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Introduction
Intangible assets of brands Brand equity has been described as the added value endowed by the brand to
the product (Farquhar, 1989). The idea of using a name or symbol to enhance
a product's value has been brought to the forefront in recent years. Brand
managers realize that parity exists in most categories as a result of ``copy
cat'' or look-alike advertising and the proliferation of me-too brands (Aaker,
1991; Cobb-Walgren et al., 1995). Price competition through the overuse of
short-term price promotions has led to a reduction in the profitability of
brands (Aaker, 1991; Cobb-Walgren et al., 1995). This has led retailers and
manufacturers to examine ways to enhance loyalty or brand equity toward
their brands. Other issues such as the escalation of new product development
costs and the high rate of new product failures has led firms to acquire,
license, and extend brand names to a degree that was once unimaginable
(Aaker, 1991). The focus of corporate mergers over the last decade has been
more about the intangible assets of brands or brand equity versus the prior
period's focus on synergies to be gained by economies of scale (Cobb-
Walgren et al., 1995).
Extensive agreement as to Wall Street and Madison Avenue know the difference between the terms
what is meant by brand and ``product'' and ``brand'', although most consumers use them
brand equity interchangeably. But a product is something that tends to offer a functional
benefit, whereas a brand is a name, symbol, design, or mark that enhances
the value of a particular product or service (Farquhar, 1989; Cobb-Walgren
et al., 1995). A review of the literature on brand equity shows that at the
conceptual level there is extensive agreement as to what is meant by brand
and brand equity. Most authors provide definitions of brand equity that are
generally similar to Farquhar's (1989) definition of equity as the value added
by the brand to the product (e.g. Srinivasan, 1979; Aaker, 1991; Kamakura
and Russell, 1993; Keller, 1993; Simon and Sullivan, 1993).
Unlike developments at the conceptual level, the literature does not address
satisfactory coverage of a number of additional pressing issues such as the
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 12 NO. 1 2003, pp. 39-51, # MCB UP LIMITED, 1061-0421, DOI 10.1108/10610420310463126 39
impact of attributes, and the results of these and the impact on preference.
The use of attributes both intangible and tangible could lead to a favorable
bias in attribute perceptions and thus an increase in brand equity. An
understanding of the source of a brand's equity for the firm's and
competitors' brands is highly essential for a brand manager to enhance the
brand's equity relative to those of competitive brands. For example, in some
categories, a branded product's name is considered by consumers as the
name of a category such as a ``Coke'' for a consumer wanting to request a
soft drink. Does the name endear the brand to consumers because of a
particular attribute such as the sugar content or because it is derived from the
sweetness or flavor?
Further understanding of The purpose of this study is first, to measure the equity of brands, which vary
brand equity along selected criteria and in relation to attributes; and second, to investigate
the impact of brand equity and the attributes on brand preferences. This study
examines products from a low involvement, consumer products category.
We include brands, which are highly similar on measurable attributes such as
caloric content, but vary significantly on intangible attributes such as
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Literature review
Measuring and antecedents of brand equity
There have been numerous ways of measuring and estimating brand equity
over the past since the term ``brand equity'' emerged in the 1980s. Both
academicians and practitioners have been most concerned with definitional
issues, but numerous authors have stressed the need to provide accurate
measurement in order to assist managers with guidance on ways to enhance
or build brand equity (Green and Srinivasan, 1978, 1990; Crimmins, 1992).
Perceived value was defined as the value of the brand, which cannot be
explained by price and promotion. Their second measure, brand dominance
ratio, provided an objective value of the brand's ability to compete on price.
Their third measure ± intangible value ± was operationalized as the utility
perceived for the brand minus objective utility measurements.
Srinivasan (1979) defines brand equity (which he calls brand-specific effect)
as the component of overall preference not explained by objectively
measured attributes. He estimates brand equity by comparing actual choice
behavior with those implied by utilities obtained through conjoint analysis
with product attributes, but no brand names. His method avoids the problem
of unrealistic product profiles mentioned previously with the conjoint
method, but has a limitation of providing, at best, segment-level estimates of
brand equity. An attractive aspect of this method is that the researcher
obtains brand equities from all consumer choices in the marketplace rather
than by relying on survey-based subjective methods. Kamakura and
Russell's (1993) approach is limiting in offering only segment level
estimates of brand equity, and the method of computing brand equity as
residuals in a regression equation tends to understate the actual variation of
equities across brands. For example, if there were as many attributes as the
number of bands, all their brand equities would be zero.
Perceptual and behavioral Aaker (1991) is one of the few authors to incorporate both perceptual and
dimensions behavioral dimensions. He suggested using a brand-earnings multiplier that
is based on a weighted average of the brand on five key components of brand
equity:
(1) awareness;
(2) associations;
(3) perceived quality;
(4) loyalty; and
(5) other proprietary assets such as patents and trade marks.
The advantage of combining both consumer perceptions and actions into a
single marketing measure of brand equity is that it is well documented that
attitudes alone are generally a poor predictor of marketplace behavior.
Method
Subjects
Limitation is recognized The respondents were drawn, on a voluntary basis, mostly from graduate and
due to the use of a student undergraduate courses at a small, traditional university in the southwest of
sample the USA. The vast majority worked either full- or part-time during this
longitudinal study. Individuals were approached and screened for being
familiar with the soft drink category. Students who expressed infrequent
usage were asked not to participate and the project sample consisted of 43
participants (with 1,175 purchase occasions). The participants ranged in age
from 19 to 48 and there were 23 women and 20 men who indicated they
would have reasonable attendance at the university during the summer
months (at least three times per week). A limitation is recognized due to the
use of a student sample. The use of the soft drink category and a longitudinal
approach should offer managerial insights for this relevant segment of the
population.
