Consumer Based Brand Equity


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Consumer Based Brand Equity

  1. 1. Journal of Marketing Management, 2002, 18, 27-48 Rodolfo Vázquez1, Consumer-based Brand Equity: A. Belén del Río2 Development and Validation of a and Víctor Iglesias3 Measurement Instrument This work considers the development and validation of a measurement instrument of brand equity based on the value ascribed to brands by consumers. The results obtained indicate the existence of four basic dimensions of brand utilities: product functional University of Oviedo, Spain utility, product symbolic utility, brand name functional utility, brand name symbolic utility. The various tests employed show a reasonable degree of reliability and validity of the proposed scale for the sports shoes sector. Keywords: brand equity, scale, reliability, validity, structural equation models Introduction The subject of brand equity has attracted increasing interest in the Marketing literature over the last decade. Certainly, it has been considered by the Marketing Science Institute as one of its main research lines. Within this topic, various clearly differentiated work lines have been opened up, resulting in highly diverse definitions of brand equity and in a great variety of methods and approaches proposed to measure it. In this way, the content and meaning of brand equity have been the subject of a far-reaching debate (Barwise 1993; Ambler and Styles 1995; Chaudhuri 1995; Feldwick 1996), although a general theoretical framework that orders and integrates the most relevant contributions has still not been formulated (Agarwall and Rao 1996; Erdem and Swait 1998). This has given rise to certain confusion with the term and so far no common viewpoint has 1 Rodolfo Vázquez, PhD. Facultad de Ciencias Economicas Avenida del Cristo s/n, 33071 Oviedo. Asturias. Spain. 2 Correspondence: A. Belén del Río, PhD., Facultad de Ciencias Economicas, Avenida del Cristo s/n, 33071 Oviedo. Asturias. Spain., Tel: 34 985 10 28 27 Fax: 34 985 10 37 08, 3 Víctor Iglesias, PhD., Facultad de Ciencias Economicas, Avenida del Cristo s/n, 33071 Oviedo. Asturias. Spain ISSN1472-1376/2002/1-200027+21 £4.00/0 ©Westburn Publishers Ltd.
  2. 2. 28 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias emerged as to how brand equity should be conceptualised and measured. Nevertheless, there seems to exist a certain consensus in that the study of brand equity can be approached from different perspectives, which should be viewed as complementary rather than competing (Irmscher 1993; Ambler and Styles 1995; Czellar 1997; Erdem and Swait 1998). Thus, brand equity has been interpreted by paying attention to four inter-related viewpoints: the customer, the firm owning the brand, the channel distribution and the financial markets. In the field of business management, in order to identify the potential sources of brand equity, the consumer-based analysis of brand equity proves to be critical. The consumer conditions the value of the brand for the firm in three ways: directly and also indirectly through the value for the distributors and for the financial markets (Keller 1993, 1998; Park and Srinivasan 1994). For this reason, based on the works of Kamakura and Russell (1991) and Cobb-Walgren et al. (1995), in this study we propose developing a measurement instrument for the utilities obtained by the consumer from the brand following its purchase (ex-post utilities). In this way, we will focus on the concept of consumer-based brand equity defined as follows: Consumer-based brand equity: the overall utility that the consumer associates to the use and consumption of the brand; including associations expressing both functional and symbolic utilities. The generic aim is to make a more in-depth study of the nature of the brand dimensions capable of generating long-term sustainable commercial advantages for the firm. Although this study focuses on the ex-post utilities, it must be borne in mind that the brand can also contribute ex-ante utilities to the consumer (utilities obtained prior to the purchase, e.g. simplifying the choice, lowering the perceived risk and the costs of the information search). Ex-ante utilities constitute a complementary research line that has been undertaken in other studies (Erdem and Swait 1998). With this aim in mind, this article is organised into four parts. The next section reviews the main contributions regarding brand concept and the utilities the brand provides to the consumer. We go on to propose a number of dimensions for measuring the value of the brand for the consumer. Then, we describe the process followed in order to develop the measurement scale and analyse its psychometric properties applying the structural equation models methodology. Finally, the managerial implications are discussed. Consumer-based Brand Equity The Traditional Approach versus the Holistic View Before analysing the different ways in which the brand can contribute
