Understanding price premium for grocery

products: a conceptual model of

customer-based brand equity
Johan Anselmsson, Ulf Johansson and Niklas Persson
Department of Business Administration, School of Economics and Management, Lund University, Lund, Sweden

Abstract
Purpose – This paper seeks to develop a framework for understanding what drives customer-based brand equity and price premium for grocery
products.
Design/methodology/approach – The paper reviews empirical studies made within the area of brand equity and studies of grocery products. It
compares and analyses the results from an explorative and qualitative field study with previous research on brand equity and food quality.
Findings – The study finds that brand equity and price premium focusing on the grocery sector specifically highlights the role of uniqueness, together
with the four traditionally basic dimensions of brand equity proposed: awareness, qualities, associations and loyalty. Relevant brand associations
(origin, health, environment/animal friendliness, organisational associations and social image), and quality attributes (taste, odour, consistency/texture,
appearance, function, packaging and ingredients) specific to groceries are identified and proposed for future measurement scales and model validating
research.
Practical implications – The development of a customer-based brand equity model, that adds awareness, associations and loyalty to previous
discussions on price and quality, brings to the table a more nuanced and multi-faced tool for marketing of consumer packaged food.
Originality/value – The paper provides a framework for understanding, evaluating, measuring and managing brand equity for grocery products. As
this paper presents the first conceptual brand equity framework for groceries, there is a contribution to research on food branding. Also, there is a
contribution to the general field of brand equity as previous models have been very general.

Keywords Brand equity, Premium pricing, Food products, Quality, Generics, Customer loyalty

Paper type Research paper

An executive summary for managers and executive
readers can be found at the end of this article.
Introduction
Increasing internationalisation together with centralisation of
retailer power and increasing the presence of store brands has
put increasing pressure on manufacturer brands. One strategy
manufacturers can use to defend themselves against retailer
brands is based on increasing quality and to distance their
manufacturer brands from the retailer’s brands in terms of
quality and price (Hoch, 1996). However there is also a clear
trend towards differentiation for retailer brands, rather than
just simplicity and low prices (Burt, 2000; Laaksonen and
Reynolds, 1994).
Literature on the competitive situation in the grocery sector
has primarily focused on two dimensions of positioning: price
and quality (e.g.,Bronnenberg and Wathieu, 1996; Hoch,
1996; Ghose and Lowengart, 2001). Much research have
accordingly focused on defining, measuring and managing
quality and determinants of quality in the food sector (Ophuis
and Van Trijp, 1995; Brunso et al., 2002; Grunert et al., 2004;
The current issue and full text archive of this journal is available at
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Journal of Product & Brand Management
16/6 (2007) 401– 414
q Emerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420710823762]
Acebrón and Dopico, 2000; Verdú Jover et al., 2004; Sanzo
et al., 2003; Richardson et al., 1994)
The strong focus on quality as a determinant of price can,
however, be questioned, as more recent empirical research has
showed that quality alone can explain only 20 per cent of the
prices consumers are willing to pay for different packaged
food products (Anselmsson and Johansson, 2005;
Sethuraman, 2000; 2003). Sethuraman (2000, 2003) found
the non-quality attributes to be more important, but gives
little guidance for future research. A stronger focus on the
brand, rather than only product quality and price, could offer
a better understanding of why consumers are willing to pay
more for products from some grocery brands: what drives
price premium and customer preferences, in grocery product
categories?
The strategic impact of branding in general has been
extensively researched (e.g. Aaker, 1996; Keller, 1993; de
Chernatony and McDonald, 2003; Kapferer, 2004; Melin,
1997). How customers perceive brands and what motivates
them to pay price premium is an important theme in research
on brand equity. Two fundamental motives for studying brand
equity exist: one financial motive, with the purpose of
estimating the value of the brand for accounting purposes,
and one motive derived from the strive for more efficient
marketing efforts (Keller, 1993). In the latter context, the
research departs from customer perceptions, i.e. customer
based brand equity. One often mentioned rationale for
focusing on consumers perception is that customer-based
brand equity precedes, and contributes to, financial brand

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 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
equity (Lassar et al., 1995; Keller, 1993; de Chernatony and
McDonald, 2003).
Customer-based brand equity has often been defined as
synonymous with price premium, i.e. consumer’s willingness
to pay for different brands (Sethuraman, 2003; Blackston,
1995; Ailawadi et al., 2003; Agarwal and Rao, 1996). Price
premium reflects the brands ability to command a higher
price than its competitors (de Chernatony and McDonald,
2003) and is considered important for all types of brands,
despite actual price position within a category.
Brand equity comprises a number of dimensions, which the
brand owner can develop, manage and control. Different
conceptual frameworks include different dimensions, but
Aaker’s (1991, 1996) framework, perhaps the most frequently
cited, comprises the commonly mentioned dimensions:
awareness, loyalty, perceived quality and associations.
Adding awareness, loyalty and associations to the previous
focus on price and quality can increase the understanding of
why customers’ willingness to pay different price for different
consumer packaged food products, and thus contribute to a
better understanding of the competitive situation in grocery
categories.
In order to utilise the customer-based brand equity
concept, it is important to understand the sources and
outcomes of brand equity (Keller, 2006). Some models have
been developed with the ambition to be universal and useable
for all different types of products (Netemeyer et al., 2004; Yoo
and Donthu, 2001), but general models are less useful when
attempting to gain in-depth understanding of specific
industries or categories. Therefore, numerous empirical
brand equity studies have instead focused on specific
product classes (see Lassar et al., 1995; Martin and Brown,
1990; Vázquez et al., 2002; Washburn and Plank, 2002).
When it comes to understanding brand equity and grocery
products, however, only a few studies have been conducted.
Consequently, relevant brand equity dimensions for grocery
products needs to be identified. A relevant starting point, as in
the specific studies mentioned above, could be the most
common brand equity dimensions.
The aim of this study is to develop a framework for
understanding what drives price premium and customer-
based brand equity for grocery products. This is achieved by
analysing and comparing the results from an explorative field
study with existing research on brand equity and food quality.
The contribution of the study concerns refining general
theory on brand equity, as well as developing a conceptual
framework for understanding of how to build price premium
through branding of grocery products.
Conceptual framework
The research on brand equity is fragmented. Some common
denominators can however be identified. Through this
literature review, the assumptions, definitions and
dimensions evident in the most central research on
customer based brand equity are identified. Finally, different
approaches on how to operationalise brand equity are
presented, i.e. aggregated measures that capture the sum of
the strength in each of the dimensions, are also reviewed and
discussed.
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The brand equity concept
In this study, brand equity refers to the customer based brand
equity, where the most common view on brand equity seems
to depart from Farquhar’s (1989) definition: the value
endowed by the brand to the product. Most researchers
have since then provided similar definitions (Aaker, 1991;
Keller, 1993; Yoo and Donthu, 2001; Lassar et al., 1995;
Washburn and Plank, 2002, Rajh et al. 2003; Myers, 2003).
