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Brands and Branding: Research Findings and Future Priorities
Author(s): Kevin Lane Keller and Donald R. Lehmann

Source: Marketing Science , Nov. - Dec., 2006, Vol. 25, No. 6, 25th Anniversary Issue
(Nov. - Dec., 2006), pp. 740-759
Published by: INFORMS
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Marketing Science infSEEL
Vol. 25, No. 6, November-December 2006, pp. 740-759
issn 0732-2399 1 eissn 1526-548X 1 06 1 2506 1 0740 doi 10.1287/mksc.l050.0153
©2006 INFORMS
Brands and Branding: Research Findings and

Future Priorities
Kevin Lane Keller

Tuck School of Business, Dartmouth College, Hanover, New Hampshire 03755, kevin.keller@dartmouth.edu
Donald R. Lehmann
Graduate School of Business, Columbia University, 507 Uris Hall, 3022 Broadway, New York, New York 10027,
drl2@columbia.edu
Branding
brands arehas
oneemerged as a valuable
of the most top management
intangiblepriority in firms
assets that the last decade
have. duein
Driven topart
the by
growing realization
this intense tha
industry
interest, academic researchers have explored a number of different brand-related topics in recent years, generat
ing scores of papers, articles, research reports, and books. This paper identifies some of the influential work in
the branding area, highlighting what has been learned from an academic perspective on important topics such
as brand positioning, brand integration, brand-equity measurement, brand growth, and brand management.
The paper also outlines some gaps that exist in the research of branding and brand equity and formulates a
series of related research questions. Choice modeling implications of the branding concept and the challenges
of incorporating main and interaction effects of branding as well as the impact of competition are discussed.
Key words: brands; brand equity; brand extensions
History: This paper was received August 19, 2004, and was with the authors 4 months for 2 revisions;
processed by Leigh McAlister.
Introduction tasks frequently performed by marketing executives

Brands serve several valuable functions. At their most are discussed in detail: (1) developing brand posi-
tioning, (2) integrating brand marketing, (3) assess-
basic level, brands serve as markers for the offerings
of a firm. For customers, brands can simplify choice,ing brand performance, (4) growing brands, and
promise a particular quality level, reduce risk, and (5)
/orstrategically managing the brand. We then con-
engender trust. Brands are built on the product itself, the implications of this work for choice models.
sider
the accompanying marketing activity, and the Finally,
use we present a simple framework for inte-
grating
(or nonuse) by customers as well as others. Brands the customer-market, product-market, and
financial-market level impact of brands and how the
thus reflect the complete experience that customers
have with products. Brands also play an important is created and developed by company actions.
brand
role in determining the effectiveness of marketing
Branding
efforts such as advertising and channel placement. Decisions and Tasks
Finally, brands are an asset in the financial sense.
Developing Brand Positioning
Thus, brands manifest their impact at three primary
Brand positioning sets the direction of marketing
levels - customer market, product market, and finan-
activities and programs - what the brand should and
cial market. The value accrued by these various ben-
should not do with its marketing. Brand positioning
efits is often called brand equity. involves establishing key brand associations in the
Our primary goal in this paper is to both selec-
minds of customers and other important constituents
tively highlight relevant research on building, mea-
to differentiate the brand and establish (to the extent
suring, and managing brand equity and to identifypossible) competitive superiority (Keller et al. 2002).
gaps in our understanding of these topics. We Besides
put the obvious issue of selecting tangible prod-
considerable emphasis on the latter and suggest
uct attribute levels (e.g., horsepower in a car), two
numerous areas of future research.1 Five basic topics
areas particularly relevant to positioning are the role
that align with the brand-management decisions and
of brand intangibles and the role of corporate images
and reputation.
1 For commentary on the state of branding, see special issues of
International Journal of Research in Marketing (Barwise 1993)exhaustive
and review of the academic literature on brands and brand
Journal of Marketing Research (Shocker et al. 1994). For a more
management, see Keller (2002).
740

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Keller and Lehmann: Brands and Branding: Research Findings and Future Priorities
Marketing Science 25(6), pp. 740-759, ©2006 INFORMS 741
Brand Intangibles. An important and relatively

Research Questions:
unique aspect of branding research
1. How does brand ispersonality
the focus on
affect consumer
decision
brand intangibles - aspects of the making?
brand Underimage
what circumstances?
that do
not involve physical, tangible, or concrete attributes
2. Is brand personality of more strategic or tactical
or benefits (see Levy 1999). Brand
(e.g., in intangibles
terms of the are
"look and feel" of ad executions)
a common means by which importance?
marketers differentiate
their brands with consumers 3. What(Park
is the valueet
of theal. 1986)
different and
personality
transcend physical products (Kotler
dimensions? and
Are certain Keller
personality 2006).
dimensions more
Intangibles cover a wide range
valuable of different
at driving types
preference or loyalty of
than others?
brand associations such as actual or
Does the value varyaspirational
by product category or by user
other
factors?
imagery; purchase and consumption imagery; and his-
tory, heritage, and experiences (Keller
4. How stable 2001).
are these various A num-
personality dimen-
sions andexist
ber of basic research questions what causes them to evolve or change?
concerning how
How doeshave
brand tangibles and intangibles this stability
their compareeffects.
to the stability of
Research Questions: other types of brand associations?
1. In developing brand equity, what
Brand Relationships. is has
Research the role
also explored
of product performance and objective or tangible
the personal component of the relationship between
attributes versus intangible aimage
brand and itsattributes?
customers. Fournier (1998) exam-
2. Are intangible attributes formative (causes)
ined the nature of relationships that or
customers have -
reflective (constructed) reasons for equity or choice?
as well as want to have - with companies (see
That is, are they considered alsoaFournier
priori and Yaoor "constructed"
1997, Fournier et al. 1998).
after experience with the brand?
Fournier views brand-relationship quality as multi-
3. When and to what extent does recall of pleasant
faceted and consisting of six dimensions beyond
images (or "hot" emotions) shield a brand
loyalty or commit ment alongfrom less
which consumer-
positive or even negative cognitive information?
brand relationships vary: (1) self-concept connection,
4. How much of brand equity is tied to unique (2) commitment or nostalgic attachment, (3) behav-
attributes of a product? What happens when competi-
ioral interdependence, (4) love/passion, (5) intimacy,
tors copy these attributes? and (6) brand-partner quality. She suggests the fol-
5. Which attribute associations are most stable and
lowing typology of metaphors to represent common
beneficial to a brand over the long run (e.g., "high customer-brand relationships: (1) arranged marriages,
quality" and "upscale") and which have limited use-
(2) casual friends /buddies, (3) marriages of conve-
ful life (e.g., being "hip")? nience, (4) committed partnerships, (5) best friend-
6. Can brands be thought of as simply a judgment
ships, (6) compartmentalized friendships, (7) kin-
bias or in terms of context effects in consumer deci-
ships, (8) rebounds /avoidance-driven relationships,
sion making? What implications do these perspectives
(9) childhood friendships, (10) courtships, (11) depen-
have for brand-equity measurement and valuation? dencies, (12) flings, (13) enmities, (14) secret affairs,
Brand Personality. Aaker (1997) examined the per-and (15) enslavements.
sonalities attributed to U.S. brands and found they While this typology contains most positive relation-
fall into five main clusters: (1) sincerity, (2) excitement,ships, it may overlook a range of possible negative
(e.g., adversary) and neutral (e.g., trading partner)
(3) competence, (4) sophistication, and (5) ruggedness.
ones. Aaker et al. (2004) conducted a two-month
Aaker et al. (2001) found that three of the five factors
longitudinal investigation of the development and
also applied to brands in both Japan and Spain, but
that a "peacefulness" dimension replaced "rugged-evolution of relationships between consumers and
brands. They found that two factors - experiencing a
ness" both in Japan and Spain, and a "passion" dimen-
sion emerged in Spain instead of "competency." Aakertransgression and the personality of the brand - had
a significant influence on developmental form and
(1999) also found that different brand personality
dimensions affected different types of people in differ-dynamics. Aggarwal (2004) explored how relationship
ent consumption settings. She interpreted these exper-norms varied for two types of relationships: exchange
imental results in terms of a "malleable self," which relationships,
is in which benefits are given to others to
composed of self-conceptions that can be made salient get something back, and communal relationships, in
which
by a social situation (see also Graeff 1996, 1997). While benefits are given to show concern for others'
Azoulay and Kapferer (2003) have challenged the con- needs.
ceptual validity of this particular brand personality Research Questions:

scale, the anthromorphism of a brand is common in 1. How can a customer's desired relationship be
both casual consumer conversation (e.g., "that branddetermined? Have concerns over privacy and the
is 'hip' ") and advertising messages. increased use of customer data by firms resulted

