Destination Brand Equity: A Perspective of Generation Z on A World Heritage Site in Indonesia

Abstract

The purpose of this study is to investigate the relationship among the components of brand equity and to examine the effects of these components on the overall customer-based brand equity from the perspective of the Generation Z. This study is applied in the case of Borobudur World Heritage Destination, which is in Indonesia. A survey questionnaire has been collected through purposive sampling from 167 Generation Z who have visited Borobudur World Heritage Destination. The research hypotheses were supported by the empirical test using a Structural Equation Model with AMOS. The result concludes that destination brand awareness has significant, positive effects on destination brand image and perception of destination quality; destination brand image has positive influences on perception of destination quality and destination brand loyalty; perception of destination quality has significant, positive impacts on destination brand loyalty. Except for destination brand image and destination brand awareness, the perception of destination quality and destination brand loyalty have positive and direct impacts on overall destination brand equity. In sum, overall customer-based brand equity of a world heritage destination in the context of a developing economy is directly influenced by only two components of brand equity, namely, the perception of destination quality and destination brand loyalty.

1. Introduction

The tourism sector has grown into a new economic resource as well as a leading sector for many economies in the world. Based on data from the World Tourism Organization/ UNWTO (2018), the rate of international tourist visits worldwide has grown by about seven percent in 2017 or increased by 86 million tourists from the previous number of 1.240 million in 2016. This percentage is the highest growth since the global economic crisis in 2009. Even this number is above the UNWTO forecast in the last ten years to 2020 in which the growth rate of international tourist arrivals is only 3.8 percent per year. Most of the goals of international visits in 2017 were for recreation and leisure (55 percent).

The tourism sector has also become a mainstay of the Government of Indonesia in driving the local and national economy. Tourism Ministry data show that in 2017, the tourism sector has contributed five percent of the National Gross Domestic Products (GDP). It was also contributed Rp202.3 trillion in foreign exchange, ranked 42nd in the Travel and Tourism Competitiveness Index (TTCI), brought in 14.04 million foreign tourists, and mobilized 270.82 million Indonesian tourist trips. Meanwhile, the government is targeting Indonesia to become a world-class tourism destination in 2019 with an indicator of contribution to the National GDP of 5.5 percent, contributing 280 trillion foreign exchange, ranking 30th on TTCI, bringing in 20 million foreign tourists, and driving 275 million archipelago tourist trips.

The government’s target is certainly not easy. Limited resources have increased competition among tourist destinations (Novais et al., 2018). Therefore, since 2016 the Government of Indonesia has established ten priority/ flagship destinations in Indonesia, namely, 1) Lake Toba; 2)Tanjung Kelayang; 3)Thousand Islands; 4)Tanjung Lesung; 5) Borobudur; 6) Bromo Tengger Semeru; 7) Mandalika; 8) Wakatobi; 9) Labuan Bajo; and 10) Morotai Island. With this determination, President Joko Widodo expects significant progress on the development of Indonesia’s top tourist destinations that can then support the realization of competitive advantage and comparative advantage in marketing the Indonesian tourist destinations. Besides, in Strategic Planning 2018-2019, the Ministry of Tourism also noticed the absence of ten Tourism Megatrends as a result of the study of Tutek et al. (2015), namely, 1) Silver-hair tourist; 2) Generation X and Y; 3) Growing middle class; 4) Emerging destinations; 5) Political issues and terrorism; 6) Technological (r)evolution; 7) Digital channels; 8) Loyalty v.X.0; 9) Health and healthy lifestyle; and 10) sustain-ability. Ten Tourism Megatrends are identified to affect the implementation of global tourism in the next few years.

Right marketing strategies and tactics are important aspects in the development of top tourist destinations. In this case, the success of a destination brand becomes an absolute demand. Destination brands will be early guidance for travelers in choosing which tourist destinations to visit. Even, investors are often influenced by the place brand equity in deciding the potential location to invest (Pham & Pham, 2020). In the context of destination, branding has appeared as a powerful tool for marketing tourist destinations, especially for differentiating a tourist destination from its competitors (Ruiz-Real et al., 2020). The intense competition among destinations in providing visitors with good facilities at a minimum cost has required a destination to create a strong brand (Kim & Lee, 2018). Therefore, there is a need to examine destination brand equity as the common term to represent the destination brand performance (Pike, 2010). The Government of Indonesia needs to evaluate the brand equity of the Indonesian priority tourist destination.