Lassar et al. (1995) summarises five important considerations,
brand equity:
1 refers to consumer perceptions, rather than objective
indicators;
2 is a global impression of the value associated with a brand;
3 originates from the brand name, and not only physical
attributes;
4 is a relative measure, that must be compared to relevant
competitors; and
5 influences the financial brand equity positively.
When it comes to the sources of brand equity, different
dimensions appear in different frameworks. Aaker (1991,
1996) and Keller (1993) are the most frequently referred in
this research area. Aaker (1991, 1996) separates the brand
equity in four dimensions: loyalty, awareness, perceived
quality and associations. Keller (1993) makes a rougher
outline and discusses brand equity (brand knowledge) in
terms of awareness and image. Principally, both authors
emphasise the same aspects. Both Keller and Aaker underline
the importance of brand awareness, and view this dimension
as a prerequisite to strong brands. The quality aspect is also
present in both frameworks, with the difference that Aaker
discusses it more explicitly, while Keller considers the
perceived quality to be a component of the brand image,
formulated on a more abstract level through the terms
attributes and benefits. Aspects related to image or
associations are also apparent in both frameworks, with the
difference that Keller’s (1993, p. 3) definition is considerably
wider, as it includes all “perceptions about a brand as
reflected by the brand associations held in consumer
memory”. The one aspect disuniting the frameworks is the
view on brand loyalty. While Aaker considers loyalty to be a
determinant of brand equity, Keller views it as a consequence
of a strong brand and brand assets. Judging by the empirical
research from the last decade, Aaker’s view on brand equity
has come to dominate the empirical research, perhaps because
his framework is more practically useful and more easily
operationalised and measured. Empirical work by Yoo and
Donthu (2001), Pappu et al. (2005), Washburn and
Plank(2002) and Atilgan et al. (2005) all depart from
Aaker’s (1991, 1996) framework, where brand equity is
determined by perceived quality, associations, loyalty and
awareness. In the next session, these four dimensions are
discussed with specific regard to grocery products.
Awareness
Brand awareness is reflected in the consumer’s ability to
identify the brand under different circumstances (Keller,
1993) and is considered to be of particular importance in low
involvement product categories (Keller, 1993; Ritson, 2003).
When it comes to high involvement products, like cars or
other durable goods, it is however likely that those consumers
spend more time on the decision process and also get familiar
with unknown brands (Ritson, 2003). Groceries can in
general be described as low involvement products, even if that
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
might not be general to all consumer groups. For example,
Silayoi and Speece (2004) argue that two trends, pointing in
opposite directions, are evident: on the one hand modern
consumers are said to search for different ways to save time
and simplify purchase decisions and preparation of food (see
also Hausman, 2000), but on the other hand, some
consumers seems to put more and more effort into their
grocery purchases.
Perceived quality
Brand equity implies that the brand not only should be well-
known, but also known for something that is valuable to the
consumer. A central aspect of the mentioned brand equity
frameworks is the quality dimension (Aaker, 1996; Lassar
et al., 1995), but none of these comprise the most important
food quality attributes identified in food quality research, for
example taste, nutrition and packaging (see Ophuis and Van
Trijp, 1995; Brunso et al., 2002; Grunert et al., 2004;
Acebrón and Dopico, 2000; Verdú Jover et al., 2004; Sanzo
et al., 2003; Richardson et al., 1994). Nor have specific brand
associations relevant to food, like health, origin, animal
friendliness (Acebrón and Dopico, 2000; Grunert et al., 1996;
Shepherd et al., 2005; Torjusen et al., 2001) been included.
An appropriate instrument for grocery brand equity should by
all means include these aspects.
First of all, a distinction between objective (or physical)
quality and perceived quality needs to be made. High
objective quality is of course worth striving for, but does not
necessarily contribute to brand equity. As with customer
based brand equity, and in contrast to objective quality, the
perceived quality is a subjective notion that exists in
consumers’ minds. Perceived quality can be said to capture
an attitude towards the brand, and differs from objective
quality by having a higher degree of abstraction (Aaker, 1996;
Keller, 1993; Zeithaml, 1988). Moreover, the perceived
quality is considered to be the consumers global judgement of
the brand’s “overall excellence or superiority” (Zeithaml,
1988), and a primary dimension of brand equity (for example
Aaker, 1996; Keller, 1993).
A majority of the research focusing on perceived product
quality seems to depart from the work of Olson and Jacoby
(1972 for example) and Zeithaml (1988). The central
argument, which Zeithaml (1988) visualises in a conceptual
framework, is that product quality is multidimensional, i.e.
comprises a number of dimensions or attributes. Because
consumers impossibly can make complete and correct
judgements of the quality (for example judge the true
ingredient quality of a food product), they instead use quality
attributes that they associate with quality (Olson and Jacoby,
1972, Zeithaml, 1988, Ophuis and Van Trijp, 1995; Dick
et al., 1996; Richardson et al., 1994; Acebrón and Dopico,
2000). Perceived quality is hence formed as the consumer first
evaluates specific product attributes, and then accumulates
these to a global judgement of the overall quality (Olson and
Jacoby, 1972). It is therefore important to understand which
the relevant quality attributes are with regard to brand equity
and price premium.
Brand associations
Both Aaker (1991) and Keller (1993) define brand associations
as the information in the consumer’s mind linked to the brand.
Although there is no doubt that brand associations per se are
important when understanding brand equity, it is not clear
which the relevant associations are. Aaker (1996) suggests that
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Volume 16 · Number 6 · 2007 · 401 –414
measures of the brand association dimension can be structured
around three different perspectives on the brand; the brand as a
product (value), person (brand personality) and organisation
(organisational associations). Organisational associations take
the organisation behind the brand into consideration and can be
linked to trust, which both Lassar et al. (1995) and Martin and
Brown (1990) have found to be important facets of brand
equity, and corporate social responsibility (see for example
Maignan and Ferell (2003)). Another aspect of associations is
uniqueness, a notion underlined by both Aaker (1991, 1996)
and Keller (1993). Differentiation or uniqueness is here defined
as “to what degree consumers feel that the brand differs from
competing brands” (Netemeyer et al., 2004, p. 211).
Loyalty
Brand loyalty has played a central role both in brand literature
and customer loyalty literature (Jacoby and Chestnut, 1978).
