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Article

Understanding the Influence of CPE on Brand Image and Brand Commitment: The Mediating Role of Brand Identification

Department of Marketing, College of Business Administration, Prince Sultan University, Riyadh 12435, Saudi Arabia
*
Author to whom correspondence should be addressed.
Sustainability 2023, 15(3), 2291; https://doi.org/10.3390/su15032291
Submission received: 10 January 2023 / Revised: 20 January 2023 / Accepted: 23 January 2023 / Published: 26 January 2023
(This article belongs to the Special Issue Market Orientation, Strategic Marketing and Sustainable Innovation)

Abstract

:
It has been recognized that there is a need for a new research area that concentrates on perceptions rather than reactions. The present study proposes a conceptual framework to incorporate consumer-perceived ethicality (CPE) and its influence on brand identification. Also, this research measure the mediating influence of brand identification on consumer brand image and brand commitment. A nonrandom sampling procedure was employed, yielding a total of 368 valid responses. This study’s findings suggest that CPE has a positive and significant direct impact on brand identification. The partial mediating impact of brand identification is observed in the path relationship from CPE to brand commitment. By examining the consequences of customer responses to CPE, businesses can develop better strategies that are desirable from both a normative and a business perspective. This study’s overall managerial implications include improving ethical practices since they have a significant impact on the consumer formation of brand commitment.

1. Introduction

Ethical consumerism has become a significant force in business in recent years [1]. The Dean Sanders company’s social equity research has revealed that “innovation, ethical standpoint, and social behavior is now driving consumer choice, not quality and price” [2]. The ethical practices of companies are increasingly being scrutinized by the public. The research on consumer-perceived ethicality (CPE) is expanding rapidly [3], and it indicates that corporate misconduct has a negative impact on how customers interact with a company’s brands and products and respond to it [4]. A wide range of recent academic research highlights the significance of corporate social responsibility (CSR), ethical corporate brand identity, and the resulting consumer/stakeholder perceptions and outcomes. Since customers and other brand stakeholders are growing more sensitive and expect firms to reflect their ethical concerns, there is a wealth of literature that contends that acting ethically is in the best interests of brands [5].
Brands must figure out how to convey to their customers a set of pertinent values [6]. We define CPE at the corporate brand level as the perception of the brand as being honest, responsible, and accountable toward diverse stakeholders, in line with the recently developed stream of the literature on ethical views of consumers. According to a number of researchers, the idea of consumer brand identification provides a deeper understanding of marketing and brand management [7]. Corporate misconduct or unethical practices can have a serious impact on its reputation and image as a whole. As a result, how unethical or ethical a company is seen to be in conducting business is closely linked to both its overall brand image and its capacity to compete in the market [8]. While many researchers have stated that consumers react negatively or unfavorably to businesses that they believe to be unethical [9], the crucial question of how CPE affects two crucial marketing outcomes—brand image and brand commitment—have largely gone unaddressed until very recently [10]. Additionally, we note that very little effort is made to incorporate the idea of identification into the larger discipline of marketing research. Instead, consumer-brand identification has primarily been studied from the perspectives of brand management and relationship marketing in the extant literature [11]. Because of this, marketing scholars have neglected the significance of brand identification in the management of brand image and brand commitment [12]. Brand identification, however, continues to be important even for branded goods because it is closely related to profitability and may have a greater impact on consumers’ opinions of a brand than quality [13,14]. Even though a number of studies have examined the relevance of brand identification as the mediator in analyzing consumer behavior, more work is still needed to learn more about how consumers identify themselves in various contexts [15]. The present study proposes a conceptual framework to incorporate a CPE and its influence on brand identification. Also, this research measures the influence of brand identification on consumer brand image and brand commitment. It has been recognized that there is a need for a new research area that concentrates on perceptions rather than reactions. The proposed research framework was tested in the Indian banking industry. Indian banks now provide funds to initiatives that support the community and address environmental and social issues [12]. Banks have begun to invest more actively in ethical practices and spend more money on social initiatives [10]. Greater awareness of ethical practices among stakeholders has encouraged banks to engage in these activities because it will be crucial for maintaining a competitive advantage in the future.