Studies of customer-based destination brand equity in the context of a world heritage destination in developing economies are still limited. Most studies of destination brand equity are related to cities (Dedeoğlu et al., 2019; Kladou & Kehagias, 2014; Tran et al., 2019) and nations (Kotsi et al., 2018; Rodríguez-Molina et al., 2019). This research wants to fill a research gap by empirically examining the components of destination brand equity on one of Indonesia’s priority destinations, Borobudur, by taking into account the perceptions of Generation Z. Borobudur was chosen as a research object because of its unique characteristics, namely, as one of the seven wonders of the world heritage, while Generation Z was chosen because it is a generation born after generations X and Y and will be the next challenge and opportunity for a tourist destination.

2. Literature Review

2.1. Destination Branding

Destination branding is a field of research that has been receiving increasing academic attention since thirty years ago (Pike, 2010). Until recently, destination branding is still a key research area in tourism marketing (Ruiz-Real et al., 2020). Branding becomes a tool which is used by customer and brand owner to create economic value (Tsiotsou & Ratten, 2010) and to create differences (Keller, 2013). In more practice, branding can be defined as the process of creating the identity and uniqueness of a brand through various marketing activities that will assist consumers and companies, both in identifying its goods and services and distinguishing it from competitors (Gnoth, 2002; Im et al., 2012). Meanwhile, destination branding is a marketing tool to improve the competitiveness of cities, regions, and even countries as a destination, usually as a tourist destination. This concept is a further development of the branding concept for a product, service, and company, which then extends to the context of a country.

2.2. Brand Equity and Destination Brand Equity

One of the concepts of brand equity that is often refer-enced was put forward by David A. Aaker in 1991 as a set of assets and obligations attached to a brand, name, or symbol that adds or decreases the value of goods or services for the company or its consumers. The set of assets consists of:

1) brand loyalty – the willingness of consumers to buy back and recommend a product and service

2) brand awareness – how a product or service is remembered by consumers so that consumers can distinguish it from other products or services

3) perceived quality – consumer assessment of overall quality excellence over products and services

4) brand associations – matters relating to thinking, opinions, feelings, attention, and visualization of products and services

5) other proprietary assets, such as copyright

Studies on brand equity have been conducted, specifically related to the development of the framework (de Oliveira et al., 2015; Huang & Cai, 2015; Jara & Cliquet, 2012; Wu et al., 2020) as well as the relationship between brand equity to other variables (Beig & Nika, 2019; Tran et al., 2020).

Destination brand equity here can be translated as brand equity from a destination or tourist destination, namely, various marketing activities that can increase the value of assets from tourist destinations that can help achieve the goal of winning competition, increasing profits, and increasing visitor loyalty (Kim & Lee, 2018). Various dimensions of brand equity are applied in the context of tourist destinations (Gartner, 2014; Kim & Lee, 2018; Kladou et al., 2015; Kladou & Kehagias, 2014; Rodríguez-Molina et al., 2019; Tran et al., 2019).

2.3. Customer-Based Destination Brand Equity

Brand equity can be measured through various approaches, namely, customer-based approach, employer-based business or corporate owner approach, and financial-based approach. Customer-Based Destination Brand Equity (CBDBE) is a brand equity concept developed from the customer-based brand equity concept and applied to desti-nations, especially tourist destinations. This concept was developed by Konecnik and Gartner (2007) using four dimensions of brand equity, namely, awareness (prospective visitors know the existence of tourist destinations), image (prospective visitors have an impression related to tourist destinations), quality (prospective visitors have a perception of the quality of tourist destinations), and loyalty (prospective visitors have loyalty to tourist destinations). After that, many scholars and academicians are developing and testing customer-based destination brand equity in various contexts (Bianchi et al., 2014; Boo et al., 2009; Chekalina et al., 2018; Yousaf et al., 2017; Yuwo et al., 2019).

2.4. Generation Z

Some sources provide different initial periods in defining Generation Z. However, in general, Generation Z is also called the post-millennial generation, which is the generation born between 1995 and 2010 (Bassiouni & Hackley, 2014; Tutek et al., 2015). This generation is very different from Generation X or Generation Y, even most of Generation Z was born by Generation X. Some of the hallmarks of Generation Z, among others, are that many associates with smart gadgets, follow the trend of digitization, or integrate into the digital world, and have a background in higher education.

2.5. Research Model and Hypotheses

In measuring the equity element of the destination brand, the study refers to the frame of thought and scale of questions developed by Tran et al. (2019) from a variety of sources. The frame of thinking has been applied in the context of tourism in developing countries with local tourist respondents. This research will measure the equity of the destination brand of Borobudur tourism by entering four dimensions, namely destination brand awareness, destination brand image, destination quality perception, and the destination brand loyalty (see Figure 1).

