PAF KIET (KARACHI INSTITUTE OF ECONOMICS & TECHNOLOGY)\

ASSIGNMENT

SUBMITTED BY: Fouzan Alam

STUDENT ID: 62232

SUBMITTED TO: Ma'am Quratulain Kazmi

COARSE: Micro Economics
COARSE ID: 107888
Introduction:
The industry has potential to grow further many fold in the era of globalization as market is
expanding and various societies are getting closer in national and international market. Locally
or internationally, distinct culture has different preferences in their consumptions and they
demand different branding strategy.
Various marketing professional has used Hofstede work to analyze the actual phenomena and
stimuli of these cultural dimensions on consumer behavior and their decision making
These six dimensions (cultural model) of Hofstede are as follows:
1. Power distance
2. Uncertainty avoidance,
3. Individualism/collectivism
4. Masculinity/femininity
5. Long-term/Short term orientation
6. Indulgence vs. Restrain (IvR)

Indulgence and Restrain:

  Indulgence refers to the extent to which societies attend to basic human needs. Indulgent
cultures spend time to meet these needs and enjoy life, while less indulgent ones focus on their
responsibilities and duties while practicing control over human drives. Understanding this
dimension allows for a better chance of successful communication and relationship management.
It is important to be flexible in international social encounters, as people from different national
cultures show certain preferences.
 The preference of duty over freedom is a characteristic of societies which practice restraint. In
such cultures life is considered to be hard and having fun or enjoying life is less encouraged.
According to Hofstede’s research, most Asian countries are on this side of the spectrum. They
include Russia, China, Japan, and South Korea. It may now seem reasonable why these countries
are developing at a fast speed.
 Brand Loyalty:
Brand loyalty—central construct in marketing, is a measure of the attachment that a customer
has to a brand. It reflects how likely a customer will switch to another brand, especially when
that brand makes a change, either in price or in product features. As brand loyalty increases, the
vulnerability of the customer base to competitive action is reduced
Brand awareness:
People will often buy a familiar brand because they are comfortable with the brand. Or there may
be an assumption that a brand that is familiar is probably reliable, in business to stay, and of
reasonable quality. A recognized brand will thus often be selected over an unknown brand. The
awareness factor is particularly important in contexts in which the brand must first enter the
consideration set. It must be one of the brands that are evaluated.
Perceived Quality:
A brand will have associated with it a perception of overall quality not necessarily based on the
knowledge of detailed specifications. Perceived quality will directly influence purchase decisions
and brand loyalty, especially when a buyer is not motivated or able to conduct a detailed
analysis.
It can also support a premium price which, in turn, can create gross margin that can be reinvested
in brand equity. Further, perceived quality can be the basis for a brand extension. If a brand is
well regarded in one context, the assumption will be that it has high quality in a related context.
Brand Association:
The underlying value of a brand name is often based on specific associations linked to it.
Associations such as Ronald McDonald can create a positive attitude or feeling that can become
linked to a brand such as McDonald’s. If a brand is well positioned on a key attribute in the
product class (such as service backup or technological superiority), competitors will find it hard
to attack.

Hypothesis
Indulgence/restrain impact positively on Brand awareness
consumers in indulgent dimension are more optimistic and brand conscious then restraint culture
consumers and due to this difference individual belong to either indulgent or restrain cultural
dimension react differently on same piece of information
Indulgence/restrain impact positively on brand loyalty
The development of brand loyalty is not a matter of one or two time purchases rather it takes
years to build the relationship of trust and fulfill promise with target customer. Mostly customers
preplanned their purchases and they decided earlier not to spend unnecessarily
Indulgence/restrain impact positively on brand image
Indulgent vs. restrain cultural dimension affect the mental orientation of an individual that is why
customers under this dimension possess different perceptions, preferences and choices of brand
Customers under this specific dimension would have distinct set of enjoyment, happiness and
handling different situations that is why individuals under this cultural orientation would get
different image from the same advertisement and message by brands
Indulgence/restrain and perceive quality
Perceive quality embrace on functional and non-functional attributes of product and brands that
make customer to take purchase decisions. Customers typically face series of purchase decisions
just for temptation and previously developed perceived quality. Promotional coupons, discount
offers and interactive bill boards create brand perception in customer’s mind which in the end
would create overall perceive quality
Brand awareness and brand equity
 Brand awareness is generated through brand knowledge which support consumers in decision
making at the time of purchase. Brand awareness is essential for advertisement purpose because
it would be shaped through the strong recall capability. it as customer’s experiences and
eventually the management of the company get promoted to develop customer based brand
equity
Brand image and brand equity
Brand image is the factor that changes consumer approach toward particular product or brand
that is why brand image is called as the heart of all promotional activities. Brand image is
measured as the key driver of brand equity which directly impact on consumer approach and
behavior through perception about specific brand
Brand loyalty and brand equity
Brand loyalty is another factor that is a building block of developing brand equity. Brand loyalty
means steady but constant purchases of a product by customers of that brand and always shows
resistance in switching to another competitor brand
Perceived quality and brand equity
Perceived quality is considered as a consumer a judgment quality and other supporting features
as well as on the consistency of product description or an evaluation on added value provided
with the basic product
IVR impact on BL and BE
Brand loyalty develop through favorable feedback from customers and some other
psychological, social and societal factors are also considered as contributing factors
IVR impact on PQ and BE
Perceive quality is the combination of brand image communicated by brand companies and
feedback customers receive from previous users of the same brand. Many subsequent factors
play their part in developing consumer perception about product/brand