2. Theoretical Background and Hypothesis Development

The key components of the consumer–brand interaction and their impact on significant marketing outcomes are predominantly integrated into the conceptual framework of our research. We specifically reference earlier research on CPE, brand identity, brand commitment, and brand image since these variables have been found to be particularly significant predictors of marketing outcomes and ultimately profits. The conceptual framework is shown in Figure 1. The following section defines the construct and presents the hypothesis.

2.1. Consumer-Perceived Ethicality

The concept of ethical branding seems to have a significant overlap with brand management and business ethics concepts. Perceived ethicality is defined as “a complex summary construct describing consumer’s subjective moral judgment of right/wrong or good/bad” ([16], p. 134). A company is said to be ethical if it does not do harm to others, advances social causes, and acts with accountability, responsibility, integrity, and honesty [17]. It is evident from the literature that it is in the best interest of the brand to behave in an ethical way [5], because consumers now expect the brand to be ethical and socially responsible [18]. CPE is relevant to the brand because it may be a strong determinant of various positive consumer responses such as intention, commitment, advocacy, etc. [19].

2.2. Brand Identification

According to social identity theory [20], individuals who strongly identify with a brand follow the brand, are involved in brand-related engagement activities, and become an advocate for the brand because the brand has become a part of their self-concept [21]. Previous research confirmed the positive impact of brand identification on consumer behavior [22]. The concept of self-brand connection is widely used in the marketing literature [12]. It is well-acknowledged that individuals choose brands that are consistent with their self-concepts [23]. Bhattacharya and Sen ([11], p. 76) suggested that the self-brand connection is “a meaningful relationship that marketers are increasingly seeking to build with their customers”. For instance, those individuals who define themselves as innovative are most likely to choose and connect with a brand that is based on innovation. Brand identification refers to the consumer’s sense of belongingness to the brand [24].

2.3. Brand Image

Brand image is defined as “perceptions about a brand as reflected by the brand association held in consumer memory” [25]. All these associations may be related to any of the aspects of the brand in the consumer’s memory [26]. Brand image entails the consumer’s feelings and thoughts about the brand. In other words, it is an overall image that consumers have of the brand of its uniqueness in comparison to other brands [27]. The brand image includes the consumer’s beliefs and knowledge about the brand and its various products and all attributes [28]. It represents a kind of symbolism that consumers hold about a brand, which comprises all the brand-related information [29,30]. If a consumer develops a positive image of the brand, it has a strong influence on the brand message in comparison to the other competing brand [31]. Thus, it can be said that brand image is one of the important determinants of consumer behavior [32]. A brand image is created by marketing programs that help in creating a favorable image of a brand in consumers’ minds [25]. The brand’s image is compiled in the consumer’s mind through the direct experience with the brand, its promotion, and advertising, as well as what other kinds of people use the same brand, and also the situations or occasions in which the brand can be used [33]. Thus, it can be concluded that brand image is all about what people feel and think about a brand [34].

2.4. Brand Commitment

Brand commitment is defined as “an enduring desire to maintain a valuable relationship with the brand” [35], p. 316. Commitment has been used extensively in the organizational literature [36], it refers to the degree of an employee’s psychological attachment to the brand and determines whether or not they will go above and beyond the call of duty to further the brand’s objectives. In the context of internal branding, the word “commitment” has been used extensively [37]. Building commitment is crucial for businesses since committed customers are more likely to pay more for the interpersonal aspects of a brand or organization and are less price sensitive compared to competitors [38,39]. Additionally, loyal customers are less likely to be sensitive to negative brand/organizational performance since they are more likely to blame external sources for service failures [40].

2.5. CPE and Brand Commitment

Many studies in the literature have emphasized that consumers tend to perceive more value from brands or companies that are engaging in ethical initiatives [41]. Brand ethicality also helps in validating one’s self-identity internally and externally, thereby helping in reducing uncertainty and subjectivity. Customers are more likely to feel linked with and committed to an organization when they connect organizational ethical actions with a set of personal beliefs [11]. The beneficial effect of corporate citizenship on organizational commitment was demonstrated in [12]. In light of this, authors of [5] revealed that consumers’ affective commitment to a brand is positively impacted by their perception of the brand’s ethical positions. Thus, we propose:
H1. 
CPE has a positive and significant influence on brand commitment.

