Introduction

Building strong brand equity is a complex yet crucial process for multinational corporations (MNCs) to achieve and maintain competitive advantage (Chatzipanagiotou et al. 2016), especially for those that have operations in emerging markets (Chabowski et al. 2013; Yang et al. 2015; Zhang et al. 2014). The competitive landscapes in those markets could be tougher than the developed ones, and there are distinctive consumer cultures and brand preferences (Heinberg et al. 2017). Moreover, these consumer cultures and preferences, particularly those in China, are in constant transition (Leung 2008), creating uncertainty for foreign MNCs (Stallkamp et al. 2017). Customer-based brand equity (CBBE), defined as “the differential effect of brand knowledge on consumer response to the marketing of the brand” (Keller 1993, p. 1), is one of the widely used tools for predicting consumer behavior (Cobb-Walgren et al. 1995; Pappu et al. 2007; Park and Srinivasan 1994). Over the years various approaches to measure brand equity have been developed, and various dimensions have been subsequently operationalized by different authors (e.g., Atilgan et al. 2005; Buil et al. 2008; Pappu et al. 2007; Yasin et al. 2007; Yoo and Donthu 2001). The major CBBE models such as Aaker’s (1996) and Keller’s (1993) models were both developed in the USA, which may limit their applications in emerging markets such as China.

It has been noted that consumers in emerging markets are different from those in developed markets due to a variety of cultural and socioeconomic factors (e.g., Christensen et al. 2015; Filieri et al. 2017; Maheswaran and Shavitt 2000; Michaelidou et al. 2015; Morgeson et al. 2015). Specifically, the way consumers evaluate different brands, and subsequently, their loyalty may differ across cultures (Ettenson 1993). Zhang et al. (2014) show that brand equity has a greater role in the West than in the East, yet Eastern consumers have higher loyalty intentions. Thus, we can expect that the sources of brand equity and loyalty in Eastern contexts may be different from Western contexts. However, to date, limited research attention has been devoted to critically examine the application of CBBE in China, despite its increasing importance for global market and MNCs (Leung 2008).

This study seeks to uncover some of the culturally specific dimensions of brand equity in China. A qualitative methodology based on in-depth interviews was adopted to inform the development of a conceptual model and the main questionnaire survey with a sample of Chinese smartphone consumers. The in-depth interview method was adopted as it yields a deeper understanding of the consumers’ own perceptions, opinions, judgments, and feelings about brands. Its findings provide basis for developing a conceptual model for empirical test through the quantitative survey. The study has focused on smartphone brands since it is a very popular product among Chinese consumers, which is the world’s largest smartphone consumer market (Reuters 2015).

This study also attempts to make contributions to the international business literature by adapting CBBE in China. First, our qualitative interview findings indicate that three factors are highly relevant for consumers when selecting a smartphone brand in China: brand popularity, country of origin and brand mianzi. Second, we conceptualize brand mianzi as the new dimension of CBBE, while brand popularity and country of origin as the key antecedents. Finally, our quantitative data results verify this conceptual model, which provides important implications for international business managers to adapt their marketing strategies.

Literature review and hypothesis development

Brands in the Chinese cultural context

Differences between Western and non-Western cultural contexts have been widely pinpointed in marketing literature with some authors suggesting that Western branding models and principles cannot be used to explain brands in Asia (Cayla and Arnould 2008). Each Eastern country presents its own specificities as it concerns the way consumers perceive brands and interpret their signals (Shukla et al. 2015). For instance, Heinberg et al. (2017) illustrate differences in the way Indian and Chinese consumers consider corporate image and corporate reputation and how these have an impact on brand equity. These findings corroborate similar conclusions reached by Eckhardt and Houston (2002), who found that the brand meaning interpretation by Chinese consumers, even in the case of a globally renowned brand such as McDonald’s, is highly entwined with local cultural values and the peculiar transitional context from traditional/national to new ways of interacting. On the same lines Zhou and Belk (2004) reveal that Chinese consumers’ understandings of global and local television and print advertising are either driven by the desire for global cosmopolitanism and status goods for the sake of mianzi (prestige face), or it is motivated by a more nationalistic desire to invoke Chinese values that are seen as local in origin.

Chinese consumers attach utmost importance to the social function of the brand so that they use brand names to build their social relationships, for instance, to delimit in-group and out-group boundaries or to communicate their social status (Bian and Forsythe 2012; Li et al. 2015). The importance of material possession in developing social relationships and gaining social status seems to be linked to the historical development of brands in the country (Wang and Lin 2009), since for a long time they have served as symbols of status when families’ wealth and position was highly uncertain (Hamilton and Lai 1989). The usage of brands to express social identity is also linked to the Chinese highly collectivist culture characterized by strong interdependences among members belonging to the same group (Bian and Forsythe 2012; Walley and Li 2015) and by a great emphasis placed on the recognition of social positions and the protection of one’s dignity (Buckley et al. 2006). These arguments have been further supported by studies on Chinese luxury brands consumption. For instance, Zhan and He (2012) have identified three psychological traits—namely value consciousness, susceptibility to normative influence, and the need for uniqueness, which have an impact on Chinese consumers’ attitude and purchase intention toward luxury brands. Siu et al. (2016), on their hand, have found that brand equity alone is not sufficient to explain Chinese consumers’ willingness to pay a premium price for luxury brands: indeed, the importance of face saving to consumers was found to influence their willingness to pay a premium price, even when they hold a less positive attitude toward the brand. Also the way Chinese consumers value their brand experience on social media is peculiar and influenced by their cultural values, so that, in comparison to US consumers, they assign higher value to the social interaction rather than to the content exchanged online with consequent effects on brand equity (Jiao et al. 2018). We argue here that due to these multiple differences, traditional brand equity measures, based on a Western consumers’ view of brands, may not apply to the Chinese context. In this sense, for instance, Tong and Hawley (2009) reveal that some brand equity dimensions such as perceived quality and brand awareness appear to be non-influential for the sportswear consumers in China. Despite these evidences, extant research on the brand equity in China has relied on existing multi-dimensional brand equity measures, without taking into account of the specificities of the Chinese context (Lehmann et al. 2008; Liaogang et al. 2007; Tong and Hawley 2009).