  3. 3. Consumer-based Brand Equity 29 value to the consumer, it must be considered whether the consumer, in his perception of the brand characteristics, makes a distinction between the characteristics related to the product and those associated to the brand. This distinction between the product and the brand is supported by those authors who defend the classic definition of the brand as they conceive this as an addition to the product, which enables its identification (Gardner and Levy 1955; Aaker 1991; McCarthy and Perreault 1991). This is therefore a restrictive definition of the brand that highlights three aspects. First, the manager’s choice between selling his products with or without a brand. Second, the essential function of the brand to incorporate a set of intangible attributes to the product. Third, the academic and business interest of separating the product’s own attributes from the attributes inherent in the brand. Alternatively, there exist three reasons justifying why some authors have defined the brand in holistic terms. First, consumers tend to perceive the products from an overall perspective, associating with the brand all the attributes and satisfactions experienced by the purchase and use of the product. Consequently, separating the product’s attributes from those of the brand entails a great difficulty due to the strong inter-relation between the two (Ambler and Styles 1995, 1997; Styles and Ambler 1995; Ambler 1996; Crainer 1997). In this sense, Murphy (1990) indicates that the individual consideration of the brand attributes and their later aggregation represents a lower perception than that resulting from the overall evaluation of the brand. Second, it must be understood that the creation of a brand is more than developing communication strategies. In this way, it is interesting to adopt a wider view of the brand embracing the set of attributes characteristic of the firm’s offer (Achenbaum and Bodga 1996). Third, it is convenient to orient brand extension decisions according to the degree in which the new product contributes to strengthening the brand, instead of taking such decisions based on the degree to which the brand favours the commercialisation of the new product (Ambler and Styles 1997). In conclusion, it is coherent to establish a conceptual distinction between brand and product (Kim 1990; Young and Rubicam 1995). Nevertheless, just as the followers of the holistic view uphold, since these notions are closely related, it is feasible that the consumer perceives the product attributes as integrally associated to the brand attributes. This argument, however theoretically compelling, has not been tested in empirical research to date. The Utilities of the Brand for the Consumer: Definition The theoretical and empirical literature on customer-perceived brand utilities suggests classifying the utilities according to two basic dimensions: the functional value and the symbolic value. This dichotomic classification of
  4. 4. 30 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias the utility provided by the brand has also been revealed in other research areas, including those related to the needs and motivations for consumption behaviour, the individual’s attitudes and social psychology (de Chernatony and McDonald 1996). In general, the delimitation of what is understood as a functional and a symbolic utility has been based on the nature of the needs satisfied by the brand. Just as pointed out by Mittal et al.(1990), the functional value relates to a person’s need to favourably manage one’s physical environment, enabling the utilitarian motives to be satisfied. In turn, the symbolic value relates to a person’s need to favourably manage one’s social and psychological environment - esteem, social and self-fulfilment needs of Maslow (1970) - allowing the consumer to experience positive emotions and to help communicate to others his link to certain social groups, values and personal features. In addition, the distinguishing character of these two utilities has been explained in terms of the aspects of the brand they are derived from. Thus, the rational approach or the economic model suggests that the functional value corresponds to a cognitive evaluation - reflexive, rational - of the utilitarian contributions of the brand, based on its objective characteristics and the performance of its physical attributes. On the other hand, the hedonic school holds that the symbolic value has its origin in the emotional or experiential appraisal of the brand, which is based on more subjective and expressive aspects, such as the convictions and sensations associated to the brand, the usage situation, the personality and the life-styles associated with the typical user of the brand. Some research works have jointly used these two criteria - needs satisfied and aspects considered in the evaluation of the brand - in order to define the functional and the symbolic utility (de Chernatony and McWilliam 1989, 1990; Mittal et al. 1990). Nevertheless, from the work by Ambler (1997) it is deduced that these criteria are not completely equivalent. This author upholds that the brand simplifies the purchasing decision for the consumer in the extent that the associations linked to the brand ‘demystify’ and synthesise its functional characteristics. This means that such a utility is derived from the brand image and satisfies the cognitive needs (physical or not related to the individual’s psychological or social environment). Following on from the above ideas, and in line with the approaches of Keller (1993, 1998) and of Park and Srinivasan (1994), it can be said that the product as well as the brand name are capable of contributing both types of utilities to the consumer. However, it is reasonable that the functional utility (satisfying the needs of the physical environment) basically proceeds from the product whereas the symbolic utility (satisfying the needs of the psychological and social environment) emanates essentially from the brand