2.6. Brand Identification and Brand Image

Given that brands play a role in constructing and/or signaling identities, brand image is significant to and highly descriptive of customers who have a strong sense of self-brand connection [42]. Negative changes to brand image lessen the brand’s potential to function as an identity marker and reduce the congruence between the brand’s image and consumer identification. The degree of congruence between the self and the brand, or how “One” the brand is considered to be, is critical to the relationship between the self and the brand [11]. Therefore, we state:
H2. 
Brand identification has a positive and significant influence on brand image.

2.7. Brand Identification and Brand Commitment

According to MacCracken [43], brands have deep significance to and aid consumers in creating their identities or sense of self. It is the extent of their psychological attachment towards the brand and develops over a period of time [25]. The consumer has a strong level of commitment, as well as a strong connection with the brand or identifying with it [44] and considers the brand an important part of their life [22]. The benefits of consumer brand identification on brand commitment are supported by theoretical considerations [11]. Identification increases a customer’s sense of belonging and satisfies a self-definitional demand [31]. The stronger the degree of identification with the brand, consumers remain loyal to the brand in order to maintain the emotional benefits they receive from the brand [11]. According to social identity theory, those who identify strongly with a brand engage in behaviors that help the brand to succeed, such as being loyal to it [45]. Thus, we state:
H3. 
Brand identification has a positive and significant influence on brand commitment.

2.8. Mediating Effect of Brand Identification

CPE has a significant influence on consumer responses because it shows the company’s character, values, and concern for its customers in addition to meeting the necessary benchmark of quality level. Ethical practices enhance the company image and are helpful in building a relationship with customers that promotes commitment [11]. A consumer’s strong identification with the brand can lead to positive reactions from consumers, including brand loyalty, and reputation or image [12]. According to [46], brand identification is a psychological system that denotes the relationships between things. Brand identification may also affect a consumer’s decision to choose and evaluate a brand, according to research on brand identification and social identity. This is the reason why high affective commitment and trust among consumers, which are outcomes of consumer identification with the brand, improve consumer perception of a brand. Thus, we state
H4. 
Brand identification mediates the relationship between CPE to (a) brand image and (b) brand commitment.

3. Research Design

The information for the current study is quantitative in nature and was gathered using a questionnaire. The target population for the study is bank customers, and a sampling frame was not accessible. A nonrandom sampling procedure was employed with the convenience sampling method. Additionally, the respondents needed to have had a bank account with that bank for longer than a year. Participants were those over the age of 18 who had bank accounts at the time of the survey and were in charge of the bank’s financial affairs. This ensured that the information collected from the participants was pertinent and that they had enough expertise with the bank. Customers of the two largest banks in India were chosen. These banks are engaged in various CSR activities and invest more than two percent of their profit in CSR activities. The respondents were contacted for the survey in the different branches of these banks in the Delhi NCR (northern capital region) during working days. A total of 410 people across all branches were contacted, and 368 valid responses were collected, yielding a response rate of 89 percent. There were 55.3% women and 44.7% men in the sample. In terms of age (20–40: 36.14%; 41–60: 51.63%; 61+: 12.23%) and in terms of their educational qualifications, 44.32% were graduates and 16.32 percent had obtained post-graduate degrees.

3.1. Measures

We measured the constructs from the previous research work using the scale items (Appendix A). The three-item scale used to test brand identification was adapted from [46]. CPE was assessed using a five-item scale that was adapted from [25,47], which was consistent with earlier studies. The four scale items were modified from the work of [48] to measure brand attachment. The brand image was measured with the three items taken from the work of [49]. All scale items were rated on a seven-point Likert scale from 1 to 7 (1 = strongly disagree, 7 = strongly agree).

3.2. Common Method Bias

Following the recommendations of a previous study [5], we applied Harman’s one-factor test combined with common method variance (CMV). CMV was unlikely to be a problem in a one-factor test because no single component emerged from the investigation and no general factor accounted for the majority of the variance. The results show that one factor accounts for 23.61 of the variance, and no single factor emerged that contributed to a majority of the variance. Thus, we can say that CMV is not an issue in the present study.