Brand equity measures and cross-country validity

Companies struggle to build strong brands with consistent and relevant identities (Aaker 2012; Kapferer 2012) that can appeal consumers and therefore influence their behaviors. As a way to capture the value that a strong brand can generate, the consumer-based approach has been most widely adopted in marketing studies. According to this view, brand equity is valued on the basis of consumers’ knowledge and the consequent relations they establish with brands (Aaker 1991; Keller 1993).

Brand equity studies have been classified depending on the recommended measurement methods: some authors have proposed direct and mainly unidimensional measures, which assess brand equity considering the immediate various attributes constituting its meaning. These authors attempted to separate the overall brand value from the product value or the symbolic value from the product-related value (Leuthesser et al. 1995; Park and Srinivasan 1994; Vázquez et al. 2002). However, there is wide consensus among scholars on the usage of multi-dimensional and indirect measures which assess brand equity through multiple dimensions and/or behavioral outcomes (Christodoulides et al. 2015). This latter and richer stream of research has proposed various dimensions as constituting the CBBE (for a complete review see Christodoulides and De Chernatony 2010). Among these different proposals, scholars have most widely adopted the brand equity dimensions as conceptualized by Aaker (1991), which include brand awareness, brand associations, perceived quality, and brand loyalty. With these four dimensions, Aaker (1991) develops the idea that the better the brand knowledge held by consumers the more positive will be their reactions to the brand and consequently the higher the brand equity. Following this logic, consumers’ capability of recognizing or recalling a brand in a certain product category—also known as brand awareness—represents the preliminary dimension of brand equity. All the meanings constituting consumers’ brand knowledge (i.e., the way people think about a brand abstractly) will represent the so-called brand associations. Consumers’ evaluations of the product’s features and performance constitute the perceived quality dimension. Finally, brand loyalty expresses consumers’ attachment to and intention to repurchase the same brand.

These dimensions have been subsequently operationalized by different authors (e.g., Atilgan et al. 2005; Buil et al. 2008; Pappu et al. 2005; Yasin et al. 2007; Yoo and Donthu 2001), and attempts have been made to adapt them to different contexts such in the cases of specific equity measures developed for green brands (Chen 2010), online brands (Christodoulides and de Chernatony 2004) or business-to-business brands (Coleman et al. 2011).

Despite the widespread utilization of Aaker’s brand equity scale, the main issue has been pointed out in relation to their cross-country application, since most of the brand equity studies have only focused on a single country (Christodoulides et al. 2015). Among the few studies that have applied Aaker’s scales to multiple countries, none is free of problems. Most importantly for an international business perspective, when one Western and one Eastern country (Yoo and Donthu 2001) or multiple European countries (Christodoulides et al. 2015) were involved in the study the measures applied have failed to discriminate among some theoretically distinguished concepts (i.e., brand awareness and brand associations) or have shown relevant variations across countries.

A fundamental implication of these incongruences would be that, in contrast to widespread academic and managerial practices of adopting the same brand equity measures across different nations, brand equity may actually be culture-specific (Christodoulides et al. 2015; Kocak et al. 2007). This is also in line with Fischer et al. (2010) who found that the importance of brands themselves and their functions for consumer decision making vary substantially across countries with consumers from certain nations, such as Japan, attributing a higher relevance to brands in relation to their social demonstrance function rather than their risk reduction function. In addition to this, Strizhakova et al. (2008) found that also the different dimensions of brand meanings (i.e., quality, values, personal identity, and traditions) assume different importance to consumers across countries, so that, for instance, identity-related and traditions-related meanings are more important in the USA than in emerging markets.

These evidences lead to the consideration that an adaptation of the brand equity construct and its measures is needed depending on the specific country/cultural context of reference. In order to develop an adaptation to the Chinese context of the brand equity construct and its measures, we have compared, in the same Chinese context, the relevance of some traditional brand equity dimensions with other new dimensions that we have identified from a qualitative study involving 30 Chinese users of smartphone brands. Details about this preliminary study can be found in the methodology section. The qualitative interview findings indicate that three factors are highly relevant for consumers when selecting a smartphone brand: brand popularity, country of origin, and brand mianzi. As detailed in the next section we expect that the identified contextualized brand equity dimensions will explain the brand equity evaluations in China better than some other traditional dimensions.

