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Corporate Social Responsibility and Brand Equity

Running head: Corporate Social Responsibility and Brand Equity

The Impact of Corporate Social Responsibilities Marketing Activities on the Brand Equity
a.bayoumi (S0900-498)
The German University in Cairo

Corporate Social Responsibility and Brand Equity

Abstract
New type of customers start to exist in the market as a result of the continuous increase of
societal concern about environmental issues, accordingly firms creates new type of
communications to interact with such phenomenon. This type of communication is known by
corporate social responsibility (CSR) marketing strategy. The purpose of this study is to explore
the impact of CSR marketing activity on the brand equity of the firm applying this type of
marketing strategy.
Keywords: Corporate Social Responsibility, Sustainability, Strategic CSR, Sustainable
Marketing, Environmental Marketing, Brand Equity.

Corporate Social Responsibility and Brand Equity

Corporate Social Responsibility and Brand Equity


Steadily increasing societal concern about social and environmental issues leads to the
existence of a new type of customers, who used to apply this concern during the purchase
process (Chen, 2010). This leads firms to interact with this social phenomenon and try to create a
way of exchanging relationships with this type of customer. This way is variously known by
societal marketing, sustainable marketing, green marketing, environmental marketing or
ecological marketing (Banegil, 2006).
Abu Dhabi National Energy Company Taqa is one of the companies that are focusing
on executing social, ethical and environmental programs to all of its stakeholders, including
shareholders, employees, bondholders, the community and the environment. Taqa has joined the
3C initiative, a group of business leaders that aims to set global limits for temperature increases,
and have specific emission reduction targets; accordingly they offered their employees to buy a
hybrid low emissions car. Taqa started with its employees as it believes that changing individual
behavior is the first step toward changing societies (Kotler, 2010).
Having a deeper look on some famous brands strategies, it will be evidently clear that
nowadays it becomes a matter of social responsibility and sustainability; McDonalds (recycled
packaging), Home Depot (sustainable harvested wood) and Coke (sugar and packaging). This
obviously states that If you dont manage your business with respect to environmental and
social sustainability, your business will not be sustained (Ottman, 2008). Here comes out the
importance of green marketing and its social role in the market for the consumers, and also its
clear support for the business, and for the brand specifically.

Corporate Social Responsibility and Brand Equity

This paper will try to find out if there is a positive relation between corporate social
responsibility marketing activities and the brand equity. In addition; this paper is structured as
follows. First, we review prior literature on CSR and its main sources, then literature on the
Brand Equity. Second, we explore the relation between applying corporate social responsibility
and the brand equity. Finally, we will describe the conceptual frame work along with the thesis
question, along with a final conclusion of a semi-structured interviews held concerning this
research topic.

Corporate Social Responsibility and Brand Equity

Literature Review

Corporate Social Responsibility (CSR)


CSR has been used as a synonym for corporate philanthropy and also for business ethics.
Moreover; CSR has also been used in describing corporate social performance and corporate
citizenship, which usually highlight the corporate contribution to society through its business
activities, and through it social investment. CSR and corporate sustainability are overlapping
movements, though not identical (Milton, 2010). As per Siegel et al (2007) corporate social
responsibility (CSR) occurs when firms join in any activity that advance a social agenda beyond
that which is required by law. CSR is interrelated with complex issues such as environmental
protection, health and safety at work, human resources management, relations with local
communities, with suppliers and consumers (Branco et al, 2006). For example, a car
manufacturer could produce hybrid vehicles, which extensively exceed government fuel
efficiency requirements.
CSR can be defined as situations where the firm goes beyond compliance and engages
in actions that appear to further some social good, beyond the interests of the firm and that which
is required by law (Mc Williams et al, 2006:1), of course this is one definition, noting that a lot
of definitions have been proposed, but theres no clear chosen definition and this makes
measurement process harder. Another definition of CSR relates it to the firms contribution in
sustainable economic development, working with the staff and their families, in addition to local
communities and society in general to improve the quality of life (Holme et al., 2000). In
addition and as cited by Milton (2010), there is a classic description for CSR developed by Carol

Corporate Social Responsibility and Brand Equity

(1979), in which he mentioned that there are four categories for CSR activities, Economic
responsibilities; the most important social responsibility of business in the production of goods
and services and the generation of profits, Legal responsibilities: (that shows the corporate
compliance with regulation, Ethical responsibilities a set of societal standards wider than the
legal ones, and finally philanthropic responsibilities that shows the voluntary activities such as
charity donations done by the corporate (Figure 1).

