WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION

International Journal of Marketing Res...
WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION

Brand Loyalty.
Brand Awareness with As...
WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION

Data from 569 respondents for twelve b...
WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION

evaluated on a seven point rather than...
WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION

Washburn H. Judith & Plank E. Richard,...
WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION

Bonghee Yoo & Naveen Donthu, (2001), D...
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The Significant Dimensions of Customer-Based Brand Equity

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Customer-based brand equity has many dimensions, however a general acceptance as to which dimensions to use when measuring customer-based brand equity has not being decided. This study reviews empirical results of literatures that utilized Aaker’s and Keller’s model in measuring brand equity and sum up the main or significant customer-based brand equity. The findings indicate that it is empirical difficult differentiating between brand awareness and brand association.

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Transcript of "The Significant Dimensions of Customer-Based Brand Equity"

  1. 1. WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION International Journal of Marketing Research JUNE 2013 VOL.1, No,4 The Significant Dimensions of Customer-Based Brand Equity Isaac Twum Asare Glorious Sun School of Business and Management, Donghua University West Yan An Road 1882 Accepted 15 June 2013 Abstract Customer-based brand equity has many dimensions, however a general acceptance as to which dimensions to use when measuring customer-based brand equity has not being decided. This study reviews empirical results of literatures that utilized Aaker’s and Keller’s model in measuring brand equity and sum up the main or significant customer-based brand equity. The findings indicate that it is empirical difficult differentiating between brand awareness and brand association. Keywords: customer-based brand equity, brand association, brand awareness 1. Introduction In today’s competitive business environment, brand equity has been one of the core issues in most marketing research since it has found to create value for both the firm and the customer (Aaker, 1991). Value to the firm by enhancing efficiency and effectiveness of marketing programs, brand loyalty, price premiums, brand extensions, trade leverage, etc. and value to the customer via enhanced information interpretation and processing purchase decision confidence and satisfaction. Brand Equity has many definitions and forms. Various authors are of the same notion that brand equity can be created, maintained and intensified by strengthening one of its dimensions (Villarejo and Sanchez-Franco, 2005). A brand with high quality perceptions, that customers have a strong and positive associations related to and are loyal to is said to have high brand equity (Yoo, Donthu and Lee, 2000). Yoo, Donthu and Lee (2000) define brand equity as the difference in consumer choice between the focal branded product and an unbranded product given the same level of product features. Aaker (1991, 1996) proposes that brand equity is a multidimensional concept consisting of brand loyalty, brand awareness, perceived quality, brand associations and other proprietary brand assets. The fifth brand asset, other proprietary brand assets consists of patents, trademarks, etc and not too relevant in customer-based brand equity. Therefore, we will not consider this in the dimensions of customer-based brand equity. Keller (1993) however suggests brand knowledge, consisting brand awareness and brand image. Lasser, Mittal and Sharma (1995) suggest brand equity is based on five underlying dimensions: performance, value, social image, trustworthiness and commitment, whereas Srivastava and Shocker (1991) view brand equity as consisting two components-brand strength and brand value. Over the years, Keller’s and Aaker’s concepts have been the most used concepts in many academic research articles. A critical study of these two models reveals Keller’s model is a subset of Aaker’s model. This paper reviews scholarly articles in brand equity and from their findings draws a conclusion on the main customer-based brand equity dimensions that really captures the brand equity or value a branded product has over unbranded product. Since the main focus of the article is on the dimensions of brand equity, less will be discussed about the antecedents (marketing activities) of brand equity. In other words, these selected articles empirical results will be reviewed and analyzed, and the main dimensions of brand equity will be made. This paper begins with a revision of the brand equity dimensions of Aaker and Keller. Which items to to capture the outlined dimensions will not be dealt with in this study. Next, the main dimensions will be deducted from their models, which will be followed by articles that supports these main/significant dimensions which are Brand Awareness/Association (Brand Knowledge), Perceived Quality and 90