4. Results and Analysis

The fit for the measurement model and structural model was evaluated in the current study utilizing CFA and SEM with AMOS22.0. The model fit statistics (χ2 = 233.78 (84), GFI = 0.925, CFI = 0.967; and NFI = 0.950, RMSEA = 0.07) satisfied the necessary conditions for an effective model fit. The measurement model was examined before the structural model was tested. All of the constructs had Cronbach alpha coefficients above 0.6, demonstrating the scale’s dependability. Additionally, the scale’s internal consistency was indicated by the fact that the composite reliability of all the constructs was higher than 0.5 (Table 1). For all the constructs matching [50,51] criteria for convergent validity, the AVE values ranged from 0.6 to 0.8. Table 2 demonstrates that the square root of AVE exceeds the squared correlation of all constructs meeting the criteria for discriminant validity [52].
The structural model’s evaluation process is part of the estimation of the hypothesized links between constructs. The estimated values of the path coefficients empirically confirmed all of the direct effects in our proposed model at a significance level of 0.05, except H2. Based on the findings, CPE has a direct and significant positive influence on consumer brand identification (β = 0.22, p < 0.001). Thus, H1 is supported. Brand identification does not have a direct and significant influence on the brand image (β = 0.09, p = 0.114). Thus, H2 is not supported. H3 states that brand identification has a positive and significant influence on brand commitment (β = 0.30, p < 0.001). The findings are significant, and H3 is supported (Table 3). For testing the mediating impact of brand identification, we used the SEM method with 5000 bootstrap samples at a 95% confidence interval using AMOS 22.0. Bootstrapping techniques were employed to obtain estimates of the indirect influence, and the significance of the influence was verified using confidence intervals. The mediation effect is deemed substantial if there is no zero between the lower and upper bound of the 95 percent confidence interval. The findings show that direct and indirect effect is not significant in the path between CPE to brand image (β = 0.024, p < 0.06, [L = −0.003; U = 0.065]); hence, H4a is not supported. A significant impact of brand identification in the path between CPE to brand commitment (β = 0.82, p ≤ 0.05) was found, supporting H4b. Since there is no zero between the lower and upper bounds of the confidence intervals ([L = 0.039; U = 0.147]), we may conclude that brand identification mediates the relationship between CPE and brand commitment. Thus, partial mediation is observed.

5. Discussion and Implications

By offering empirical findings that consumers’ perceptions of a bank’s ethical behavior have a positive and significant impact on consumer brand identification. These results imply that when customers believe a bank’s behavior is moral, they are more likely to strongly connect with the bank, which enhances the bank’s reputation. Long-lasting relationships between clients and a bank are the result of this favorable opinion of the brand. This is a fruitful insight that highlights how banks can strengthen their favorable brand perception among customers by participating in CSR projects [53,54,55] and developing ethical brand policies. Overall, this is an important addition that supports the idea that putting ethics at the center of the business brand from the beginning [5], may help the company create a positive reputation. Consider companies such as Patagonia and Toms, who have practiced ethics, CSR, and sustainability as an integral part of their brand identities and business strategies since they first existed. These brands’ perceived ethicalness among consumers has significantly aided in the growth of a positive and favorable reputation, which in turn has resulted in the formation of their equity. This study emphasizes the considerable impact of CPE on brand image and brand commitment through brand identification in the context of Indian banking services.
The present research has found an impact of brand identification on brand commitment, and the current study adds to the body of knowledge on brand management. Additionally, this study indicates that consumer-perceived ethicality has an indirect impact on brand commitment through brand identification. The mediating effect of brand identification is found to be significant. Because consumers are more likely to see ethical behaviors favorably and with greater trust than unethical ones, business managers should pay attention to them and provide resources to them. As a result, customers identify with the brand. It has been found that the CPE of a bank’s ethics transfers into a favorable assessment of the brand [56]. According to earlier studies, brands are the quickest approach to connecting with customers while differentiating the products and services the brand offers. Consumers can establish a strong link with the company through brand loyalty as informal members of the business. According to the social exchange model, people choose their relationships after analyzing the pros and cons of many choices. If a bank is engaged in ethical behavior, consumers or clients will tend to associate more value with it when they come across the bank’s engagement in various CSR activities. As a result, customers view the brand favorably compared to competing for other banks; this fairness impression encourages positive brand associations, and the consumer develops affection for the brand, which prompts brand commitment. The study’s findings revealed a mediating influence of brand identification on brand commitment, supporting the validity of hypothesis 4b. The current research did not observe the significant role of brand identification in the path relationship between CPE and brand image. This suggests brand identification plays an important role in the formation of consumer commitment towards the brand and that it does not have any significant impact on brand image in the context of banking services. Brand identification assumes more importance in the service industry because customer impression of ethical behavior strongly influences commitment.