203.109.101.50 on Tue, 28 Sep 2021 05:55:05 UTC
742 Marketing Science 25(6), pp. 740-759, ©2006 INFORMS
in customers wanting more brand anonymous, transac-

identification facilitate experiences? How much
does product placement
tional relationships, or do customers (e.g., inclose
still desire movies) impact
relationships with companies? Does
brand equity and personalization
how enduring is such equity?
of communication make customers
5. How can a firm feeltakeempowered
advantage of unusual cir-
and /or valued, or do they cumstances
feel more such as when the brand is associated
exploited?
2. How can a desired customer relationship
with a positive event? How canbea firmcul-minimize the
tivated by the company through marketing activities?
impact of being associated with a negative event (e.g.,
How do different types ofa marketing
spokesperson behavingactivities
badly)? such
as advertising, customer service, and online resources
combine to affect customer Corporate Image and Reputation. Corporate im-
relationships?
age has been extensively
3. In a world where information is widely studied in terms of its con-
shared
ceptualization,
and discrimination is seen as bad, should antecedents,
a firm and consequences
deal (see
differently with customersreviews
who by Biehal and
desire Sheinin 1998rela-
different and Dowling
tionships? Can customer relationships
1994). Corporate brandsbe- versus
segmented
product brands - are
and can customers who desiremoredifferent
likely to evoke associations
types of of common
rela- prod-
tionships be identified? Does this
ucts vary
and their by
shared product
attributes cat-people
or benefits,
egory or by competing product benefits?
and relationships, and programs and values (Barich
4. What is the relative profitability
and Kotler 1991). of different
types of customer relationships? Should
Several empirical studiessome
show thecus-
power of a
tomers be encouraged and others
corporate brand discouraged or
(Argenti and Druckenmiller 2004).
"fired?" Alternatively, are Brown
there and systematic ways
Dacin (1997) distinguish to
between cor-
migrate unprofitable customers into profitable rela-
porate associations related to corporate ability (i.e.,
tionships? expertise in producing and delivering product and /or
Brand Experience. Experiential marketing is an service offerings) and those related to corporate
important trend in marketing thinking. Through sev- social responsibility (i.e., character of the company
eral books and articles, Schmitt (1999, 2003) has devel- with regard to societal issues), such as treatment of
oped the concept of customer experience management employees and impact on the environment.
(CEM), which he defines as the process of strategi- Keller and Aaker (1992, 1998) define corporate cred-
cally managing a customer's entire experience with ibility as the extent to which consumers believe that
a product or company. According to Schmitt, brands a company is willing and able to deliver products
can help to create five different types of experiences: and services that satisfy customer needs and wants
• Sense experiences involving sensory perception; (see also Erdem and Swait 2004). They showed that
• Feel experiences involving affect and emotions; successfully introduced brand extensions can lead
• Think experiences which are creative and cogni- to enhanced perceptions of corporate credibility and
tive;
improved evaluations of even quite dissimilar brand
• Act experiences involving physical behavior and extensions. They also showed that corporate market-
incorporating individual actions and lifestyles; and
ing activity related to product innovation produced
• Relate experiences that result from connecting more favorable evaluations for a corporate brand
with a reference group or culture.
extension than corporate marketing activity related to
Research Questions:
either the environment or, especially, the community
1. What are the different means by which experi-
(see also Giirhan-Canli and Batra 2004). In addition,
ences affect brand equity? How can firms ensure that
Bhattacharya and Sen (2003) extended the thinking on
experiences positively impact brand equity? More
consumer-brand relationships to consider consumer-
specifically, how can advertising trigger positive expe-
company relationships, adopting a social identity the-
riences with a brand or make negative ones less
salient or influential? ory perspective to argue that perceived similarity
2. How much of brand-related experiences arebetween consumer and company identities play an
important role in relationship formation.
under the control of the company? How can they be
effectively controlled? Research Questions:
3. When and to what extent do customers re- 1. How much are corporate images created by
words
spond - positively or negatively - to attempts versus actions? What is the role of public rela-
to con-
trol their experiences? How do customers maketions and publicity in shaping corporate reputation
attri-
butions about company actions and attitudesand corporate brand equity?
toward
control of experiences? 2. What are important determinants of corporate
4. How does the recognition or realization credibility?
of com- How do "corporate social responsibility"
pany involvement impact brand experiences? or causeCan
marketing programs work?

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3. How do corporate images affect the

and cross-cultural equity
implications of
of brand names (e.g.,
Zhang and Schmitt
individual products? Alternatively, how 2001,
do Tavassoli
individ- and Han 2002).
ual product equities build up Although companies frequently
to corporate equity? spend considerable
sums on the design
4. What is the impact of corporate of logos,
image on little academic research
cus-
tomer purchases and firmhas explored the impact and
profitability on consumer behavior of
value?
logo design through
Does it operate directly or indirectly or other visual
itsaspects of branding (see
effect
on specific brand equity? Schmitt and Simonson 1997 for background discus-
sion). As one exception, Henderson and Cote (1998)
conducted
Integrating Brand Marketing a comprehensive empirical analysis of
195 logos to determine
A variety of branding and marketing the ability ofcan
activities different design
characteristics to achieve
be conducted to help achieve the desired brand posi- different communication
objectives
tioning and build brand equity. (see also Henderson
Their ultimate et al. suc-
2004, Janiszewski
and Meyvis 2001).
cess depends to a significant extent not only on how
well they work singularly, A related
but area,
also packaging,
on how has begun
they to receive
work in combination, such that synergistic results et al.
greater attention in recent years (e.g., Garber
2000, Folkes
occur. In other words, marketing and Matta 2004).
activities haveFor example,
inter- Wansink
has conducted several
action effects among themselves as wellstudiesas
related
main to packaging
size and shape and consumption
effects and interaction effects with brand equity. Three (e.g., Wansink and
van Ittersum 2003;
noteworthy subareas of this topic are the brand- see also Raghubir and Krishna
1999).
building contribution of brand elements, the impact
Research Questions:
of coordinated communication and channel strategies
1. What are the brand-building
on brand equity, and the interaction of contributions
company- of
controlled and external events. brand logos and other nonverbal brand elements? Are
names and logos differentially effective or important
Integrating Brand Elements. Brands identify and in different circumstances, e.g., for high versus low
differentiate a company's offerings to customers and
involvement purchases or early versus late in the life
other parties. A brand is more than a name cycle? (or
"mark"). Other brand elements such as logos and sym- 2. How are visual and verbal effects manifested
bols (Nike's swoosh and McDonalds' golden arches),in consumer memory for brand elements? Which are
more accessible? Do more easily accessible elements
packaging (Coke's contour bottle and Kodak's yellow
and black film box), and slogans (BMW's "Ultimate influence or bias what is recalled subsequently?
3. From both a physiological and psychological
Driving Machine" and VISA's "It's Everywhere You
perspective, how do brand and design elements gain
Want to Be") play an important branding role as well.
A number of broad criteria are useful for choos- attention and instill favorable attitudes? How long of
ing and designing brand elements to build brand a productive life do they have, i.e., when do they
equity (Keller 2003): (1) memorability, (2) meaning-cease being effective?
4. How do consumers integrate packaging and
fulness, (3) aesthetic appeal, (4) transferability (both
within and across product categories and across other
geo- brand element information with information
graphical and cultural boundaries and marketabout seg- product performance, marketing communica-
ments), (5) adaptability and flexibility over time,tions,
and or personal experience?
5. Are there criteria for combining a diverse set
(6) legal and competitive protectability and defensibil-
of brand elements? How do marketers know if their
ity. Brand elements vary in their verbal versus visual
brand elements are "well integrated?" What are the
content and product specificity. Although a robust
financial consequences of integration?
industry exists to help firms design and implement
these various brand elements (Kohli and LaBahn
Integrating Marketing Channels and Communi-
1997), comparatively little academic research atten-
cations. Marketers employ an increasingly varied
tion, even in recent years, has been devoted to the of communication (e.g., various forms of
means
topic of designing and selecting brand elements other
broadcast, print, and interactive advertising; trade
than brand names. and consumer promotions; direct response; sponsor-
Brand name properties have been studied exten- ship; public relations; etc.) and multiple means of
sively through the years. For example, researchers
going to market (via retailers, company-owned stores
studying phonetic symbolism have demonstrated or outlets, telephone, Internet, mail, etc.). Some mar-
how the sounds of individual letters can contain keters have attempted to orchestrate these activities
meaning that may be useful in developing atonew create synergistic effects (Duncan 2002).
brand name (see Klink 2000, Yorkston and Menon Research has shown that coordinating market-
ing activities can lead to beneficial results (Naik
2004 for reviews). Other research has examined global

