The Effect Of Corporate Philanthropy On Customer-Based Brand Equity

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The Effect Of Corporate Philanthropy On Customer-Based Brand Equity

Introduction

Over the recent decades, the issue of the benefits and risks associated with Corporate philanthropy (CP) has been an evolving topic on shareholders and the society as they have developed stronger expectations of firms behaving in a socially responsible way. Houqe at el (2016) purport that society’s perceptions play an important raw in contributing to firm’s success in the current business environment. In addition, society’s perception over a firm act as a stimulus for the organisation to grow its customer-based brand equity, which according to Kin and Kin (2014) is essential for driving customer equity, differentiating brands, assessing brand performance and gaining competitive advantage. This study is aimed at examining whether CP has an effect on customer-based brand equity.

This chapter gives the background information of the study on the effect of CP on customer- based brand equity in the Telecommunication sector of Zimbabwe, with emphasis on NetOne Cellular Company. The chapter provides the statement of the problem that motivated the researcher to undertake the study. The purpose of the study is also indicated in this chapter with specific objectives being highlighted. The research questions are derived from the objectives and key assumptions, significance of the study, delimitation and limitation are also included.

Background of the study

Corporate philanthropy, according Wang and Qian (2011) entails the gifts given by corporations to social and charitable causes, such as support for education, culture, or the arts, for minorities or health care or for relief funds for victims of natural disasters. Carrol (1999) stipulates that CP is one of the important dimensions of Corporate social responsibility (CSR).

Previous research by Huang and Cai (2015) reports that the majority of research on customer-based brand equity (CBBE) has emerged from theoretical frameworks developed by Aaker (1991, 1996) and Keller (1993, 2003). Keller (2003), delineates CBBE as the differential effect that brand knowledge has on consumer response to the marketing of a brand. Keller (2003) postulates that CBBE is amongst the two variables used to measure brand equity and the other variable is referred to as financial based brand equity.

Over the past recent decades, CBBE has risen as one of the important marketing concepts for academics and practitioners (Keller 1993). There have been little agreements with regards to literature on the dimension which can be used to measure CBBE. According to Aaker (1991), provided the core CBBE dimensions which include brand awareness, perceived brand quality, brand association and brand loyalty. Keller (2003) postulated that CBBE can be measured using dimensions such as brand salience, brand performance, brand imaginary, brand judgement, brand feeling and brand association. Yoo and Donthu (2001) treated CBBE as a three-dimensional construct, combining brand awareness and brand associations into one dimension. However, authors such as Buil et al (2008, 2013) provided empirical evidence of the multidimensionality of CBBE, supporting Aaker’s (1991) and Keller’s (1993).

Within the Zimbabwean region, different domestic and foreign firms have been taking initiates toward marketing investment on CSR activities mainly inform of CP. Among the entities engaging in CP is NetOne cellular which is the second largest giant company in terms of subscriber base and market share in the telecommunication sector of Zimbabwe. NetOne cellular is the first telecom company to be created in Zimbabwe and is totally owned and controlled by the government.

[bookmark: _Hlk3438758]In addition, NetOne Cellular offers a wide variety of goods and services which include voice call services, easy call package(simcards), One money (mobile money service) and other value-added services (VAS) which include, one fi, one music, one tech Vehicle tracking, one cover and one fusion. The Zimbabwe’s telecommunication sector is governed by the Postal telecommunication Regulatory Authority of Zimbabwe (POTRAZ) which has the mandate of implementing policies, operational measures and parameter which all entities operating in this sector must abide to. The regulatory authority is also responsible for the creation of sector performance reports based on the data provided by the service providers.

According to the statistical data, as from the period of 2016 up to 2018, NetOne Cellular has been recording a slow rate of increase in subscriber base, as the greater number of its potential subscribers are being lost to Econet Wireless which has been recording outstanding numbers in subscriber base, as per the three-year period. Telecel has to lesser extent been recording limited numbers in subscriber base which have been below that of NetOne and Econet.