6. Conclusions and Limitations of This Study

This study’s goal was to determine whether CPE has a direct or indirect effect on brand image and brand commitment. From a survey of the literature, a theoretical model was developed and then empirically validated. The findings of the study have important implications for banks. Marketing and consumer behavior research can help us understand consumers better, as well as how they respond to CPE. By examining the consequences of customer responses to CPE, businesses can develop better strategies that are desirable from both a normative and a business perspective [57]. This study’s overall managerial implications include improving ethical practices, since they have a significant impact on the consumer’s formation of brand commitment.
Apart from the significant contribution, a few limitations are observed as follows. This study’s findings’ generalizability raises questions because the sample is solely representative of the Indian population. Future studies could repeat our analysis in other nations, particularly in those with major cultural variations, in order to address this problem, because consumers with diverse cultural values typically base their judgments of service companies on distinct elements [58]. Future studies could focus on how consumers get opinions about a brand’s ethics. Knowing the drivers of consumer perceptions of brand ethics or CPE can help businesses better plan their ethical initiatives to address ethical issues.

Author Contributions

Conceptualization, I.K. and M.F.; methodology, I.K.; software, I.K.; validation, I.K.; writing—original draft preparation, M.F.; writing—review and editing, I.K. and M.F. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Data Availability Statement

Not applicable.

Acknowledgments

The authors would like to acknowledge the support of Prince Sultan University for paying the Article Processing Charges (APC) of this publication.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A

Table A1. Construct and items.
Table A1. Construct and items.
ConstructScale ItemSource
CPE“The bank is a socially responsible”Brunk (2012) [25] and Walsh and Beatty (2007) [47]
“The bank seems to be environmentally responsible”
“The bank appears to support good causes”
“This bank is more beneficial for the welfare of the society than other banks”
“This bank contributes to the society”
Brand identification“I am very interested in what others think about my bank”Mael and Ashforth (1992) [46]
“When someone compliments my bank then it feels like a personal compliment”
“When someone criticizes my bank it feels like apersonal insult”
“When I talk about my bank, I usually say “we””
Brand image“This bank provides good value for money”Martinez and de Chernatony (2004) [59]
“There is a reason to associate with the bank instead of others”
“This bank is different from competing banks”
Brand commitment“I really feel as if this bank’s problems are my own”Meyer and Allen (1997) [48]
“I feel like “part of the family” at our bank”
“I feel “emotionally attached” to our bank”
“Our bank has a great deal of personal meaning for me”

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Figure 1. Conceptual Framework.
Figure 1. Conceptual Framework.
Sustainability 15 02291 g001
Table 1. CFA results.
Table 1. CFA results.
ConstructsScale ItemsFactor LoadingsComposite ReliabilityαAVE
CPECPE 10.850.9050.9040.655
CPE20.85
CPE30.75
CPE40.79
CPE50.75
Brand IdentificationBI10.850.9370.9350.832
BI20.96
BI30.92
Brand imageBImage10.860.9330.9300.823
BImage20.90
BImage30.96
Brand CommitmentBC10.800.9350.9350.784
BC20.86
BC30.96
BC40.91
Table 2. Discriminant validity results.
Table 2. Discriminant validity results.
Brand IdentificationCPEBrand CommitmentBrand Image
Brand identification0.912
CPE0.2180.810
Brand commitment0.3310.2050.885
Brand image0.1130.1400.1880.907
Table 3. Path relationship.
Table 3. Path relationship.
HypothesisPath Coefficientt ValueResults
H10.223.938Supported
H20.091.580Not supported
H30.305.654Supported
p-value < 0.001.
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Khan, I.; Fatma, M. Understanding the Influence of CPE on Brand Image and Brand Commitment: The Mediating Role of Brand Identification. Sustainability 2023, 15, 2291. https://doi.org/10.3390/su15032291

AMA Style

Khan I, Fatma M. Understanding the Influence of CPE on Brand Image and Brand Commitment: The Mediating Role of Brand Identification. Sustainability. 2023; 15(3):2291. https://doi.org/10.3390/su15032291

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Khan, Imran, and Mobin Fatma. 2023. "Understanding the Influence of CPE on Brand Image and Brand Commitment: The Mediating Role of Brand Identification" Sustainability 15, no. 3: 2291. https://doi.org/10.3390/su15032291

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