Figure 1: Research Model

The hypothesis applied in this study are as follows:

H1: Destination brand awareness has a positive and significant influence on the brand image of destinations.

H2: Destination brand awareness has a positive and significant influence on the perception of destination quality.

H3: The brand image of the destination has a positive and significant influence on the perception of destination quality.

H4: Destination brand image has a positive and significant influence on destination brand loyalty.

H5: Perception of destination quality has a positive and significant influence on destination brand loyalty.

H6: Destination brand awareness has a positive and significant influence on destination brand equity.

H7: Destination brand image has a positive and significant influence on destination brand equity.

H8: The perception of destination quality has a positive and significant influence on the equity of the destination brand.

H9: Destination brand loyalty has a positive and significant influence on destination brand equity.

3. Research Methods

This research is empirical, with Generation Z respondents who have visited Borobudur’s flagship tourist destination located in Magelang Regency, Central Java Province, Indonesia. Data collection is done by distributing questionnaires online using Google Form. During the one-week data collection period in early 2020, a total of 167 questionnaires were collected for analysis. Questionnaires were compiled on a scale of Likert 1 to 5 to express strongly disagree to strongly agree. Data collection is conducted purposive sampling for respondents with a range of birth years between 1995 and 2010 who have visited Borobudur tourist destinations. The collected data is then processed using the AMOS Program.

4. Results and Discussion

4.1. Respondents Description

This study collected data from respondents from 64 regions (cities/districts) in Indonesia. Most respondents were born between 1995 and 2000, of which 146 respon-dents (87%), the rest were born between 2001 and 2005 (21 respondents, 12%). Based on age, the majority of respondents who filled out the questionnaire were between 18 and 22 years old. By gender, the majority of respondents who filled in were women (106 respondents, 63%), while men as many as 61 respondents (37%). Based on educational background, the majority of respondents with a Diploma (65%) background, followed by under-graduate respondents (28%), high school/vocational educated respondents (0.07%), and others (0.01%). Based on the experience or frequency of visits, the number of respondents who had only visited Borobudur once was 29 percent, visited twice as much as 30 percent, visited three times as much as 16 percent, and visited more than three times as much as 26 percent.

4.2. Validity

The validity test on AMOS can be determined from the standardized loading factor value (see Table 1). An item is declared valid if it has a value greater than 0.50.

Table 1: Initial Validity Test Results

The results in Table 1 show that Destination Brand Awareness 4 (‘Borobudur is an idea when I am thinking about a destination’) has a value of less than 0.50, so it must be removed from the model analysis. The results of the analysis after the deleted item are as follows (see Table 2):

Table 2: Final Validity Test Results

The above results show that all items have passed the validity test and are worth using for the next stage of research.

4.3. Reliability

The reliability test is determined by using the composite reliability value calculated with the formula:

\(\text { Construct Reliability }=\frac{\left(\sum \text { St.Loading }\right)^{2}}{\left(\sum \text { St.Loading }\right)^{2}+\sum \varepsilon_{j}}\)       (1)

The results of the reliability test calculation are as follows (see Table 3):

Table 3: Reliability Test Results

The above results indicate that each variable already has a good reliability value, indicated by a value of more than 0.70.

4.4. Goodness of Fit

The goodness of fit results showed that the model was fit because some good fit criteria had been met, while others were entered into the marginal fit criteria (see Table 4).

Table 4: The Goodness of Fit Test Results

4.5. Hypothesis Test

After the validity test, reliability test, and goodness of fit test, a hypothetical test is carried out. The results of the hypothesis test are presented as follows (see Table 5):

Table 5: Hypothetical Test Results

The results presented in Table 5 show that:

1. Destination Brand Awareness proved to have a positive effect on Destination Brand Image, indicated by an estimated value of 0.487 and a p-value of 0.001 < 0.05. This corresponds to hypothesis 1.

2. Destination Brand Awareness proved to have a positive effect on Destination Quality Perception, indicated by an estimated value of 0.641 and a p-value of 0.000 < 0.05. This corresponds to hypothesis 2.

3. Destination Brand Image proved to have a positive effect on Destination Quality Perception, indicated by an estimated value of 0.240 and p p-value value of 0.001 < 0.05. This corresponds to hypothesis 3.

4. Destination Brand Image proved to have a positive effect on Destination Brand Loyalty, indicated by an estimated value of 0.465 and a p-value of 0.001 < 0.05. This corresponds to hypothesis 4.

