Background and analysis of Brand Equity

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1st Jan 1970 Marketing Reference this

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The concept of brand equity becomes popular around 1980’s and becoming more and more popular ever since then. It is closely related to brand loyalty and brand extensions which are significant in assisting a brand or a company to achieve competitive advantage. Competitive advantages of a brand or a company are critical in ensure the success of the organization among its competitor. It’s said that the levels of brand equity affects consumer preferences and purchase behavior (Cobb-Walgren, Cathy, Ruble & Donthu, 1995), thus, in brief a brand which manage to achieve high brand equity obtains competitive advantage as to its competitors.

2.1.1 David Aaker

Throughout these 30 years, many researchers had contributed their effort in conducting research on how brand equity can be associated to a brand. Various frameworks had been drawn, yet, the common model used would be the Aaker model. David Aaker states that the brand equity are form by loyalty, perceived quality, associations, and awareness in his book – Managing Brand Equity, published in the year 1991. He then proposed Brand Equity Ten as an effort to create a set of brand equity measures that could be applied across markets and products in the year 1996. Brand Equity Ten are ten sets of measures that are grouped into five categories, namely, loyalty, perceived quality, associations, awareness and market behavior measures.

When a customer had a special attachment or connection towards a brand, it is said that the customer is loyal to the brand (Aaker 1991), or in other words, brand loyalty is created. According to Reichfeld (1996) study, he had concluded that when a brand had high brand loyalty from its customer, it can easily become the market leader. The brand can then set premium price, have greater bargaining power with the channels of distribution, reduced selling costs, set high barrier of entry and enjoy competitive advantage in establishing brand extensions into related field (Reichfeld 1996). Therefore, Aaker uses price premium and customer satisfaction as measurements for loyalty. Premium price is the extra amount of money that a customer willing to pay for the brand when it is compared with another brand offering similar benefits (Aaker 1996). Based on past studies, there is no direct relationship between loyalty and satisfaction. Although loyalty leads to satisfaction, yet, satisfaction does not necessarily leads to loyalty (Waddell, 1995; Oliver, 1999). The short coming of using customer satisfaction as a measurement is that it can only apply to existing customer as it involves the last use experience or overall experience of using the product or service. This measurement is relatively powerful measurement for the service sector as customer satisfaction usually piles up from the use experience of the service.

Perceived quality is taken as one of the measurement for brand equity (Aaker 1991; Kapferer 1991; Kamakura & Russell, 1991; Martin & Brown, 1991; Feldwich 1996). Zeithaml (1988) had stated that the judgment about the product’s performance that varies from the objective quality is the perceived quality. Perceived quality had been shown to be associated with price premiums, price elasticity, brand usage, and, remarkably, stock return in the Total Research approach (Aaker 1996). Leadership or popularity of the brand is the other measurements for perceived quality measures. If a brand is the sales leader in that particular market, it resembles that it is the market leader and thus gain majority of the market share.

Brand association is anything that is linked in memory to a brand (Aaker 1991) or in details, informational nodes linked to the brand node in memory that contains the meaning of the brand for the consumers (Keller 1998). Association measures are divided into three measurements, which are perceived value that focus on brand-as-product, brand personality that focus on brand-as-person and organizational associations that focus on brand-as-organization. Perceived value is the perceived brand utility relative to its costs, assessed by the consumer and based on simultaneous considerations of what is received and what is given up to receive it (Lassar, Mittal & Sharma, 1995) and it focuses on functional benefit and practical utility of buying and using the brand (Aaker 1996). Brand personality links the brands emotional and self-expressive benefits to the brand that meet consumers’ needs for social approval, personal expression or self-esteem (Keller 1993; Hankinson and Cowking 1993; de Chernatony and McWilliam 1989, Pitta & Katsanes 1995). Organizational associations leads consumer to link the organization which consists of the people, values and programs which lies behind the brand (Aaker 1996).

Brand awareness refers to how aware customers and potential customers are of your business and its products (Gustafson and Chabot 2007). It reflects the salience of the brand that is “anchored” in the customers mind (Aaker 1996). Perceptions and attitudes of consumer can be affected by how aware he/she is to the brand. There are several level of awareness, which includes, recognition, recall, top-of-mind, brand dominance, brand knowledge and brand opinion. According to Aaker, brand in different product life cycle requires different level of awareness.

The last measures from Aaker model is the market behavior measures. It includes market share, price and distribution indices, which are information that are obtained from the market rather than directly from the consumers.