  5. 5. Consumer-based Brand Equity 31 name. To date, these issues have not been examined in empirical research. Dimensions of Brand Utilities for the Consumer Despite the fact that from a theoretical viewpoint brand utilities have received considerable attention, at the empirical level there exist very few studies analysing their dimensionality. To this lack of attention in the literature, it must be added that some authors describe the functions or benefits that the brand gives the consumer without distinguishing what type of utility - functional or symbolic - is provided. In summary, the main contributions regarding the dimensions of brand utilities are shown in Table 1. Table 1. Dimensions of Brand Utility Construct Source Product Sheth et al. (1991); de Chernatony (1993); Múgica and functional utility Yagüe (1993); Bhat and Reddy (1998); Long and Schiffman (2000) Choice utility Kapferer and Laurent (1991); Lambin (1991); de Chernatony (1993); Múgica and Yagüe (1993); Ambler (1997); Keller (1998) Innovation utility de Chernatony (1993); Ambler (1997) Trustworthiness Kapferer and Laurent (1991); Lambin (1991); de utility Chernatony (1993); Ambler (1997); Keller (1998) Emotional utility Sheth et al. (1991); de Chernatony (1993); Dubois and Duquesne (1995); Ambler (1997). Bhat and Reddy (1998); Long and Schiffman (2000) Aesthetic utility Wind (1982); Schmitt and Simonson (1997) Novelty utility Kapferer and Laurent (1991); Lambin (1991); Sheth et al. (1991); Long and Schiffman (2000) Social Kapferer and Laurent (1991); Lambin (1991); Sheth et al. identification (1991); de Chernatony (1993); Dubois and Duquesne utility (1995); Ambler (1997); Keller (1998); Bhat and Reddy (1998); Long and Schiffman (2000) Personal Kapferer and Laurent (1991); Lambin (1991); de identification Chernatony (1993); Múgica and Yagüe (1993); Dubois utility and Duquesne (1995); Ambler (1997); Keller (1998) Proposal of a Measurement Scale of the Brand Utilities for the Consumer Faced with the multiplicity of variables revealing the value of the brand for
  6. 6. 32 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias the consumer, when researching this subject, it is essential to distinguish between various levels of analysis. Following this approach, several authors have emphasised the need to define the concept of brand equity specifying the perspective and the area of study considered (Friedrich and Marion 1991; Martin and Brown 1991; Srivastava and Shocker 1991; Irmscher 1993; Feldwick 1996; Czellar 1997; Erdem and Swait 1998; Keller 1998). With this consideration, the present research work focuses on analysing the value of the brand for the consumer in accordance with the utilities perceived by the consumer once the purchase has taken place (ex-post utilities of the brand). In particular, the basic aim of this research is to construct a reliable and valid measurement instrument for consumer-based brand equity that includes the brand name utilities and the product utilities, and that also compiles the functional and symbolic content of each of these utilities. An additional aim, based on this scale, is to answer two questions. Are the brand name and the product concepts adequately distinguished in consumers’ minds? Does the consumer perceive from both components - brand name and product - the functional and symbolic utilities? Given the strong inter-relation between the different elements making up the firm’s offer, we follow on from the idea that in order to measure consumer-based brand equity it is necessary to gather information not only on the attributes of the brand name but also of the product. We understand by attributes of the product the tangible aspects of the offer, whereas we consider that the attributes of the brand name represent the associations made by the consumer with the product due to the fact of being marketed with a certain brand name. According to this approach, and based on the literature review, the following dimensions are proposed to create a measure of the ex- post utilities of the brand: 1. Functional utility associated with the product. This refers to the utilities directly linked to the tangible attributes of the offer that satisfy the needs of the consumer’s physical environment, e.g., comfort, resistance and performance. 2. Symbolic utility associated with the product. We refer here to the utilities obtained. These are also attained from the tangible characteristics of the offer but respond to the needs of the psychological and social environment, e.g., style, colour and artistic design. 3. Functional utility associated with the brand name. These utilities meet the functional or practical needs of the individual, e.g., guarantee. Although some of them could be linked to certain tangible attributes (e.g. duration) the consumer appreciates such utilities thanks to the identification of the product with a certain brand name.
  7. 7. Consumer-based Brand Equity 33 4. Symbolic utility associated with the brand name. Unlike the above, these utilities meet the needs related to the psychological and social environment, e.g. communicating to others desirable impressions about oneself and helping the individual to live out his self-concept. Methodology Selected Product Class and Brands For the measurement of the brand utilities, non-specialised sports shoes (suitable for sport and casual wear) were taken as a reference. This market was chosen as it presents the following characteristics that enable us to research brand utilities without overcomplicating the data collection: 1. This is a product that is usually used in public (conspicuous or visible consumer product) and in which fashion together with the technical aspects - for example, the materials used, the design of the soles or air chambers - have considerable importance in the purchasing decision. In line with the arguments of Jacoby and Olson (1985) and Hogg et al. (1998), these characteristics facilitate the analysis of the brand utilities related with the consumer’s social environment and with the guarantee of making the right choice. 