Aaker (1991, p. 39) defines loyalty as “the attachment that a
customer has to a brand”, and consider it to be a primary
dimension of the brand equity. In contrast, Keller (1993)
views loyalty as a consequence of brand equity, i.e. when
favourable attitudes results in repeated purchase. Customer
loyalty offers several benefits: it creates entry barriers for
competing brands; makes it possible to charge higher prices;
gives the company time to react on competitors innovations;
and also function as a buffer in times of intensive price-
competition (Aaker, 1996). Broadly, there are two schools of
thought when it comes to defining and measuring brand
loyalty: behavioural and attitudinal loyalty. Keller (1998)
notes that the behavioural school dominated initial empirical
research, where simplified measures of re-purchases often
were used. However, the movement from purchase loyalty to a
more holistic conceptualisation appears supported in the
emerging literature. It is today widely assumed that loyalty is a
multi-dimensional construct, which is better understood
when adding an attitudinal dimension (Baldinger and
Rubinson, 1996; Oliver, 1999; Bandyopadhyay and Martell,
2007). This multidimensionality is made explicit in Oliver’s
(1999, p. 34) definition:
[. . .] a deeply held commitment to rebuy or repatronize a preferred product/
service consistently in the future, thereby causing repetitive same-brand or
same brand-set purchasing, despite situational influences and marketing
efforts having the potential to cause switching behavior.
Price premium as an over all assessment of brand
equity
Price premium is considered to be the most useful measure of
brand equity (Aaker, 1996; Sethuraman, 2000; Blackston,
1995), with the motivation that each dimension of the brand
equity should have an impact on the price consumers are
willing to pay for the brand, a dimension that has no impact
on the price premium is thus no relevant indicator of brand
equity. Other global measures are also evident in existing
literature (see de Chernatony and McDonald, 2003, Agarwal
and Rao 1996). Existing brand equity dimensions (for
example loyalty), or specific global measures (overall brand
equity, purchase intention, satisfaction) have been used.
Another approach is to measure the brand equity by
summarising the strength in each dimension to an average
brand equity measure. Yoo and Donthu (2001) have
developed a global measure, which according to their
empirical studies capture brand equity. Their “overall brand
equity” has been utilised by Atilgan et al. (2005) and
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
Washburn and Plank (2002). Na et al., (1999) on the other
hand uses satisfaction as a global measure of brand equity.
Price premium is defined as the sum consumers are willing
to pay for a brand, compared to other relevant brands, and
can be either negative or positive (Aaker, 1996). The price
premium does not necessarily fully correlate with actual
consumer prices. Therefore, actual consumer prices are not a
satisfactory measure of brand equity. An empirical
investigation conducted by Ailawadi et al. (2003) confirms
that price premium is an excellent global measure, as it is
relatively stable over time but yet captures variations in the
brands health, and in addition correlates with other global
measures of brand equity. Agarwal and Rao (1996)
demonstrated that price premium was the measure that best
could explain choice of brand at individual level as well as
aggregated market shares. For anyone interested in comparing
brands from completely different product classes, the price
premium obviously becomes an illogical measure, but as
Lassar et al. (1995) and de Chernatony and McDonald
(2003), among several others emphasise, brand equity is a
relative measure that needs to be compared to relevant
competitors. Comparisons within a grocery category are
consequently more useful and reasonable than comparisons
between different product groups.
Methodology
Since existing research and literature on brand equity is not
extensive or specific enough to the nature of the impact if the
various dimensions of grocery brand equity, a qualitative and
exploratory study of grocery consumers needed to be
conducted.
The Swedish retail market
As for other countries, during the last decade, the competition
in the Swedish grocery retail industry has intensified, which
makes Sweden a typical case. International retail chains have
entered the market and more Swedish retailers are developing
standardised store concepts and centralise their purchases.
The retailer brand market share is growing fast and now
reaching 14 percent in Sweden across categories, in
comparison to approximately 25 percent in Belgium, The
Netherlands, Spain, France, and around 30-45 percent in
countries like Great Britain, Switzerland and Germany
(ACNielsen, 2005). Presently Sweden is placed fifth in the
world regarding private brand market share growth rate
(ACNielsen, 2005). All together, this makes Sweden a
suitable case for understanding customer-based brand equity.
Data collection
Personal telephone interviews were performed with 150
randomly chosen respondents, with the purpose of capturing
all kinds of geographical, demographical, psychographical and
behavioural consumer characteristics. Face-to-face interviews
would for example not have enabled the same geographical
spread with regard to differences in size and location of
different cities. Moreover, there was no need to physically show
products or brands for the respondents. The sample was
randomly gathered from the public telephone register. The
criteria for participating were that the respondent must be at
least 20 years old and fully or partially in charge of the
household purchases of food and groceries. 72,5 percent of the
respondents were women and the average age was 50 years.
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Questionnaire design
Initially respondents were asked to name one specific brand
they are willing to pay “more for”, in any of a number of
product categories mentioned. They were thereafter asked to
answer a spontaneous, open-ended question why they were
willing to pay more for the chosen brand, compared to other
competing brands. This was done in accordance with
recommendations of Keller (2006). The purpose with the
initial question was to identify the general brand equity
dimensions (awareness, loyalty, perceived quality and
associations). Thereafter the questions switched to focus on
what the respondents associate with the brand. For example
“What does x brand mean to you?”, “What comes to mind
when you see products from brand x?” and “How is brand x
different from other brands?”. A corresponding procedure
was then repeated, but this time focusing on brands
respondents would definitely not pay the same price for. In
accordance with suggestions of Keller (2006), the interview
was completed with a summarising question regarding what
the respondents in general believe separate brands they are
willing to pay for from brands they definitely not would pay
the same price for.
Selected product categories
The sample was divided into three groups, i.e. each
respondent answered questions regarding one specific
category. The three different groups of product categories
chosen for the study were fresh semi-refined groceries, frozen
ready meals and colonial groceries. These represent the total
assortment of product categories in retail grocery stores, if the
two dimensions used to categorise groceries (degree of
refining and degree of freshness) are considered. Fresh semi-
refined groceries can be cream, margarine, butter, yoghurt,
sandwich delicatessen, caviar, sausages and bacon. Examples
of frozen ready meals are frozen bakeries or frozen soup, pizza
and fish au gratin. Colonial groceries are rice, flour, sugar,
beans, lentils and peas. Several categories from each group
were suggested to the respondents, based on total category
penetration (share of households who have bought at least one
item from the category during one year) according to
household panel data provided by an international research
company.
A brand equity framework for consumer
packaged groceries
Insights gained from the consumer interviews form the basis
of the model summarising the dimensions of brand equity and
determinants of price premium as perceived by consumers.
The interviews revealed that, regardless of category,
consumers used similar criteria in evaluating brand equity in
terms of price premium. These criteria and statements seem
to fall into four key categories, which are labelled brand equity
dimensions: awareness, perceived quality, associations and
loyalty. The same dimensions were suggested in past research
and more general models of brand equity (Aaker, 1996).
