ABSTRACT

This study investigates the effect of brand equity dimensions (brand awareness, brand loyalty, brand association and perceived quality) on consumer purchasing decisions in the insurance industry. Focusing on a specific geographic region of Buea and utilizing a quantitative research approach, this study shows how strong brand equity influences consumer’s propensity to choose a particular insurance company. The objective of this study is to examine the effect of brand equity on consumer buying behavior in insurance companies in Buea Municipality the study adopts a cross-sectional survey research design. With a population of 3110 customers of insurance companies, having a sample size of 354. Primary source of data collection was used, distributing questionnaires to a representative sample of insurance policyholder. Convenient sampling was used to collect data. Collected data was analyzed using statistical techniques including multiple regression analysis to determine the relationship between brand equity dimensions and the behavioral outcomes The results established that brand awareness has a positive effect on consumer buying behaviour with a  correlation coefficient of 0.354.This study found a positive effect of brand loyalty on consumer purchasing behavior with a coefficient of 0.420.Also, perceived quality is significantly at a coefficient of 0.618. Finally brand association as a significant effect with a coefficient of 0.602.The study concludes that brand equity significantly affects consumer buying behavior in insurance companies in Buea Municipality. The study recommends that since brand equity has a positive and a significant effect on consumer buying behavior, insurance companies should improve on service and product quality, enhance customer experience and develop a strong brand identity

Keywords: Brand Equity, Consumer Buying Behavior, Brand Loyalty, Brand Awareness,Brand Association, Perceived Quality, Insurance Companies.

CHAPTER ONE

INTRODUCTION

1.1 Introduction

This study on the effect of brand equity on consumers buying behavior in insurance companies in Buea was conducted out and presented in five Main chapters. The five chapters can be seen below beginning from Chapter One which is the Introduction. This chapter is all about giving a general introduction about the issue and area under study. It was further divided into 7 subtopics which are; Background of the Study, Statement of the Problem, Research Objectives, Research Questions, Research Hypothesis, Significance of the Study, and Scope of the Study and definition of terms. This chapter is followed by Chapter Two which is the Literature Review. Here we examine the theoretical, conceptual and empirical literature concerning the subject matter. This chapter equally carries the conceptual framework of the study. Next is chapter three which is the methodology. This chapter is further divided into research design, background of the study area, source and nature of data, data collection instrument, validity of data collection instrument, target population, sample and sampling technique, data analysis techniques and procedures and ethical consideration. We further delve into chapter four which is the presentation of research results and it is subdivided into presentation of data, descriptive results and inferential results. We conclude with chapter five which is summary of findings, conclusions, and recommendations. This chapter is divided into summary of major findings, conclusion, recommendations, limitation of the study and suggestions for further studies.

1.2 Background

In the era of globalization and increasingly fierce market competition, companies face great challenges in maintaining the competitiveness and relevance of their products in the eyes of consumers. One of the main keys to winning this competition is through the establishment and maintenance of strong brand equity (Pai, 2024). Brand equity is the added value associated with a product or service that can influence consumer perceptions. This includes not only the quality of the product itself, but also the emotional and symbolic perceptions attached to the brand (Syafriandra & Kusuma, 2024). Brand equity is an important asset in business that has a significant impact on the success and sustainability of the company. The value of brand equity includes brand recognition, customer loyalty, and perceived quality, which together can influence consumer preferences and purchasing decisions (Maulidiyah & Indayani, 2024).

