Presented by: Brett Brown

1. The Importance of Brand Cues in Intangible Service Industries: An Application to Investment ServicesBy: Michael K. Brady, Brian L. Bourdeau, and Julia Heskel Presented by: Brett Brown Article 48

2. Objective • To empirically test the suggestion that branding is more important for services than for physical goods and that there is a direct relationship between the level of intangibility and the importance of branding.

3. Previous Research • Berry (1995), Bharadwaj et al (1993), and Mitra et al (1999) • Literature that suggests brand cues are more important for products high in credence properties than for products dominated by search or experience properties.

4. Previous Research • Krishnan and Hartline (2001) • Empirical work on the importance of branding across product types. • They found that consumers tend to rely more heavily on brand equity evaluations for physical goods than services.

5. Intrinsic Hypotheses • H1. Intrinsic cues are more important in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. • H1a. National reputation is a more important cue in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. • H1b. Objective product rankings are a more important cue in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. • H1c. Good media reviews are a more important cue in the purchase decisions of mutual funds than for hotel accommodations and computers purchases.

6. Extrinsic Hypotheses • H2. Extrinsic cues are less important in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. • H2a. Personal referrals are a less important cue in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. • H2b. Price is a less important cue in the purchase decisions of mutual funds than for hotel accommodations and computers purchases. • H2c. Advertising is a less important cue in the purchase decisions of mutual funds than for hotel accommodations and computers purchases.

7. Methodology • A survey was administered to determine the relative importance of brand cues on consumers’ purchase decisions across three products. (Mutual Funds, Hotel Accommodations, and Computers) • 101 part-time and full-time graduate business students from a medium sized university were given the survey.

8. Methodology • 66% of the participants were male • 16% were between the age of 18 and 25 • 76% were between 26 and 35 • 8% were over 35 • 70% were recent undergrads in grad school • 30% completed grad school

9. Survey • Participants were placed in the position of purchasing three products that varied in tangibility. • Computers- Very Tangible • Hotel Accommodations- Less Tangible • Mutual Funds- Very Intangible

10. Survey • Respondents role played the purchasing process for each of the three products. • They were asked to indicate the importance of the brand cues (national reputation, rakings, media reviews, referrals, price, and advertising) • Brand cues were presented on an 11-point scale ranging from “Not Very Important” to “The Most Important Factor”

11. Results • Each of the 8 hypotheses were tested using a repeated measures ANOVA design. • P<0.05 (Mauchly’s test) • This test was used because it is a powerful way to detect the effects of experimental manipulation and it also reduces unsystematic variability for the design. • It was also used because it is easy to graph the results from an ANOVA design.

12. Results

13. Results

14. Intrinsic Cues • The profile plot suggests that individuals place most emphasis on intrinsic cues when purchasing mutual funds followed by computers and then hotels. • Contrasts indicated that each of these differences was significant (p<0.001) • National Reputation • Most important for mutual funds, followed by computers and hotels • Contrasts indicated that only the hotels/mutual funds comparison was significant (p<0.001)

15. Intrinsic Cues • Objective Product Rankings: • The mean scores supported that objective product rankings were more important for mutual fund purchases than hotels and computers. • Contrasts indicated that all mean differences are significant (p<.001) • Media Reviews: • The means supported the expected direction • Contrasts indicate that only the difference between mutual funds and hotels was significant (p<.026)

16. Extrinsic Cues • Extrinsic Cues are less important in the purchase decision of mutual funds than hotels and computers. • Contrasts indicated that each difference was significant (p<0.001) • Personal Referrals: • Least important for mutual funds purchase decisions compared to hotels and computers. • Advertising: • The means support the prediction that advertising has less of an impact on purchase decisions for mutual funds. • Contrasts indicated that only the difference between mutual funds and hotels was significant (p<0.001)

17. Conclusion • Intrinsic cues are more important for mutual fund purchase decision than for hotels and computers purchases • Extrinsic cues are less important for mutual fund purchases than hotel and computer purchases. • All the means were in the expected direction. • 6 out of 8 ANOVA were significant at p<.05, and all 8 were significant at p<.10 • 12 out of the 16 contrasts were significant.

18. Need For More Research • Future research is needed that expands this study to other industries and other respondents. • More research is also needed that applies to investment services. • Future research should also examine the importance of brand cues in other intangible service industries.