Figure (1)

Brief overview on CSR Past Conceptualizations


Starting 1950s, CSR (Bowen, 1953) along with the related concepts of corporate social
responsiveness, corporate social performance (Carroll 1979; Wood 1991), and corporate social
responses (e.g., Strand 1983), and, have been the subject of many conceptualizations initiated

Corporate Social Responsibility and Brand Equity

from the management literature. In the following section we will outline the main viewpoints
that come out of this generous literature (Maignan, 2006).
CSR as social obligation:
As cited by Maignan, 2006; the first standpoint was initiated by Bowen (1953), who
defined CSR as the obligation "to pursue those policies, to make those decisions, or to follow
those lines of action which are desirable in terms of the objectives and values of our society".
The view of CSR as a social obligation has been promoted in later conceptualizations
(e.g., Carroll 1979). Carroll (1997) emphasized different types of social obligations can be
noticed: (a) legal and ethical obligations (b) economic obligations, and (c) philanthropic
obligations.
CSR as stakeholder obligation:
A number of scholars have challenged that the term of social obligation is too broad to
smooth the progress of the effective management of CSR in the mid- 1990s. As Clarkson (1995)
mentioned, society is at "a level of analysis that is both more inclusive, more ambiguous and
further the ladder of abstraction than a corporation itself". Clarkson (1995) and other scholars
(e.g., Donaldson and Preston 1995; Wood and Jones 1995; Jones 1995) argue that businesses are
responsible only toward those who directly or indirectly affect or are affected by the firm's
activities. These are simply called stakeholders and can be regrouped in four main categories (a)
organizational (shareholders, suppliers, employees, customers), (b) community (residents, special
interest groups), (c) regulatory (regulatory systems, municipalities), and (d) media stakeholders
(Maignan, 2006).

Corporate Social Responsibility and Brand Equity

CSR as ethics driven:


Swanson (1995) regrets that the previous approaches fail to account for a "positive
commitment to society that disregards self-interest and consequences", Moreover, the view of
CSR as a obligation does not succeed to provide a clear criteria to evaluate the extent to which
business activities can be or cannot be considered as socially responsible (Jones 1995). Based on
these condemnations, some scholars started to advocate an ethics-driven view for CSR that
affirm the appropriateness or wrongness of specific corporate activity of any social or
stakeholder obligation.
As an example, following justice-based ethics, a corporate could challenge to
systematically favor decisions and procedures that kindle liberty, equality, and fairness of
opportunities for all stakeholders.
CSR as managerial processes:
The previous three perspectives introduced thus characterize the factors inducing
businesses to consign to CSR. On the other hand, some authors have showed CSR in terms of
concrete organizational processes, For example, Ackerman (1975) stated three major activities
representing corporate social responsibility: (a) attending to stakeholder demands, (b) monitoring
environmental conditions, and (c) designing plans and policies required to enhance the firm's
positive impacts.
Considering the different viewpoints outlined above, it is crystal clear that no single
conceptualization of CSR has dominated past research. The integration of all the past definitions
is difficult as scholars have considered social responsibilities have different entities, including (a)
businesses in general, (b) the individual firm, and (c) the decision maker (Wood 1991).

