The importance of brand cues in intangible service industries By: Brady, M.K and Bourdeau, BL

1. The importance of brand cues in intangible service industriesBy: Brady, M.K and Bourdeau, BL Presented by: David Kang

2. Topics of the article • Why was the test conducted • What is a cue and why it is used • What is the importance of brand cues in intangible service industries • Hypothesis & Conclusion of the research

3. Why was the test conducted • Purpose of this study is to test that whether branding is more important for services or for physical goods • There is a direct relationship between the level of intangibility and the importance of branding

4. What is a cue and why it is used • "a characteristic event, quality, or object that is external to the consumer that is encoded and used to categorize a stimulus object" (Crane and Clarke, 1988) • Dawar and Parker (1994) suggest five reasons for the use of cues: • 1. the consumer wants to reduce perceived risk (Olson, 1977) • 2. the consumer lacks expertise (Rao and Monroe, 1988) • 3. consumer involvement is low (Celsi and Olson, 1988) • 4. objective quality is too complex to assess or the customer is not accustomed to spending much time doing such assessments (Allison and UhI, 1964; Hoch and Ha, 1986) • 5. an information search preference exists (Nelson, 1970, 1974)

5. What is a cue and why it is used (cont.) • Price is important for cue and quality • Intangible services & Tangible services • Price is least important cues for highly intangible services • Price is most important cues for more tangible services • Two types of cues: • Intrinsic cues • Example: media reviews, objective product rankings • Extrinsic cues • Example: personal referrals, price, and advertising

6. What is the importance of brand cues in intangible service industries • Customers use cues for external events, qualities or objects when deciding on services or products • Using Intrinsic and Extrinsic cue, consumers engage in a two-step cue utilization process before making a purchase decision • 1. consumer selects and stores information about cues • 2. cognitive processing of these cues to evaluate the product

7. Hypothesis & Conclusion of the research • Hypothesis: • the researchers believed that since services vary greatly in intangibility, the impact of cues on purchase decisions should vary as well. • cues should be important for purchase decisions because of highly intangible products, as well as providing tangible evidence of quality • reputation, objective product rankings, and media reviews will be more important for intangible services, then tangible services

8. Hypothesis & Conclusion of the research (cont.) • 8 Hypothesis: • 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. • 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.

9. Hypothesis & Conclusion of the research (cont.) • Tests and results: Hypothesis was tested using an repeated measures ANOVA design • Found that first four hypothesis on intrinsic cues were correct. • Found that last four hypothesis on extrinsic cues were correct • Results were that the importance of intrinsic cues were intangible services and extrinsic cues were important in tangible services

10. Conclusion • This article is important in service marketing because it offers more study on service branding and what consumers are using • Extra information: • Krishnan and Hartline in their article, "Brand equity: is it more important in services?“ testing the brand cues will show which cue effects specific consumer's purchase decisions