  2. 2. WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION Brand Loyalty. Brand Awareness with Association: Brand awareness relates to the likelihood that a brand name easily comes to the mind of a consumer and it consists of brand recognition and brand recall (Keller, 1993). Similarly, Aaker (1991) defines brand awareness as the ability of a consumer to recognize or recall that a brand is a member of a product category. In building brand equity, the first step is to create brand awareness. It plays a critical role in consumer decision making for three major reasons: “It is important that consumers think of a brand when they think about the product category, brand awareness can affect decisions about brands in the consideration set, even if there are essentially no other brand associations and brand awareness affects consumer decision making by influencing the formation and strength of brand associations in the brand image”. Brand awareness is measured through brand recognition and recall (Aaker, 1996; Keller, 2003) Aaker (1991) defines brand association as “anything linked in memory to a brand”. Keller beliefs brand association (or brand image, a dimension of brand knowledge) which are held in the minds of consumers are the other informational nodes connected to the to the brand node in memory. The meaning of the brand is stored in these consumers’ nodes in memory. Purchasing decisions are made based on the images formed through brand associations and are related to a series of tangible and intangible attributes associated with the brand (Villarejo and Sanchez-Franco, 2005). Brand associations are very important to marketers (differentiation, positioning and brand extensions to create positive attitudes and feelings towards the brand) and consumers (processing, organizing and information retrieve to aid in making purchase decision) (Low and Lamb Jnr., 2000). Brand Association is closely related to brand awareness since both brand equity dimensions arise from the consumer-brand contact (Aaker, 1991) and are reported to precede perceived quality and brand loyalty in the hierarchy of effects model (Levidge and Steiner, 1961). These two dimensions (brand awareness and brand association) are highly correlated but not synonymous since one can be aware of a brand without having any strong links in memory (Washburn and Plank, 2002). Perceived Quality: This is based on consumer’s subjective evaluations of a product’s quality. Zeithaml (1988) defines perceived quality as the “consumer’s judgments about a products overall excellence or superiority”. A consumer’s personal experience with a product, unique needs and expectations, consumption condition may influence the consumer’s judgments of the product quality (Yoo, Donthu and Lee, 2001). Perceived quality can also be seen as the quality perception of consumers comparing a products quality or superiority of the product or service with respect to its intended purpose, relative to alternative. A products performance, features, reliability, durability, serviceability are some factors that influence its perceived quality. Perceived quality is regarded as a core Customer-Based Brand Equity construct because of its association with the willingness to pay a price premium, intention to purchase a brand and choice of brand (Netemeyer et. al, 2004). Brand equity is positively related to perceived quality but that a high perceived quality does not necessarily mean high brand equity (Yoo, et al, 2001). Brand loyalty: Creativity, building and maintaining brand loyalty has been an important issue for most marketers in establishing sustainable competitive advantage. Brand loyalty, a reflection of brand equity refers to the tendency to be committed to a focal brand demonstrated through the intention of purchasing that brand as a primary choice (Oliver, 1997). Routine purchase of a brand without switching to other brand is referred to as brand loyalty. This brand equity dimension is composed of two different components; attitudinal (which includes cognitive, affective and behavioral intent dimensions) and behavioral (repeat buying behavior) (Dick and Bass, 1994, Taylor et.al, 2004). This dimension plays an outstanding role in creating brand equity. (Aaker, 1991; Grover and Srinivasan, 1992). There are different levels of brand loyalty. Trust plays a vital role in augmenting both behavioral and attitudinal loyalty which makes consumers purchase a brand routinely and resist switching to another brand. 