Corporate Social Responsibility and Brand Equity

Corporate Social Responsibility and Strategy


The notion of CSR and the view of strategic management for firms usually seem to be
contradictory. Strategists usually aim for generating and maximizing profits while CSRs main
goal is ensuring that business earn a social license to operate (Milton, 2010). However; the term
Strategic CSR appeared on the surface in 2001, when Mc Williams, Siegel and Baron plotted the
model profit maximizing CSR. As Baron (2001:774) defined CSR as the private provision of
a public good. In addition, Baron (2001) emphasizes that companies compete for socially
responsible customers by clearly linking their social contribution with the sales of their product.
Moreover, and as cited by Siegel (2007); McWilliams et al. (2001) identified a model in which
two different firms sell identical goods, while one firm adds an extra social attribute to its
product. This social attribute is valued by some socially responsible consumers who view CSR as
a signal of firms reliability and honesty, and who believe that those firms will accordingly
produce better products. Consequently, CSR can be considered as a form of product
differentiation, and also a method for building brand loyalty.
As cited by Sharma et al. (2011), A lot of firms identify CSR applications with their core
strategy and policy based on the importance given to a) defining social action plan, b) amount of
investment awarded to social programs, c) commitment of their human resources, d) Perceived
impact of social programs on the firms competitive position, and e) measuring outcome of the
social programs applied (Husted et al., 2007). Moreover; managers can conduct a cost/benefit
analysis to determine the level of resources to be dedicated to CSR activities. Simply put, firms
simultaneously assess the demand for CSR and the cost of satisfying this demand and then
determine the optimal level of CSR to provide (Sharma et al, 2011).

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The CSR concept is regarded as a powerful tool for achieving sustainable competitive
profit and also for achieving enduring value for the investors, stakeholders. CSR can be used as
an opportunity for businesses, financial investors, and society. Proper implementation of CSR
practices can shape the perception of customers, investors, local communities, governments,
suppliers and competitors. Many multinationals, like the Tata Group, ITC, DuPont, etc., have
managed to create a better social image in society by providing a better and healthier work
environment to their employees and by providing the best services for their entire society
(Sharma et al, 2011).
As cited by (Sharma et al, 2011), the implementation of CSR practices calls for a
strategic framework. And in order to put together the different perspectives of CSR design,
planning, and implementation into one single strategic framework, we need to develop a
preliminary model that helps in testing of all these practices, also suggests the required changes.
Moreover; the organization shall align its CSR goals and its decisions along with its overall
targets and strategies so that having corporate social responsibility becomes a natural in a day to
day activity (Maon et al., 2008). There are various forces that also affect the implementation of
CSR, as outlined in Figure 2.
Gov. Policies
Philanthropy

Introduction of CSR
MNCs
Ethical Consumerism

Figure (2)

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Drivers Pushing Business towards Corporate Social Responsibility


According to Sharma et al (2011), there are different drivers that make business pushed
toward CSR activities. These drivers shown in figure (3) are commonly affected by the firms
main objectives.

In addition, Sharma et al added that when the businesses are implementing CSR, they
will gain new business opportunities and may be business partners. Also the firms social image
and reputation will be enhanced. This enhanced reputation will catch the attention of more
customers, which in turn will increase profits. Finally, firms can cut costs and make good
relations with stakeholders.

Corporate Social Responsibility and Marketing


As cited by Jones et al. (2007), Ernst and Young (2002) suggest that there are five major
drivers have influenced the growing business focus on CSR, greater stakeholder awareness of
social, corporate ethical and environmental behavior; investor pressure, direct stakeholder
pressures and an increased social responsibility sense. In addition and in order to cope with the

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overall changing business environment, which include the issues of globalization, image and
reputation; National and supranational governments have been dynamic in promoting CSR. For
example, The European Union promotes CSR in all the member states, in addition the UK
Government has a clear ambitious vision for CSR.
Exploring the links between CSR and marketing; Maignan and Ferrell (2004)
summarized the work of marketing researchers in examining consumer reactions to CSR
initiatives, the importance of CSR among marketing practitioners and the marketing benefits
achieved as a result from corporate social activities. They also explored some specific
dimensions of CSR such as the protection of the environment and the support of charitable
causes (Jones et al, 2007)
Moreover; a continuous growing interest in the ways by which CSR can develop and
enhance brands and in what Blumenthal and Bergstrom (2003) have defined as the convergence
of branding and Corporate Social Responsibility. Bronn and Vrioni (2001) emphasizes that
having a pro-social agenda means having a powerful marketing tool that can build brand image
and brand equity sector , in addition Middlemiss (2003), for example, suggests that CSR is
taking centre stage to provide more sustainable, long term brand value, while Yan (2003) argue
that CSR marks the difference between brands that have captured the imagination of
tomorrows consumers and those that are proving to be causalities. (Jones et al, 2007)
As cited by Jones et al (2007); Ogrizek (2002) has clarified that CSR branding is of
paramount importance to the financial sector while for the retail sector Girod and Michael
(2003) have emphasized that CSR can be considered a key tool to create and sustain
differentiated brand names. Moreover; Blomqvist and Posner (2004) argued that there are three
ways to integrate CSR with marketing namely the integrated, the selective and the invisible