As Figure 1 shows, a fifth dimension – uniqueness – was
also added. It relates to the performance of the other four
dimensions relative competing brands and indicates that
customer-based brand equity is the result of the fact that
customers compare the brand to other brands within the same
category. Uniqueness is proposed as a single dimension of
brand equity, in contrast to Aaker’s (1996) framework where
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
Figure 1 A brand equity model for understanding price premium for
grocery products
uniqueness is one of several brand associations. Our results
indicate that uniqueness is just as likely to be related to
performance on quality aspects as awareness, associations or
loyalty. A brand’s degree of uniqueness appears to be the most
important dimension in order to achieve price premium –
why would customers be willing to pay the highest price (a
unique price within the category) for a certain brand if it not
is unique in some way?
In addition to supporting and developing the basic
dimensions of the brand equity framework, an important
part of this article is to also specify which the relevant
attributes within each dimension is when it comes to grocery
products.
Awareness
In the interviews, respondents articulated that well-known
brands stand for security or trust, and expressed scepticism
against unknown brands. On a practical level, brand
awareness can influence consumer choice at the point-of-
purchase, and on a more abstract level brand awareness
determines the strength in the associations linked to the brand
(Keller, 1993). For grocery products, sold in stores together
with 40,000 other products, awareness plays a central role as
it increases the chances of the brand being a member in, what
Keller (1993) calls, the consideration set, i.e. the handful
number of brands considered by the consumer when making a
purchase. Awareness also influences the actual choice, since
consumers tend to buy well-known brands.
By considering the six different levels of brand awareness
that Aaker (1996) describes, a more nuanced interpretation of
the quotes can be made. The six levels are recognition (“Have
you heard of brand x?”), recall (“What brands of x can you
recall?”), top-of-mind (the first mentioned brand in a recall
task), brand dominance (the only brand recalled), brand
knowledge (“I know what the brand stands for”), brand
opinion (“I have an opinion about the brand”). For grocery
products, the quotes, “It’s a famous brand”, “Well-known
brands give me a feeling of security”, “Haven’t heard of them,
seems risky”, seems to express the most basic form of
awareness (recognition), and demonstrates how important it
can be that consumers recognise the brand at the
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Volume 16 · Number 6 · 2007 · 401 –414
point-of-purchase. The higher levels of awareness can also be
traced in the interviews. A closer look at the quote “I know
nothing about them, feels insecure” reveals that the respondent
admittedly recognise the brand, but is not sure what it stands
for, i.e. a lack of brand knowledge. This study does not allow
us to draw conclusions about what specific kind or level of
awareness that contributes most to brand equity, but the
interviews confirms that brand awareness generally is a relevant
and important dimension of brand equity, as shown in previous
empirical research by Washburn and Plank (2002); Yoo and
Donthu(2001) and Pappu et al. (2005).
Perceived quality
Taste was the most frequently mentioned intrinsic quality
attribute, almost exclusively articulated with simple
expressions like “It must be tasty” or “tastes good”.
Ingredients (“nutritious product”, “low-fat”) are linked to
both naturalness (“no additives or preservatives”) and the
quality of the ingredients (“better ingredients”). These
attributes have been identified in previous research, which
also have shown that consumers for example are sceptical
towards genetically modified food (Bredahl, 1999, 2001;
Grunert et al., 2001; Huffman, 2003). The same thing can be
said about additives. In an American study, 43 percent of the
respondents stated they were worried about the risks with
different additives and 31 percent that they had adjusted their
purchase behaviour due to these worries (Rimal et al., 2001).
The packaging can have a direct impact on quality, both on
intrinsic quality (if it for example has a special construction or
a functional benefit) and extrinsic quality (the information on
the package and the visual identity) (Zeithaml, 1988).
Example of quotes mentioning the packaging in intrinsic
terms are “User-friendly screw cork” and “I like the size of the
package”. To what extent the products fulfils its basic function
is also a relevant attribute, for example important in
categories like frozen ready meals (“Convenient to have in
the freezer, easy and quick to prepare”) and margarine (“my
baking never fails with x”, “excellent for cooking”). Moreover,
relevant intrinsic attributes according to the interviews are
texture/consistency (“Good consistency”, “It’s not sticky”),
appearance (“Got the right colour”, “Strangely greyish”),
durability (“It goes bad quickly”) and odour (“Smells bad”).
Numerous different extrinsic quality attributes occur in the
literature, commonly linked to specific product categories.
Zeithaml (1988), however, identifies a number of general
attributes that can be used across product groups; price,
brand name and promotion. Judging by the quotes in this
study, these extrinsic attributes are relevant as respondents
stated that they are using price (“lower quality is often
cheaper”) as well as promotion (“I’ve seen advertising for the
brand”) and brand name (“I judge by the brand”) to infer the
quality of products they never tried, in accordance with work
by Dick et al. (1996) among others. Kirmani and Zeithaml
(1993) argue that promotion, and thereby indirectly
awareness, can effect quality perceptions, either directly (if
quality explicitly is mentioned in advertising for example) or
indirectly (through the associations the size and layout of the
advertising awakens). In accordance with existing studies –
for example Acebrón and Dopico (2000) and Richardson et al.
(1994) – the package were important for how the respondents
perceive the quality of different brands. A pair of examples is
“I look at the package” and “I look at the box, that it looks
professional and not as boring as Blåvitt (retailer brand)”.
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
Ingredients and nutrition information are apparently also
used as an extrinsic attribute when consumers draw
conclusions about the quality of different products (“I
examine the ingredients and how fat the product is. I want
it to be high quality fats”, “I read the nutrition information”).
Not very surprising considering that ingredients was found to
be such an important intrinsic attribute in this study and that
previous research have came to the same conclusions (for
example Ophuis and Van Trijp, 1995).
Associations
The principal difference between brand associations and
quality attributes is that consumers can not actually judge
how a brand “performs” on a specific association, due to the
apparent lack of relation between consumption and effect
(Ophuis and Van Trijp, 1995; Brunso et al., 2002). For
example, a consumer eating beef can immediately tell whether
it tastes good or bad, but impossibly determine how nutritious
the food is, whether the animals have been treated well at the
time of production or if the organisation behind the brand
takes social responsibility and acts environment friendly. The
brand associations are instead a matter of credible
communication (Ophuis and Van Trijp, 1995; Grunert et al.,
2000; Brunso et al., 2002).
The criteria sorted under this dimension could further be
categorised according to the following structure; origin,
health, organisational associations, environment/animal
friendliness and social image. As existing research has
suggested (for example Acebrón and Dopico, 2000; Thakor
and Lavack, 2003; Hong and Wyer, 1990; Samiee et al., 2005;
Ahmed et al., 2004), our results shows that the origin
associated with a brand can influence the price premium.