2. The consumer has, in general, sufficient knowledge of the main brands of sports shoes, given the high figures of advertising and sponsorship investment. Similarly, the existence of a high number of consumers also facilitates the information collection. 3. The concentration of almost half the sales of sports goods in only three brands (Adidas, Nike and Reebok). Regarding the selection of the commercial brands studied, we followed the recommendation of Leuthesser et al. (1995) of analysing brands that are sufficiently well-known by the consumer in order to avoid halo effects (the evaluations of individual product attributes are influenced by a person’s overall attitude towards the product being rated) that are artificially induced. For this reason, as a preliminary step to the study, four hundred individuals were personally interviewed, being requested to indicate on a list of twenty- eight brands of sports shoes those they had used and of which they had sufficient knowledge of their different features. In line with the percentages attained for the different brands, we decided to focus our research on six brands: Adidas (64%), Fila (17%), Kelme (27%), J’hayber (16%), Nike (57%) and Reebok (65%) . Data Collection The information necessary to carry out the empirical study was collected
  8. 8. 34 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias through face-to face interviews accompanied by survey questionnaire administration. The study subjects were confined to individuals who had bought sports shoes in the last two years and who, in addition, were users of the brands being studied. In order to avoid differences with respect to the population we carried out a proportionate stratification in terms of age and sex. The subjects were selected from three cities in North of Spain. A total of 1,054 personal interviews were conducted, which resulted in 1,000 valid surveys and 1,726 brand assessments (each individual was requested to evaluate a maximum of two brands). Scale Development: Research Process The basic steps employed in constructing the scale closely parallel procedures recommended in Churchill (1979) and Deng and Dart (1994). Figure 1 provides an overview of the steps. This methodology consists of three basic tasks. First, the ratification of content validity. Second, the collection of information by means of a sample. Third, the testing of the psychometric properties concerning reliability, concept validity (convergent and discriminant) and nomological validity. STEP 1: Literature review and specifying domain of customer- based brand equity construct STEP 5: Refine the Sample questionnaire and data data collection STEP 2: Identification of 4 critical factors making up the construct STEP 6: Assess reliability domain Content validity STEP 3: Generation of items STEP 7: Assess content representing the 4 factors: validity: Psychometric − Convergent validity assessment − Revision of proposed scales − Focus groups with users − Discriminant validity − Interviews with distributors − Specialized journals and STEP 8: Assess nomological studies on the sector validity STEP 4: Scale refinement through expert opinions and a pretest Figure 1. Steps Employed in Developing the Consumer-Based Brand Equity Scale Firstly, following the literature review, we proceeded to specify the domain and the key factors associated to brand utilities (steps 1 and 2 of the process).
  9. 9. Consumer-based Brand Equity 35 Using these factors as a starting point, a pool of items was generated to tap the utilities that the brand provides the consumer with following the purchase. Then, we went on to list a series of items that, as a whole, compile all the basic aspects that the proposed dimensions refer to. For this, we resorted to four information sources: 1) examination and adaptation of the main scales published for the measurement of brand utilities; 2) two focus group with sports shoes users; 3) in-depth interviews with various distributors in the sector; 4) consulting specialised journals and studies available on the market analysed. Table 2. Measurement Scale of the Brand Utilities for the Consumer Dimensions Items (P1.1) Flexibility (P1.1.1) (P1) Comfort Weight (P1.1.2) Product Size (P1.1.3) Product functional Foot Protection-Care (P1.2.1) Utility utility (P1.2) Sensation when walking (P1.2.2) Safety Sole Absorption /perspiration (P1.2.3) Grip (P1.2.4) (P1.3) Duration (P1.3.1) Duration (P2) Product (P2.1) Design/aesthetic line (P2.1.1) symbolic Aesthetics Colours (P2.1.2) utility (B1) Brand that continuously (B1.1.1) Brand name (B1.1) improves features functional Guarantee Brand that is trustworthy (B1.1.2) utility Brand that offers good value-for- (B1.1.3) Brand money* Name Brand of excellent quality (B1.1.4) Utility Brand in fashion (B2.1.1) (B2) (B2.1) Brand used by friends (B2.1.2) Brand name Social Reputed brand (B2.1.3) symbolic identification Leading brand (B2.1.4) utility (B2.2) The use of the brand is a prestige (B2.2.1) Status symbol Brand recommended by famous (B2.2.2) people (B2.3) Brand you particularly like/find (B2.3.1) Personal attractive identification Brand in keeping with your life- (B2.3.2) style Note: * The result obtained in the confirmatory factor analysis recommended dropping this variable from the scale.
