=MC2 published in September 2011, had 117 authors. It demonstrates how competitive research has become, and to do quality research, will force researchers to collaborate if they want to get published in the big journals. The new levels of sophistication are just too much to handle for individuals, and the pace to achieve success is too slow for one person to attempt. The strongest papers still come out of North America, with a good mix from continental Europe, UK and Asia as a joint cluster. Australia and New Zealand are also improving their profiles in the bigger journals.

Research output generated by the CE • ARG in 2010

Nel, D., Lester, L., Chan, A., and Pitt, L.F., (2010) “Customer Equity Drivers in Prepaid and Postpaid Airtime Markets”, ANZMAC Conference, University of Canterbury, 29 Nov-3 Dec, New Zealand.

Pitt, L.F., Terblanche, N., Nel, D., (2010) “Market Orientation and Mode of Focus: An Exploration”, ANZMAC Conference, University of Canterbury, 29 Nov-3 Dec, New Zealand.

Nel, D., (2010) “Customer Equity Drivers in Postpaid and Prepaid Mobile Telephony Markets”, FBS Research Seminar Series, 20 August 2010.

C. Research activity: February – June 2011

Social Media and Brands – The Fleurieu Peninsula to the south of Adelaide is wine growing country. Members of the CE • ARG met with the McLaren Vale Wine Growing Region partners in early 2011, to investigate their interest in studying the impact of social media on brands. Brands are becoming more important as the focus point of conversations on social media. There is a need to better understand how to use social media to reach customers and to leverage the brand in social communication. The research group collaborated with colleagues in Canada and Sweden on two studies collecting social media data on wine and financial services brands. An important innovation was the use of Chernoff Faces to portray the social media brand images of wine and financial services brands for easier interpretation of essentially multivariate data.  This research forms a useful link to the brand equity component of customer equity management.  This research has been completed and accepted for journal publication.

D. Research activity: July – November 2011

Brand Value Trajectories – This longitudinal study examined growth trajectories of brand value in a sample of 284 brands, using panel data for the period 2006 to 2011. The research design uses an econometric data analysis approach available under an umbrella of multilevel modeling options. The study uses a random coefficient model to measure latent brand value growth during a volatile financial period. The model captures random intercepts (brand performance at time period zero) and random slopes (or rate of change over the six years) at both industry sector and brand levels during the global financial crisis (GFC). The methodology uses a three level hierarchy, to capture within- sector random intercepts and slopes at Level 3, the industry sector. At Level 2, or the between-brand level, performance on a brand value measure, y, of brand j at time i is a function of that brand’s Dollar value at time i, plus the residual. Level 1 represents the observation level of the measured dependent variable. The results show that the relationship between brand value and market capitalisation is of lesser concern. Rather brand value grows at the industry sector level irrespective of low or high market capitalisation even during a period of financial shocks. A better metric to manage, is to outperform competitive sectors by at least one standard deviation above the sector mean (the rising curves). Below one standard deviation have a negative growth impact at the brand level, but a stable non-growing impact at one standard deviation above the mean. USA based brands are still in a commanding position. Both European and UK brands are significantly less valuable than USA brands. South American, Asian and UK brands were able to close the gap during the GFC.

This is ongoing research that forms the basis of the PhD work by Janine Ashwell in a tourism application and Peter Lenz in a financial services environment, both supervised by Associate Professor Deon Nel as part of the work done within the CE • ARG.

Research output generated by the CE • ARG in 2011

Nel, D., Van Heerden, G., Chan, A., Ghziaeedi, M., Halvorson, W., and Steyn, P. (2011) “Eleven Years of Scholarly Research in the Journal of Services Marketing”, Journal of Services Marketing, 25, 1, 4-13.

Farshid, M., Plangger, K., and Nel, D. (2011) “The Social Media Faces of Major Global Financial Service Brands”, Journal of Financial Services Marketing, (forthcoming).

Nel, D., Ashwell, J., Covick, O., Cui, W., Jones, G., Lenz, P., and Seda, L., (2011) “Brand Value Trajectories: A Latent Growth Model”, FBS Research Seminar Series, 16 September 2011.