Examples of quotes are “The origin of the product is
important, I want it to be Swedish”, “produced in Sweden”,
“I think of southern Sweden” and “It is important that this
company can be located here in Southern Sweden also in the
future”, “We must support Swedish farmers”). In terms of
negative associations, both foreign products in general (“It’s
foreign”) and specific regions (“I’m thinking of eastern
Germany”) were mentioned. Besides having some kind of
positive or negative impact on consumer perceptions, origin
relates to assumptions about genuine production traditions or
local patriotism. If this study would have been conducted in
eastern Germany, associations to East Germany would most
likely have been positive. Geographical closeness and
domestic origin is thus what consumers perceive to be
positive. Quotes regarding the organisation behind the brand
include aspects linked to innovation (“They have the most
products and constantly introduces new ones”), promotion
(“They profile themselves and are positive in the
communication with others”), and success (“They are doing
well”). Obvious analogies to those associations Aaker (1996)
argues are worth striving for (that the organisation is
perceived to be innovative and successful for example) are
evident. An additional facet of the organisational associations
put forward by Aaker (1996) is that the organisation should
be perceived to care about the customers, an aspect that can
be linked to both corporate responsibility (see also
Anselmsson et al., 2005) and trust – a dimension both
Lassar et al. (1995) and Martin and Brown (1990) have found
to be relevant determinants of brand equity. Among the
interviews in this study quotes linked to trust (“A serious
family business”, “I trust them”, “I dare to try their new
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products, because I find them trustworthy”) and social
responsibility (“A big corporation who does not care about
labour rights and environmental issues”) can be found. In
accordance with previous studies, health-related associations
were also confirmed relevant for grocery consumers’
perceptions (see work by Grunert et al., 1996; Wandel and
Bugge, 1997; Magnusson et al., 2003; Shepherd et al., 2005;
Bech-Larsen et al. 2001, Nielsen et al., 1998). Quotes linked
to health were often concisely articulated around nutrition or
health, for example “more nutritious” or “not healthy”.
Moreover quotes like “I care about my figure”, “better
composition of nutrition and ingredients” and “Good food,
you get what your body needs” were also evident.
Environment/animal friendliness includes all quotes
implicitly expressing environmental issues, but also
associations linked to ecological products. This
interpretation is supported by the fact that respondents
seems to associate ecological products with environmental
aspects, as several quotes like “It’s ecological, good for the
environment” occurred. The variety of ecological and organic
products have increased substantially during the last decade,
but even if many consumers have a positive attitude to
environmentally friendly products, that does not necessarily
imply that they are willing to pay a price premium for these
products. A study of Norwegian consumers (Torjusen et al.,
2001), focusing on the product categories fruit, vegetables,
potatoes and meat showed that consumers (especially women
and well-educated people) were interested in ecological food,
but not willing to pay the, at the time of the study, high prices
on these products. Judging by the results in this study, we can,
however, identify a link between these aspects and price
premium. How strong this link is, and how much consumers
are willing to pay for ecological grocery products, needs to be
further investigated. A few quotes related to animal
friendliness, an aspect that food consumers are suggested to
become more and more interested in (Brunso et al., 2002;
Ophuis and Van Trijp, 1995; Torjusen et al., 2001), were also
identified. Two examples from the interviews are the quotes
“They handle the animals better” and “I’ve read a lot about
how bad they treat animals there”. A separate group of
associations concerning animal friendliness is not motivated,
since only a few respondents refer to these aspects.
Loyalty
Several respondents mentioned how they always search for a
specific brand and purchase certain products almost
“habitually” or “by tradition”. There is a relation both to
loyalty as an intention, as consumption over a long period of
time as well as the frequency and share of purchases. Gremler
and Brown (1996) describe three different levels of loyalty.
The first level is linked to consumer behaviour in the
marketplace, i.e. repeated purchases and is consequently
named behavioural loyalty. Thereafter is attitudinal loyalty,
which refers to consumer preferences and attitudes. The
highest level is cognitive loyalty which means that a brand
comes up first in a consumers’ mind, when the need to make a
purchase decision arises, i.e. the consumers’ first choice. The
cognitive loyalty is closely linked to the highest level of
awareness (top-of-mind), where the matter of interest also is
the brand, in a given category, which the consumers recall
first. Judging by the quotes above, the mentioned brands have
apparently managed to become the respondents’ first choices
(cognitive loyalty) and is therefore purchased repeatedly
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
(behavioural loyalty). The attitudinal loyalty, i.e. that
consumers feel some kind of positive emotional connection
or devotion to the brand (see Aaker’s (1991, p. 39)
definition), can also be traced in the interviews, in quotes
overlapping other dimensions of the brand equity. Some of
the respondents even seemed to recommend the interviewer
to also try or use the brand. One could discuss whether loyalty
is a dimension that contributes to, or is a consequence of,
brand equity (Melin, 1997). When brand equity is
operationalised as synonymous with price premium, it is,
however, more rational to consider loyalty as a contributing
dimension, rather than assuming that price premium would
lead to brand loyalty.
Uniqueness
It is apparent that uniqueness plays a central role when
building and controlling brand equity in a business currently
characterised by price competition, copy-cat activities and
increasingly successful me-too brands gaining higher and
higher market shares, etc. In Keller’s (1993) framework, the
degree of uniqueness in the brand associations, together with
their favourability and strength, determines the brand equity.
Also Aaker (1996) acknowledge uniqueness, and in previous
empirical studies (for example Netemeyer et al., 2004; Kalra
and Goodstein, 1998), the link between uniqueness and price
premium have been statistically confirmed. Another support
for the central role of uniqueness comes from the very
concept of the brand. Branding means to distinguish the
goods of one producer from those of another (Keller and
Kotler, 2005).
Perhaps is uniqueness more important in retail than in
other industries, considering that an average supermarket
offers thousands of product articles and thousands of different
brands. In this study, only a few respondents mentioned the
brands uniqueness as a reason to why they are willing to pay/
not pay for a brand. A more comprehensive analysis of the
interviews however reveals that uniqueness has a central role
in brand equity. Uniqueness is implicitly present in all quotes
where respondents have expressed that a brand is the
“healthiest”, “most tasty”, “most environmentally friendly”.
Something perceived to be best or most regarding a certain
attribute must by definition be considered unique in some
sense, as opposed to quotes like “healthy”, “tasty” or
“environmentally friendly” – which does not include any
ranking of the brands. The importance of uniqueness can also
be linked to the other dimensions of brand equity. The
cognitive loyalty is seen as the highest and most attractive
form of loyalty (at least from a brand managers point of view),
where the brand becomes the consumers’ first choice, a
unique position only one brand (in each category or product
group) can achieve. In the same sense, top-of-mind awareness
and brand dominance, the highest levels of brand awareness,
is a unique status only one brand can accomplish.