  10. 10. 36 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias This list of items was submitted to the opinion of a group of experts in subjects related to the performance qualities of sports shoes and/or to the design of measurement scales studying the consumer. Similarly, a pre-test was carried out in order to detect any necessary changes in the wording of the items and the range to be used in order to evaluate these. As a result of this process, aimed at attaining content validity for the scale, a total of 22 items were obtained and can be seen in Table 2. The items were measured on an eleven-point Likert scale (ranging from 0 to 10). In short, the proposed scale assumes that: 1. The utilities that the brand can contribute to the consumer following its purchase are composed of four basic dimensions (product functional utility, product symbolic utility, brand name functional utility, brand name symbolic utility); 2. In the sports shoes market, the functional utility of the product is measured through eight variables structured into three factors (comfort, safety and duration) and the product symbolic utility is compiled by two variables; 3. The functional utility of the brand name can be evaluated in terms of four indicators and the brand name symbolic utility by eight items with three underlying dimensions (personal identification, social identification and status). Table 3. Analysis of Competing Measurement Models Model χ S-Bχ2 (d.f) (p) NFI NNFI GFI AGFI CFI RMSEA AIC One- 3249.38 0.699 0.675 0.730 0.669 0.716 0.116 3333.385 Factor (189) (p<0.01) Eight- 847.91 0.923 0.913 0.939 0.912 0.933 0.060 985.914 Factor (162) (p<0.01) Results Confirmatory factor analysis was used to test the validity and reliability of the scale items (Anderson and Gerbing 1988). The EQS program was employed. First, a one-factor model was performed with all the measurement variables. The results achieved with this model were compared with those obtained for the eight-factor model (comfort, safety, duration, aesthetics, guarantee, personal identification, social identification and status). As shown in Table 3, the one-factor model presents clearly unsatisfactory goodness of fit indexes: the indicators NNFI, NFI, GFI, AGFI, CFI are far below the minimum required level of 0.9 and the RMSEA is over 0.1. On the other hand, the eight-factor model presents values for all these indexes reflecting a good fit. Furthermore, in the eight-factor model the AIC indicator reaches a much lower value than the one-factor model.
  11. 11. Consumer-based Brand Equity 37 Table 4. Reliability and Validity of the Eight-Factor Measurement Model Std. Composite Discriminant validity t- Factor reliability Dimensions Items values Confidence loadings coefficient Items Correlation interval λ ρ (ρ) (P1.1.1) 0.685 24.679 0.714 P11-P12 0.897 0.861 0.933 (P1.1) (P1.1.2) 0.639 24.631 P11-P13 0.351 0.281 0.421 Comfort (P1.1.3) 0.694 24.731 P11-P21 0.519 0.449 0.589 (P1.2.1) 0.756 32.031 0.777 P11-B11 0.674 0.618 0.730 (P1.2) (P1.2.2) 0.677 25.939 P11-B21 0.583 0.578 0.710 Safety (P1.2.3) 0.657 24.783 P11-B22 0.313 0.527 0.639 (P1.2.4) 0.641 23.914 P11-B23 0.644 0.243 0.383 (P1.3) (P1.3.1) 0.952 - 0.906 P12-P13 0.477 0.416 0.537 Duration (P2.1) (P2.1.1) 0.954 26.328 P12-P21 0.399 0.333 0.465 Aesthetics 0.771 (P2.1.2) 0.605 22.015 P12-B11 0.653 0.601 0.705 (B1.1.1) 0.650 24.793 P12-B21 0.466 0.490 0.618 (B1.1) (B1.1.2) 0.795 33.478 0.793 P12-B22 0.279 0.412 0.520 Guarantee (B1.1.4) 0.797 30.832 P12-B23 0.554 0.211 0.347 (B2.1.1) 0.771 33.046 0.837 P13-P21 0.189 0.125 0.253 (B2.1) (B2.1.2) 0.600 28.212 P13-B11 0.463 0.398 0.529 Social (B2.1.3) 0.797 30.740 P13-B21 0.184 0.261 0.399 Identification (B2.1.4) 0.821 35.659 P13-B22 0.057 0.127 0.241 (B2.2.1) 0.717 28.519 0.633 P13-B23 0.330 - 0.119 (B2.2) Status 0.005 (B2.2.2) 0.643 26.332 P21-B11 0.481 0.417 0.545 (B2.3) (B2.3.1) 0.711 28.247 P21-B21 0.519 0.465 0.601 Personal (B2.3.2) 0.652 27.608 0.635 P21-B22 0.296 0.463 0.575 Identification P21-B23 0.533 0.232 0.360 B11-B21 0.800 0.858 0.954 B11-B22 0.517 0.764 0.836 B11-B23 0.906 0.459 0.575 B21-B22 0.675 0.030 0.770 B21-B23 0.718 0.652 0.784 B22-B23 0.675 0.625 0.725 After testing for a reasonable fit between the proposed eight-factor model and the data, we went on to estimate the reliability and validity of the scales used. Following the recommendations of Anderson and Gerbing (1988), in order to determine the reliability in the measurement of latent variables, for each of these factors the composite reliability coefficients (ρ) were calculated. These results appear in column 5 of Table 4. Taking into account that values