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approaches. The first sees the brand and CSR operating synchronously and it works most
successfully where responsible practices are seen to be a key in driving brand preferences. In the
second CSR is said to manifest itself in much targeted ways and that it can provide
differentiation in a crowded marketplace. Third, while CSR plays an important strategic role
within the company it receives little attention in external communications.

Brand Equity
Brand equity is one of the most significant marketing concepts since the 1980s. Several
definitions for brand equity have been presented over the years, and most of them are consistent
with Farquhars (1989) definition as he defined brand equity as the value added to the product by
the brand itself. (Srinivasan et al, 2005: 1433)
In addition, Aaker (1991) defined brand equity as a set of brand assets and liabilities
linked to a brand, its name and symbol that add or subtract from the value provided by a product
or service to a firm and to the firms customers (as cited by Chen, 2010: 310), Moreover, Keller
(1993) clarified that the differential effect of brand knowledge on consumer response to the
marketing of a brand is totally created by brand equity (as cited by Chen, 2010: 310), In addition,
and according to (Mudambi et al, 1997), brand equity also can be defined as the total value
added by the brand to the core product, thus industrial brand equity is the value added by the
brand to the industrial buyers (as cited by Lai et al, 2010: 459)
As per Chen (2010: 310), there are two perspectives in defining brand equity: the first is
the consumer perspective that clarifies the value of the brand to the consumer (Aaker, 1991;
Keller, 1993; Rangaswamy et al., 1993), the second perspective is the financial one which
highlights the value of a brand to the firm (Simon and Sullivan, 1993).

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Creating brand equity is achieved when buyers perceive meaningful variation among
different brands in a product category; this clarifies the importance of differentiation for the
business. Brand equity has some components that shall be taken into consideration; these
components are brand awareness, brand associations, brand loyalty, brand satisfaction and
perceived quality (Lai et al, 2010: 459).
Brand equity is a major marketing asset (Ambler 2003), which can provoke a unique
relationship differentiating the link between the firm and its stakeholders (Hunt & Morgan 1995)
and encouraging long-term buying behavior. Clear understanding for brand equity, then investing
to build up this intangible asset increases the competitive advantage and drives brand wealth
(Yoo et al. 2000).
As cited by Christodoulides (2009); previous research recognized a positive effect of
brand equity on the following: Consumer purchase intention and consumer preference (CobbWalgren et al. 1995); consumer perceptions of product quality (Dodds et al. 1991); consumer
evaluations of brand extensions (Aaker & Keller 1990; Rangaswamy et al. 1993; Bottomley &
Doyle 1996); shareholder value (Kerin & Sethuraman 1998); consumer price insensitivity
(Erdem et al. 2002).
In addition; Marketing theorists hypothesize that market-based assets, like brands, may
help firms not only to increase returns but also may help to decrease the risks linked with these
returns and accordingly increase their value (e.g., Fornell et al. 2006; Srivastava, Shervani, and
Fahey 1998).

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Corporate Social Responsibility and Brand Equity