With strong brand equity, companies can gain competitive advantages-such as the ability to set premium prices, lower marketing costs, and increase the effectiveness and efficiency of promotions-that ultimately increase profitability and expand market share. Therefore, investment in building and maintaining brand equity not only brings short-term benefits through increased sales, but also secures the company’s strategic position in the long term (Hastuti & Rusdin, 2023).Brand equity has a very strong influence on consumer behavior, playing a critical role in influencing how consumers perceive, evaluate, and ultimately make purchasing decisions. Through high brand awareness, positive quality perceptions, strong brand associations, and brand loyalty, consumers tend to show greater preference for products or services from that brand, even willing to pay a premium price for them (Supriatna et al., 2022). Brand equity also influences consumer trust, minimizes perceived risk in the buying process, and strengthens emotional bonds with the brand, all of which can lead to repeat purchase behavior and word-of-mouth recommendations. Thus, brand equity can substantially determine product success in the marketplace, highlighting the importance of effective branding strategies to positively influence consumer behavior in a competitive market environment (Tannady et al., 2022).Considering the speed of globalization, information and communication technology and the enormous activities happening in the 21st century business terrain, branding has continued to represent the face of most businesses lately. Similarly, according to Cynthia (2018), brand equity holds significant benefits for both firms and consumers. Nowadays, marketers pay increasing attention to brand equity as a useful tool to establish a global brand that appeals to all users. As a result of the information revolution and intense competition, consumers now have access to a large amount of solicited information before buying a product (Ousanee et al., 2018).

The information they receive, which advocates the merits of each branded good, heavily influences their purchasing decision, and companies use different factors (such as a name, symbol, design, or mixture of these three) to create an image in the mind of the consumer, enabling them to identify a specific product or brand. To remain competitive, brand equity is a crucial tool for attracting the attention of potential customers, which could lead to a buying decision (Okechukwu et al., 2020) .A brand, is a collection of both tangible and intangible attributes that aid in the recognition of a product, service, individual, location, or organization. A brand helps to create a brand reputation. The bigger picture of branding as a long-term strategy encompasses various elements, ranging from new products to marketing messages. In this case, the brand of a product is considered the most significant factor because it allows it to be identified by consumers. Selecting a brand for a product necessitates a thorough understanding of both the product and the target market segmentation in order to guarantee the product’s existence, profitability, and, most importantly, success in the market. For a product to establish a strong brand equity, it must first succeed in the market (Sammut, 2015). The aim of every brand is to entice and hold on to customers, which guarantees the triumph of both the brand and the product. Research has revealed that customers seek out brands that possess distinctive characteristics (Londono et al., 2016).Wood (2000) stipulated that brand equity denotes the combination of all the perceptions and actions that accumulate in the minds of the consumers of a product, including the influence of distribution channels and agents. This will lead to greater profits and sustainable cash flows in the long run. The impact of brand equity can also be seen in the way consumers feel, think, and behave towards a brand.  As a result of this, the buying behavior of consumers is a vital aspect considered by businesses. According to Khaniwale (2015), consumer behaviour can be referred to as the combination of individuals’ efforts before or while purchasing any product or service intended to fulfill an unmet need. Khaniwale further explains that buyer behaviour is the concept which answers what, why, how, when, and where an individual makes a purchase. As a result, the outcome of buyer behaviour is the buyer’s decision. The consumer typically goes through five stages before the actual purchase. Kotler and Armstrong (2014) point out that the consumer can skip a few stages during a routine purchase. That is, purchases of a habitual nature often lead directly to buying, and thus the second and third stages are skipped. However, when a consumer faces a new and complex purchase, for instance, where there is a change in price or availability, the buyer may re-enter the full decision process and consider alternative brands. Whether complex or simple, the decision making process starts with the recognition of a need.       

Kotler and Armstrong (2014) suggest that internal or external stimuli can trigger a consumer’s recognition of a need. Internal motivations are linked to a human’s basic needs, such as thirst, that prompt the consumer to buy a water bottle. In contrast, external stimuli can be in the form of an advertisement that can get a potential consumer thinking about purchasing a new smartphone. It is at this stage when the consumer recognizes a distinct difference between their current and desired   state. The need recognition process can occur naturally. However, marketers can often set it in motion by employing marketing tactics that create demand and encourage purchase. After a need is recognized, the consumer engages with information searches to identify and evaluate alternative products and services. According to Khaniwale (2015), the possible sources of information include family, friends, personal observation, consumer reviews, salespeople, or mass media. However, millennials currently rely more so on the internet for information. The extent of the search will mostly depend on a consumer’s drive and satisfaction got from the search (Kotler & Armstrong, 2014). Despite consumers obtaining a large amount of their information from commercial sources controlled by marketers, Kotler and Armstrong believe that the most effective sources tend to be personal such as family or friends. As consumers obtain information, there is an increase of awareness towards available brands. In order to influence the buying behavior of consumers, many businesses have explored the use of brand equity. The relationship between a brand and a consumer is known as a consumer-brand relationship (Keller, 2013). 