203.109.101.50 on Tue, 28 Sep 2021 05:55:05 UTC
and Raman 2003). For example, print on

society that self-selects and
a basisradio
of a shared com-
reinforcement of TV ads - where the video and audiomitment to a particular product class, brand, or con-
components of a TV ad serve as the basis for print sumption
and activity. Studying the Harley-Davidson and
Jeep
radio ads - has been shown to leverage existing com- brands, they explore various relationships that
munication effects from TV ad exposure and more consumers could hold with the product /possession,
brand,
strongly link them to the brand (Edell and Keller 1989, firm, and /or other customers and use these
to
1999). Cueing a TV ad with an explicitly linked radio develop a measure of loyalty (McAlexander et al.
2002).
or print ad can create similar or even enhanced pro-
cessing outcomes of the radio or print ad that can A number of other researchers have explored word-
of-mouth effects and their effect on brand evalu-
substitute for additional TV ad exposures.
Research Questions: ations (e.g., Laczniak et al. 2001, Smith and Vogt
1. Under what circumstances is marketing integra-1995). Moore et al. (2002) delineated how intergenera-
tion more appropriately based on consistency (shar-tional influences affected intrafamily transfer of brand
ing common brand meaning) versus complementarity equity in some product categories. Despite this atten-
(presenting different brand meanings)? tion to interpersonal sources of influence and com-
2. How should brand-building activities change asmunication, however, research has not systematically
contrasted
different audiences are targeted (e.g., consumers, dis- company-controlled and externally-driven
marketing
tributors, press, analysts, etc.)? To what extent can activities.
Research Questions:
and should a firm tailor different messages to differ-
1. How can brand communities and social net-
ent segments? When does confusion overwhelm the
benefits of more precise targeting? works best be modeled, cultivated, and influenced by
3. What are cost-effective vehicles for building marketers? What is the relative impact on consumers
brands? How do public relations, product placement,of verbal versus other types of communication (e.g.,
and experiential marketing approaches compare to mere observation)?
traditional advertising and promotion programs? 2. What is the relative impact of company actions,
agents and evaluators, and customer conversations
4. What is the relative impact of third-party
(e.g., web sites) on brand equity? How are sequences
communications (e.g., competitors, rating services,
of interactions combined in the customer's mind?
web communications, or the government) on brand
Does being first or last have any real advantages?
equity? How can a firm utilize positive communica-
3. How much do opinion leaders influence other
tions and counter negative ones?
consumers? To what extent is communication "ver-
5. How do customer contact points (personal and
tical" (from expert to novice) versus "horizontal"
automated) influence brand equity?
(experts talking to each other)? Are there "anti-opinion
6. When changing the information communicated
leaders," i.e., people from whom others consciously
about a brand over time, how important is it for the
try to behave differently? What is their impact?
messages to follow a logical progression?
4. For socially conspicuous products, a major
Combining Company-Controlled and External
association influencing brand equity is other cus-
Events. Marketers are increasingly embracing alter-
tomers of the product. What is the relative impor-
native forms of brand-building activities. In partic-
tance of these associations versus company-controlled
communications?
ular, greater emphasis is being placed on "guerilla
5. Does the Internet reduce the effects of brand
marketing," creating emotion-laden experiences, gen-
equity
erating "buzz" among consumers, and creating online and its impact on consumer decision making?
and real-world communities. To understand the
Assessing
underpinnings of these activities, researchers study- Brand Performance
ing interpersonal communication and influencemanage
To have brands properly, marketers should have
uncovered some important insights. a clear understanding of the equity in their brands -
what
Muniz and O'Guinn (2000) defined "brand com- makes them tick and what they are worth. Two
interesting
munities" as a specialized, nongeographically bound subareas of this topic are the measurement
community based on a structured set of social andrela-
valuation of brand equity at different levels -
tionships among users of a brand. After studying the product market, and financial market - and
customer,
Apple Macintosh, Ford Bronco, and Saab brands,the relationship
they of customer equity to brand equity.
Measuring Brand Equity. In recognition of the
note that, like other communities, a brand community
is marked by (1) a shared consciousness, (2) rituals
value of brands as intangible assets, increased empha-
sis has been placed on understanding how to build,
and traditions, and (3) a sense of moral responsibility.
Schouten and McAlexander (1995) defined a "sub-and manage brand equity (Kapferer 2005;
measure,
Keller 1993,
culture of consumption" as a distinctive subgroup of 2003). There are three principal and

203.109.101.50 on Tue, 28 Sep 2021 05:55:05 UTC
Customerbeen
distinct perspectives that have Level The taken
value of a brand
by - and thus
aca-
demics to study brand equity.
its equity - is ultimately derived from the words and
1. Customer based. From actions
the ofcustomer's
consumers. Consumerspoint
decide with of
their
purchases,
view, brand equity is part of based on whateverto
the attraction factors
- or they deem
repulsion from - a particular product
important, which brandsfrom
have moreaequity
par- than oth-
ers by
ticular company generated (Villas-Boas
the 2004). Although the details of dif-
"nonobjective"
ferenti.e.,
part of the product offering, approaches
not to by
measuring
thebrandprod-equity differ,
uct attributes per se. While initially
they tend a brand
to share a common core: All may
typically either
be synonymous with the implicitly
product or explicitly focus on brand-knowledge
it makes, over
structuresexperience,
time through advertising, usage in the minds of consumers
and - individuals
other or
organizations
activities and influences it can develop - as the sourceaor series
foundation ofof brand
attachments and associations that exist over and equity.
beyond the objective product. Importantly,Tobrand
capture differences in brand-knowledge struc-
tures,
equity can be built on attributes that have no a number of hierarchy of effects models have
inher-
been
ent value (Broniarczyk and Gershoff 2003, put forth by consumer researchers through
Brown
the years (e.g., AIDA, for Awareness-Interest-Desire-
and Carpenter 2000, Carpenter et al. 1994), although
Meyvis and Janiszewski (2002) show irrelevant Action).
infor- Customer-level brand equity can largely be
mation can be counterproductive in consumer captured
deci-by five aspects that form a hierarchy or
sion making. chain, which are bottom (lowest level) to top (highest
level) as follows:
2. Company based. From the company's point of
(a) awareness (ranging from recognition to recall);
view, a strong brand serves many purposes, includ-
ing making advertising and promotion more effec- (b) associations (encompassing tangible and intan-
gible product or service considerations);
tive, helping secure distribution, insulating a product
(c) attitude (ranging from acceptability to attrac-
from competition, and facilitating growth and expan-
tion);
sion into other product categories (Hoeffler and Keller
(d) attachment (ranging from loyalty to addiction);
2003). Brand equity from the company perspective is
therefore the additional value (i.e., discounted (e) activity
cash (including purchase and consumption
frequency and involvement with the marketing pro-
flow) that accrues to a firm because of the presence
gram, other customers through word of mouth, etc.,
of the brand name that would not accrue to an equiv-
or the company).
alent unbranded product. In economic terms, brand
Many similar models exist (e.g., Aaker 1996, Keller
equity can be seen as the degree of "market inef-
2003). Several commercial versions are also avail-
ficiency" that the firm is able to capture with its
brands.2 able (e.g., Young and Rubicam's BrandAsset Valuator
(BAV), WPP's Brand Z, and Research International's
3. Financial based. From a financial market's point of
Equity Engine), although many focus largely on the
view, brands are assets that, like plant and equipment,
first three aspects above.
can and frequently are bought and sold. The finan-
There are several available research techniques to
cial worth of a brand is therefore the price it brings
measure brands at each of these five levels (Agrawal
or could bring in the financial market. Presumably
and Rao 1996). In addition, research has provided
this price reflects expectations about the discounted
insight into how the value of a brand's customer base
value of future cash flows. In the absence of a market
relates to stock-market value (Gupta et al. 2004). In
transaction, it can be estimated, albeit with great diffi-
the more qualitative realm, a variety of alternatives
culty (Ambler and Barwise 1998, Feldwick 1996), fromexist for understanding the structure of associations
the cost needed to establish a brand with equivalentthat a customer has for a product. These "mental
strength or as a residual in the model of the value maps"
of rely on concepts such as metaphors (i.e., "It is
a firm's assets (Simon and Sullivan 1993).3 like a
Comprehensive models of brand equity have been customer reactions to a brand (e.g., Zaltm
developed in recent years to incorporate multiple per- Research Questions:
spectives (Ambler 2004, Epstein and Westbrook 2001, 1. How much brand equity can be ca
Keller and Lehmann 2003, Srivastava et al. 1998). Each
structured procedures (e.g., conjoint anal
of the three brand-equity measurement perspectives ner data modeling) and how much re
has produced relevant work. tative understanding (e.g., via metaphor
maps)? Are there certain aspects of brand
can only on
2 See Erdem (1998a, b) for some economic perspectives be branding.
uncovered with qualitative r
3 See the special issue on brand valuation in the Journal of
2. Can the value of different qualitativ
brand equity be quantified?
Brand Management (1998, 5(4)) for additional discussion and points What is the
of view. between qualitative and quantitative aspe