Due to the fact that the telecom sector is characterised of product of similar nature, customer switching cost are low and it takes a lot of hard work for organisations to convince customers to become loyal to their brand. For the past recent years, the management at NetOne has been

embarking on a number of strategies aimed at improving their operational viability and boost their brand equity. The strategies that were implemented include the introduction of a successful one fusion brand, increase in network coverage, introduction of the long-term evolution network system (LTE), introduction of brand ambassadors and an excellent customer experience service.

Despite all the efforts made by the management through implementing strategies, the telecom sector has been continuously proving to be a difficult ground for NetOne cellular to operate, as evidenced by their subscriber base and market share growing at low rate as compared to that of its major rival Econet Wireless, even though the management had hopes that their implemented strategies could result in NetOne dominating the sector. Customers are still switching towards Econet and Telecel products and services at the expense of NetOne product, despite the improvements in operation efficiency. Therefore, indicating that the strategies were not effective enough in encouraging an increase in brand equity of NetOne Cellular. Therefore, active measures have to be implemented to ensure that the brand equity of the firm increases, thereby signalling an increase in the subscriber base and market share of the firm. If the organisation fails to come up with measures meant to curb the problem, they are likely to lose more of their customer to competitor which in turn indicates a leakage in the firm’s potential and actual revenue.

In light of this, the management of NetOne has recently decided to engage in CP through contributing some donations to places such as Mushamukadzi inform of funding on cancer awareness programmes, donation of foods stuffs and sleeping beds to Queen of Peace Gweru, donation of $25000 to National Blood Service of Zimbabwe and the recent donation of 4 motor bikes, 217 reflective jackets, 31 rain suits and whistles valued at $65 000 to the ZRP traffic department in order to create positive perception and strengthen the relationship between society and the organisation’s brand, thereby eventually promoting growth on brand equity of the organisation. According to Aaker (1991) companies with high brand equity are expect to experience favourable brand awareness, brand loyalty, brand association and perceived quality. It is not known whether the philanthropic programmes done by the firm are effective or not in establishing a strong brand equity. Therefore, this study aims at giving a hint on whether CP is effective in promoting brand equity growth.

Prior researches on CP have been carried out by various authors and the results have managed to create a substantial body of literature regarding CP. Amongst the research done is that of Peterson (2018) with the title “enhancing corporate reputation through corporate philanthropy’. The aim of this study was to investigate the variables affecting the link between annual changes in the amount of corporate foundation giving and changes in reputation. The author concluded that corporate charitable giving and corporate reputation covaried positively for firms with an existing favourable reputation, versa via, especially under a condition of an economic downturn. However, the study failed to investigate whether CP has an effect on CBBE. Therefore, the current study seeks to bridge on the gap through examining effectiveness of CP on CBBE at NetOne Cellular Zimbabwe

Another research was done by Wonsuk. and Michael during the year 2016, which focused on board of directors and industrial determinants of corporate philanthropy. The research was encored on empirically exploring the specific type of antecedent, that is director composition and industrial membership. The researcher concluded by stating that the extent to which firms build relationships with certain stakeholders is tied to the personal and social background of the board member who in turn influence the allocation of resources towards philanthropy. However, the author did not go an extra mile through examining the effect of CP on CBBE. Therefore, the author seeks to bridge the gap through analysing the effect of CP on CBBE in Zimbabwe, in relation to NetOne company.

Valor and Grzegorz (2017) undertook a research which focused on quality reporting of corporate philanthropy. The research was mainly encored on outlining the framework for CP reporting that could help differentiate between symbolic and substantive reporting and whether reporting practise of large corporate donner are symbolic or substantive. The finding of this research stipulated that disclosure regarding CP are more symbolic than meaningful. The study only focused on quality reporting of CP and there were no further investigations done on whether CP has an effect on CBBE. Therefore, this study seeks to investigate whether CP has an effect on CBBE in the telecom sector of Zimbabwe, with regards to NetOne company.