5. Destination Quality Perception proved to have a positive effect on Destination Brand Loyalty, indicated by an estimated value of 0.701 and p-value of 0.001 < 0.05. This corresponds to the hypothesis of 5.

6. Destination Brand Image has NOT been shown to have a positive effect on Destination Brand Equity, indicated by an estimated value of −0.012 and p-value 0.900 > 0.05. This does not correspond to hypothesis 6.

7. Destination Brand Awareness was NOT shown to have a positive effect on Destination Brand Equity, indicated by an estimated value of 0.027 and a p-value of 0.849 > 0.05. This does not correspond to hypothesis 7.

8. Destination Quality Perception proved to have a positive effect on Destination Brand Equity, indicated by an estimated value of 0.521 and a p-value of 0.007 < 0.05. Destination Quality

Perception proved to have a positive effect on Destination Brand Equity, indicated by an estimated value of 0.521 and a p-value of 0.007 < 0.05. This corresponds to hypothesis 8.

9. Destination Brand Loyalty proved to have a positive effect on Destination Brand Equity, indicated by an estimated value of 0.751 and a p-value of 0.001 < 0.05. This corresponds to hypothesis 9.

4.6. Discussion

Theoretically, the study adopted a model to investigate the relationship between multiple dimensions of brand equity and its impact on overall brand equity. The results indicate a structural model that is a good fit. There are two dimensions of brand equity that do not have a direct significant effect on brand equity likely due to the context of the research. This study sample is Generation Z from Indonesia, which looks at Borobudur the same way as other tourist destinations, so the uniqueness of Borobudur does not make enough of an impression on Generation Z travelers.

The results showed a positive influence of the destination brand awareness dimension on the dimensions of the destination brand image and the quality dimension of the destination brand. This indicates that the more successful Borobudur is in creating awareness to tourists, the more positive the impression of tourists on the quality of Borobudur. Therefore, there need to be various marketing promotions, for example through social medias, video and websites promotions, influencers, and various tourist activities.

The results also showed a positive influence on the dimensions of the destination brand image on the dimensions of the perception of destination quality and loyalty of the destination brand. This indicates that Borobudur should be able to build an effective and unique impression that suits the personality and style of Generation Z to satisfy them.

The results showed that the dimensions of brand quality perception had a significant and positive influence on the loyalty of the destination brand indicating that the better the quality of service provided, the more loyal travelers will be. Therefore, local governments, entrepreneurs, and people in Borobudur tourist destinations must synergize to improve services related to infrastructure, accommodation, food, and so on.

Finally, the results of studies showing that there is a significant relationship between the quality dimension of the destination brand and the loyalty of the destination brand to the overall equity of the destination brand indicate the importance of building quality and loyalty in the travel world. On the other hand, the awareness of the destination brand and the brand image of the destination does not affect the overall equity of the destination brand can be understood because Borobudur is already known by domestic tourists and is seen as not unique to Generation Z who prefer the dynamic and modern impression that Borobudur does not yet have. However, that does not mean that the two dimensions have no positive influence at all, only that this model has not been able to confirm a positive relationship. The dimensions of destination brand awareness and destination brand image can have an indirect influence on the equity of the destination brand through other components. These results recommend that when all resources are allocated to improve the quality dimension of the destination brand and the destination brand loyalty dimension, marketing organizers should not forget the dimensions of destination brand awareness and destination brand image.

In general, tourists will consider the brand of a destination to visit. Travelers treat tourist destinations like products and perceive them as brands so they will decide on destination choices based on their brand equity (Tran et al., 2019). The increasingly intense level of competition between tourist destinations demands that each tourist destination be able to measure its brand equity so that effective brand equity can increase competitiveness.

5. Conclusion and Limitations

This research aims at evaluating the equity of the Borobudur tourist destination brand as a recommendation for stakeholders to make strategic branding plans to attract more tourists. The results of this study can lead to the conclusion that, based on the hypothesis compiled, there are two unfulfilled hypotheses, namely, 1) the brand image of the destination does not affect the equity of the destination brand and 2) the awareness of the destination brand has no effect on the equity of the destination brand. In addition to both hypotheses, other hypotheses were fulfilled.

This study has several limitations. First, the results show that destination brand awareness and destination brand image do not significantly influence the customer-based destination brand equity. Therefore, it is necessary to add a sample of respondents. Second, the case study is implemented in only one world heritage destination, which could not be generalized to another context, besides in destination branding no one solution fits all. Therefore, it is necessary to apply this framework to another context.

Future research needs to be further developed by looking at the relationship between the equity of Borobudur destination brands and other marketing factors. Besides, the number of respondents also needs to be increased by reaching different Generation Z.