An Examination of Brand Sensitivity in Organizational Buying Framework: A Case Study of Khyber Pakhtunkhwa (Pakistan)

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1 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS An Examination of Brand Sensitivity in Organizational Buying Framework: A Case Study of Khyber Pakhtunkhwa (Pakistan) *Amanullah Khan, *Dr. Sher Kamal, **Jamshed Raza, *Asfandyar khan, ***Irfanullah * Gomal University, D.I.Khan. ** GCMS, Karak *** GCMS, Kohat Abstract: he study aim is to ascertain branding in organizational buying setup developing a model that posits the conditions that are likely to increase or decrease firm s brand sensitivity when deciding on suppliers. Data was collected through self-administered questionnaires and analyzed through Regression analysis. Results revealed that purchase situation variables i.e. complexity and importance positively affect organization s brand sensitivity level. Results suggest that organizational buyers are likely to benefit from positive brand cues where they have difficulty in defining, formulating, or mentally grasping the product under evaluation and when they have high quality relationships with their vendors. Keywords: Examination ; Brand Sensitivity ; Organizational Buying Framework; Case Study of Khyber Pakhtunkhwa (Pakistan) INRODUCION: Branding in consumer perspective has a rich literature with few exceptions and it has been mostly ignored as important area of focus by Business to business academics (Kim, Reid, and Dahlstrom, 1998). he division between industrial marketing and consumer marketing has been well documented including differences among product and market variables and differences in the decision-making processes (de Chernatony, and McDonald, 1998; Johnston, and Bonoma, 1981; Johnston, and Lewin, 1994). Fern and Brown stated that the discussion regarding assumptions of a chasm between business and consumer marketing claims that the dichotomy is neither based on theory nor empirical support. hey further suggested that the implication of such an argument include the establishment of artificial intra disciplinary boundaries which inhibit the development of marketing theory (Fern, and Brown, 1984). Yet much has to be done in B2B perspective because of business markets uniqueness and lack of branding understanding and its role. Brands play an interesting role in industrial settings resulted from recent conceptual and empirical studies (Bendixen, Bukasa, and Abratt, 2004; McQuiston, 2004; Mudambi, 2002). herefore it is upto academic researchers to address questions like: what branding means in a B2B versus B2C context? In what ways does branding differs between the two? How can business marketers make effective use of branding? In what conditions brand matters and how branding principles can be applied effectively? PROBLEM SAEMEN B2B marketing practitioners are more and more relying on branding strategies though their use has been limited to consumer markets, since educational researchers have been slow in studying branding in organizational contexts, so the problem in focus will be: the examination of branding in organizational contexts versus consumer contexts by developing and testing a conceptual model. COPY RIGH 2012 Institute of Interdisciplinary Business Research 827

2 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS OBJECIVES OF HE SUDY he thesis aim is to study brand sensitivity in organization s buying situations with respect to Khyber Pakhtunkhwa. he intention is: 1. o study the effect of procedural control on brand 2. o examine the impact of purchase importance on buying center s level of brand 3. o check the impact of purchase complexity on buying center s level of brand 4. o check the influence of departmental objectives on buying center s level of brand 5. o examine the impact of buyer-seller relationships on organization s level of brand 6. o check the effect of perceived quality intangibility on organization s level of brand 7. o study the impact of individual risk attitude on organization s level of brand RESEARCH HYPOHESIS Keeping in view the problem statement and research objectives, the hypothesis/questions for this study will be: H1.A buying center s level of procedural control will directly impact its level of brand More specifically, procedural control will have a negative affect on brand sensitive. H2.Departmental objectives will directly influence a buying center s level of brand More specifically, dominant functional areas that are quality oriented will be more brand sensitive than dominant functional areas that are cost-oriented. H3.High levels of purchase importance will positively impact a buying center s level of brand H4.High levels of purchase complexity will positively impact a buying center s level of brand H5.Buyer-seller relationships that are high in quality will negatively impact an organization s level of brand H6.Higher levels of perceived product intangibility will positively impact an organization s level of brand H7.Individual risk attitude will moderate an organization s level of brand More specifically, individual risk aversion will strengthen the relationship between buying center, purchase situation, and product/relationship variables and an organization s level of brand APPROACH A survey based questionnaire was used for data collection on this topic. he methodology for survey was tested on buying center members (purchase managers/officers) to explore different facets of organizational buying behavior based on their expertise and experience in B2B perspective. POPULAION AND SAMPLING he population of the research study consists of 1302 businesses / enterprises working in different sectors of Peshawar (KPK) registered with SCCI a. A random sample of 90 buying a Sarhad chamber of commerce and industry COPY RIGH 2012 Institute of Interdisciplinary Business Research 828