Hypothesis development

Brand popularity

Based on the analysis of interviews, it appears that Chinese consumers tend to choose popular brands. More specifically, the meaning associated with brand popularity emerging from interviews referred to a consumer’s assessment of the level of diffusion or popularity of a brand in society, namely the number of people who are buying the same smartphone brand/model. Brand popularity can be considered as a cultural factor because its importance may derive from Chinese people’s respect for social norms and group conformity (Filieri et al. 2017; Markus and Kitayama 1994; Triandis 1995). Furthermore, the Chinese culture is highly collectivist meaning that there is strong interdependence among its group members (Hofstede et al. 2010). In Chinese society the social pressure to conform to the group would ‘urge’ consumers to make decisions that might not necessarily reflect individuals’ private opinion. Additionally, following others’ behavior may reduce uncertainty. Accordingly, Chinese people observe what other people do or buy and follow the behavior or the norms accepted by the majority in order to join them, establish harmony and sense of community (Hsu 1948). Consequently, the more a product or brand is chosen by consumers, the more it becomes popular in society. As Chinese consumers dislike deviating from the group (Markus and Kitayama 1994), as brand popularity increases, the loyalty attached to the brand that has become the brand chosen by the society members increases, too. Thus, we hypothesize the following:

H1a

Brand popularity has a positive influence on brand loyalty.

The fact that more and more people purchase a specific brand also increases its visibility and it may be easier for consumers to recall and recognize a brand when they see it into the shops or in the streets. For instance, the iPhone is sometimes called a “street phone” in large cities for its common sightings in the streets (Wakabayashi 2016). Thus, we expect that:

H1b

Brand popularity has a positive influence on brand awareness.

Additionally, the more people buy the same brand the more other people believe that the brand being purchased is of good quality. Research in other contexts has established that the number of download counts, an indicator of polarity, may indicate perceived quality and reliability for software products (Hanson and Putler 1996). Accordingly, the more people buy the same smartphone brand, the more other people believe that this brand must be of good quality otherwise not so many people would want to buy it. Therefore, we can also hypothesize the following:

H1c

Brand popularity has a positive influence on perceived quality.

On the other side, the more a brand is popular in a specific society or an individuals’ social circle, the more people will reduce risks. In particular, purchasing a popular brand will reduce the risk of losing face, while at the same time the popularity of the brand may bring prestige and positive impression to its owner. Thus:

H1d

Brand popularity has a positive influence on mianzi.

Country of brand origin

The country of origin of a brand is the stereotypical image of the country where a brand is believed to originate (Bilkey and Nes 1982). Many consumers use these stereotypical associations to assess products (Yasin et al. 2007). Country of brand origin is known to originate associations with a specific source country in consumers’ minds, regardless of where the product is actually produced (Diamantopoulos et al. 2017). Previous studies have indicated that country of origin signals the value of a brand, serves a cue for product quality, helps to reduces consumer perceived risk and facilitates purchase decision (e.g., Bloemer et al. 2009; Chao and Gupta 1995; Costa et al. 2016; d’Astous and Ahmed 1999; Verlegh and Steenkamp 1999). Particularly in the emerging countries, it is found that country of origin strongly influences brand distinctiveness, awareness, and loyalty (Sharma 2010; Yasin et al. 2007). Comparing consumer behavior differences between the developed and emerging countries, Sharma (2010) reveal that consumers in the emerging countries such as China and India have stronger preference to products originated from developed countries. Therefore, we hypothesize that country of origin has a positive impact on brand loyalty. For example, if consumers perceive the country from which the brand originates as modern and technologically advanced, they will be less reluctant to switch to a brand from a country that does not excel in such a product category according to consumers’ stereotypical perceptions. Thus, consumers will keep buying the product and brands originating from a country that they perceive to be superior in terms of technological advancement. Thus,

H2a

Country of brand origin has a positive influence on brand loyalty.

Previous research has established that country of origin has a significant effect on brand awareness/associations; however, they did not really explain why (Yasin et al. 2007). In this study we argue that young Chinese people are particularly attentive to any new technology or innovation coming from technologically advanced countries, about which they have a positive perception. Young Chinese consumers are increasingly aware of the smartphone brands and models originating from these countries. Additionally, many smartphone manufacturers also offer various technological products (e.g., iPad, camera, television) which may enhance consumer’s knowledge of the country of origin and at the same time consumers’ knowledge of these brands. The country of origin can be an important driver of interest toward the brand, which may enhance brand recall and recognition. Thus, we hypothesize:

H2b

Country of brand origin has a positive influence on brand awareness.

Country of origin influences consumers’ perception of quality of products (e.g., Heslop et al. 1987; Kaynak and Cavusgil 1983). Chinese consumers favor Western brands because they believe they have high standards of quality. This perception is due to frequent product safety issues which, together with lax government supervision, have pushed Chinese consumers away from certain domestic products. Chinese consumers have typically been wary about items manufactured in their home country; as a consequence, many Chinese consumers are willing to pay a premium for foreign brands to ensure quality (e.g., infant formula). Therefore, the foreign country of origin of a brand influences Chinese consumers’ perception of quality.

H2c

Country of brand origin has a positive influence on perceived quality.

Brand names, especially foreign brand names, are appealing to the Chinese for the status that these brands provide to the consumer (Lai and Zaichkowsky 1999). In this study we argue that the foreign country of origin of a brand will impact the capacity of the brand to enhance Chinese consumers’ mianzi, namely their social status and make them feel proud and honored. Thus, we hypothesize:

H2d

Country of brand origin has a positive influence on brand mianzi.

Brand loyalty

Brand loyalty is another component of the CBBE model (Aaker 1991; Keller 1993), and it is defined as “a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future, despite situational influences and marketing efforts having potential to cause switching behavior” (Oliver 1997).