  12. 12. 38 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias over 0.6 are considered acceptable (Bagozzi and Yi 1988), the reliability of the scale is verified. That is to say, it can be said that the items proposed to evaluate the brand utilities provide consistent measurements. For the validity of the scales, for each measurement variable the lambda standardised parameter that relates this variable to the corresponding specified factor was measured. In columns 3 and 4 of Table 4, it can be observed that all the parameters are substantial - that is to say, they are significant and reach values over 0.5 - thus guaranteeing the convergent validity (Steenkamp and Trijp 1991). As for the discriminant validity, the confidence interval of all the possible correlations between the eight factors was analysed. Just as can be seen in the last column of Table 4, in no case did the estimated confidence interval contain the value 1. This demonstrates that the correlations between the latent variables significantly diverge from the unit and, consequently, the discriminant validity is confirmed. In conclusion, it can be affirmed that the proposed scale of brand utilities is reliable and valid. In the following step, individual item scores were subsequently averaged under each of the eight first-order latent constructs. Then, scores were used as indicators to derive the four second-order dimensions previously proposed: product functional utility, product symbolic utility, brand name functional utility and brand name symbolic utility (see Figure 2). 0.631 Comfort 0.80 FUNPROD 1 Safety 0.82 FUNBRAND Guarantee (P1) 0.543 0.43 (B1) Duration 0.438 0.711 Social 0.89 Identification 0.395 1 0.95 Personal Aesthetics SYMPROD SYMBRAND (P2) (B2) Identification 0.461 0.53 Status Notes: The standard parameters are presented. All the parameters are significant at a confidence level of 95% (t-Robust > 1.96) Overall Fit Indices S-Bχ2 (d.f) (p) NFI NNFI GFI AGFI CFI RMSEA 136.62 (p < 0. 01) 0.961 0.921 0.971 0.919 0.968 0.093 Composite reliability coefficient for multi-item factors (ρ): FUNPROD: 0.737 SYMBRAND: 0.846 Figure 2. Confirmatory Factor Analysis: Four-Factor Model.
  13. 13. Consumer-based Brand Equity 39 The initial results obtained with this model recommended, in the light of the information provided by the Lagrange Multiplier Test, the release of the error covariances among the variables ‘personal identification’ and ‘social identification’. The results obtained, following this change appear in Figure 2. First, it was observed that all indexes indicated a satisfactory global fit except the S-Bχ2 (due to the large sample size): a value lower than 0.1 for the RMSEA and values over 0.9 in the remaining indexes. The composite reliability coefficients can be observed at the bottom of Figure 2. These coefficients are clearly over the recommended minimum limit of 0.6, thus suggesting the reliability of the dimensions. We have also been able to confirm the convergent validity, since all the items associated to the dimensions are shown to be significant. The discriminant validity was also confirmed, upon checking that the correlations between the factors proposed significantly diverge from the unit, as the confidence intervals of these correlations do not include the value 1 (see Table 5). Table 5. Discriminant Validity of the Factors Dimensions Correlation Confidence interval FUNPROD- SYMPROD 0.438 0.375 0.500 FUNPROD- FUNBRAND 0.631 0.580 0.683 FUNPROD- SYMBRAND 0.543 0.499 0.587 SYMPROD- FUNBRAND 0.395 0.336 0.454 SYMPROD- SYMBRAND 0.461 0.412 0.511 FUNBRAND-SYMBRAND 0.711 0.658 0.763 Once the reliability and validity of these four dimensions had been checked, we went on to analyse the causal relationship existing between these dimensions and two observable variables: price premium (the amount a customer will pay more for the brand in comparison with another apparently similar product of an unknown brand) and the consumer’s tendency to recommend the brand to others. The aim is to study the nomological validity and thus contribute additional data that demonstrate the construct validity of the scale (Peter and Churchill 1986). In this way, we then estimated the causal model that considers ‘recommendation of the brand’ as a dependent variable of the four dimensions, and ‘price premium’ as the dependent variable of the brand functional and symbolic utilities. The question on the price premium measures the amount that the consumer would be willing to pay more for the brand, compared to another unknown brand name but with apparently similar physical characteristics (product). For this reason, the relation between the price premium and the product utilities is not considered. On
  14. 14. 40 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias the other hand, in the brand equity literature, it is widely recognised that in the extent that the consumer associates value to a brand he will be more willing to pay a higher price for the brand and to recommend it to others (Aaker 1991; Huttom 1997; Keller 1998; Yoo et al. 2000). As for the product utilities, since we are not aware of studies that specifically research these relations in the sports shoes market, we propose estimating the effect of both types of utilities on the willingness to recommend the brand to others, assuming that both utilities have a significant and positive effect. The results of the causal model are presented in Figure 3. It has been observed that the brand name functional and symbolic utilities have a positive influence on the variable ‘price premium’. The variable ‘recommendation of the brand’ is significantly and positively related to the product functional utility and the brand name functional and symbolic