2. Literature Review As stated earlier, the main/significant dimensions of brand equity are Brand Awareness/Association (Brand Knowledge), Perceived Quality and Brand Loyalty. Developing the right items to measure these three significant dimensions, the brand equity of a product can be well captured. We begin by reviewing Yoo, Donthu and Lee (2000) paper, where they researched into how marketing activities can increase and decrease brand equity. They employed perceived quality, brand loyalty and brand awareness with strong associations as common dimensions of brand equity in their research. They suggest by strengthening the dimensions of brand equity, brand equity can be created maintained, and expanded. Villajero and Sanchez-Franco (2005) also agree with Yoo et al. (2000) that brand equity can be created, maintained and intensified by strengthening one of its dimensions. 91
  3. 3. WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION Data from 569 respondents for twelve brands covering three product categories (athletic shoes, camera film, and color television) were collected. Reliability and confirmatory analysis were performed and was followed by Structural Equation Model (SEM). Exploratory and Confirmatory Factor analysis resulted in only three brand equity dimensions (perceived quality, brand loyalty and brand awareness with strong associations) and these were used as the endogenous mediating constructs which were related to the last endogenous construct, overall brand equity in their SEM. Structural equation model was used to estimate the parameters of their model. In their SEM results, brand equity was positively related to perceived quality, brand loyalty and brand associations with awareness. Yoo, Donthu and Lee (2000) analysis revealed that there are two types of marketing managerial effort; brand building (high advertising, high price, high distribution through retailers with good store image) and brand harming (frequent use of price promotion). They presented some limitations of their research but the prominent one is looking at the interaction among the marketing efforts and how they affect the brand equity through the dimensions. To further support that brand knowledge, perceived quality and brand loyalty are the significant dimensions of brand equity, Yoo and Donthu (2001) article titled “Developing and Validating a Multidimensional Consumer-Based Brand Equity Scaled was reviewed.” This paper was selected to show that these three dimensions can be used in cross cultural brand equity studies. Using the same product category in their previous paper (Yoo et. al, 2000), due to its familiarity, difference in price range, frequency of purchase, product involvement, consumption situation, they used an etic approach in developing brand equity measure. The researchers analyzed data from a total of 1530 eligible responses (633 Koreans, 320 Korean Americans and 577 Americans) on three levels: an individual analysis (to determine common items across samples); a multi-group analysis to examine factorial invariance; and an individual-level multicultural factor analysis (pooled analysis). Reliability analysis were significant in all four brand dimensions (Aaker, 1991) however, exploratory factor analysis resulted in three dimensions because of the inseparability of brand awareness and brand association. Further confirmatory analysis supported the three-dimension model (model comprised brand loyalty, perceived quality and brand awareness/association). The χ2 fit index for the three-dimension model was better than any of the other model. Other values of fit (χ2 fit index, goodness of fit index, comparative fit index, etc) were all significant in the three-dimension model. The three-dimension model was then used for the multi group analysis then followed by the pooled analysis. Results from the pooled failed to produce the expected four dimensions of brand equity due to lack of discriminant validity between brand awareness and associations. The three-dimension showed a better fit (χ2 d.f=32=326.19, see Yoo and Donthu, 2001, pp.9). Table 1: Intercorrelations among Brand dimensions Source: B. Yoo and N. Donthu (2001), pg 8 To buttress the three-model dimension, Washburn and Plank (2002) paper was examined. The reason for selecting this paper is to demonstrate that other product categories apart from what Yoo et. al, (2000;2001) used in their research as well as co-branding can also be measured using these three brand equity dimensions. Washburn and Plank investigated empirically the psychometric properties of Yoo and Donthu’s (1997, 2001) customer-based brand equity scale within the context of a co-branding study. Their analysis examined consumer-based brand equity in the context of co-branded products and focused on the brand equity scale and its properties, not on the effects of co-branding. Due to this purpose, they utilized the same scales as Yoo and Donthu (1997), questions used were identical but were 92