Brand equity doesn’t just allow companies to reap higher profits. It also allows them to get a more significant market share. On the other hand, for a consumer, brand equity gives peace of mind, reduces dissonance, guarantees some level of comfort and happiness, and equally establishes some form of reputation and status (Omar, 2015). The history of academic research on brand equity traces back to late 1980s. The literature review on this topic reveals that past researchers examined this concept in different country contexts, sectors, and product lines using variety of research methodologies. The focus of research on brand equity has been changing across different decades. Most of the research on brand equity in the period of 1980s, and 1990s has focused mainly on measuring brand equity. For example, Simon and Sullivan (1990), established that brand equity can be measured according to the financial market value of the company, by which the evaluation technique derives the value of brand equity from the value of the company’s other assets. Similarly, Keller (1993) suggested that brand equity can be assessed by financial based measures either through the asset valuation of the balance sheet or by using subjective multiplier of brand profit based on the performance of the brand along the following dimensions (leadership, market stability, internationality, trend, support, and protection). Lassar et al. (1995) suggested that brand equity can be measured from two different perspectives which are the financial and customer based measure. Indeed, the financial perspective of brand equity is based on the financial asset value it creates to the business franchise, whereas, customer-based brand equity can be measured based on five fundamental dimensions: performance, value, social image, trustworthiness and commitment.

The issues pertaining to brand equity in the early 2000s were mainly concentrated on conceptualizing and measuring brand equity. Additionally, certain researchers have been working on examining other antecedents of brand equity such as brand trust customer satisfaction Pappu & Quester, (2006), service quality and company image. A few researches have also focused on studying the interrelationships among the dimensions of brand equity Kayaman and Arasli, (2008). Compared to 1990s where the focus of research on the topic was almost exclusively laid on the measurement aspects of brand equity, in 2000s the research got new directions and new ideas were explored in those years. 

And in more recent years, brand equity has gained significant attention from many more scholars. Service rendering firms, especially the insurance sector are one of the highest maximizers of brand equity. This is so because their market offerings are very similar and also the regulatory bodies in this field demand that all companies use and maintain the laid down procedures and processes to deliver their services to the consumers. This limits the ways in which these firms can carry out differentiation, hence they leverage brand equity to boost their uniqueness. Insurance can be seen as the pooling of risk by policy holders with the aim of indemnifying them from unforeseen risk. The primary function of insurance is to act as a risk transfer mechanism. The basic principle of insurance is that the losses of the few are paid by the many. Its underlying purpose is to provide protection against the risk of financial loss thus giving peace of mind to the policy holders, (American Risk and Insurance Association, 1979). 

The development of the insurance sector in Cameroon is identical to the general situation of the insurance market in Africa, where the activity recently registered a 6% increase. The insurance sector which survived a serious confidence and growth crisis in the 1990s, is offering a brighter and more reassuring face since the 1992 reform instituting the CIMA Treaty and its annexes, including the insurance code. While the sector has registered a rapid growth of its turnover and a continuing improvement of its fundamentals (solvency, covering regulated commitments and level of equity capital), there is need for us to improve our claim settlement policy, as well as the quality of our services and our communication policy, (Amchamcam, 2006). Buea in recent years have experienced a rapid growth in the number of insurance companies. This rise has caused the competition to be fierce and hence most of these companies are trying to leverage on brand equity to differentiate themselves and gain more market share.

1.3 Problem Statement

Insurance companies find difficulty in keeping the same consumer over time which means consumers are changing their behavior. Consumers can either increase or reduce their buying this study seeks to assess how brand equity increases or reduces the buying behaviour of consumers. Insurance companies face the persistent challenge of retaining customers exhibiting variety-seeking buying behavior. While businesses invest in building brand loyalty and promoting consistent product satisfaction, many consumers are driven by a desire for exploration, leading them to frequently switch brands and try new products, even within categories where they are otherwise satisfied. This constant brand switching makes it difficult for companies to build lasting customer relationships.