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3. How "independent" versus3. How can brand equity

redundant arebethe
disentangled from its
causes or source (e.g.,
numerous customer-related brand-equity measures product quality)? How can
which have been studied? Is there a reduced set which brand and category equity be separated?
is applicable to all products and/or all countries? 4. How can the impact of the brand be separated
What unique measures are relevant in different cat-from that of company market power, entry order, and
egories, cultures, locations, or to different customerother possible determinants?
groups? 5. What are the best approaches to tracking brand
4. Well-known brands provide a role in reducing performance? How frequently should it be measured?
risk: Not only are brands signals of quality (both in 6. How much explanatory power does brand
terms of mean and variance), but they also provide equity have after accounting for market-share effects
the "deep pockets" needed to rectify a product fail- (Uncles et al. 1995)?
ure. To what extent is increased confidence in deci- Financial-Market Level A different approach to mea-
sion making a key or even critical factor of brands suring brand equity is based on financial market per-
and brand equity; i.e., are standard deviations more formance (Amir and Lev 1996, Barth et al. 1998). One
important than means? measure that has been proposed uses the compo-
Product-Market Level A number of approaches have of market value unexplained by financial assets
nent
and results (i.e., profits). Using Tobin's Q (the mar-
been developed to assess the impact of brand equity
in the product market. These include measures ket value of assets divided by their replacement value
as estimated by book value) as a proxy of brand
of price premiums, increased advertising elasticity,
equity,
decreased sensitivity to competitors' prices, and the Lindenberg and Ross (1981) found that con-
sumer
ability to secure and maintain distribution through
goods companies such as Coca-Cola, Pepsico,
channels (Hoeffler and Keller 2003). Kellogg's, and General Foods had Tobin Q's greater
than 2, suggesting that these companies had con-
Several studies have demonstrated that leading
siderable intangible value. On the other hand, more
brands can command large price differences (Simon
commodity-like manufacturers such as metal produc-
1979, Agrawal 1996, Park and Srinivasan 1994,
ers and paper products companies had Tobin Q's of
Sethuraman 1996) and are more immune to about
price1.
increases (Sivakumar and Raj 1997). Lower levels
Simon and Sullivan (1993) decomposed firm value
of price sensitivity have been found for households
into tangible and intangible components: Tangible
that are more loyal (Krishnamurthi and Raj 1991).
components reflected replacement costs and included
Ailawadi et al. (2003) proposed that the revenue pre-
mium a brand commands vis-a-vis an unbranded
assets such as plant and equipment and net receiv-
ables; intangible components were broken down into
product is a simple useful measure of brand equity
industry-wide, cost, and brand factors. The brand
and showed how it responds to brand actions.factors
They were derived from a market share equation
contend that neither the sales premium nor the
using an instrumental variables approach (i.e., brand
price premium alone captures the increased demand
value was determined by order of entry and adver-
attributable to a brand.
tising). As a percent of replacement values, brand
Advertising may play a role in decreasing price
equity ranged from a low of essentially zero for cat-
sensitivity (Kanetkar et al. 1992). Consumers who
egories such as paper and allied products; petroleum
are highly loyal to a brand have been shown toand coal; stone, glass, and coal; and primary and fab-
increase purchases when advertising for the brand
ricated metals to as much as 61% for apparel, 58%
increased (Raj 1982, Hsu and Liu 2000). Research sug-
for printing and publishing, and 46% for tobacco.
gests that stores are more likely to feature well-knownFirms for which brand value exceeded replacement
brands if they convey a high quality image (Lai and cost included Dreyer's Ice Cream, Tootsie Roll, and
Narasimhan 1996). Fader and Schmittlein (1993) pro- Smucker.
posed that differences in retail availability may be aAnother approach to assessing the financial value
key component of the higher repeat-purchase rates forof a brand involves taking customer mindset mea-
higher-share brands. sures and relating them to stock-market values. This
Research Questions: approach is used by Stern Stewart's Brand Economics
1. What are the advantages of residual versuswhich link Young & Rubicam's BrandAsset Valuator,
direct measures of the effect of the brand on a survey-based measure of brand strength, to eco-
marketing-program effectiveness? nomic value added (EVA), a financial performance
2. How do you assess and identify the measure.
"optionAlong those lines, Aaker and Jacobson
value" of the extension potential of a brand?(1994) What
relate yearly stock returns for 34 companies
are the "cost savings" that result from higher
duringbrand
1989 to 1992 to unanticipated changes in ROI,
equity in terms of advertising effectiveness,brand
etc.?equity, and brand salience. Using EquiTrend's