The psychological reason why uniqueness is so important
can be explained by choice theory, which states that when
consumers are facing a choice (between different brands, for
example), they tend to ignore attributes common to the
alternatives, because these offer no preferential guiding, and
instead the unique attributes becomes important (Tversky,
1972). The comparison made in the choice process thus
implies that the objective attributes of each alternative is not
essential, but rather how the alternatives relate to each other,
i.e. which attributes that are unique (Dhar and Sherman,
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1996). Relating this to brand equity, how a single brand is
perceived is thus not interesting, it must be related to
competing brands (Lassar et al., 1995). This can be said both
about brand equity in general and each brand equity
dimension. For example, if brand A is associated with animal
welfare is of course positive, but if all the competing brands are
perceived to be equally animal friendly, brand A will most
certainly not be able to achieve price premium (brand equity)
based on this characteristic. The same argument can be applied
to quality: if products from brand B are perceived to have
adequate texture or taste is favourable, but results in price
premium only if consumers perceive this characteristic to be
unique for brand B. In this comparative perspective lies the
central argument behind the operationalisation of brand equity
as price premium: the aim to offer something that motivates
consumers to pay more for the brand than for other competing
brands. A brand’s degree of uniqueness is therefore central to
the strength of the brand equity.
Within marketing literature in general, and positioning and
differentiation theories specifically (for example, Reeves,
1961; Ries and Trout, 1986), it is often argued that a
brand’s uniqueness should be based on aspects that
consumers value. According to Keller and Kotler (2005),
the differences could be found on functional, rational,
tangible performance as well as symbolic, emotional or
intangible representation. Behavioural research on consumer
choice has however shown that even so called meaningless
differentiation, i.e. differentiation by adding an irrelevant
attribute, can influence the brand equity positively.
Meaningless attributes can make the brand more distinctive
in consumers mind, offer a simple decision rule, and thus
have a positive influence on brand awareness and knowledge
(Carpenter et al., 1994). Under certain circumstances, a
physically meaningless attribute can even be perceived as
valuable, and thereby also contribute to more positive quality
judgements and associations linked to the brand (Carpenter
et al., 1994). Numerous empirical studies confirm that
uniqueness can influence both choice of brand (Carpenter
et al., 1994), and the price consumers are willing to pay (Kalra
and Goodstein, 1998; Netemeyer et al., 2004).
It is important to emphasise that the different brand equity
dimensions are interdependent of each other. A high degree of
awareness is not enough, the brand must also be known for
something valued by customers, and the associations must be
consistent with the quality attributes. The brand equity halo
effect (Leuthesser et al., 1995), i.e. how an improvement in one
dimension can reinforce and leverage the customer-perceived
performance of other dimensions, is a very important
advantage of having a strong and consistent brand (Ritson,
2006). Research has for example shown that strong brands are
rewarded three times quicker (in terms of perceived quality) for
an increase in (objective) quality and punished one year slower
for a decrease in quality compared to weaker brands (Mitra and
Golder, 2006). This interdependency can be referred to as
internal brand equity balance.
Summary
For each dimension, Table I provides examples of specific
criteria that emerged from these interviews. It is likely that the
four dimensions overlap and because the research was
qualitative and exploratory, analysis of the association
among and importance of the dimensions and criteria must
await further empirical investigation.
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
Table I Brand equity dimension and price premium determinants for
grocery products
Brand equity dimensions
Quality means that products from the brand should not only be consistent
and meet consumers’ expectations, but also be of higher quality than other
products and brands:
.
Taste of the products
. Based on good ingredients
. Functions and performs as expected
. Texture of the products
. Packaging is attractive and functional
. Product colour
. Durability in comparison to other products
. Odour/smell.
Awareness: consumers’ awareness and recognition of the brand and its
products, in commercially relevant situation:
. The first-mentioned brand in a category
. Consumers know what brand, logotype and name looks like
. Consumers recognise the brand among other brands in the shelf
. Consumers know what the brand stands for.
Loyalty: consumers’ attitudes and behaviour, as well as their willingness to
speak positively about the brand in front of friend and relatives:
.
The extent or frequency to which the customer has bought the brand
.
Consumers encourage fiends and relatives to try the product
. Consumers’ first choice in the category.
Associations: memories and information which come to the consumers
mind, when seeing or thinking about the brand:
. Origin in terms of continent, country or region
. Health in terms of nutrition, low sugar and fat, functional food, athletic
. Organisational associations, innovative, successful
. Environmental and animal friendliness
. Social image; how other might perceived the buyer/user of the user.
Uniqueness: to what extent the brand and its products are different from
competitors in the mind of the customer:
. The brand or its products have one or several unique features (not
necessarily important)
. The brand or its products has a unique combination of features.
Discussion and implications for future research
A general or formal theoretical contribution from this study is
the qualitative development and refinement of a conceptual
brand equity framework for grocery products, together with
an empirical confirmation of the relevance in the brand equity
dimensions occurring in existing frameworks and previous
empirical research (for example Aaker, 1996; Keller, 1993,
Yoo and Donthu, 2001; Netemeyer et al., 2004). The
framework developed in this study share many similarities
with the brand equity concept proposed by Aaker (1991,
1996), which also have been utilised in empirical studies by
Washburn and Plank (2002), Yoo and Donthu(2001) and
Pappu et al. (2005). This study however adds a more explicit
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role of uniqueness, therefore the central position in Figure 1.
The degree of uniqueness has often been put forward as
important in general marketing literature, with terms like
“Unique selling proposition” (Reeves, 1961), differentiation
(Smith, 1956; Levitt, 1980) and positioning (Ries and Trout,
1986). Despite this widely accepted importance, uniqueness
has not been emphasised to the same extent within brand
equity research. Both Aaker (1996) and Keller (1993) include
uniqueness in their frameworks, but not as explicit as in this
study, where uniqueness is proposed as a single dimension, in
fact the most important dimension. When using the
traditional approach of conducting and analysing interviews,
in the way Keller (2006) suggests, it is easy to miss the
important role of uniqueness. First when the interviews where
examined a second or third time, the central role uniqueness
emerged.
The choice to emphasise uniqueness, more than what have
been done in existing frameworks, is theoretically motivated
by the fact that brand equity is a relative measure, and thus
needs to be compared with competitors. How one single
brand is perceived is not interesting, if it not is related to
competing brands. In this comparative perspective lies the
central argument behind the operationalisation of brand
equity as price premium; the strive to offer something that
motivates consumers to pay more for the brand than for other
competing brands, which implies that the brand need to offer
something other brands do not offer, i.e. be unique.