3 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS center members including purchasing agents (male & female) that play an influential role in purchase decisions to investigate various aspects of organizational buying behavior because of their knowledge and distinctive expertise. he inclusion of other buying center members provided a more complete assessment of organizational buying. Pilot study (n) N SD 2 SE(E) = / n E 2 Z@5% Computed Sample Sizes Peshawar = Formula used [ 2 /((E 2 /Z 2 )+( 2 /N))] EXRACED VARIABLES he following variables were acknowledged from the literature review: Brand sensitivity is identified as dependent variable which is affected by three categories of variables: buying center, purchase situation, and product/relationship. Each of these variables is proposed to be moderated by a buying center member s individual risk attitude. HEOREICAL FRAMEWORK he variables of interest in this study are: buying center, purchase situation, product/relationship, brand sensitivity, and individual risk attitude. In particular the buying center variables are procedural control and departmental objectives, the purchase situation variables are purchase importance and complexity, and the product/relationship variables are relationship quality and intangibility. In this study seven point Liker-type scale is being used. Figure 1: identifying the key variables and a theoretical framework Independent Variables Procedural control, purchase importance, product intangibility Individual Risk Attitude Moderating Variables Dependent Variables Brand Sensitivity DAA COLLECION Quantitative data was collected through a self-administered questionnaire. Data on brand sensitivity was collected by using mixed method procedures i.e. quantitative and qualitative methods. he sources used for collecting secondary-data & primary-data were: printedmaterials & books; journals & newspapers; magazines & catalogues; field-studies & interviews. COPY RIGH 2012 Institute of Interdisciplinary Business Research 829

4 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS FINDINGS OF HE SUDY 4.1 ANALYSIS OF HYPOHESIS Regression Analysis In order to check the sensitivity level of business organisations with respect to purchasing brands in the province of Khyber Pakhtunkhwa (Pakistan) regression analysis was used. he intention in this study was to check the association between dependent variable (brand sensitivity) and independent variables (buying center, purchase situation and relationship quality and intangibility) with moderating effect of individual risk attitude (ABLE 1-12). ABLE-1 Procedural Control vs. Brand Sensitivity Unstandardized 1 (Constant) Procedural Control Organisations having brand sensitivity distinctiveness do not significantly practiced procedural control variable at level (0.05) with R 2 -value (0.005), b-value (0.074) and t-value (0.695). Hence Hypothesis-1 (H1) is not supported. Implying that buying center level of procedural control has an indirect impact on brand sensitivity hence carries a positive effect. ABLE-2 Department Objectives vs. Brand Sensitivity a Unstandardized 1 (Constant) Department Objectives Organisations having brand sensitivity features do not significantly accomplished Department Objectives at level (0.05) with R 2 -value (0.003), b-value (0.056) and t-value (0.528). herefore hypotheses-2 is not supported, implying that the departmental objectives has indirectly manipulated the buying centers level of brand ABLE-3 Importance vs. Brand Sensitivity a Unstandardized 1 (Constant) Importance COPY RIGH 2012 Institute of Interdisciplinary Business Research 830