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Research Questions:
perceived quality rating as a proxy for brand equity,
1. What
they find that changes in quality are the
and links between
thus equity customer-market,
had
a significant effect over andproduct-market,
above that of changes
and financial-market level measures
in ROI. Firms who experienced the
of brand largest
equity? gains
For example, in
does customer-level
brand equity saw their stock return
equity lead toaverage 30%;equity
financial-market con- by generat-
versely, those firms with the largest losses in brand
ing additional cash flow or by directly influencing
equity saw stock return average a decisions?
investor negative 10%. Inter-
estingly, other results suggest2. How canthere
that the causalis a bigger
impact of brand equity on
improvement when the changes in quality
financial market performance percep-
be established given the
tions occur among heavy users, a result consistent
large number of other factors that drive stock price?
with suggestions that retention (impacting
3. Are current
large values of brand equity limited to con-
customers) may often be the best way
sumer and to increase
hedonic goods or cancus-
they also exist
tomer and, hence, firm valuefor
(Thomas et al. 2004).
business-to-business and other high-involvement,
Using data for firms in the computer
utilitarian products? industry
in the 1990s, Aaker and Jacobson (2001) found that
4. Should brand equity be reported on the balance
changes in brand attitude were
sheet? Ifassociated
so, how? contem-
poraneously with stock return and
5. Which areled accounting
forward- versus backward-looking
financial performance. Awareness that
brand-equity did not trans-
measures?
late into more positive attitudes, however, did little
to the stock price. Adopting an Theevent
Marketing-Mix
study and method-
Brand Equity. Marketing-
mix modeling
ology, Lane and Jacobson (1995) has increased
showed in popularity
that the with indus-
try and
stock market response to brand academics (Gatignon
extension 1993, Hanssens et al.
announce-
ments depended interactively 1998).
and Considerable research has examined the effec-
nonmonotonically
tiveness of different
on brand attitude and familiarity: The elements
stockofmar- the marketing mix.
ket responded most favorably Fortoexample, numerous studies
extensions have examined the
of either
high esteem, high-familiarityshort-term
brands andorlong-term
those effects
of of advertising and
low
promotion
esteem, low-familiarity brands. Mizik (e.g., and
Ailawadi et al. 2001, Anderson and
Jacobson
Simester
(2003) examined the relative 2004, Dekimpeof
importance and value-
Hanssens 1999, Mela
appropriation activities (i.e., extracting et al. 1997). This research
profits often in
looksthe
at different out-
marketplace via advertisingcomes and andpromotion) versus
indicators of marketing effectiveness. For
value-creating activities (i.e., through
example, Pauwels et R&D) on the
al. (2002) found that price pro-
stock market. motion has a strong effect on category purchase inci-
In an event study of 58 firms that changed their dence for a storable product but a correspondingly
names in the 1980s, Horsky and Swyngedouw (1987) larger impact on brand choice for perishable products.
found that, for most of the firms, name changes were Although these research streams have pro-
associated with improved performance. The greatest vided considerable insight, they have not typically
improvement tended to occur in firms that produced addressed the full breadth of brand equity dimen-
industrial goods and whose performance prior to the sions. In particular, it is rare that measures of
change was relatively poor. Not all changes, however, customer mindset are introduced as possible mediat-
were successful. They interpreted the act of a name ing or moderating variables in analyzing marketing
change as a signal that other measures to improve effectiveness.
performance - e.g., changes in product offerings and Research Questions:
organizational changes - will be seriously and suc- 1. How stable is brand equity? Does the stability
cessfully undertaken. depend on the marketing driver involved, e.g., an
Mahajan et al. (1994) suggest how to assess the ad versus a personal experience?
level of brand equity in the context of firm acquisi- 2. How does the effectiveness of marketing drivers
tions. Kerin and Sethuraman (1998) also have exam-
of brand equity change over time? When are emo-
ined the link between brand value and stock value. In
tional drivers more important: early on or as a market
the brand strategy arena, Rao et al. (2004) examinedmatures? Are emotional drivers more relevant to cor-
the question of whether a "branded house" strategy
porate brands and rational drivers more relevant to
with a corporate brand as an umbrella was associated
product brands?
with higher stock-market returns than a multiple-
3. To what extent can and should a company
brand "house of brands" strategy. In their data, a
try to influence (versus respond to) what the key
corporate branding strategy produced higher average drivers are?
return than a multibrand strategy, perhaps to com-
pensate for the greater risk due to the nondiversifica- Relationship of Brand Equity to Customer Equity.
tion involved. An important emerging line of research concerns

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customer equity and the antecedents and

based on the quality conse-
of the original brand, the fit
quences of developing strong ties
betweentothe customers (Rust
parent and extension categories, and the
et al. 2000). A number of researchers
interaction of thehave noticed
two, although cultural differences
the relationship between the brand-management
influenced the relative importance attached to these
model components.
and customer-management perspectives Studies
(e.g., have shown how well-
Ambler
et al. 2002). Indeed, under one set
known andof assumptions
well-regarded brands can extend more
the value of a customer to thesuccessfully
firm (i.e., customer
(Aaker and Keller 1990, Bottomley and
equity) can be shown algebraically to and
Doyle 1996) beinto
themoresum
diverseof categories (Keller
the profit from selling equivalent
and Aakergeneric products
1992, Rangaswamy et al. 1993). In addition,
and the additional value from the amount of
selling brand equitygoods
branded has been shown to be
(i.e., brand equity). correlated with the highest- or lowest-quality mem-
Research Questions: ber in the product line for vertical product extensions
1. Does brand equity management simply
(Randall et al. reflect
1998). Brands with varied product cat-
an aggregate view of customer equity
egory management?
associations developed through past extensions
How do concepts such as customer lifetime
have been shown value
to be especially extendible (Dacin
and Smith
and CRM relate to brand equity? 1994, Keller
How canand Aaker 1992,
they be Sheinin and
integrated? Schmitt 1994). As a result, introductory marketing
2. How closely related are measures of brand programs for extensions from an established brand
equity and customer equity (e.g., loyalty and share of can be more efficient (Erdem and Sun 2002, Smith
wallet or requirements, brand relationship and cus- 1992, Smith and Park 1992).
tomer retention)? A number of other factors also come into play to
3. How can a firm balance a product-driven brand influence extension success, such as consumer knowl-
focus with a customer-driven CRM one? Which strate- edge of the parent and extension categories (e.g.,
gies are most effective? Under what circumstances? Moreau et al. 2001) and characteristics of the con-
sumer and extension marketing program (e.g., Barone
Brands as Growth Platforms
and Miniard 2002, Maoz and Tybout 2002, Zhang
No problem is more critical to CEOs than generat-
and Sood 2002). Kirmani et al. (1999) found evidence
ing profitable growth. Brands grow primarily through
of an ownership effect whereby current owners gen-
product development (line and category extensions)
erally had more favorable responses to brand line
and market development (new channels and geo-
extensions.
graphic markets). Important subtopics here includeOne oft-cited concern with brand extensions is that
new-product and brand-extension strategies and their
a failed brand extension could hurt (dilute) the par-
effects on brand equity. ent brand in various ways. Interestingly, academic
New Products and Brand Extensions. Brand exten- research has found that parent brands generally are
sions are one of the most heavily-researched not and particularly vulnerable to failed brand extensions.
An unsuccessful brand extension potentially damages
influential areas in marketing (Czellar 2003). Mar-
a parent
keting academics have played an important role in brand only when there is a high degree
identifying key theoretical and managerial issues of andsimilarity or "fit" involved - e.g., in the case of a
providing insights and guidance. failed line extension in the same category - and when
Research has shown that extension success depends consumers experience inferior product performance
largely on consumers' perceptions of fit betweendirectly a (Ahluwalia and Giirhan-Cali 2000, Gurhan-
new extension and parent brand (Aaker and Keller Canli and Maheswaran 1998, Keller and Aaker 1992,
1990; but see Klink and Smith 2001, van Osselaer Loken and Roedder John 1993, Milberg et al. 1997,
and Alba 2003). There are a number of bases of fit - Roedder John et al. 1998, Romeo 1991).
virtually any brand association is a potential basis - Several other factors also influence the extent of
but two key bases are competence (attribute) and damage to a parent brand from an unsuccessful
image (Batra et al. 1993). Research has also shown brand extension. The more involved the consumer is
that positively evaluated symbolic associations may with the extension decision (e.g., if they own or use
be the basis of extension evaluations (Reddy et al. the parent brand), the more likely it is that harm-
1994, Park et al. 1991), even if overall brand attitude ful dilution effects will occur (Kirmani et al. 1999).
itself is not necessarily high (Broniarczyk and Alba Importantly, research has shown that a subbranding
1994). One key conclusion is that consumers need to strategy, where an extension is given another name
see the proposed extension as making sense. in addition to the parent brand (e.g., Courtyard by
Based on a meta-analysis of seven studies using Marriott), can effectively shield a parent brand from
131 different brand extensions, Bottomley and Holden dilution from a failed similar extension (Keller and
(2001) concluded that brand extension evaluations are Sood 2004, Milberg et al. 1997).