The uniqueness might be rooted in one single attribute or a
certain combination of attributes that together makes the
brand unique, and it can be of tangible or intangible
character. When it comes to intangible uniqueness, the
determinants can either be categorised as too specific to be
mentioned or too difficult to define (and thereby also too
difficult to copy). The highest level of uniqueness, “one of a
kind”, can mean that the unique aspects can not be traced or
expressed in terms of general quality attributes or brand
associations. On a product level, researchers have defined
attributes that are impossible to evaluate as salient product
attributes (Parasuraman et al., 1985). This phenomenon
might occur when a brand or a product is first in a category,
but can also be relevant for other brands. For example, what is
it that makes Coca-Cola so unique? Most consumers have
troubles trying to rationally and specifically motivate the
uniqueness linked to Coca-Cola, and blind zip tests have
shown that the taste not is exceptionally unique or superior
(Hartley, 1992). Since it is more relevant to state that Coca-
Cola in fact is unique, rather than motivating what exactly
makes the brand so unique, there are reasons to treat this
dimension as a single and very important one.
The development of a brand equity framework for grocery
products has contributed to a better understanding of why
consumers are willing to pay more for certain brands of
packaged food. The study clearly demonstrates that that not
only quality matters: the brand equity concept provides
additional, and apparently very essential, aspects that help
explain how price premium is driven for grocery products.
Also awareness, associations, loyalty and uniqueness need to
be considered. When asking respondents in this study why
they are willing to pay more for certain brands, 40 per cent of
the quotes are related to non-quality arguments, showing
again that not only quality should be in focus. Brand equity is
here proposed as a more comprehensive alternative to product
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
quality and could be used in discussions on competitive
actions in customer packaged food categories.
On a detailed level, the specific brand associations
important to grocery consumers have been identified. The
associations linked to consumers’ willingness to pay could be
grouped in accordance with existing frameworks and research
(for example Acebrón and Dopico, 2000; Thakor and Lavack,
2003; Martin and Brown, 1990; Pappu et al., 2005).
Associations mentioned in the interviews were origin,
health, organisation and environment/animal friendliness.
Important intrinsic grocery quality attributes, which are parts
of the physical product and what consumers consider being
equivalent to quality, are taste, appearance, consistency and
texture, odour, ingredients, function and packaging. Relevant
extrinsic attributes, which are not a part of the physical
product, but signal quality and influence the perceived
quality, are packaging, ingredients and nutrition information,
price, promotion and brand name. Packaging should be more
important for creating brand equity for convenience goods,
like groceries, than for shopping goods sold in combination
with personal selling and displayed without packaging, like
the type of products Lassar et al. (1995) studied.
When taking these findings into consideration, it is
important to remember that this study has focused
specifically on product level brand equity. If one assumes
that it is easier to copy specific product attributes than
intangible brand associations, the strength of brands
grounded on product attributes will consequently be more
difficult to sustain than brands based on intangible brand
associations. Take the cereal category for instance: when
Kellogg’s has introduced a new product brand, they enjoy
price levels almost twice the category average during the first
years. Kellogg’s fifth largest product K-Special RedBerries is
for example currently priced at nearly twice the category
average price and the price of K-Special Classic. As time goes,
competitors copy those product attributes that made the
premium product unique (in this case by adding red berries to
their cereal products), and the prices on K-Special RedBerries
goes down in the same rate as the uniqueness is eroded.
Consumer packaged food manufacturers could maybe benefit
from building strong brands on a higher level (for example
strengthening the Kellogg’s brand instead of the K-Special
RedBerries brand), by creating more tacit and hence less
imitable associations, rather than trying to constantly
introduce innovative and unique product brands.
Managerial implications
The most important managerial contribution is the
development of a more nuanced and multi-faced tool for
marketing of consumer packaged food. Discussions within the
area so far appears to have focused solely on price and quality
(for example Hoch, 1996) as the variables that can be
managed, but with the brand equity model at hand, more
managerial options are made available. From a brand equity
perspective, the goal must be to allocate, the often limited
resources, to those dimensions where the impact on the price
premium is strongest. This can be defined in terms of external
brand equity balance, taking into account what happens in the
surrounding marketplace.
Whether or not the company actually takes action, the
brand will be affected by what competitors do and how
customers perceive competing brands. If competing brands
for example raise the perceived quality, one could assume that
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customer perception of quality will change and the relative
quality level of the other brands is lowered, especially on those
attributes where competitors are making progress. For any
given time period (each year for example) companies can
choose to allocate resources to improve uniqueness,
awareness, loyalty, quality or associations. Which of the five
dimensions that should be improved is a function of how the
brand performs on specific aspects relative other dimensions
and how competitors perform. In order to make a beneficial
choice, there is of course a continuous need for information
about the marketplace and consumer perceptions.
The external balance could be described in terms of what
could be named the price/brand balance, a modification of
existing price/quality balance discussion. In Figure 2, the x
axis is price (or price premium) and the y axis is brand equity
and how the brand performs on the five brand equity
dimensions. The diagonal balance curve and its slope are
determined by prices and how the brands perform, in a given
category. Brands should strive to be positioned on the curve,
i.e. to have a reasonable balance between the performance on
the five brand equity dimensions and the price (current or
desired) to achieve long-term profit and success. Brands out
of balance will most likely loose market shares or margins, and
in worst case be marginalised. A position on the balance curve
should give highest possible payoff (in terms of sustainable
price premium), in relation to the resources used. Being out of
balance can simplified be described as two different scenarios,
either the brand is over priced (brand B in Figure 2) or under
priced (brand B in Figure 2).
An overpriced brand has a price higher than the value
consumers perceive (brand B) and will most certainly loose
market shares, since consumers do not receive enough value
for their money spent. This could mean that the brand
managers are forced to lower the price on products from the
brand, or alternatively strengthen the brand equity, by
improving the performance on any or a few of the five
dimensions. The opposite situation, a under priced brand, is
maybe not an equally critical situation, on short term. There
are, however, long-term drawbacks with having a under
priced brand. First of all, an under priced brand refrains from
a higher margin, which decreases the long-term profits. Since
the balance curve shows the price that can be achieved,
without loosing in profitability, there is principally no reason
to have a lower price. Besides refraining from a higher margin,
under priced brands run the risk of weakening the brand
Figure 2 The price/brand balance
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
equity, because constantly discounted brands can be
perceived as being of lower quality.
The balance curve and the price/brand balance is not a
static condition, it changes constantly depending on how the
market or category changes and how competing brands are
developed. Internationalisation, new low price chains and
retailer brands have lowered the prices on consumer packaged
food. As this happened, the grocery categories became more
cost and quality transparent, consumer perceptions changed
and the demand more value for the price, or lower price for
the same value, increased (Sinha, 2000). The only way for
brand managers to defend their price premium is to
understand how to load their brands with valuable and
unique content.