Loyalty is mainly derived from a positive evaluation of the brand image and from previous experiences. Loyal consumers are willing to pay a higher price and will first choose the brand which they are loyal to, and they will not consider buying a competing brand if their favorite brand is available at the store (Beatty et al. 1988). Many researchers (e.g., Yasin et al. 2007; Yoo et al. 2000) have stressed the importance of brand loyalty in the formation of brand equity; in Yoo et al. (2000) and in Yasin et al. (2007) research brand loyalty resulted to be the dimension which contributed the most to establishing brand equity. Chinese consumers tend to be more brand loyal than Western consumers (Yau 1988); thus, we expect that loyalty to a smartphone brand is positively related to brand equity.

H3

Brand loyalty has a positive influence on brand equity.

Brand awareness

Brand awareness refers to an assessment of a consumer’s capability to recognize or recall a brand or logo from memory among other competing brands (Keller 1993) or as a member of a certain product category or service (Aaker 1991). Rossiter and Percy (1987) related it to the strength of the brand node in memory, as reflected by consumers’ ability to identify the brand under different conditions. Keller (1993) and Yoo and Donthu (2001) suggest that brand recognition and brand recall are the most important dimensions to measure brand awareness.

Scholars in marketing have found that brand with high awareness is more likely to enter into the consumer’s consideration set of brands for possible purchases (Nedungadi 1990) and have proved the impact of brand awareness on brand equity (Park and Srinivasan 1994; Srinivasan et al. 2005). Tolba and Hassan (2009) found that the dimension of brand equity which had the highest correlation with repurchase intention was brand awareness when they researched the US automotive market.

However, Yasin et al.’s (2007) study on electrical appliances in Malaysia found that brand awareness contributes least to brand equity, which is in line with the findings of Kim et al. (2003) for luxury hotels. Although in both studies brand awareness positively influenced the formation of brand equity, Tong and Hawley (2009) found that brand awareness did not contribute to brand equity for branded sportswear goods in China. In this study we hypothesize that brand awareness contributes to establishing brand equity. The more consumers can recall a smartphone brand from memory, the higher will be the equity of the brand. So our hypothesis is:

H4

Brand awareness has a positive influence on brand equity.

Perceived brand quality

Perceived quality is generally defined as “the customer’s judgment of the overall excellence, esteem, or superiority of a brand (with respect to its intended purposes) relative to alternative brand(s)” (Netemeyer et al. 2004). According to Aaker (1991), perceived quality has a lot of advantages for consumers and firms; firstly, it gives consumers a good reason to buy the brand; secondly, it contributes to increase the differentiation of the brand with other competing brands; thirdly, it helps firms to charge a premium price; fourthly, it enables brand extension. Personal product experiences, unique needs, and consumption situations may influence the consumer’s subjective judgment of quality (Yoo et al. 2000). Therefore, high perceived quality would drive a consumer to choose a specific brand rather than other competing brands. Previous studies found support for the relationship between perceived quality and brand equity (Yoo and Donthu 2001; Yoo et al. 2000), while Kim et al. (2003) found that the perceived quality of hotels is the dimension of brand equity which contributes the most to the formation of brand equity. In contrast with these findings, Tong and Hawley (2009) found that perceived quality did not have a direct significant influence on brand equity in the sportswear industry in China. In this study we believe that the perceived quality of a smartphone brand will affect brand equity. For instance, smartphone brand’s quality will be judged based in terms of its features such as durability, resistance, performance, and safety. The higher consumer overall evaluation of the quality of a smartphone brand, the higher will be the brand’s equity. Thus, we hypothesize:

H5

Perceived quality has a positive influence on brand equity.

Brand mianzi

Mianzi or Face is a concept that is peculiar to Chinese culture and implies consciousness of glory and shame, and it represents the individual’s reputation and social position in others’ eyes (Hu 1944). Mianzi stands for “the kind of prestige that is emphasized…a reputation achieved through getting on in life, through success and ostentation”, while face is “the respect of a group for a man with a good moral reputation: the man who will fulfill his obligations regardless of the hardships involved, who under all circumstances shows himself a decent human being” (Hu 1944). On the one hand, Chinese consumers try to increase or maintain their reputation (mianzi) in front of socially and culturally significant others; on the other hand, they try to defend or save face (Bao et al. 2003).

The findings from the qualitative study highlight that the capacity of a brand to enhance Chinese consumers’ mianzi is not only important to improve the consumer’s reputation in front of significant others, but rather it is also associated with feelings of dignity, honor, and pride. Briefly, Chinese consumers may add value to a brand name because of its capacity to enable them to gain mianzi, namely to make them feel special and be accepted and recognized by others, hence the construct of brand mianzi. Some brands may thus foster feelings of pride and vanity in Chinese consumers and leads them to believe that they can enhance their social position. If a brand can enable an individual to achieve such goals in life, its brand equity will be very high.

H6

Brand Mianzi has a positive influence on brand equity.

Finally, scholars have demonstrated the role of brand equity on purchase intention in different studies (Cobb-Walgren et al. 1995; Kim and Ko 2012). Thus, following this literature we argue that the higher the equity of a brand the more consumers will want to purchase that brand. Thus, we hypothesize as follows:

H7

Brand equity has a positive influence on purchase intention.

Figure 1 summarizes the conceptual framework with hypotheses.