  4. 4. WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION evaluated on a seven point rather than the five –point response scale employed by Yoo and Donthu. Using the CALIS procedure in SAS, both the four-factor and three factor models were analyzed on the six samples (potato chip/barbecue sauce, towel/disinfectant, high equity, low equity and mixed co-brands in both product classes, and combination of all brands) in their research. Their results supported Yoo and Donthu’s that groups together brand awareness and brand association forming one dimension called brand knowledge. Furthermore, Gil et. al (2007) study results on the role played by the family on consumer-based brand equity is examined. Their analysis was divided into three sections: effects of the information provided by both family and firm through its marketing actions (they selected advertising, price and promotion); relationships between dimensions of brand equity; and the relationship between each dimension and overall brand equity. Random data were gathered from 360 young adults aged between 18 and 35 years from a major city in Spain for their empirical work. The highest and lowest brands familiar to the sample in the three product categories (olive oil, toothpaste and milk) were selected and used in their research. The reliability and dimensionality of the scales were tested and results were above the values generally accepted. This was followed by confirmatory analysis of the scales through the EQS software to study convergent and discriminant validity. Regarding convergent validity criteria, items with factor loadings below 0.5 were removed. However discriminant validity results for awareness and associations intervals contained the value 1. They considered two alternatives; joint dimension and establishing a second order structure. Results indicated that joint dimension of brand awareness and brand association, on the whole had a better fit. The three-dimension model was then employed in the rest of their research in which they concluded that positive brand information by the family has an important influence on brand equity formation process. Steve Hoeffler and Kevin Keller (2002) describe six means by which corporate societal marketing (CSM) programs can build brand equity and among the six is building brand awareness, which they refer to the customer’s ability to recall and recognize the brand. They further states that brand awareness also involves linking the brand (brand name, logo, symbol) to certain associations in memory. It can be concluded that brand awareness and brand association are very highly correlated. They distinguish brand awareness into two key dimensions; breadth and depth. From this perspective, the breadth can be considered as being aware of the brand (example ikea) and the depth as linking the brand to certain association (linking ikea to family). Consumers first need to be aware of a product before strong, favorable and unique associations are created in their minds. These two actions often happen at the same time but the level of association will determine how easily a brand is recognized or recalled from memory. Brand awareness is a fundamental attribute of customer brand equity. Macdonald and Sharp (2003) describes it as being the essential for the communications process to occur as it precedes all brand dimensions. Further, it is the vital step in creating brand association in memory with the brand and this conceptualization has been suggested by other authors. In their study, the objective was to determine the understanding level of brand awareness amongst marketing practitioners and how they use it to measure the effect of their marketing activities. Their results show that a majority of marketing managers have limited knowledge about brand awareness and how to measure it and often use sales figures to measure brand awareness. They concluded that determining the breadth (in line with Hoeffler and Keller, 2002) of brand’s awareness is quite easy, measuring the depth (nodes in memory which allows brand