Prahalad's market approach impacting brand loyalty in base of the pyramid Philippines

This purpose of this paper is to examine how Prahalad’s 4As market framework influences brand loyalty in the Base of the Pyramid (BoP) market of the Philippines. Specifically, Prahalad’s proposed market framework composed of four constructs – awareness, affordability, access, and availability. Prahalad proposed that the 4As strategic framework was a more appropriate alternative to the traditional marketing framework of the 4Ps – product, price, place and promotion. To date, limited market research has focused on brands and brand loyalty in BoP markets. The present study was conducted first to examine Prahalad’s 4As as a comprehensive set of constructs, and second to measure the impact of the 4As on brand loyalty in the BoP market of the Philippines. Using an online survey, data was collected from 606 Philippine college students. Structural equation modeling was utilized to examine the relationship between Prahalad’s constructs and their combined impact on brand loyalty. Two constructs, access and availability, were combined into the construct presence, reflecting the consumers’ perspective that the product is present in the consumers’ marketplace, both in a store and on the shelf. Examining the impact on brand loyalty, both awareness of the branded product and the affordability of the branded product were found to be positively related to brand loyalty; these findings support previous research studies. While presence was not found to be related to brand loyalty, presence was found to be positively related to both awareness and affordability. The paper concludes with a discussion of how the findings link to previous research, the theoretical implications, recommendations for marketing practitioners, the limitations of this research, and suggestions for future research. Corresponding author: Marvin O. Bates, DBA Email addresses for corresponding author: BatesMr@lewisu.edu First submission received: 4th July 2017 Revised submission received: 29 August 2017 Accepted: 30thSeptember 2017 1. Review of the Problem Statement Despite the increase in globalization and the rapid growth in emerging markets, Multinational Corporations (MNC) continue to be challenged in their attempts to penetrate the BoP markets. Prahalad’s response to the MNCs’ failure to effectively penetrate the BoP markets was a strategic reframing of marketing; Prahalad shifted from the traditional 4Ps’ approach to his proposed 4As’ strategic marketing approach. Prahalad’s (2004, 2010, 2012) 4As include: 1. Awareness of the product and service so that the BoP consumer knows what is available, and how to use the product or service. 2. Affordability of the product or service for the BoP consumer. 3. Access to the product or service, even for consumers in remote geographical areas. 4. Availability of the product or service with an uninterrupted or continuous supply of the product or service. Journal of Business and Retail Management Research (JBRMR), Vol. 12 Issue 2 January 2018 www.jbrmr. com A Journal of the Academy of Business and Retail Management (ABRM) 29 Little research has been undertaken focusing on brands or brand loyalty in BoP markets (Barki & Parente, 2010; Chikweche & Fletcher, 2010; Dawar & Parker, 1994; Tong, 2006). Chikweche and Fletcher found that “research on branding at the BoP is one area where there is a gap in current literature” (2011, p. 248). While still in its infancy as a field of research, recent studies have begun to focus on brands and brand loyalty in both emerging and BoP markets (Ahmed, Sandhu, Zulkarnain, & Gulzar, 2011; Eisengerich & Rubera, 2010; Khan & Mahmood, 2012; Kim, Forsythe, Gu, & Moon, 2002; Nguyen, Barrett, & Miller, 2011; Punniyamoorthy & Raj, 2007; Wel, Alam, & Nor, 2011). Surprisingly, none of these nascent studies quantified the basic relationships which exist when considering Prahalad’s 4As. Secondly, no studies have quantitatively examined all Prahalad’s 4As as a set of independent variables influencing the dependent variable brand loyalty. The purpose of this study was to address these two heretofore unaddressed research questions, specifically: 1. Are Prahalad’s 4As unrelated variables, or are they related to each other? And if associations do exist, how strong are the associations? 2. Do the independent variables of Prahalad’s 4As effect the dependent variable of brand loyalty? And if effects do exist, how strong are the effects? Based on these problem statements, research hypotheses for the current study were developed and are presented in Table 1. Hypothesis Hypothesis Statement H1 No statistically significant relationship exists between awareness and affordability. The relationship was expected to be neutral. H2 No statistically significant relationship exists between awareness and access. The relationship was expected to be neutral. H3 No statistically significant relationship exists between awareness and availability. The relationship was expected to be neutral. H4 No statistically significant relationship exists between affordability and access. The relationship was expected to be neutral. H5 No statistically significant relationship exists between affordability and availability. The relationship was expected to be neutral. H6 No statistically significant relationship exists between access and availability. The relationship was expected to be neutral. H7 Higher levels of product awareness will be positively related to higher levels of brand loyalty. The relationship was expected to be positive. H8 Higher levels of product affordability will be positively related to higher levels of brand loyalty. The relationship was expected to be positive. H9 Higher levels of product access will be positively related to higher levels of brand loyalty. The relationship was expected to be positive. H10 Higher levels of product availability will be positively related to higher levels of brand loyalty. The relationship was expected to be positive. Table 1: Research Hypotheses 2. Review of Methodology Data collection was accomplished through a survey completed by 1,520 college respondents in the Philippines. Income and family size responses were collected to qualify respondents in the BoP economic level. The final research data set consisted of 606 respondents who were classified as BoP members with an annual income of 135,645 PhP or less (i.e., $3,000 USD or less). The measurement of Prahalad’s 4As constructs was based on Prahalad’s definitions. The measurement of the brand loyalty construct was based on an earlier definition by Lam (2007) and Sproles and Kendall (1986). Additional demographic responses were collected to increase homogeneity in the sample, and for potential use in future analysis. This study included two cross-cultural communication assumptions inherent in international research. The first key assumption was that the questions in the measurement instrument would be understood by Filipino college students. The questionnaire was presented to the respondents in the English language, an official language in the Philippines. Recognizing the existence of cultural language idioms, the measurement instrument was further reviewed for both comprehension and unique language Journal of Business and Retail Management Research (JBRMR), Vol. 12 Issue 2 January 2018 www.jbrmr. com A Journal of the Academy of Business and Retail Management (ABRM) 30 issues by five Philippine university professionals. With the completion of this review, the first key assumption was addressed in two ways. First, using English, the survey items would be understood when the questionnaire was deployed in the Philippines. And second, using Philippine English, the measurement instrument would be appropriate for use in the unique environment of the Philippines. The second cross-cultural communication assumption was that the questions in the measurement instrument would be answered accurately and without bias in the Philippines. The measurement instrument was developed to minimize bias-generating questions. After a thorough pre-analysis data screening, data was analyzed by means of structural equation modelling (SEM). The hypotheses were tested using EQS SEM which can correct for non-normal data in large samples through EQS’s use of robust fit statistics (Byrne, 2006). 3. Discussion and Implications of the Research Results Results of the current research are reviewed in this section. First those hypotheses addressing the first research question are reviewed; specifically, “are Prahalad’s 4As unrelated variables, or are they related to each other? ” And second, those hypotheses addressing the second research question are reviewed; specifically, “do the independent variables of Prahalad’s 4As effect the dependent variable of brand loyalty”? 3.1 Relationship among Prahalad’s constructs Prahalad initially described the 4As as distinct and unrelated constructs; because of this, the null hypothesis structure was utilized to validate the independence of these variables. The hypotheses examined in this section include: H1, H2, H3, H4, H5 and H6. The optimized model identified multiple statistically significant relationships between Prahalad’s 4As constructs; these significant relationships are shown in Figure 1. The construct presence is the combined construct made up of three question items initially from the exogenous construct access, and two question items initially from the exogenous construct availability.