Fig. 1
figure 1

Theoretical framework

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Methodology

Study 1

Qualitative study

The research approach adopted in this study is a sequential exploratory mixed-method design, moving from qualitative to quantitative methods (Creswell 2014). In more details, the methods are a combination of in-depth interviews and survey as this integration is expected to provide a holistic view about Chinese consumers’ culture and smartphone brands (Mertens 2012). The focus was upon gathering qualitative data first and then testing in a larger scale the findings by collecting quantitative data. The current piece relies on a positivist and pragmatic viewpoint, as it often happens to mixed-method studies (Giddings 2016). The sequential exploratory mixed methods research design starts from interviews with participants and not by creating hypotheses (Onwuegbuzie and Johnson 2006).

The in-depth interview method was adopted as it can yield a deeper understanding of the participants’ perceptions about smartphone brands and how the value added provided by these (Creswell 2014). This method will further shed light on consumers’ underlying motives, perceptions, experiences, and attitudes toward smartphone brands.

This study focuses on young Chinese early adopters and particularly Chinese students of a British University. We chose this sample group because university students are considered as early adopters of mobile phones and the relevance of young consumers as a target segment in the smartphone sector is highlighted in the literature (Vishwanath and Goldhaber 2003; Wilska 2003). In order to take into account the potential influence of smartphone price and income levels on consumers’ decision making (Karjaluoto et al. 2005), participants with families having different levels of income were contacted, and an equal distribution of female and male participants to control for gender bias (14 females vs. 16 males).

In total, 30 face-to-face interviews were conducted over a 6-month period. Most of the themes emerged in the first 24 interviews, and thus, the number of interviews conducted was judged as sufficient for reaching theoretical saturation (Strauss and Corbin 1998). Interview questions primarily explored experience and use of smartphone, purchase decision, meanings attached to the brand, and repurchase intentions. The semi-structured interviews lasted from 40 to 55 min and were recorded digitally, transcribed, and translated into English by one research assistant who is a native Chinese speaker. The participants’ profile is displayed in Table 1.

Table 1 Profile of interviewees
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With regard to the emergence of the themes, Table 2 shows the quotes of participants and the meanings associated with the emerging concepts of brand mianzi and brand popularity. With regard to the concept of brand mianzi, participants emphasized how some smartphone brands enabled them to gain mianzi, namely to make them feel proud, special, confident in front of others, and more easily accepted in relevant reference groups. Thus, it is evident that in Chinese culture some smartphone brands had the capacity to convey a high mianzi to its owners. With regard to the theme of popularity, participants underlined how some smartphone brands are more popular than others and that if many people are purchasing and using a specific brand, other people will think that brand must be of high quality and will purchase it. In particular, it was evident that Chinese people attach much importance to the overall number of people that are using a brand in the society or a social group, hence its popularity in the market or in the reference groups. These themes were confronted with existing academic literature. Hence, the analysis moved back and forth between theories and data.

Table 2 Results: Qualitative analysis
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Following the interviews new constructs emerged, namely brand mianzi (6 items) and brand popularity (4 items). These constructs were developed following Churchill’s (1979) approach to scale development; accordingly, interviews were used to derive the items for brand mianzi (6 items) and brand popularity (4 items). The items created were subsequently tested with experts, namely two experienced academics with PhDs in marketing and information systems.

Study 2

Questionnaire development, pilot test, measures, sample selection

The questionnaire was pilot-tested with a sample of 117 respondents, including Chinese undergraduate and postgraduate students. This pilot test was particularly important to refine the new scales that were developed for this study. As a result of the pilot test, some items were rephrased and others were dropped.

Following the pilot study, the data were tested for reliability as well as convergent and discriminant validity, testing Cronbach alpha, item to total correlations, exploratory factor analysis using Varimax rotation, as recommended by Anderson and Gerbing (1988).

The exploratory factor analysis removed items that had factor loadings below 0.50, high cross-loadings above 0.40, and commonalities lower than 0.30. Cronbach’s alpha values for the scales developed which loaded below the threshold of 0.70 were also removed (Bagozzi and Yi 1988). In total, two items were removed. The table including the constructs and all the items used in the study can be observed in Appendix 1.

The questionnaire was divided into two parts and was preceded by an introduction that explained the purpose of the study and ensured the confidentiality of the responses provided. The first contained the key constructs of the study, while in the second part respondents have to indicate their sociodemographic details. The questionnaire adopted a 7-point Likert scale, where 1 indicates strongly disagree, 4 indicates neither agree nor disagree, and 7 indicates strongly agree.

Constructs from existing studies were adopted wherever possible. Perceived quality and brand equity were measured with items used by Yoo and Donthu (2001). Purchase intention was adapted from Dodds et al. (1991) (4 items). This study targets young Chinese consumers owning a smartphone brand. The rationale for focusing on young consumers of smartphone lies in the fact that the importance of young people as a target group in the mobile phone industry is widely acknowledged. Nokia, for instance, first tested new innovations such as the digital camera among young customers (Wilska 2003). We choose to focus on China because it is the biggest country for smartphone sales and expected growth (Reuters 2015) and no study has investigated Chinese consumers’ repurchase intention of smartphone brands. Thus, a prerequisite to participate in the survey was to be in the age-range 18–25.