Yongqiang (2017) did a research which emphasised on inverting a U-shaped relationship between CP and spending on research and development (R&D). The author concluded that CP, by securing stakeholder support differently at different levels of spending first increases then reduces spending on (R&D). The study only focused on determining the relationship between CP and R&D, but other areas relating CP and its contribution on variables such as CBBE were not explored by the study. In this regard, the present study seeks to examine the effect of CP on CBBE in the Zimbabwean context, focusing on the telecom sector.

Cisheng et al (2018) also undertook a research on CP which was aimed at examining the relationship between female executives and corporate philanthropy. The results from the study show that female top executive or managers who are female stimulate CP, there is no published literature focusing on the contribution of CP stimulated by female leaders on CBBE. This study aims at sealing the literature gap on CP through examining its effect on CBBE at NetOne.

A quite number of studies related to CP have been carried out by different authors and the results of these studies have indeed contributed much towards building more literature on CP and different aspects related to it. However, there seem to be limited research on literature examining CP in particular relation to customer-based brand equity. This as a result indicate a vacuum in the contemporary literature of variables which relate to CP. Therefore, the present study seeks to add more to literature through sealing in the gap and providing useful insights to the theory and practice of CP. The research will focus on the effect of CP on customer-based brand equity in the telecommunication sector, with regards to NetOne Cellular Zimbabwe.

Statement of the problem

NetOne cellular has been facing stiff competition from its major rival competitors within the telecom sector and this has been shown by a limited increase in its subscriber base as indicated by POTRAZ reports, as from 2016 to 2018.This in turn indicate poor brand equity and limited market share. The competition has been stifled by the fact that the three giant firm dominating the sector sell products and services of similar nature. In light of this issue, the company has been engaging in cooperate philanthropy, an activity which the management have hopes, that it might help them foster good relationships with their potential and actual customer and also help them improve their brand equity. It is not known whether the philanthropic programmes done by the firm are effective or not in establishing a strong brand equity. Therefore, this study aims at giving a hint on whether CP is effective in promoting brand equity growth.

Significance of the study

To the researcher

The researcher will benefit from the in-depth insight gained during the research process. The researcher will also gain time management skills of conducting research. In addition, the study will assist the researcher in completing his degree programme.

To theory

This study could close the literature gap since no study was carried out in Zimbabwe concerning the effect of CP on CBBE in the telecommunication sector, with regards to NetOne. The study might provide literature on CP, which other studies reviewed in the background to this study did not focus on.

To practise

The results and recommendations of this study will assist the organisation in effective practise of CP, thereby helping the company boost its brand equity. To add more, the results will also assist the company in getting an insight on the non-monetary rewards of marketing investments done by the firm, this will in turn assist in formulating future marketing decisions.

Delimitations

The scope of the research is confined to the market in Harare only.
The respondents to the study were managing directors, company employees and the Harare customers only.
The study only focused on corporate philanthropy as the only factor which has an impact on customer-based brand equity behaviours.
The data periods which were used in this research ranges from January 2016 to December 2018.

Limitations

The research is limited to the CRS activities currently being undertaken by NetOne Cellular.
The respondent to the questionnaires and interviews were managing directors, employees and customers of NetOne only.
The research could not use vernacular language for data collection, hence only respondents who could read and understand the English language were used.

Assumptions

The researcher assumed that the use of data gathering tool such as questionnaires and interviews was going to be more effective as these tools are the best suited for the purpose of out sourcing information the desired information from customers.
The researcher also assumed that the respondents will give genuine and sincere responses.
The researcher also assumed that the research design was the best and well suited for the study.

Chapter summary

Chapter one comprises of the background information that motivated the researcher to undertake a study on the given topic, the outline process, the significance of CP activity on achieving customer-based brand equity. The statement of the problem and research objectives are mentioned to provide guidance to the researcher. The limitations and delimitations were also examined in this chapter. Finally, the key terms were defined and assumptions outlined. The next chapter focuses on literature review

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