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Research has also shown that extensions can cre- to maintain brand exclusivity. A subbranding strat-
ate positive feedback effects to the parent brand
egy, however, protected owners' parent-brand atti-
(Balachander and Ghose 2003). For instance, brand
tudes from dilution.
extensions strengthened parent brand associations
In terms of multiple brand extensions, Keller and
(Morrin 1999) and "flagship brands" were highly
Aaker (1992) showed that by taking "little steps," i.e.,
by introducing a series of closely related but increas-
resistant to dilution or other potential negative effects
due to unfavorable experiences with an extension
ingly distant extensions, it was possible for a brand to
(Roedder John et al. 1998, Sheinin 2000). ultimately enter product categories that would have
Research Questions: been much more difficult, or perhaps even impossi-
1. How can the long-term new product potential ble, to have entered directly (Dawar and Anderson
of a brand be assessed? What is the optimal product 1994, Jap 1993, Meyvis and Janiszewski 2004).
breadth for a brand franchise? Joiner and Loken (1998), in a demonstration of the
2. How should a brand be built and managed as inclusion effect in a brand extension setting, showed
a growth platform? Which kinds of brand associa- that consumers often generalized possession of an
tions are most beneficial or detrimental for future attribute from a specific category (e.g., Sony televi-
brand growth? What kind of brand associations facil- sions) to a more general category (e.g., all Sony prod-
itate versus inhibit the introduction of line and brand ucts) more readily than they generalized to another
extensions? specific category (e.g., Sony VCRs). Research has
3. What should be built into a pioneer brand to
shown that family-brand evaluations depend on the
retard future competition? expected variability of individual product quality and
4. For new-to-the-world products, what should beattribute uniqueness (Giirhan-Canli 2003; see also
the relative emphasis on building the brand versus Swaminathan et al. 2001).
establishing and growing the category? More gener- Research has also shown that a subbranding strat-
ally, what should be the brand versus product focus egy can enhance extension evaluations, especially
over the product life cycle? when the extension is farther removed from the prod-
uct category and less similar in fit (Keller and Sood
Strategically Managing the Brand 2004, Milberg et al. 1997, Sheinin 1998). A subbrand
In many firms, the CEO is effectively the chief brand
can also protect the parent brand from unwanted
officer (CBO) as well. Regardless of who (if any-
negative feedback (Milberg et al. 1997, Janiszewski
one) is in charge of managing the brand, severaland van Osselaer 2000, Kirmani et al. 1999), but
general strategic issues arise: the optimal design of only in certain circumstances, e.g., if the subbrand
brand architecture, the effects of co-branding and consists of a meaningful individual brand that pre-
brand alliances, and cross cultural and global brand-cedes the family brand, e.g., Courtyard by Marriott
ing strategies. (Keller and Sood 2004). Wanke et al. (1998) showed
Brand Architecture. Brand architecture has been how subbranding strategy could help set consumer
studied in the context of line extensions, vertical expectations.
extensions, multiple brand extensions, subbrands, Bergen et al. (1996) studied branded variants -
and brand portfolios (Aaker 2004). Several researchers the various models that manufacturers offer differ-
have examined characteristics of successful line exten- ent retailers (see also Shugan 1989). They showed
sions (Andrews and Low 1998, Putsis and Bayus 2001, that as branded variants increased, retailers were
more inclined to carry the branded product and pro-
Reddy et al. 1994). In the context of fast-moving pack-
aged goods, Cohen et al. (1997) developed a decision vide greater retail service support. Other research has
support system to evaluate the financial prospects ofshown how brand portfolios can increase loyalty to
potential new line extensions. multiproduct firms (Anand and Shachar 2004). Kumar
(2003) argues that companies can rationalize their
Although many strategic recommendations have
brand portfolios to both serve customers better and
been offered concerning "vertical extensions" - exten-
sions into lower or higher price points (e.g., Aakermaximize profits (see also Broniarczyk et al. 1998).
1997) - relatively little academic research has beenResearch Questions:
conducted to provide support for them (see Randall 1. How do product brands impact the equity of cor-
et al. 1998 for an exception). Kirmani et al. (1999)
porate brands (and vice versa)?
found that owners had more favorable responses2. How can the interplay and flow of equity
than nonowners to upward and downward stretches between product and corporate brands be measured
of nonprestige brands (e.g., Acura) and to upward ("ladder up" versus "waterfall down")?
stretches of prestige brands (e.g., Calvin Klein and3. Can and should line extension proliferation be
BMW). Downward stretches of prestige brands, how- controlled? What are the design criteria for the opti-
ever, did not work well because of owners' desires mal brand portfolio?

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750 Marketing Science 25(6), pp. 740-759, © 2006 INFORMS
4. Does it matter who and where concentrated on when

in the marketers should standard-
organiza-
tion controls the brand? ize versus customize their global marketing programs
5. How should a company deal with differences(e.g., Gatignon and Vanden Abeele 1995, Samiee and
(heterogeneity) in terms of what consumers think
Roth 1992, Szymanski et al. 1993).
about and want from a brand? Research has also examined cultural and linguis-
Co-Branding and Brand Alliances. Brand alli-tic aspects of branding, e.g., showing how Chinese
versus English brand names differ in terms of visual
ances - where two brands are combined in some way
versus verbal representations (Schmitt et al. 1994, Pan
as part of a product or some other aspect of the mar-
and Schmitt 1996, Zhang and Schmitt 2001). From a
keting program - come in all forms (Rao 1997, Rao
brand building standpoint, Steenkamp et al. (2003)
et al. 1999, Shocker et al. 1994) and have become
show how perceived brand globalness creates brand
increasingly prevalent. Park et al. (1996) compared
value.
co-brands to the notion of "conceptual combinations"
Research Questions:
in psychology and showed how carefully selected
brands could be combined to overcome potential1. How do consumer schemas and accepted prac-
tices for branding strategies and activities vary across
problems of negatively correlated attributes (e.g., rich
countries?
taste and low calories).
2. What is the optimal degree of localization for
Simonin and Ruth (1998) found that consumers'
branding and marketing communications? To what
attitudes toward a brand alliance could influence
subsequent impressions of each partner's extent
brandsshould both the marketing programs for a
brand
(i.e., spillover effects existed), but these effects and the product itself (e.g., level of sweetness
also
depended on other factors such as product "fit" for Coca-Cola) be varied across locations?
or compatibility and brand "fit" or image con- 3. How does global brand management vary by
gruity. Desai and Keller (2002) found that although life-cycle stage? Should it be mandated
product
or encouraged by sharing best practices across the
a co-branded ingredient facilitated initial expansion
acceptance, a self-branded ingredient couldcompany?
lead to
4. To what
more favorable long-run extension evaluations. In extent does country image (or equity)
other words, borrowing equity from another brand equity of brands from that country?
impact the
does not necessarily build equity for the parent Branding
brand and Social Welfare. Brands would exist
(see also Janiszewski and van Osselaer 2000). even if no money were spent on advertising and
Research Questions: promotion for products. Customers would find some
1. What is the proper executional approach to com-
distinguishing characteristics (name, color, shape) to
bining brands? What characterizes effective identify
imple- products or services that had served them
mentation?
well and use them to simplify (make more efficient)
2. What are the relative implications of formal
future choices. Moreover, as satisficers, customers
alliances, co-branding, and ingredient branding on
are slow to update performance improvements (or
customer reactions and company profits? decreases) in their current or other alternative choices.
3. When one brand buys another or is merged withThe result, at least in the short run, is market inef-
it, how should it be determined whether or not one
ficiency in the physical attribute product space. In
brand should dominate?
essence, market inefficiency (see Hjorth-Anderson
4. Does a brand carry the same value after it1984)
is can be seen as the same as brand equity, raising
acquired? several interesting questions.
5. How much brand equity is derived from sur-
Research Questions:
roundings (e.g., retail stores, distributors) and how1. Do brands create value, provide value, or reduce
much does a brand contribute to the equity of thesevalue for customers?
surroundings?
2. Are there categories of goods for which large
6. What are the roles of different brands in pro-
brand equities are acceptable (e.g., luxury goods mar-
viding "complete solutions" to consumers? How are
keted to affluent customers), and others where they
"lead brands" best determined?
are not (e.g., pharmaceuticals)?
Cross-Cultural and Global Branding. Branding 3. is Is market inefficiency and the creation of brand
increasingly being conducted on a global landscape.equity desirable or undesirable in terms of its effect
A number of issues emerge in attempting to build on the overall economy?
a global brand. Levitt (1983) has argued that com- 4. How should marketers respond to criticisms of
panies needed to learn to operate as if the world brands as being overpriced? As creating needs versus
satisfying real needs? How about issues of product
were one large market - ignoring superficial regional
and national differences. Much research, however,failure
has or safety?