Following the backward translation method, the questionnaire was created in English and then translated into Chinese (Mandarin) by a Chinese native speaker with English proficiency. Subsequently, the questionnaire was retranslated in English by another bilingual Chinese speaker. No differences were found between the first and the last versions of the questionnaire.

Data collection and profile of respondents

An online questionnaire was created and hosted on the professional online survey website Sojump (www.sojump.com), which is very popular in China. The link to the questionnaire hyperlink was sent to smartphone users through some popular smartphone online forums, such as cnmo.com, which is the largest integrated smartphone forum in China, and imobile.com.cn which is the largest smartphone website in China, gfan.com, which is the largest Android smartphone online forum in China, and weiphone.com, which is the largest iOS online forum in China. After a period of 1 month, a total of 357 questionnaires were collected; however, 36 questionnaires were removed from the dataset because not being filled properly or due to missing data, which gives 321 usable questionnaires.

Table 3 provides information about the profile of the respondents to the survey. All respondents were comprised between 18 and 25 years old, and 64% are female while 36% were males and mostly in higher education. Their family monthly incomes were well spread across different income levels.

Table 3 Profile of respondents
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Data analysis

Partial least squares structural equation modeling (PLS-SEM) was applied to estimate the model. PLS-SEM is a suitable technique for prediction-oriented research (Henseler et al. 2009), because its objective is to maximize the explained variance of the dependent constructs (Hair et al. 2011). Moreover, PLS-SEM has the advantage of not holding the distributional assumption of normality, making less demand on measurement scales, being able to work with much smaller as well as much larger samples (Hair et al. 2011). The software application used in this study is SmartPLS 3.0.

Results

Measurement model evaluation

To assess convergent validity, analysis determined that each indicator loaded significantly on the constructs they were intended to represent. As shown in Table 4, all the constructs’ average variance extracted (AVE) values are well above the minimum threshold of 0.5 (Henseler et al. 2009). Also, all the indicators exhibit significant standardized loadings above 0.7 (p < 0.001, Table 3), demonstrating construct item reliability (construct item loadings in Table 3). Similarly, the model constructs attained high Cronbach’s alpha (α) and composite reliability (ρ) values greater than 0.9, implying satisfactory internal consistency. All items loaded higher on their own construct than any other ones, demonstrating good discriminant validity. The Fornell and Larcker (1981) criterion was applied for discriminant validity test. The results are shown in Table 5, which shows that the square root of each construct’s AVE was greater than its correlation with each of the remaining constructs, indicating that the constructs exhibit discriminant validity.

Table 4 Convergence validity and cross-loadings
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Table 5 Fornell and Larcker’s test
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All of the constructs measures in this study were based on a single source, the questionnaire survey. As such, there might be common method biases. Following Kock’s (2015) recommendation, we conducted a full collinearity assessment. As shown in Table 6, the results of our test show that most of our inter-construct variance inflation factors (VIFs) are smaller than 5, with the exception of only three of them which are just about 5. The rule of thumb is that a VIF of 1 indicates no correlation, 1–5 moderate correlation, and above 5 high correlation. Thus, overall the common method bias is not a major issue of concern in our model.

Table 6 Results of common method bias analysis (Inter-factor VIFs)
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Structural model evaluation

In PLS-SEM, the central criterion for the evaluation of the structural model is the variance explained (R2). R2 values of 0.19, 0.33 or 0.67 for endogenous latent constructs of the structural model are described as weak, moderate or substantial (Chin 1998). As shown in Table 4, the model explains 67.7% of the variance in brand equity and 53.7% of variance in purchase intention, showing substantial and moderate explanatory power; and R2 values for the remaining endogenous latent constructs (i.e., brand loyalty, brand awareness, perceived quality, and mianzi) are above 0.33, which are at moderate level (Chin 1998).

To assess the predictive validity of the structural model, the Stone–Geisser’s Q2 test (Geisser 1974; Stone 1974) was applied. We used the blindfolding procedure to compute the cross-validated redundancy measure Q2. Values of Q2 greater than zero suggest that the exogenous constructs have predictive relevance (Chin 1998). As shown in Table 7, all Q2 values range significantly above zero, thus demonstrating the model’s high predictive power.

Table 7 Explained variance (R2) and the prediction relevance (Q2) test
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In running the bootstrap analysis, we followed the procedure suggested by Hair et al. (2011), using 5000 subsamples. An examination of the estimates of path coefficients and t values indicated that all the hypothesized relationships were statistically significant (Table 8 and Fig. 2).

Table 8 Hypotheses’ test results
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Fig. 2
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The structural model results. **Significant at p < 0.01, ***significant at p < 0.001

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The results show that brand popularity had positive and significant effects on brand loyalty (H1a), brand awareness (H1b), perceived quality (H1c), and brand mianzi (H1d). The results also show country of origin image had positive and significant effects on brand loyalty (H2a), brand awareness (H2b), perceived quality (H2c), and brand mianzi (H2d).

As hypothesized, it was found that brand loyalty (H3), brand awareness (H4), perceived quality (H5), and brand mianzi (H6) had positive and significant effects on brand equity. The effect of brand mianzi was stronger than that of brand awareness and perceived quality. Finally, also as can be expected, the results show that brand equity has a strong effect on purchase intention, supporting H7.