Firms apply corporate social responsibility (CSR) activities as they consider that some
kind of competitive advantage can be achieved. From a resource-based perspective CSR can be
seen as a source of providing internal or external benefits for firms (Branco, 2006).
Corporate social responsibility activities may have internal benefits for a firm through
developing new resources and capabilities that are interrelated to corporate culture. As cited by
Branco (2006), these internal benefits whether the outcomes or behaviors are irrelevant to the
development of internal resources and organizational efficiency (Orlitzky et al., 2003). The RBV
suggest that firms generate sustainable competitive advantages through managing and controlling
their resources and capabilities that are rare, valuable, cannot be imitated, or substituted. Human
resource activities that enhance employees attitude on workplace quality are considered as a
base to fulfill these four characteristics (Ballou et al., 2003).
Moreover, Branco et al. (2006) argued that in addition to the productivity benefits, firms
also can save on costs for staffing and training of new employees. Firms with strong social
responsibility commitment usually have additional ability to catch the attention of better job
applicants, retain them upon hiring, and maintain their employee morale. Accordingly this leads
to reduced recruitment and training costs and long with lower rate of turnover.
On the other hand; firms socially responsible activities have an obvious effect on
corporate reputation. Firms with a superior social responsibility reputation may get better
relations with external factors such as suppliers, customers, bankers, investors, and competitors.
They may also catch the attention of better employees and may increase the current employees
morale, loyalty and commitment to the firm. This, sequentially, may improve the firms financial

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performance. In addition; disclosure of information about firms performance and outcomes


regarding CSR may help build a positive corporate image with all stakeholders (Branco et al.,
2006).
As cited by Branco et al. (2006) that, According to Fombrun et al. (2000), firms can
benefit from CSR and disclosure as it helps firms along with their employees to become socially
integrated with the surrounding community, and give a hand for firms to build reputational assets
that may improves their ability in negotiation with suppliers and governments, and also to charge
premium prices Cost of Brand Equity for whatever they offer in terms of products or services.
It also mitigates the risk of reputational losses that can end result from pushing away key
stakeholders. By disclosing that they operate in accordance with ethical and social criteria, firms
can build reputation.
Some authors argue that the firms stock value can be increased through the involvement
in corporate social initiatives. They depend on the ability to catch the attention of new investors
and reduce exposure to risk. As cited by Branco et al (2006) that public declaration of
environmental awards had a positive effect on the firms market valuation and also on the
negative impacts immediately followed environmental crises, such as oil-spills (Klassen et al.
1996).
CSR activities disclosure is thus mostly important in enhancing the corporate reputation.
Hooghiemstra (2000) argues that social responsibility disclosure is a communication tool that
can be used by firms to create, enhance their image and reputation. It can support the firm in the
having a competitive advantage as creating a positive image may entail that people are prepared
to buy the firms products or even do business with it. In addition it can be seen as a public
relations vehicle, which aims to influence peoples perceptions about the firm.

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According to Jones (2005), brand equity is derived from co-creative interactions between
the brand and its stakeholders, this means the more satisfied stakeholders, the more valuable
brand equity, and he considered socially responsible behavior as one of the most proposed
expectations that will affect brand equity (as cited by Lai et al, 2010: 460), In addition and as
indicated by Smith and Higgins (2000) the brand manager uses consumer concern for business
responsibility as a means for securing competitive advantage.

Thesis Statement
Following the same logic, we can deduce that there is a positive relation between the
CSR marketing activities and the brand equity, especially with the increase of the societies
concern about environmental issues.

H1: Firms green marketing activities positively affect the firms brand equity.

CSR Marketing
Activities

Brand Equity
Brand Loyalty
Brand Awareness
Perceived Quality
Brand Satisfaction

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In this research we are going to study the relationship between the CSR marketing
activities as an independent variable and the brand equity as a dependent variable, In addition we
are going to answer the following research question:
Shall firms focus of CSR marketing activities in order to increase its brand equity?
Answering this question is a value added to the literature, which doesnt directly answer
it, and it will help marketing managers to identify their strategy in increasing their companies
brand equity.

Limited Qualitative Study


The researcher relies on the findings of the literature to identify the research question that
need to be addressed. The researcher had a quick one to one interview with a random sample of 8
persons, 3 of them are working in multinational companies, and the balance is working in
Egyptian companies. Also all of them are working in the commercial field, as commercial
directors, marketing managers and supply chain manager as well as two sales agents.
A semis-structured survey (Attachment 1) is already discussed with all the eight
interviewees. The questionnaire is checked for reliability and validity by the use of the causal
model that specifies the causal relationship of each construct to each other (Anderson and
Gerbing, 1988). The questionnaire includes three main parts, the first part is to assess the
suppliers CSR marketing activities concept, and the second part is to assess the brand equity and
the consumers respond toward it. The last part is to collect demographic information about the
respondents.

