Professional Documents
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consumer based
Chapter: 01 Introduction
1-1 Overview
(An attempt to define the relationship between customers and brands produced the term ``brand
equity'' in the marketing literature. The concept of brand equity has been debated both in the
accounting and marketing literatures, and has highlighted the importance of having a long-term
focus within brand management. Although there have been significant moves by companies to be
strategic in the way that brands are managed, a lack of common terminology and philosophy
Brand equity, like the concepts of brand and added value (discussed in the section headed ``the
brand construct'') has proliferated into multiple meanings. Accountants tend to define brand
equity differently from marketers, with the concept being defined both in terms of the
Management Decision
Brands and brand equity: definition and management
Lisa Wood
and exploit brand equity (Aaker, 1991; Keller, 1993; Yoo and Donthu, 2001). Building brand
equity is considered an important part of brand building (Keller, 2008). Brand equity is regarded
marketers can gain competitive advantages through strong brands (Keller, 1993; Aaker, 1996a;
Keller, 2008). For example, high brand equity levels are known to lead to higher consumer
preferences, brand purchase intentions and brand choice behavior (Cobb-Walgren et al., 1995;
Freling et al., 2011; Romaniuk and Nenycz-Thiel, 2013). Firms who have strong brands with
positive brand equity are also known to have better product-market outcomes such as brand
extensibility and price flexibility (Wang et al., 2008), and brand market performance outcomes
(The research on brand equity has been inserted in cognitive psychology and centred in the analysis
considered for the analysis of brand equity (Irmscher, 1993, Barwise 1993, Chaudhuri
1995 and Feldwick 1996) - the first one is that brand equity is equivalent to the
multidimensional construction of the knowledge of the brand (Keller, 1993, 2003) and,
the second one, headed by the works of Aaker (1991, 1996), consider brand equity like
a multidimensional construction integrated into a series of assets and liabilities that add
value to the brand, for the company and for the consumer. The problem of validity of
content around brand equity, is not solved yet, given the diversity of operative
descriptions that we can found about it (Aaker (1991), Keller (1993), Farquhar, (1989),
Park and Srinivasan, (1994), Rangaswamy et al., (1993), Lassar et al., (1995), Kapferer
(1997), Motameni and Shahrokhi (1998), Dawar and Pilluta (2000), Yoo et al. (2000),
Faircloth et al. (2001), Vásquez et al. (2002), Stahl, et al. (2012), Buil et al., (2013)).
The subject of brand equity measurement has attracted the attention of academic and
companies. Keller and Lehman (2003) delineate three approaches for assessing brand
equity: customer mind-set (Aaker 1996; Keller 2008), product market (Park and
Srinivisan 1994), and financial market (Mahajan, et al. 1994). These approaches have
different strengths and weaknesses (Ailawadi, et al. 2003). In this paper, brand equity is
measured based on the consumer perspective and are analysed the constructs and scales
construction approach in the consumer's mind (Keller, 2008) and in a holistic view of
brand management.
In this study, the main goal is to propose a measurement model in brand equity
intangible asset that has associated a certain capital, which is the result of perceptions
and attitudes, toward brands which give them a value. The measurement model of
brand equity based on consumers’ mind separates the perceptual component of the
behavior component of individuals in their preferences for brands. This is, as a result of
a set of perceptions, consumers create a brand equity that will be realized in loyal
Brand awareness refers to the capacity of the consumer to remind and recognise the brand
(Keller, 1993; Netemeyer et al., 2004; Yoo et al., 2000; Yoo and Donthu, 2001). Awareness
affects the perceptions the consumer has about the brand, contributing to the perceptual
evaluation that is expressed on brand equity. A brand with a large remembrance leads to an
H1: There is a positive relationship between awareness and brand equity from the point of
While the price-quality heuristic employed in the context of evaluation tasks predicts negative
effects of lower prices on perceived quality, when consumers are engaged in a choice task, an
alternative mechanism may be at work that could lead to lower prices having a positive effect on
perceived quality of the focal brand (Blattberg and Neslin, 1989; Pauwels et al.,2002).We call
H2: There is a positive relationship between perceived quality and brand equity from the point
Aaker (1997, p. 347) defines brand personality as “the set of human characteristic associated
with brand”. Researchers have established in the marketing literature that brands can have
human traits that influence critical outcomes such as purchase likelihood and brand choice
(Ha and Janda, 2014; Gordon et al., 2016; Guèvremont and Grohmann, 2013; Swaminathan
et al., 2009). Although brand personality is considered as one of the prominent constructs in
predicting consumer preferences and choices (e.g. Eisend and Stokburger-Sauer, 2013;
Gordon, Zainuddin, and Magee, 2016; Guèvremont and Grohmann, 2013; Hultman, Skarmeas,
Oghazi, and Beheshti, 2015; Swaminathan, Stilley, and Ahluwalia, 2009), previous research
however note that the effects of brand personality on the brand success variables partly depend
on the specific dimension (Eisend and Stokburger-Sauer, 2013). For example, out of the brand
personality dimensions developed by Aaker (1997), many studies mainly focus on two, namely,
sincerity and excitement, respectively (e.g. Aaker, Benet- Martinez, and Garolera, 2001; Hosany,
Ekinci, and Uysal, 2006; Ivens and Valta, 2012; Rojas Mendez, Erenchun-Podlech, and Silva-
Previous studies consider these two dimensions to be the most important since these dimensions
appear to capture much of the variance in personality ratings of brands (Aaker, 1997).
H3: There is a positive relationship between brand personality and brand equity from the
Besides analysing factors that contribute for the construction of brand equity from the part of the
consumer, this hypothesis claims that brad equity may lead to a certain consumer behaviour.
Therefore, it is considered if may allow the analysis of how far brand equity influence consumer
loyalty and his willingness to pay a higher price for a branded product. Brand loyalty in the
proposed model is a perceptual loyalty that is to say if, the result of the evaluation the consumer
does when is selecting the brand, it is the result of a positive perceptual evaluation strong enough
to lead him to a loyalty behaviour. A favourable evaluation of brand equity may lead to the
preference and purchase of the branded products along time (Odin et al., 2001; Oliver, 1997,
1999; Chaudhuri and Holbrook, 2001; Back, 2005; Kuikka and Laukkanen, 2012). Attitude
H4: There is a positive relationship between brand equity and brand loyalty from the point of
A brand obtains a price premium when the sum that customers are willing to pay for products
from the brand is higher than the sum they are willing to pay for similar products from other
relevant brands (Aaker, 1996). Conceptually, several writers describe price premiums as the
most useful indicator of brand equity (Blackston, 1995; Aaker, 1996; Sethuraman, 2000).
Empirically, several studies (see Agarwal and Rao, 1996; Ailawadi et al., 2003) seem to support
their argument by showing, for example, that a price premium is relatively stable over time, yet
captures variation in the brand’s health, and is a powerful predictor of market shares. Some
writers, such as Doyle (2001), even argue that a price premium is the most important way in
which brands can create shareholder value, because it requires no direct investments to charge a
higher price.
H5: There is a positive relationship between brand equity and the willingness to pay a price