Mediation test

We tested whether the four determinants of brand equity in our study (brand loyalty, brand awareness, perceived quality, and brand mianzi) performed a mediating role on the relationship between brand popularity and brand equity, and between country of origin and brand equity. We used the bootstrapping procedure as suggested by Zhao et al. (2010), and the results are shown in Table 9. According to Hair et al. (2010), a mediation effect can be established if the indirect effect is significant. Only one indirect effect was insignificant, which is on the path of “brand popularity → brand awareness → brand equity” and the 95% confidence interval includes zero (− 0.346, 0.438); all the remaining 7 indirect effects were significant, with a 95% confidence interval excluding zero. Thus, we can conclude that both the effects of brand popularity and country of origin on overall brand equity were mediated through the four brand equity determinants.

Table 9 Mediation test results
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Discussion

Both researchers and managers at MNCs face a challenge in applying Western-derived theory in China where rapid economic growth, social transition, and a unique culture shape consumer behavior (Heinberg et al. 2017; Leung 2008; Sharma 2010; Stallkamp et al. 2017). In particular, each of the time scholars has attempted to develop a CBBE framework, and they took an etic approach, namely advocate the advantages of examining differences by using previously established universally valid brand equity measurement (although most studies are based in one country only) (Maheswaran and Shavitt 2000). This study adopts an emic approach, suggesting that brand equity frameworks should be adapted to the country’s culture (Maheswaran and Shavitt 2000). In this study we investigated how Chinese consumers make sense of brand equity and we developed some specific measures that suit the Chinese context (i.e., brand mianzi, brand popularity). We proposed that the newly developed brand equity “culturally contextualized” (Eckhardt and Houston 2002) dimensions that explain brand equity in China better than the traditional brand equity dimensions.

Theoretical implications

Findings show that brand mianzi, a construct that we derived from interview findings, namely the perceived capacity of a brand to enhance an individual social reputation but also to provide him/her with positive feelings of dignity, honor, and pride, is a very important determinant of brand equity in China. Brand mianzi was actually the second strongest determinant of brand equity after brand loyalty, and this result underlines how cultural values are important influencers of people perception of brands value. This result shows that in China brand mianzi is much more important than perceived quality or brand awareness in influencing people evaluation of the added value of brands.

This study also underlines the importance of brand popularity (another concept derived from interviews) in Chinese society, namely the degree to which a brand is popular/spread in society. Brand popularity was found to be a significant predictor of all of the determinants of brand equity (brand awareness, perceived quality, and brand loyalty). This may appear in contrast with Whang et al. (2015) who have found that for Chinese consumers brand popularity is not a predictor of perceived quality. However, it has to be noticed that this result is influenced by the method employed by the authors who have used a ranking of brands as a cue for brand popularity. However, as highlighted by the authors themselves, Chinese do not trust this kind of enterprise information and therefore this has influenced the result. Therefore, we can imply here that the kind of brand popularity we refer to is different in that it is inferred by consumers through their direct observation of other consumers’ buying behaviors rather than by indirect cues such as official information released by companies. The influence of brand popularity on brand equity is peculiar to Chinese culture, because when a reference group establishes a brand or product as the normative standard, all other people will be less likely to deviate from the norm and they would prefer to conform to the group’s decision (Yau 1988) and buy the same brand. While in individualist countries consumers attempt to establish a unique personality and image that may deviate from the masses, in collectivist countries consumers tend to conform and adopt the brands that are more diffused and popular in society. The more a brand becomes diffused and popular the more other people would want to buy the same product or brand. Chinese consumers often endeavor to conform to group norms and therefore tend to purchase the same brand or product other members of the group recommend or buy. Findings show that if a brand is popular, it is also more easily to be recalled and recognized (brand awareness), is perceived to be of high quality, and also affects brand loyalty and brand mianzi.

This study also underlines the importance of country of origin as an influencer of the sources of brand equity. This finding supports the results of Yasin et al.’s (2007) study on electrical appliances; however, we also found that country of origin predicts brand mianzi and perceived quality (not tested in previous studies), which advances the literature on country of origin’s effect.

The findings further indicate that both the effects of brand popularity and country of origin on overall brand equity were mediated through brand loyalty, brand mianzi, perceived quality, and brand awareness. As mentioned above, brand loyalty resulted to be the strongest determinant of brand equity, which supports previous findings (Yasin et al. 2007; Yau 1988). This result stresses the importance of loyalty, which can be explained by the fact that Chinese consumers tend to be more brand loyal than Western consumers (Yau 1988). Beyond the fact that some consumers are loyal to the brand we should add that for smartphones they may also be locked into a specific operating systems, which makes it difficult to switch to another one because of the amount of time and effort that would be needed to learn the new operating system. Future research could investigate the importance of switching cost in the decision to remain loyal to a particular smartphone operating system.

We found that brand awareness was the determinant with the least predicting power of the dependent variable. This finding is in line with Yasin et al. (2007) and Kim et al.’s (2003) researches. Consumers in China are becoming more and more knowledgeable of brands and they clearly recall and recognize most of them but this is not a particularly important aspect for them to assess their value. The perceived added value of the brand is more socially derived, and it stems from the widespread use of the brand in the reference group of a consumer or in society (brand popularity). What matters the most in Chinese society is the capacity of the brand to provide mianzi, honor and positive feelings (esteem) to his owner. This finding appears particularly relevant in that traditional customer-based brand equity models have all based the construction of brand equity on the preliminary achievement of brand awareness, which is an individual psychological measure of brand knowledge. Our study, however, suggests that in the context of collectivist cultures, such as in China, brand popularity would represent a better measure of preliminary brand knowledge to build brand equity: indeed brand popularity represents a measure more adapt to these cultural contexts, since it encapsulates a social dimension and comparison with others. Future studies could draw on this suggestion to propose new culture-related theoretical models of consumer-based brand equity.

