The effect of fake news on the relationship between consumer-based brand equity and consumer responses to premium brands

The landscape for brand management in the 21st century is dynamic and global with the creation of the Internet and more particularly social media where consumers are able to interact in real-time with brands and other consumers. Fake news (often shared through social media) has become popular in recent times owing to the low barriers to entry in the media industry which has created conducive space to spread information that is not fact-checked or verified which may affect the reputation of brands. The impact of word of mouth, particularly through electronic word of mouth on brands has been the focus of researchers recently. This study investigated the role of fake news on the relationship between consumer-based brand equity and consumer responses to premium brands. A conceptual model was developed from the literature review testing the relationship between consumer-based brand equity (independent variable), brand preference, willingness to pay a price premium and brand loyalty (dependent variables) with fake news via electronic word of mouth as the moderating variable. By employing a quantitative study, 191 valid responses were received from the middle-class consumers in South Africa through an online survey to test the developed hypotheses. Structural equation modelling (SEM) was used to analyse the relationship the consumer-based equity, and consumer responses and a moderation interaction analysis was used to examine the effect of the fake news through electronic mouth on these relationships. The result revealed that brand awareness, brand image, perceived quality and brand association were strong indicators of the consumer based-brand equity of premium brands. However, the strongest dimensions were brand awareness and brand image in the context of South Africa. The relationship of consumer-based brand equity was found to be the strongest with brand preference, followed by brand loyalty and willingness to pay a price premium. It was further revealed that fake news through electronic word of mouth does not moderate any of the relationships between brand equity and consumer responses in this case. These findings are relevant for both academics and brand managers as it revealed that the building of strong brand equity would shield premium brands from any fake news that may be disseminated through social media platforms.Mini Dissertation (MBA)--University of Pretoria, 2018.dm2019Gordon Institute of Business Science (GIBS)MB