information to be anchored to it-brand association) is extremely difficult. Macdonald and Sharp (2003) final statements expresses the salience of a brand in the consumer’s mind (which involves both brand awareness and brand association) as the most important factor in mature markets. Table 2: Brand Awareness related researches Joint Dimension of Brand Awareness and Brand Association findings with other Brand Author Dimensions Brand Knowledge (Brand Awareness & Brand Keller, K.L., (1993) Image) Brand Awareness with strong association, Yoo B., Donthu N. & Lee S., (2000) Perceived Quality and Brand Loyalty Brand Awareness with strong association, Yoo Boonghee & Donthu Naveen, (2001) Perceived Quality and Brand Loyalty Gil R. Bravo, Andres E. Fraj & Salinas E. Brand Awareness with strong association, Martinez, (2007) Perceived Quality and Brand Loyalty 93
  5. 5. WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION Washburn H. Judith & Plank E. Richard, (2002) Hoeffler Steve & Keller K.L, (2002) Macdonald Emma & Sharp Bryon, (2003) Brand Awareness with strong association, Perceived Quality and Brand Loyalty Very high correlation between Brand Awareness and Brand Association Very high correlation between Brand Awareness and Brand Association 3. Discussion Many authors have used different forms of brand equity dimensions in measuring customer – based brand equity but this study focus on the brand equity models of Aaker and keller. Customer – based brand equity is defined by Keller (1993) as the “differential effect of brand knowledge on consumer response to the marketing of the brand.” Building customer – based initially requires creating a familiar brand (create brand awareness) that has favorable, strong and unique brand associations (Keller, 1993). When companies use advertising and other marketing activities to create awareness of their brand, it increases consumer exposure to the brand and in doing so, results in consumers forming associations with the brand. When familiarity of a brand is increased, it leads to increase consumer ability to recognize and recall the brand (Keller, 1993). The marketing programs by firms try to create awareness and associations simultaneously which makes joining them as one construct/dimension when measuring customer – based brand equity very necessary. Both Aaker and Keller (1996) agree that brand awareness have levels; recognition and Recall. However, Aaker, (1996) add a third level, top – of – mind. These three levels are well connected with brand associations. In other hands, a top of mind level of brand awareness means the brand has favorable, strong and unique brand association, whereas a low level (recognition level) will not have a strong association. According to the literatures reviewed, the three-model dimension, that is brand awareness/association, perceived quality and brand loyalty produced very good fit values. These three dimensions can be utilized in different cultures (Yoo et. al, 2001), it can also be employed in the context of co-branding (Washburn and Plank, 2002) and across product categories (Yoo et. al, 2001; Washburn and Plank, 2002; and Gil et. al, 2007). The fit values for the three-model dimension in all these studies were are significant, that is generally above the acceptance value. 4. Conclusion The issue of whether or not brand awareness and brand association should be combined is critical. Both Aaker and Keller distinguish between the two constructs, nonetheless from authors like Yoo et. Al (2000; 2001) and Washburn (2002) reported it is difficult to separate brand awareness from brand association. Both dimensions are linked to the memory nodes of consumers’ differently. A brand with a good level of associations can be easily recalled from memory. A brand with top-of-mind awareness will promptly come to mind because of the very strong associations linked in consumers’ mind when given the product category. On the other hand, a brand with weak (or no associations) can be (or not) recognized when given a cue. These two dimensions are very well inter-correlated as awareness is reflected in association which makes it empirically difficult to separate and measure. Future research should concentrate more on these two constructs examining more on whether they are both synonymous or not as well as the relationship between them. Also the three-dimension model should be used to examine more product categories as well as in different regions to see if this model is enough to measure brand equity from the consumers’ perspective. However, in the situations where the need to separate theses two dimensions is vital, then brand awareness and brand association should be separated and measured by designing better items to capture these two dimensions more accurately. When the above situation is not required, the three-dimension model will be well suited to measure customer-based brand equity. References Aaker, David A., (1991), Maintaining Brand Equity, New York: The Free Press Aaker, David A. (1992), Managing the most important Asset: Brand Equity, Planning Review, pp. 56-58 Aaker, David A, (1996), Measuring Brand Equity Across Products and Markets, California Management Review, Vol. 38 No. 3, pp.102-120 94