Study design
Absolute measures can be Brand equity can be measured in relative or absolute terms. From the firm's
virtually meaningless perspective absolute measures are probably more useful. Managers have an
interest in maximizing their brand's equity. Thus, they need the ability to
determine benchmarks and objectives for individual brands, which can then
be contrasted with competitive offerings and industry norms. However, when
comparing a very limited number of brand equity scores (as in the present
study), absolute measures are virtually meaningless. Furthermore, not all
operationalizations allow the calculation of an absolute score. Therefore, this
investigation relied on a relative measure. The study was designed in two
phases using nine of the top market share brands of soft drinks with nine
previously studied attributes (Table I) in order to capture the information
required on preference behavior. The first phase was to measure the effect of
brand equity (adaptive conjoint analysis) and overall perceptions (constant
sum scale) on consumer preferences. Adaptive conjoint analysis is a
Preferences
Finally, we present regressions using individual choice model and comparing
brand equity and overall perceptions on the attributes used in the study. In
Table III. Utility levels from conjoint analysis for soft drinksa
45
Table IV, we note some interesting contrasts with earlier findings. The
correlations revealed that there was validity between the different measures
of brand equity and that of preference. The aggregate-level perceptual
measures revealed the variability in the intangible attributes was higher than
the tangible attributes. For comparison purposes, we use a linear model with
price as a benchmark (Model 1), followed by one with overall preferences
(Model 2), and finally a model with brand equity and specific attributes
(Model 3). We note that, for the multinomial logit models, the reference
brand is Diet Sprite, which is the brand with the lowest market share
nationally. The individual brand constants represented by the specific brand
names represents the unobserved and unmeasured intrinsic value of the
particular brands. The base model shows that, if price is the only major
difference, respondents still make choices based on the differences in brands.
However, when we account for the differences in overall preferences for the
brands, we see an improvement in the model. We also see that the inclusion
of overall preferences affects the importance of 7-Up and Sprite. To improve
further, we add the impact of brand equity and attributes to understand the
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impact on choice. Brand equity is highly significant. The attributes are all
Table IV. Multinomial logit models for brand equity measures with alternative
specific constants
References
Aaker, D. (1991), Managing Brand Equity, Macmillan, New York, NY.
Aaker, D. (1996), ``Measuring brand equity across products and markets'', California
Management Review, Vol. 38 No. 3, Spring, pp. 102-20.
Bass, F., Pessemier, E. and Lehmann, D. (1972), ``An experimental study of relationships
between attitudes, brand preference, and choice'', Behavioral Science, Vol. 6, November,
pp. 532-41.
Biel, A. (1992), ``How brand image drives brand equity'', Journal of Advertising Research,
Vol. 6, November/December, RC6-RC12.
Cobb-Walgren, C., Riuble, C. and Donthu, N. (1995), ``Brand equity, brand preference, and
purchase intent'', Journal of Advertising, Vol. 24 No. 3, pp. 25-40.
Crimmins, J. (1992), ``Better measurement and management of brand value'', Journal of
Advertising Research, Vol. 32, July/August, pp. 11-19.
Farquhar, P. (1989), ``Managing brand equity'', Marketing Research, Vol. 1, September,
pp. 24-33.
Green, P. and Wind, Y. (1975), ``New way to measure consumers' judgments'', Harvard
Business Review, Vol. 53, July/August, pp. 107-17.
Green, P., Wind, Y. and Srinivasan, V. (1978), ``Conjoint analysis in consumer research: issues
and outlook'', Journal of Consumer Research, Vol. 5, September, pp. 103-23.
Green, P., Wind, Y. and Srinivasan, V. (1990), ``Conjoint analysis in marketing research:
a review of new developments'', Journal of Marketing, Vol. 54, October, pp. 3-19.
scales to predict consumer brand purchases'', Management Science, Vol. 17, pp. 371-85.
Sharkey, B. (1989), ``The people's choice'', Adweek's Marketing Week, November 30,
pp. 6-10.
Simon, C. and Sullivan, M. (1993), ``The measurement and determinants of brand equity:
a financial approach'', Marketing Science, Vol. 12, Winter, pp. 28-52.
Srinivasan, V. (1979), ``Network models for estimating brand-specific effects in
multi-attribute marketing models'', Management Science, Vol. 25, January, pp. 11-21.
Yovovich, B. (1988), ``What is your brand really worth?'', Adweek's Marketing Week, Vol. 29,
August 8, pp. 18-20.
Further reading
Biel, A. (1991), ``Coping with recession: why budget cutting may not be the answer'', Keynote
address to the 3rd Advertising Research Foundation Advertising and Promotion
Workshop, 6 February.
&
the marketer)?
It is probably true to say that the answer to this question lies somewhere
between the two extremes. Our opinion about a brand depends on the matter
of ``conversation'' we have with the promoter of the brand, the general
market conditions and history of the brand plus the communications we
receive from competing brands. In some markets there are mavens and
self-appointed experts who interpret the market environment and
communicate this to consumers.
As ever, this situation suggests that the traditional brand management model
must be enhanced ± we have to develop a better understanding of the
dynamics within the market and especially the way in which the attributes we
attach to our brand are manipulated and moulded by the market. While we
cannot control all the influences within the market, we can and should seek
to influence those influences. Much can be learned from what are usually
seen as specialised brand markets such as high fashion where endorsement,
public relations and the use of market mavens sits above advertising as the
core of successful promotion.
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