utilities. However, the significant incidence of the product symbolic utility has not been corroborated. This could be explained by the fact that the product symbolic utility is measured by items (design and colour) whose evaluation is totally subjective and directly observable by the consumer. In this way, it is feasible that the individuals do not take into account such aspects when recommending the brand. P1.1 FUNPROD 0.10* Price premium P1.2 (V1) P1.3 0.16* P2.1 SYMPROD 0.11* 0.01 B1.1 FUNBRAND Recommendation 0.28* (V2) 0.31* B2.1 B2.2 SYMBRAND B2.3 Notes: (*) the parameter is significant at a confidence level of 95 % (t-Robust > 1.96). Although for purposes of clarity, we have not included in the graph the covariances between the independent latent variables, these are released in the model (and are all statistically significant). Figure 3. Nomological Validity: Relation of the Scale with Other Variables Discussion We have developed and empirically examined a measurement instrument of brand equity based on the utilities perceived by the consumer once the brand
  15. 15. Consumer-based Brand Equity 41 has been purchased. The results suggest that the proposed scale exhibits strong internal consistency and a reasonable degree of validity. In accordance with these results, it can be concluded that in the study of brand utilities, the separation of the product utilities from those utilities associated to the brand name is reliable and valid. At the same time, it is found that the consumer perceives functional and symbolic utilities of both the product and the brand name. This implies that the associations held by the consumer of the brand can be structured into four main dimensions: product functional utility, product symbolic utility, brand name functional utility and brand name symbolic utility. The reliability and validity analyses also reveal that for the category of product analysed - sports shoes - the product functional utility is a multidimensional concept. In particular, this may comprise three subdimensions labelled ‘comfort’, ‘safety’ and ‘duration’. Similarly, the symbolic utility of the brand name is a multidimensional concept embracing the subdimensions of ‘social identification’, ‘status’ and ‘personal identification’. This result is consistent with the study of Bhat and Reddy (1998). On the other hand, the product symbolic utility and the brand name functional utility are uni-dimensional concepts. In this way, customer-perceived value of the brand represents a multidimensional concept. Nevertheless, this affirmation does not invalidate the holistic conception of the brand, since it has been confirmed that the different dimensions show a strong inter-relation. The correlations between the dimensions are highly significant, although they maintain discriminant validity. In short, the consumer’s perceptions about the different attributes of a brand are highly related, but can be ordered in independent dimensions. These observations suggest to the firms that measure consumer-based brand equity, that they should adopt an intermediate posture between the holistic and classic conceptions of the brand. The consumer does not see the product as a reality identical to that of the brand name (holistic conception in its strictest sense). However, nor should the brand managers consider the product and brand name as two totally independent realities (classic conception in its strictest sense). In line with these results, firms should simultaneously strengthen the associations related to the product as well as those linked to the brand name. Due to the inter-relation of these associations, important synergies can be generated and a clearer, more credible and consistent image can be communicated to the consumer. In these cases, it is possible that the consumer perceives greater utilities of the brand, compared to the situations in which only product associations or brand name associations are strengthened. A further implication to be partially derived from the above one is that the
  16. 16. 42 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias consideration of each of the dimensions and sub-dimensions of the brand utilities enables firms to better orient their differentiation strategy in terms of consumer needs. For example, for consumers who place greater emphasis on social needs, an effective strategy is a marketing mix that shows how the brand can be used to express the consumer’s personality or the affinity between certain social groups and the consumer. On the other hand, it has been observed that the price premium that the consumer is willing to pay for the brand depends positively on the functional and symbolic utilities of the brand name. Similarly, it has been observed that these utilities, together with the product functional utility have a positive effect on the consumer’s willingness to recommend the brand to others. In addition, it is noted that the utilities that have a greater incidence on these variables are the symbolic utilities of the brand name. Therefore, all these results indicate that the use of commercial brands is a vital strategy for firms to improve the competitiveness of their