  6. 6. WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION Bonghee Yoo & Naveen Donthu, (2001), Developing and Validating a Multidimensional Consumer-Based Brand Equity Scale, Journal of Business Research, Vol. 52, pp. 1-14 Dick, A. & Basu, K., (1994), Customer Loyalty: Towards an Integrated Conceptual Framework, Journal of the Academic Marketing Science, Vol. 22, No. 2, pp. 99-114 Dyson Paul, Farr Andy & Hollis S. Nigel, (1996), Understanding, Measuring and Using Brand Equity,” Journal of Advertising Research, November/December, pp. 9-21 Gil R. Bravo, Andres E. Fraj & Salinas E. Martinez, (2007), Family as a Source of Consumer-Based Brand Equity, Journal of Product and Brand Management, Vol. 16, No. 3, pp. 188-199 Low S. George & Lamb Charles W. Jnr., (2000), The Measurement and Dimensionality of Brand Associations, Journal of Product and Brand Management, Vol. 9, No. 6, pp.350-368 Grover R. and Srinivasan V., (1992), Evaluating the Multiple Effects of Retail Promotions on Brand Loyalty and Brand Switching Segments, Journal of Marketing Research, Vol. XXIX, pp. 76-89 Keller, K.L., (1993), Conceptualizing, Measuring and Managing Customer-Based Brand Equity, Journal of Marketing, Vol. 53, pp 1-22 Keller, K. L., (2002), Strategic Brand Management; Building, Measuring and Managing Brand Equity, Prentice Hall, Upper Saddle River, N.J Keller, K.L., (2003), Building, Measuring and Managing Brand Equity, 2nd ed., Prentice-Hall, Upper Saddle River, NJ Lasser Walfried, Mittal Banwari & Sharma Arun, (1995), Measuring Customer-Based Brand Equity, The Journal of Consumer Marketing, Vol. 12, No. 4, pp. 11-19 Levidege R.J. and Steiner G.A., (1961), A Model of Predictive Measurement of Advertising Effectiveness, J Mark, Vol. 25, pp. 59-62 Macdonald Emma & Sharp Bryon, (2003), Management Perceptions of the Importance of Brand Awareness as an Indication of Advertising Effectiveness, Marketing Bulletin, 14, Article 2, Reprinted from Marketing Research On-Line, 1996, 1, pp. 1-15 Marcel Gommans, Krish S. Krishnan, & Katrin B. Scheffold, (2001), From Brand Loyalty to E-Loyalty: A Conceptual Framework, Journal of Economic and Social Research, Vol. 3, No. 1, pp. 43 -58 Oliver L. Richard, (1997) Satisfaction: A Behavioral Perspective on the Consumer, New York: McGraw-Hill Pappu R., Quester P.G. & Cooksey R.W., (2005), Consumer-Based Brand Equity: Improving the Measurement-empirical evidence, Journal of Product and Brand Management, Vol. 14, No. 2/3, pp. 143-155 Srivastava, R.K. & Shocker, A.D., (1991), Brand Equity: A Perspective on Its Meaning and Measurement”, Report Number 91-124, Marketing Science Institute, Cambridge, MA Hoeffler Steve & Keller K.L, (2002), Building Brand Equity Through Corporate Societal Marketing,”Journal of Public Policy and Marketing, Vol. 21 (1), pp. 78-89 Taylor S.A., Goodwin S. & Celuch K., (2004) “The Relative Importance of Brand Equity to Customer Loyalty in an Industrial Setting,” Journal Product and Brand Management, Vol. 13, No. 4, pp. 217-227 Villarejo-Ramos A. F. & Manuel J. Sanchez-Franco, (2005), The Impact of Marketing and Communication and Price Promotion on Brand Equity, Brand Management, Vol. 12, No 6, pp. 431-444 Washburn H. Judith & Plank E. Richard, (2002), Measuring Brand Equity: An Evaluation of a Consumer-Based Brand Equity Scale, Journal of Marketing, Theory and Practice, pp.46-61 Yoo Boonghee & Donthu Naveen, (1997), Developing and Validating a Consumer-Based Overall Brand Equity Scale for Americans and Koreans: An Extension of Aaker’s and Keller’s Conceptualization, Paper presented at 1997 AMA Summer Educators Conference, Chicago Yoo B., Donthu N. & Lee S., (2000), An Examination of Selected Marketing Mix Elements and Brand Equity, Journal of the Academy of Marketing Science, Vol. 28, pp. 195-211 Yoo Boonghee & Donthu Naveen, (2001), Developing and Validating a Multidimensional Consumer-Based Brand Equity Scale, Journal of Business Research, Vol. 52, pp. 1-14 Zeithaml A. Valarie, (1988), Consumer Perceptions of Price, Quality and Value: A Means-End Model Synthesis of Evidence, Journal of Marketing, Vol. 52, pp. 2-22 95

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