Finally, we found that brand equity influences purchase intention, which is in line with previous studies’ findings (Cobb-Walgren et al. 1995; Kim and Ko 2012). Thus, the stronger the added value provided by the name of the brand to a smartphone, the higher will be consumers’ willingness to buy it.

Managerial implications

Some important managerial implications can be drawn from this study’s findings. First, findings of this study can be particularly important for smartphone companies operating in China. For example, it is evident that a socially accepted and highly reputed smartphone brand can be particularly important to keep customers loyal and gain market share. If young Chinese people observe that people in their reference group are buying the same brand, which is considered the source of social benefits—such as prestige and a signal of social status—they would not want to miss out and so they will be buying the same smartphone brand even if they may not need it. In this sense, technological products are not only evaluated for their technical performance or usefulness, but rather for the social image that they can project to important others. Thus, technological products that are conspicuously consumed, such as smartphone brands, not only serve and satisfy functional needs (e.g., making a telephone call or browsing the internet) but increasingly social image and status needs (communicating status and improving self-esteem through an improved social image). Accordingly, technology manufacturers whose products are conspicuously consumed must take into account these needs and provide products that are perceived as stylish and fashionable so that young Chinese consumers would want to buy them. A conspicuously consumed technological product should be thought as a fashion accessory, similarly to a Gucci or a Louis Vuitton purse. Thus, more effort should be spent by technological companies in communicating the lifestyle of smartphone brand owners and the status benefits it provides rather concentrating only on the technological functions and features (like they have done in the past). To achieve those goals, more money should be invested in local celebrity endorsements through Chinese social media, where nowadays the younger population search for information on brands. Additionally, some smartphone brands could partner with popular fashion designers or fashion brands to develop aesthetic features inspired by a collection or a fashion style (e.g., Burberry). Moreover, social media and micro-bloggers may be used to increase the perception of brand popularity and therefore to enhance the value that consumers attribute to the brand.

Additionally, the country of origin seems to be a very important determinant of brand equity in this study. Chinese consumers have positive perceptions of products and brands originating from foreign countries, especially Western countries. Therefore, we recommend companies to exploit this strength and communicate more clearly the origin of their brand. Moreover, seen the importance of the social dimension of consumption for Chinese consumers, another suggestion derived from this study is that the country of origin of the brand can be expressed showing the popularity of certain foreign brands in China through messages such as ‘Chinese’s favorite European brand’ which may additionally affect consumers’ positive perceptions coupling the effects of the country of origin and of the brand popularity. We also recommend brands to carefully select the countries in which their products are produced as scholars suggest that consumers develop stereotypical perceptions on products based on the country of origin. It is important to mention that some smartphone companies are designed in a country but manufactured in a different one, which is the case of Apple that is designed in USA and manufactured in China. Although we did not investigate the influence of country of manufacturing in this study, in order to not create confusion in customers’ eyes, it would be probably better to manufacture the product in the same country in which the company originates unless consumers have negative perceptions about the quality of manufacturing in that country. Thus, countries perceived as highly advanced from a technological standpoint (e.g., Germany, South Korea, Japan, USA) (FutureBrand 2014) should be chosen for both the design and manufacturing of high quality and expensive technological products such as smartphone brands.

Limitations and future research

Although this can be considered the first of a sequence of studies that will research the importance of culturally specific CBBE measures, this study is not extent from limitations. First, we have tested our model in China. Future studies could test the same model in other countries that share cultural similarities with China (e.g., Confucianism). With this study we did not aim to develop a universally valid brand equity measurement, rather we stress that cultural specificities can inform the development of brand equity dimensions. Accordingly, we view measures of CBBE as country-specific, which can be bound to a particular culture or country.

Further studies may explore more in detail the connection between country of origin and cultural idiosyncratic dimensions of brand equity across countries as a way to explore different motives for foreign product preferences in Eastern countries. Moreover, deeper examinations could be developed on the relation between brand identity leverage on country of origin (Aaker 2012; Kapferer 2012) and the effect on consumers’ brand equity perceptions.

Additionally, following the prevalent trend in marketing studies, we have adopted a consumer-based approach. However, it would be worth investigating in future research the relation between Chinese consumers’ perceptions and the specific brand identity building processes adopted by companies in this country.

Moreover, in this study we have focused on one product category only, smartphones. Future research should also test our model with other products (e.g., car brands) and technologies (e.g., smartwatches, photo cameras, and so on). If we consider that brand mianzi is linked with appearance and image, we can argue that its influence could be even higher for less complex and more conspicuously consumed products like clothing, cars, and watches. Thus, future research could also investigate the difference between different product types.

Additionally, most of the participants in this study were young consumers and owned popular smartphone brands (e.g., Apple, Samsung). People in different age groups and owning a less popular smartphone brand might use a different set of criteria when they have to choose among different smartphone brands, such as usefulness or product’s performance.

Finally, research could test our model in the service sector. Services are intangible and non-visible; for instance, education is a service. Western universities are very popular in China and many Chinese families are increasingly sending their kids in British and American universities to study for their degree. Some Western Universities can be considered as brands that can increase the student as well as the family’s mianzi in front of others although education is not a material possession like a smartphone brand.