5 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS Organisations with brand sensitivity attributes significantly carried out importance at level (0.05) with R 2 -(0.044), b-value (-0.211) and t-value (-2.022). So hypothesis-3 (H3) is supported. And hence purchase importance has positive effect on brand sensitivity level. ABLE-4 Complexity vs. Brand Sensitivity a Unstandardized 1 (Constant) Complexity Organisations with brand sensitivity characteristics significantly performed Complexity at level (0.05) with R 2- value (0.043), b-value (-0.207) and t-value (-1.980). herefore hypothesis-4 (H4) is supported. And as a result purchase complexity shows positive impact on brand ABLE-5 Commitment, rust and Satisfaction vs. Brand Sensitivity a Unstandardized 1 (Constant) rust Satisfaction Commitment Organisations with brand sensitivity characteristics do not significantly performed Relationship Qaulity at level (0.05) at all. rust variable at significance level (0.514) with R 2 - value (0.072), b-value (-0.069) & t-value (-0.655). Satisfaction variable at significance level (0.022), significantly implies with dependent variable, with b-value (-0.247) and t-value ( ). Like trust, commitment fraction of the relationship quality does not significantly practice the dependent variable with b-value (0.062), t-value (0.580) and significance level (0.564). So hypothesis 5 is not supported suggesting that relationship quality has a negative effect on brand ABLE-6 Intangibility vs. Brand Sensitivity a Unstandardized 1 (Constant) Intangibility COPY RIGH 2012 Institute of Interdisciplinary Business Research 831

6 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS a Unstandardized 1 (Constant) Intangibility Organisations with brand sensitivity characteristics do not significantly performed intangibility at level (0.05) with R 2 -value (0.014), b-value (0.117) and t-value (1.105). herefore hypothesis 6 (H6) is not supported. So product intangibility shows a negative impact on brand ABLE-7 Individual Risk and Procedural Control vs. Brand Sensitivity a Unstandardized 1 (Constant) Procedural Control Individual Risk Organisations with brand sensitivity characteristics observed no significant influence on procedural control accompanied by individual risk indicated with R 2 value (0.011), b-values (0.070) & (0.078) and t-values (0.653) & (0.727) respectively. So as a result procedural control fraction regarding hypothesis 7 with intervening effect of individual risk is not supported. ABLE-8 Individual Risk and Department Objectives vs. Brand Sensitivity a Unstandardized 1 (Constant) Department Objectives Individual Risk hose organisations having brand sensitivity characteristics observed no significant influence on Departmental Objectives and individual risk indicated by R 2 -values (0.011), b-values (0.063) & (0.078) and t-values (0.591) & (0.087) respectively. Hence as a result departmental objective regarding hypothesis 7 with moderating effect of individual risk is not substantiated. COPY RIGH 2012 Institute of Interdisciplinary Business Research 832

7 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS ABLE-9 Individual Risk and Importance vs. Brand Sensitivity a Unstandardized 1 (Constant) Importance Individual Risk Organisations with brand sensitivity characteristics observed significant influence on importance at level (0.05) with R 2 -value (0.059), b-value ( 0.232) and t-value (0.031). Organisations having brand sensitivity characteristics observed no significant influence on individual risk at level (0.05) with R 2 -value (0.059), b-value (0.121) and t-value (1.148). And as a result importance fraction regarding hypothesis-7 (H7) with mediating effect of individual risk is not supported. ABLE-10 Individual Risk and Complexity vs. Brand Sensitivity a Unstandardized 1 (Constant) Complexity Individual Risk Organisations with brand sensitivity characteristics observed significant influence on Complexity and individual risk indicated by R 2 -values (0.046), b-values (-0.200) & (0.062) and t-values (-1.906) & (0.588) respectively. And as a result complexity fraction regarding hypothesis-7 with intervening effect of individual risk is not supported. ABLE-11 Individual Risk, Commitment, rust and Satisfaction vs. Brand Sensitivity a Unstandardized 1 (Constant) rust Satisfaction Commitment Individual Risk COPY RIGH 2012 Institute of Interdisciplinary Business Research 833