Implications for future research
Future research should first of all focus on validating the
structure of the framework. The key question is whether
brand equity should be considered to be comprised of five
determinants (perceived quality, brand associations, loyalty,
uniqueness and awareness) or four determinants, where
loyalty is seen as a consequence of brand equity and brand
assets rather than a determinant. Several previous empirical
and quantitative studies have shown that Aaker’s view on
loyalty, as a determinant of brand equity rather than a
consequence of it – is valid (see, for example, Yoo and
Donthu, 2001; Washburn and Plank, 2002; Atilgan et al.,
2005). To fully answer this question, a quantitative method
and structural equations are needed. A future quantitative
analysis, conducted with structural analysis, can give us better
answers to the question whether loyalty is a determinant or
consequence of brand equity. In this study, where the aim is to
identify determinants, confirming the relevance of attitudinal
loyalty as a brand equity dimension must be considered
satisfactory.
Finally it is tempting to speculate whether uniqueness
would be equally important if brand equity is not
operationalised as price premium. One alternative option is
for example Yoo and Donthu’s (2001) definition, where brand
equity is seen as the preference for a brand over another
brand, given the same product features. Considering that
most customers do not choose unique products, features or
brands, but instead tend to belong to the mainstream in terms
of features and average prices, the central role of uniqueness
should be further examined. We can only support the central
role of uniqueness when brand equity is operationalised as
price premium. Future research could try to validate whether
uniqueness is as relevant when it comes to preferences and
overall brand equity.
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Johan Anselmsson, Ulf Johansson and Niklas Persson
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About the authors
Johan Anselmsson (PhD) is Assistant Professor in Marketing
at Department of Business Administration, Lund University
in Sweden. Food industry is one of his main research
interests, focused on retail service as well as aspects about
product branding. His publications are found in several
academic journals: International Review of Retail and
Distribution Research, Journal of Retailing and Consumer
Services, International Journal of Retail & Distribution
Management. Johan Anselmsson is the corresponding author
and can be contacted at: johan.anselmsson@fek.lu.se
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Ulf Johansson (PhD) is Professor in Marketing at
Department of Business Administration, Lund University in
Sweden. Internationalisation is one of his main research
interests, focused on retailing and aspects that deal with, e.g.
consumer image, store management and branding. His
publications are found in several academic journals,
including British Journal of Management, the European
Journal of Marketing, Journal of Strategic Marketing and
Organisation Studies.
Niklas Persson is a PhD Candidate in Marketing at
Department of Business Administration, Lund University in
Sweden. Brand management in general, and brand equity in
particular, is his main research interest. He has published also
in Journal of Retailing and Consumer Services, and is currently
writing a doctoral thesis on the nature and relevance of brand
equity and brand orientation in business-to-business
marketing.
Executive summary
This executive summary has been provided to allow managers and
executives a rapid appreciation of the content of this article. Those
with a particular interest in the topic covered may then read the
article in toto to take advantage of the more comprehensive
description of the research undertaken and its results to get the full
benefit of the material present.
Driving consumer-based equity and premium prices:
lessons from the grocery sector
Whether you choose to manage the process or not, customers
are making judgments about your products. How good is the
product? Does it do what they expect it to? Do they trust the
company that creates it?
A change in the behaviour of a competitor might change the
nature of the game. An increase in perceived quality of their
product might help their sales to the detriment of yours. It
may also impact negatively on how your brand is perceived –
if theirs is the high quality one now, what does yours stand
for?
The concept of brand equity has been an important one as
gauged by the intensity of research in this area combined with
the interest among brand managers. Definitions vary, but an
all encompassing one is that of Keller who has it including all
“perceptions about a brand as reflected by the brand
associations held in consumer memory”.
Lassar, Mittal and Sharma had broken brand equity down
into that which:
.
refers to consumer perceptions, rather than objective
indicators;
.
is a global impression of the value associated with a brand;
.
originate from the brand name, and not only physical
attributes;
.
is a relative measure, that must be compared to relevant
competitors; and
.
influences the financial brand equity positively.
Brand equity is an intangible concept, but one that lies behind
the more tangible elements of business success. In what is
primarily a study that interrogates previous literature, Johan
Anselmsson, Ulf Johansson and Niklas Persson of Lund
University in Sweden examined brand equity and premium
pricing in the grocery sector. They drew upon earlier
empirical studies, both quantitative and qualitative in
nature. Their work highlights, should it have been needed,
 Understanding price premium for grocery products
Johan Anselmsson, Ulf Johansson and Niklas Persson
the importance of uniqueness, and also of understanding the
four generally considered dimensions of brand equity, which
are:
1 awareness,
2 quality;
3 associations; and
4 loyalty.
These are considered in relation to the grocery sector, and
proposed as future measurement scales.
The devil in the detail
When it comes to brand equity, small clues can make a big
difference. Perhaps the most significant output from the Lund
University study is a more nuanced tool for marketing
packaged food to consumers. Past studies have primarily
focused on price and quality, but there is more to it than that.
More sophisticated approaches can be taken to the allocation
of resources.
Considering each of the brand equity dimensions in turn:
. Awareness – it was Keller who noted that consumers
associate well-known brands with security and trust. They
are much more sceptical about the values of unknown
brands. In practical terms it has an impact on point-of-
purchase decisions, in a more abstract sense it determines
the strength of brand associations customers feel.
.
Quality – it is all about perceptions. When it comes to
food this usually relates to taste (is the food tasty, does it
taste good?) and to the ingredients (is it nutritious, such as
low fat? Or natural with no additives?). These have been
identified by past research as has unease with genetically
modified food.
.
Associations – which are mainly different from quality
attributes in that they are less tangible and more abstract.
Ophius and Van Trijp were among those identifying that
with associations consumers cannot judge the
performance of the brand against a specific dimension as
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there is an apparent lack of relationship between cause
and effect.
.
Loyalty – is always a hot area for brand managers.
Customers may buy through habit or tradition. It may be
because they like what they are getting, consistently so.
Loyalty is related to intention to buy as well as actual
consumption, and the frequency and share of purchases
over a long period.
.
Uniqueness – is a central consideration, indeed Keller’s
framework has brand equity determined by the degree of
uniqueness in brand associations, together with their
favourability and strength. Price competition may be a
factor of there not being much in the way of uniqueness
on offer. Copycat activities would indicate there was, or a t
least, was until recently.
Taking forward the findings of Anselmsson, Johansson and
Persson’s study from a brand equity perspective, when
resources are finite decisions need to be taken on how to
allocate them. This will be based upon identifying those
dimensions where there is the strongest impact on securing a
price premium, where there can be the biggest bang for the
Kroner or Euro.
There is an old saying that if you can’t measure it you can’t
manage it. It is often challenged, but tends to have a fair bit of
truth in it. Even when dealing with something as intangible as
brand equity it seems a way can be found where this adage
more or less applies. If the dimensions can be identified, and
they can, then decisions can be taken as to where to put the
energies and the funds. And returns can be measured, in very
tangible terms, in increased margins.
(A précis of the article “Understanding price premium for grocery
products – a conceptual model of customer-based brand equity”.
Supplied by Marketing Consultants for Emerald.)