products. In this way, it is revealed that the value of the brand for the consumer has a significant impact on brand equity for the firm. The advantage of the developed scale is its the ability to identify the sources of brand equity for the firm using four basic dimensions. The application of this scale enables us to ascertain the strengths and weaknesses of a brand compared to its main competitors. In this way, firms can orient their marketing programs in terms of the brand utilities they wish to improve. In particular, for the sports shoes market, it is noted that the development of brand name symbolic utilities are particularly important. Regarding the research limitations, it is fitting to question to what extent the above results will be similar in other sectors. It is foreseeable that the functional and symbolic utilities have a strong impact on all products related to sport: the purchase of these products can be determined not only by their physical attributes but also by the attributes that enable the consumer to enrich his self-image and communicate certain values to the people in his environment (these are products usually used in public). On the other hand, it seems reasonable that symbolic utilities take on great importance in products for which the purchasing decision mainly depends on fashion trends (for example, clothes, watches, bags, and other accessories). Similarly, a strong presence of functional utilities should be expected in cleaning and hygiene products (for example, detergents) as these are products that are basically used in private. As for future research, the scale developed here can be used to measure consumer-based brand equity in other sectors, introducing the necessary adaptations, in line with the specific characteristics of the products, the usage situations or the type of customer. Finally, it must be said that this work has focused on the ex-post utilities of the brand. However, it would also be
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  21. 21. Consumer-based Brand Equity 47 Appendix: Correlations and Standard Deviations P1.1.1 P1.1.2 P1.1.3 P1.2.1 P1.2.2 P1.2.3 P1.2.4 P1. 3.1 P2.1.1 P2.1.2 P1.1.1 1.000 P1.1.2 .452 1.000 P1.1.3 .501 .399 1.000 P1.2.1 .417 .423 .519 1.000 P1.2.2 .421 .397 .485 .494 1.000 P1.2.3 .379 .429 .372 .513 .402 1.000 P1.2.4 .363 .391 .353 .483 .430 .479 1.000 P1. 3.1 .231 .153 .280 .369 .296 .287 .273 1.000 P2.1.1 .353 .323 .332 .260 .346 .209 .224 .168 1.000 P2.1.2 .131 .279 .170 .178 .255 .131 .164 .152 .577 1.000 B1.1.1 .316 .257 .286 .264 .264 .204 .225 .175 .341 .221 B1.1.2 .360 .335 .345 .369 .414 .321 .311 .347 .347 .224 B1.1.4 .406 .324 .403 .432 .402 .344 .352 .413 .363 .210 B2.1.1 .355 .271 .287 .277 .283 .251 .211 .112 .433 .276 B2.1.2 .225 .235 .144 .140 .171 .164 .178 .057 .319 .224 B2.1.3 .388 .317 .325 .302 .321 .274 .228 .217 .396 .270 B2.1.4 .339 .274 .303 .256 .270 .238 .205 .113 .357 .219 B2.2.1 .137 .195 .135 .135 .152 .179 .144 .048 .224 .197 B2.2.2 .133 .172 .102 .083 .082 .153 .127 .023 .143 .127 B2.3.1 .295 .279 .322 .287 .322 .266 .201 .219 .357 .225 B2.3.2 .290 .316 .281 .253 .286 .248 .199 .212 .333 .273 STD 1.73 2.01 1.50 1.62 1.54 1.78 1.66 1.77 1.79 1.97 N 1726 1726 1726 1726 1726 1726 1726 1726 1726 1726 B1.1.1 B1.1.2 B1.1.4 B2.1.1 B2.1.2 B2.1.3 B2.1.4 B2.2.1 B2.2.2 B2.3.1 B2.3.2 B1.1.1 1.000 B1.1.2 .520 1.000 B1.1.4 .483 .651 1.000 B2.1.1 .508 .412 .442 1.000 B2.1.2 .427 .331 .294 .513 1.000 B2.1.3 .543 .543 .545 .583 .460 1.000 B2.1.4 .557 .462 .484 .649 .454 .671 1.000 B2.2.1 .297 .283 .275 .403 .380 .334 .409 1.000 B2.2.2 .334 .254 .219 .289 .341 .283 .383 .461 1.000 B2.3.1 .412 .564 .501 .408 .328 .415 .429 .351 .302 1.000 B2.3.2 .314 .472 .461 .339 .319 .392 .296 .339 .354 .463 1.000 STD 2.04 1.99 1.83 2.52 2.96 1.89 2.37 3.01 3.18 2.61 2.73 N 1726 1726 1726 1726 1726 1726 1726 1726 1726 1726 1726 Note: Variables are defined in Table 2.
  22. 22. 48 Rodolfo Vázquez, A. Belén del Río and Víctor Iglesias P1.1 P1.2 P1.3 P2.1 B1.1 B2.1 B2.2 B2.3 V1 V2 P1.1 1.000 P1.2 .669 1.000 P1.3 .273 .397 1.000 P2.1 .392 .327 .181 1.000 B1.1 .504 .502 .374 .395 1.000 B2.1 .442 .370 .149 .443 .670 1.000 B2.2 .218 .199 .042 .231 .386 .509 1.000 B2.3 .437 .388 .251 .400 .636 .521 .461 1.000 V1 .158 .119 .054 .183 .220 .240 .175 .191 1.000 V2 .400 .359 .246 .321 .586 .445 .328 .616 .138 1.000 STD 1.38 1.28 1.77 1.66 1.64 1.96 2.64 2.86 2688 2.68 N 1726 1726 1726 1726 1726 1726 1726 1726 1726 1726 Note: Variables are defined in Table 2 and Figure 3. About the Authors Rodolfo Vázquez (Ph.D., University of Oviedo, Spain) is a Professor of Marketing at Oviedo University (Spain). His areas of research interest include brand management, relationship marketing and distribution channels. A. Belén del Río (Ph. D., University of Oviedo, Spain) is an Assistant Professor of Marketing at Oviedo University (Spain). Her areas of research interest include brand equity and brand evaluation processes. Víctor Iglesias (Ph.D., University of Oviedo, Spain) is an Assistant Professor of Marketing at Oviedo University (Spain). His areas of research interest include consumer behaviour, restraints and contractual agreements in distribution channels.