8 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS Organisations with characteristics of brand sensitivity do not significantly performed Relationship Quality at level (0.05) at all. rust variable at level (0.481) don t perform significantly with R 2 -value (0.077), b-value (-0.075) and t-value (-0.707), whereas satisfaction variable at level (0.024) perform significantly with dependent variable, with b- value (-0.245) and t-value (-2.306). Like trust, commitment fraction of the relationship quality does not significantly practice the dependent variable with b-value (0.056), t-value (0.520) and at significance level (0.604). Like wise individual risk do not practice significantly with b-value (0.073), t-value (0.693) and significant level (0.490). As a result quality fraction regarding hypothesis-7 (H7) with mediating effect of individual risk is not supported. ABLE-12 Individual Risk and Intangibility vs. Brand Sensitivity a Unstandardized 1 (Constant) Intangibility Individual Risk Organisations with brand sensitivity characteristics observed no significant influence on Intangibility and individual risk indicated by R 2 -value (0.021), b-values (0.122) & (0.088) and t-values (1.145) & (0.826) respectively. Hence as a result intangibility regarding hypothesis-7 (H7) with moderating effect of individual risk is not supported. By concluding the intervening effect of individual risk, organizations with brand sensitivity attributes observed no significant influence of independent variables i.e. procedural control, departmental objectives, purchase importance and complexity, relationship quality and intangibility respectively. Hence independent variables regarding hypothesis 7 with moderating effect is not supported at all. CONCLUSION he concept of brand sensitivity was originated in consumer literature and related to an individual s personality characteristic. his study adapted the original measure of brand sensitivity and applied it in an organizational buying setting. It appears to be versatile enough to capture the attitudes of a group of business managers charged with making a product selection. he study provides valuable information to business organisations working in different sectors of Khyber Pakhtunkhwa (Pakistan) by indicating that purchase situation is a theoretical concept and is critical for understanding the role of branding in the organizational buying process. It posits that purchase situation variables i.e. purchase importance and complexity has a positive impact on organisation s buying centre level of brand sensitivity by signifying that businesses working in this area must take into account the importance of purchase situation when formulating branding strategies with respect to business environment in which they are working. here is a need for recognition to measure the variation in brand importance from one buyer to another buyer introducing the concept of brand sensitivity as a means of comparing branded products with un-branded ones (Kapferer, and Laurent, 1988). COPY RIGH 2012 Institute of Interdisciplinary Business Research 834

9 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS Since buying units are dynamic & fluid and their brand sensitivity levels depend on a variety of personal and contextual variables, including their perceptions of risk, the intangibility of a product, level of relationship quality with a vendor and complexity and importance of the brand. By taking these into account business firms can successfully make their way towards prosperity by formulating acceptable business strategies. COPY RIGH 2012 Institute of Interdisciplinary Business Research 835

10 INERDISCIPLINARY JOURNAL OF CONEMPORARY RESEARCH IN BUSINESS REFERENCES Bendixen, M. Bukasa, K. A., & Abratt, R. (2004). Brand Equity in the Business-to-Business Market. Industrial Marketing Management, 33, de Chernatony, L., & McDonald, M. (1998). Creating Powerful Brands in Consumer, Service, and Industrial Markets, 2nd ed. Oxford, England: Butterworth Heinem Kim, J., Reid D. A., Plank, R. E., & Dahlstrom, R. (1998). Examining the Role of Brand Equity in Business Markets: A, Research Propositions and Managerial Implications. Journal of Business-to-Business Marketing, 5 (3), s Johnston, W. J., & Bonoma,, V. (1981), "he Buying Center: Structure and Interaction Patterns," Journal of Marketing, 45, Johnston, W. J., & Lewin, J. E. (1994), A Review and Integration of Research on Organizational Buying Behavior, In Working Paper Series, Report No Cambridge, MA, Marketing Science Institute. Fern, E. F., & Brown, J. R. (1984). he Industrial/Consumer Marketing Dichotomy: A Case of Insufficient Justification. Journal of Marketing, 48, s McQuiston, D. H. (2004). Successful Branding of a Commodity Product: he Case of RAEX LASER Steel. Industrial Marketing Management, 33, Mudambi, S. M. (2002). Branding Importance in Business-to-Business Markets: hree Buyer Clusters. Industrial Marketing Management, 31, Kapferer, J.N., & Laurent, G. (1988). Consumer Brand Sensitivity: A Key to Measuring and Managing Brand Equity. In Defining, Measuring and Managing Brand Equity. Ed. L. Leuthesser. Cambridge, MA: Marketing Science Institute, COPY RIGH 2012 Institute of Interdisciplinary Business Research 836