203.109.101.50 on Tue, 28 Sep 2021 05:55:05 UTC
5. What is the role of brands in acquiring

the last brand purchased (otherwise,and Vj and S; are not
retaining employees? Do brands
identifiable).positively impact
Much of the previous
employee effort and hence customer research that incorporates
satisfaction or
welfare? brands has focused on assessing the impact by mod-
eling consumer choice with a specific brand term
(Srinivasan 1979). The rationale is a view that brand
Implications for Choice Modeling equity is what remains of consumer preferences and
The previous discussion captures some of the research
choices after accounting for physical product effects.
progress and gaps in the study of branding. The dis-
Several approaches have been suggested:
cussion also has some specific implications for incor-
• Kamakura and Russell (1993) proposed a
porating branding concepts into choice models.
scanner-based measure of brand equity that attempts
To demonstrate how brands influence consumer
to explain the choices observed by a panel of con-
choice through their value (utility), we contrast the as a function of the store environment (actual
sumers
stylized "classic" microeconomic view of utility andprices, sales promotions, displays, etc.), the
shelf
choice (Lancaster 1966) with a view which explicitlyphysical characteristics of available brands, and a
and/or implicitly encompasses the impact of brands.
residual term dubbed brand equity (here, Vj).
In the classic view, the value of brand ; is the sum of
• Swait et al. (1993) proposed a related approach
its / (objective) attributes, net of price, as follows:
for measuring brand equity which utilizes choice
experiments that account for brand name, product
VBj= £ BiXp-Pj. (1) attributes, brand image, and differences in consumer
1=1
sociodemographic characteristics and brand usage.

They define the equalization
Essentially, at the customer level, price
aas brand
the price that is the
lens through which the equates the utility ofand
words a brand to the utilities that of
actions could a com-
pany, its competitors, andbe attributed
thetoenvironment
a brand in the category where innogenera
are converted to thoughts,brand differentiation
feelings, occurred. images, beliefs,
perceptions, and attitudes, • Park and
etc., Srinivasan
about(1994) proposed
a product a method- (or
family of products). Much ology for ofmeasuring
the brand value equity ofbased a on branded
the
multiattribute attitude
product is in these subjectively model. The attribute-basedcompo-
determined
nents. The manner by whichcomponent ofconsumers
brand equity is the difference
transform between
objective product value subjectively
to create perceived attribute values and(intangi-
additional objectively
ble) value leads to four measured
components attribute values, of brand
essentially value:
the X* - X;I
terms-inXyi),
• Biased Perceptions (X*{ (2) (i.e., the "halo effect,"
i.e., the extent Beckwith andto
Lehmann 1975, 1976).
which specific product attribute The nonattribute-based
perceptions are com-influ
enced by the halo effect ponent (Beckwith
of brand equity is the and difference between
Lehmann
1975). subjectively perceived attribute values and overall
• Image Associations (Z;Jt), i.e., nonproduct-related preference and reflects the consumer's configural rep-
attribute beliefs such as "friendly" or "stylish." resentation of a brand that goes beyond the assess-
• Incremental Value (Vj), an additive constant asso- ment of the utility of individual product attributes.
ciated with the brand name that is not related to any • Dillon et al. (2001) presented a model for decom-
particular attribute or benefit. posing ratings of a brand on an attribute into two
• Inertia Value (Sy), the value to consumers of sim- components: (1) brand-specific associations (i.e., fea-
ply choosing the same option rather than spend- tures, attributes, or benefits that consumers link to a
ing effort to consider others, e.g., due to switching brand), and (2) general brand impressions (i.e., overall
costs, or the confidence (less uncertainty) of a known impressions based on a more holistic view of a brand,
alternative. here the Z;jts).
The value of a branded product (VBP) can be seen One clear and important implication of the above
as the sum of the objective value of a product as well discussion is that the value of a brand is greater
as the four components of brand value listed above: than either its additive (main effect) incremental value
(e.g., in a conjoint study or logit model) or its impact
VBj= £ P,X,l-Pi+ £ )8,(X*-X;,) on perceptions, and it needs to be separated from
1=1
state dependence.
+ £ C^ + Vj + Sf. (2) Influences on Brands
k=l,...,K
Brands are made, not born. The process of their con-
struction is complex. From a manufacturer's point of
Note that S;- is not strictly a brand term but rather
reflects state dependence and can be modeled usingview there is a reduced form, "stimulus-response"

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at least
style simplicity to it: (1) the include a brand main takes
manufacturer effect, brand interaction
actions (e.g., the marketing effects,
mix) and andthe that leads
impact of to
competition. This is obvi-
(2) customer mental responses ously towards
a very complex the
modelbrand
so that simplifications
(perceptions, beliefs, attitudes, areand
needed.
soFor example,
on). These we can assume brand equity
per-
ceptions (and the resulting willingness modifies the impact
to pay)of marketing
in turn activities through
lead to (3) customer behavior ain varying
the parameter
product formulation
market such as (D;n = Dn +
(e.g., sales), which in turn generates wVj). It is(4)
alsofinancial
difficult, of value
course, to separate the
in general and stock market and impact of a brand
market from its unique attributes or
capitalization
in particular. attributes not included in the analysis. This separabil-
This framework or value chain is a useful basic con- ity problem makes it hard to identify whether appar-
ceptualization. Still, it obscures some important com- ent brand equity is due to brand image or attribute
differences; attributing it all to the attributes may
plexities. The first is that a brand's position is heavily
influenced by others, e.g., competitors, governmental induce omitted variable bias whereas attributing it all
bodies, and interest groups, as well as by actions of to the brand may overstate brand impact.
employees and the identity and behavior of customersFurther levels of complication are also possible,
although rarely considered. For example, the decision
of the brand. Analogous to the customer level, high
of channels to stock and support a brand depends on
levels of brand equity reduce price sensitivity and
make advertising more effective. Perhaps most impor- much revenue it will generate which, in turn,
how
depends in part on brand equity (e.g., see Besanko
tant, it ensures distribution in channels with limited
selection (e.g., convenience stores or small distribu- et al. 2005). Similarly, brand equity can have indi-
tors), making it available in more locations. Greater rect cost effects through its impact on volume (i.e.,
availability may in turn impact (signal) perceptions: economies of scale) or by providing the confidence
"If a brand is widely carried and displayed, then it to suppliers for them to commit resources to "part-
must be good." nering" with a firm and supporting its product. It is
Thus, another complexity is that the impact of also possible that brand equity influences competitive
what the brand does depends on the brand itself actions and reactions. For example, will a competitor
be
(i.e., is endogenous), particularly in terms of its over- more or less likely to cut price when faced with a
all strength. Considerable evidence exists that strong high equity competitor who is to some degree insu-
lated
brands have lower price elasticity with respect to their from the impact of their price cuts? While we
own price increases or price decreases of their com- have no specific answers to these issues, these areas
are promising and underdeveloped avenues for future
petitors. Similarly, the advertising elasticity of strong
modeling research.
brands may be larger. This leads to different decisions.
Allowing mix elements to have different, compet-
Consider the impact of advertising on one compo-
itor-specific effects, greatly complicates modeling by
nent of brand equity - image associations. Specifically,
introducing more parameters than can be effectively
consider a simple model of how a specific image asso-
estimated. One issue, therefore, is whether it is worth-
ciation k is related to a specific marketing program
while trying to capture such complexity, i.e., by
activity (MJ for brand ;:
adding the large number of possible interaction (mod-
Z/w = Z/Jkf_1+Dyn*M/fI. (3)erating) effects. Said differently, for some purposes,
is a "wrong" but simple model likely to outperform
For a strong brand, the marginal impact of its adver- an extensive but likely misspecified more complete/
tising (Djn) may be greater than for a weak brand.complex model? Another related issue, particularly
Thus, strong brand ; can spend less than a weak relevant for modelers, is how to capture such com-
brand and still improve its image. More generally, the plexity in structural models of brand evaluation and
image of a brand depends on the N marketing activi- competition. For purposes of this review, we leave
ties of the various R competitors as well as main and these as an area for future analysis.
interaction effects of its own activities: More generally, there may be a "virtuous circle."
As brands develop positive brand equity, it becomes
Zjkt = Zjkt-l+ £ DjnMjn easier for them to develop further (and harder for
competitors to compete with them). The obvious
n=l
+ E E DjnpMjnMiP implication is that there are increasing returns to

n=l,...,N p=n+l,...,N scale to building a brand, at least up to a point.
The research question then becomes when, if ever,
+ £ £ DjrnMrn. (4) and under what conditions additional brand build-
r=l,...,R n=l,...,N
ing becomes less efficient (e.g., see Naik et al. 2005).
The multiple consequences of brand equity Combined
mean with the earlier discussion on the multiple
ways a brand manifests its extra value, this suggests
that an aggregate product-market level model should