Insurance companies with complex buying behaviour consumers face the challenge of effectively guiding consumers through the complex buying process. These consumers engage in extensive information seeking, and often experience post-purchase dissonance. Many businesses struggle to provide the necessary level of information, support, and reassurance to their consumers.

Most previous researches on brand equity were carried out in other parts of the world ,not much work has been done on this topic in Cameroon, this is one of the problem the researcher seeks to solve.

In situations where consumers perceive little difference between available brands but are making a high-involvement purchase(requiring a lot of research and thought  before making a decision), companies face the challenge of reducing post-purchase dissonance and fostering brand loyalty. While these consumers initially focus on minimizing risk and simplifying the decision-making process, they often experience anxiety and second-guessing after the purchase. Insurance companies fail to address this post-purchase discomfort, leading to dissatisfaction, negative word-of-mouth, and a lost opportunity to cultivate lasting customer relationships.”

Research shows that many potential consumers of insurance products in Buea perceive insurance as an unnecessary expense (Oumarou, 2019).  This perception and behavior of the consumers greatly affects the ability of these insurance companies from building positive brand equity.  While the importance of brand equity is widely recognized across various sectors, its specific influence on consumer buying behavior within the insurance sector remains under-researched. Insurance companies face challenges in attracting and retaining customers in a competitive market. Understanding how brand equity influences consumer buying behavior is vital for developing effective marketing strategies and building sustainable competitive advantage. This research aims to identify the key dimensions of brand equity that most strongly predict insurance purchasing decisions, providing actionable insights for improving customer acquisition and within the insurance industry.  More in-depth knowledge of consumer behavior helps marketers understand why and how consumers buy certain brands and how their environment shapes those decisions. In addition to the consumer decision-making process, a marketer also needs to understand the dynamics that affect the way individuals and groups buy goods and services. On this basis, this study seeks to find out the effect of brand equity on the buying behaviour of consumers of insurance services in the Buea Municipality.

1.4 Research Questions

The research questions, research objectives and research hypotheses are in line with Aaker’s Brand Equity Model.

1.4.1 The Main Research Question

What is the effect of brand equity on consumer buying behavior in insurance companies in the Buea Municipality?

1.4.2 Specific Research Questions

1. What is the effect of Brand Loyalty on Consumer Buying Behavior in insurance companies in the Buea Municipality?
2. How does Brand Awareness affect Consumer Buying Behavior in insurance companies in the Buea Municipality?
3. What is the effect of Brand Association on Consumer Buying Behavior in insurance companies in the Buea Municipality?
4. How does Perceived Quality affect Consumer Buying Behavior in insurance companies in the Buea Municipality?

1.5 Research Objectives

1.5.1 Main Research Objective

To examine the effect of brand equity on consumer buying behavior in insurance companies in the Buea Municipality.

1.5.2 Specific Research Objectives

1. To investigate the effect of Brand Loyalty on Consumer Buying Behavior in insurance companies in the Buea Municipality.
2. To evaluate the effect of Brand Awareness on Consumer Buying Behavior in insurance companies in the Buea Municipality.
3. To assess the effect of Brand Association on Consumer Buying Behavior in insurance companies in the Buea Municipality.
4. To evaluate the effect of Perceived Quality on Consumer Buying Behavior in insurance companies in the Buea Municipality.

1.6 Research Hypotheses

The following Null hypotheses are formulated to guide the study;

H0₁: Brand Loyalty does not have a significant effect on Consumer Buying Behavior in insurance companies in the Buea Municipality

H0₂: Brand Awareness does not have a significant effect on Consumer Buying Behavior in insurance companies in the Buea Municipality.

H0₃: Brand Association does not have a significant effect on Consumer Buying Behavior in insurance companies in the Buea Municipality.

H0₄: Perceived Quality does not have a significant effect on Consumer Buying Behavior in insurance companies in the Buea Municipality