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Conclusion
Among all the eight interviewees; around 60% of them are concerned about social
activities done by any of the suppliers they are dealing with, and also they have no problem to
pay a little bit some extra costs for the products just to support suppliers sustain such campaigns,
and help in changing the overall mindset of consumers toward socially responsible attitudes of
corporate. Moreover; 40% feel not only satisfied but loyal for such socially responsible brands,
have a perceived high quality about what they offer, and finally they feel delighted once dealing
with or buying such brands.
CSR practices are becoming necessary for the endurance of every firm. As is evident
from previous literature, foreign multinational firms are implementing CSR practices at higher
levels; also customers prefer to buy their products more than the products produced by
companies who dont apply CSR activities. This finding suggests that there is a great
responsibility for firms to put a hand and adapt their strategies accordingly. The CSR marketing
activities will help firms to improve their social image and market reputation and accordingly
their brand equity.

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References
McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate Social Responsibility:
Strategic Implications. Journal Of Management Studies, 43(1), 1-18.

Branco, M., & Rodrigues, L. (2006). Corporate Social Responsibility and Resource-Based
Perspectives. Journal Of Business Ethics, 69(2), 111-132.

Chen, Y. (2010). The Drivers of Green Brand Equity: Green Brand Image, Green Satisfaction,
and Green Trust. Journal of Business Ethics, 93(2), 307-319. doi:10.1007/s10551-009-0223-9

Lai, C., Chiu, C., Yang, C., & Pai, D. (2010). The Effects of Corporate Social Responsibility on
Brand Performance: The Mediating Effect of Industrial Brand Equity and Corporate Reputation.
Journal of Business Ethics, 95(3), 457-469. doi:10.1007/s10551-010-0433-1

Isabelle Maignan (2006). Corporate Social Responsibility and Marketing: An integrative


Framework. Journal of the Academy of Marketing Science

George Christodoulides (2009). Consumer based brand equity conceptualization and


measurements. International Journal of Market Research

Siegel, D. S., & Vitaliano, D. F. (2007). An Empirical Analysis of the Strategic Use of Corporate
Social Responsibility. Journal Of Economics & Management Strategy, 16(3), 773-792.

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Kiran, R., & Sharma, A. (2011). CORPORATE SOCIAL RESPONSIBILITY: A CORPORATE


STRATEGY FOR NEW BUSINESS OPPORTUNITIES. Journal Of International Business
Ethics, 4(1), 10-17.
Chen, Y. (2010). The Drivers of Green Brand Equity: Green Brand Image, Green Satisfaction,
and Green Trust. Journal of Business Ethics, 93(2), 307-319.

Chamorro, A., & Baegil, T. M. (2006). Green marketing philosophy: a study of Spanish firms
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Srinivasan, V. V., Chan Su, P., & Dae Ryun, C. (2005). An Approach to the Measurement,
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Peter Jones, & Daphne Comfort (2007). Marketing and Corporate Social Responsibility within
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Corporate Social Responsibility and Brand Equity

Attachment 1

CSR Marketing Strategy

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Corporate Social Responsibility and Brand Equity

1. Our major supplier / brand is very concerned with local community


2. Our major supplier / brand is very concerned with environment protection
3. Our major supplier / brand is very concerned with buyers environmental benefits
4. Our major supplier / brand actively participates in social initiatives

Brand equity
Brand loyalty
1. Products and services of this brand are the first choice of us
2. We feel ourselves loyalty to this brand
3. Even with many choices, we will not choose alternative brands

Perceived quality
1. This brand is of very good quality
2. The likelihood that this brand will function well is very high
3. The likelihood that this brand is reliable is very high

Brand awareness/association
1. The name of this provider is well known in our industry
2. We can recognize this brand among competitive brands
3. In comparison to other providers, this company is a leading brand in the industry
4. We have no difficulties in imagining this brand in mind
5. We can recall some characteristics of this brand

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Corporate Social Responsibility and Brand Equity

Brand satisfaction
1. Products and services of this brand usually meet our expectations
2. Products and services of this brand are at the desirable level
3. Overall, we are very satisfied with products and services of this brand
4. Products and services of this brand always bring happiness and delights to us

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