Methodology
This research study is following the philosophy of positivism as quantitative data was gathered
analyzed and generalization is made that confirm the applicability of deductive approach.
Structured questionnaire was adopted and data was collected from customers aged between 16 to
above 55years. Respondents were approached at their actual settings of shopping branded cloths
in different shopping malls located in Karachi. As Karachi is the metropolitan and largest city in
Pakistan and immense immigrants which declare this city as largest ethno-linguistic populous
city of Pakistan (Karachi population, 2019). That is why this research is conducted in Karachi.
Scales and Measure
Already developed scales have been used on the subject of Indulgence and restrain, brand
awareness, brand loyalty, brand image, perceived quality and brand equity. Table 1 represent the
sources of scales used
Result and interpretation:
The results suggested that brand equity (0.961) has the highest composite reliability and perceive
quality has the lowest composite reliability that is on (0.791).Moreover, brand equity has the
highest level of average variance that is on (0.831) and perceive quality is the lowest average
variance that is on (0.486). As the values of composite reliability and average variance are
greater than 0.7 and 0.7 respectively that is why we can conclude that variables have acceptable
range of convergent validity
Discriminant Validity
The results suggest that all variables are unique and distinct as their diagonal values are greater
than the square of each pair or correlation.
Hypothesis Testing
The study applied structural equation modelling using the Smart PLS software to test the
hypothesis. We have propose 8 direct hypothesis which discuss the direct relationships and four
indirect hypothesis,

Results and conclusion

Brand awareness and brand equity (H1) (Accepted)
The first hypothesis is examining the direct relationship between brand awareness and brand
equity. The hypothesis was supported by results as (P< 0.05). As brand awareness is one of the
most important constituent of brand equity
Brand Image and Brand Equity (H2) (Accepted)
The second hypothesis examining the relationship of brand image on brand equity. The results
of the hypothesis suggest significant as P 0.05. As brand is considered as more than a product and which is
more than a satisfaction level

Bl and BE (H3) (Accepted)

The 3rd hypothesis is explaining the relationship of brand loyalty on brand equity. The results of hypothesis are
significant as (p < 0.05) and suggested the positive relationship in between loyalty and brand equity
PQ and BE (H4) (Accepted)
The 4th hypothesis is examining the positive relationship between perceive quality and brand
equity. The results of the hypothesis suggested positive relationship as (P 0.05) . Many previous
researchers have worked on the concept of perceive quality and liked it with memory network
model
Indulgence/restrain and Brand awareness (H5) (Accepted)
The fifth hypothesis is explaining the impact of indulgence and restrain cultural dimension on
brand awareness. The results of the hypothesis suggest significant relationship. Brand awareness
as per previous researches is attained through the combination of brand recognition and brand
recall capabilities
Indulgence/restrain and brand image (H6) (Accepted)
The sixth hypothesis is explaining the relationship of indulgence/restrain cultural dimension and
brand image. The results of the hypothesis suggested significant relationship as (p 0.05). Brand
image is considered as subsequent factor which develop through consumer perception
Indulgence/restrain and brand loyalty (H7) (Accepted)
The seventh hypothesis is explaining the relationship of indulgence/restrain cultural dimension
with brand loyalty. The results of the hypothesis suggested significant relationship as (p 0.05)
Indulgence/restrain and perceived quality (H8) (Accepted)
The 8th hypothesis explains the relationship between indulgences and restrain cultural dimension
and perceived quality. The results of the hypothesis suggested significant impact of indulgence
and restrain dimension on perceive quality as (P<0.05).
Indulgence/restrain -> Perceived Quality -> Brand Equity (H9) (Accepted)
The 9th hypothesis explain the indirect impact of indulgence and restrain cultural dimension on
perceive quality and then impact brand equity. The results of this hypothesis suggested
significant impact as (P 0.05)
Indulgence/restrain, brand image and brand equity (H11) (Accepted)
The 10th hypothesis is explaining the indirect relationship of indulgence vs. restrain cultural
dimension on brand loyalty and then brand equity is affected. The result of this indirect
relationship suggest insignificant as (P>0.05)
Indulgence/restrain brand awareness and brand equity (H12) (Accepted)
The 11th hypothesis is explaining the indirect relationship between indulge /restrain cultural
dimensions on brand image and brand equity. The results of this indirect relationship suggest
significant relationship and hypothesis is approved as (P<0.05)