203.109.101.50 on Tue, 28 Sep 2021 05:55:05 UTC
an important measurement issue: how

their own tomarket
current capture its
(as in Equation (4)) but so
total value and how to determine the relative contri-
they provide a basis for both expanding the existing
bution of its multiple sources. market and the option of entering others.
Finally, it should be noted that the topics concern-
A Systems
ing brand-management decisions discussed above Model of Brand
have direct implications for these modeling formu-
Antecedents and Consequences
lations. Developing brand positioning relates to how
A number of brand dashboards have been devel-
marketing activities (Ms) lead to the formationoped
of by firms which capture, but rarely link, many
attribute perceptions (Xs) and image associations
aspects of brand equity and performance. For brand-
(Zs) in Equation (2). Integrating brand marketing
ing research to be scientifically rigorous, it is impor-
addresses, in part, consistency issues and is implic-
tant to develop a comprehensive model of how brand
itly related to the interaction terms among market-equity operates and to develop estimates of the var-
ing activities in general and making their impact ious cause-and-effect links within it. To that end,
positive in particular. Assessing brand performancewe expand on the notion of a "brand value chain"
relates to metrics which both measure the elements (Keller and Lehmann 2003) discussed earlier. The
of Equation (4) and their consequences in the prod-
chain focuses on the following four major stages (see
uct and financial markets. Brands as growth platforms
Figure 1):
addresses the key strategic issues of how to orches- 1. What companies do. Marketing programs, as well
trate efforts over time to develop brands not justasfor
other company actions, form the controllable
Figure 1 A Systems Model of Brand Antecedents and Consequences

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antecedents to the brand value These expectations

chain. should increase the number of
Importantly,
these activities can be characterized people willing
alongto buytwo the sepa-
brand extension initially
rate dimensions: quantitative factors such of
(p, the coefficient asinnovation)
the type and the speed of dif-
and amount of marketing expenditures (e.g.,
fusion of the extension dollars
through word of mouth (q, the
spent on media advertising), and qualitative
coefficient of imitation) factors
since it will seem less risky to
such as the clarity, relevance, distinctiveness, those consumers who wait andfor con-
others to buy it first.
sistency of the marketing program, both
A stronger brand canover time
more easily gain wider distribu-
and across marketing activities. tion which will also lead to faster trial among innova-
2. What customers think and feel. tors (in Customer
effect, makes the mindset
market potential m larger).
consists of the "Five As" discussed above.
Thus, a reasonable predictionImpor- is that stronger brands
tantly, there are feedback effects here,
will, ceteris paribus,as havedemon-
both faster diffusion and
strated by the "halo effect" greater where brand
market attitudes
potential.
affect perceptions of brand associations (Beckwith
To move branding toward becoming a rigorous
and Lehmann 1975, 1976). Moreover, what model
science, a general customers
similar to Figure 1 needs
think and feel about brands is obviously not under
to be tested and calibrated. the little progress
Currently,
sole, or often even primary, control of the company.
has been made toward estimating such a compre-
Individual customer characteristics hensive model,
as well or even
asa compe-
reduced form version of
tition and the rest of the environment help shape
the model, such as marketing what activities -> product-
is thought of the brand, e.g., market by influencing expec-
results -> financial impact. As noted above,
tations (Boulding et al. 1993). Both
there personal
are certainly scatteredexpe-
empirical generalizations.
rience (feedback from use andFor product satisfaction)
example, we know increasing ad budgets has lit-
and the experience of others (through tle impact on word
current of mouth
sales unless either the prod-
and "expert" ratings) also determine what a customer
uct or the use that is promoted is new (Lodish et al.
thinks of a brand.
1995, Assmus et al. 1984). What is badly needed are:
3. What customers do. The primary payoff from cus- (1) metaanalyses that combine partial tests of model
tomer thoughts and feelings is the purchases that they components (i.e., only relating a subset of variables)
make. This product-market result is what generates into an overall estimate of the average links and
revenue, share, and other metrics commonly usedkey contingencies in the model, and (2) comprehen-
to evaluate the effectiveness of marketing programs. sive studies that systematically examine the model, or
Of course, other things customers do, especially wordat least a large part of it, in its entirety.
of mouth, impact future product-market results and
need to be considered in any comprehensive model.
4. How financial markets react. For a publicly held Conclusion
company, stock price and market capitalization, asBranding and brand management has clearly become
well as related measures such as Tobin's Q, are critical an important management priority for all types of
metrics. In essence, these measures are the ultimate organizations. Academic research has covered a num-
bottom line. As such, they are relevant at the CFO andber of different topics and conducted a number of
CEO level, unlike most marketing metrics which are different studies that have collectively advanced our
at the customer level or product-market level. Impor- understanding of brands. Table 1 summarizes some
tantly, stock price is impacted by a number of other of the generalizations that have emerged from these
variables such as the growth potential of the indus- research studies that were reviewed in this paper.
try as a whole, general economic trends, and stock- To put the academic literature in marketing in some
market dynamics, which need to be controlled for in perspective, it could be argued that there has been
assessing the financial value of brands. somewhat of a preoccupation with brand extensions
The overall model is thus conceptually fairly sim- and some of the processes that lead to the develop-
ple (i.e., it has only four main components), but in ment of brand equity. By contrast, there has been rel-
practice is both complicated (to account for all theatively limited effort directed toward exploring the
influences and feedback effects) and stochastic. financial, legal, and social impacts of brands. In terms
The model reflects and accounts for a number of of methodology, considerable effort has been devoted
marketing principles. Consider the impact of a brand to controlled experimentation (often with student sub-
extension in the context of the Bass model of new jects), although some work has focused on choice
product diffusion. Assuming there is some level modeling
of of scanner data. Little integration of these
two
fit with a parent brand which has positive equity, a streams with each other or the qualitative work
brand extension has advantages in terms of assumed
on branding has appeared.
product quality and the willingness of the firm Although
to much progress has been made, especially
in the last decade or so, a number of important
stand behind the product in the event of problems.

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Institute Research Generation Conference and 2004 AMA

Table 1 Sample Branding Generalizations
Doctoral Consortium for helpful feedback and suggestions.
Brand positioning and values
• Brands have personalities and the basic types exist across products
and, to a large extent, countries/cultures.
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Brands and Branding: Research Findings and Future Priorities

Author(s): Kevin Lane Keller and Donald R. Lehmann

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Brands and Branding: Research Findings and

Kevin Lane Keller

Introduction tasks frequently performed by marketing executives

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Brand Intangibles. An important and relatively

ceptual validity of this particular brand personality Research Questions:

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in customers wanting more brand anonymous, transac-

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3. How do corporate images affect the

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and Raman 2003). For example, print on

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3. How "independent" versus3. How can brand equity

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customer equity and the antecedents and

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4. Does it matter who and where concentrated on when

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sociodemographic characteristics and brand usage.

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+ E E DjnpMjnMiP implication is that there are increasing returns to

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an important measurement issue: how

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antecedents to the brand value These expectations

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Institute Research Generation Conference and 2004 AMA

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Gatignon, H. 1993. Marketing mix

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Simonin, B. L., J. A. Ruth. 1998. IsTavassoli,

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