Aaker model acts as a general guideline in order to measure brand equity. The model needs to be adapted into the specific market when research on certain brand is conducted in order to provide a better measurement on the brand equity of that particular brand.

Cite past research studies using Aaker’s model.

2.1.2 Kevin Lane Keller

Keller focuses his studies and analysis on brand equity from the viewpoint of the individual consumers. The differential effect of brand knowledge on consumer response to the marketing of the brand is the definition for customer-based brand equity (Keller, 1993). Keller states that customer-based brand equity happens when the consumer is familiar with the brand or in other words has knowledge on that particular brand. Several researches done had support that the knowledge of the product will affect product choice and decision making (Cheung M. & Chan A. S., 2009). Besides that, better knowledge generally increases the purchase intention (Wansink B., Westgren R.E. & Cheney M.M., 2005). Brand knowledge represents the information stored in consumers’ memory about a specific brand within the product category (Blackwell R. D., Miniard P. W. & Engel J. E., 2006). Keller (1993) defined brand knowledge with two components, which are the brand awareness and brand image.

Brand awareness is defined as the ability of a potential buyer to recognize or recall a brand from the product category (Aaker, 1991). Awareness is link with the strength of the brand node or trace in ones memory that is reveal by the consumer’s capability to identify the brand under different circumstances (Rossiter & Percy 1987). Keller (1993) further breaks up brand awareness into brand recognition and brand recall. Brand recognition relates to consumer’s capability to verify past exposure to the brand when given the brand as a cue (Keller, 1993). Brand recall relates to consumer’s capability to retrieve the brand when given the product category, the needs fulfilled by the category, or some other type of probe as a cue (Keller, 1993).

The importance of the concept of brand image was recognize long time ago, which can track back to the year 1955 by Gardner and Levy in the journal entitled the product and the brand. Image is defined as the sum of all feelings, associations of ideas which are connected by the person to a particular product, brand, company, person and others (Patrik P., 2007). On the other hand, it is defined as the insight about a brand as reflected by the brand associations held in consumer memory (Keller, 1993). Brand associations are informational nodes linked to the brand node in memory and contain the meaning of the brand for consumers (Keller, 1993).

Associations affect consumers’ product evaluation and selection (Osselaer S. M. J. V. & Janiszewski C., 2001). Keller’s explanation on brand association can be traced back to Human Associative Memory (HAM) theory by Anderson and Bower in 1973. Brand association is classified into three major categories which are attributes, benefits and attitudes (Keller, 1993). Attributes refers to the description of the feature of the product or services. Keller (1993) distinguished attributes into two categories: product-related attributes and non-product-related attributes. Product-related attributes are the element essential for performing the product or service function sought by consumers while non-product-related attributes are the external feature of the product or service that relate to its purchase and consumption (Keller, 1993). Benefits are individual value that the consumer link to the product or service attributes (Keller, 1993). Attitudes are the consumer’s general assessment of a brand (Wilkie, 1986).

Cite past research studies using Keller’s model.

2.1.3 Dave Walker

Based on numerous researches conducted, brand equity is said to have direct association to a brand’s market position and business results, or in other terms, brand equity affects sales. Advertising is one of the primary tools used by marketers to develop and nurture brand equity (Walker, 2002). Walker (2002) relates his research on the relationship between brand equity and advertising. It is said that advertising is one of the contributors to brand equity.

A pretest (copytest) is formed in order to measure the impact of an advertisement in short term. The potential of noticing and remembering the advertisement; the probability of recalling the brand name and understanding the message behind the advertisement; the likelihood of creating brand loyalty among present buyer; and the odds of encouraging other consumer to purchase the product are study by Walker (2002).

Past research had shown that some of the advertisement had short-term effect which only applies when it is run, while some of the advertisement had long-term effect (more than a year). Based on past research from Broadbent (1996), Jones (1995), Keller (1998), Light (1995), Lodish (1991) and Lubetkin (1991), it can conclude that advertisement can create short-term effectiveness, yet, not necessary to create long-term results.

In order to testify the brand equity, Walker (2002) focuses on measuring from the consumer marker. Walker (2002) uses a model that has consistent attitude measures that are common across brands, business sectors, and markets. “Brand Health” is linked with brand equity (Walker, 2002). According to Berg, Matthews & O’Hare (2007), brand health is link with business performance. Unlike brand equity that is linked with shareholder values, brand health is linked with current and future value with customer (Berg et al., 2007). Berg et al., (2007) emphasis that brand health is essential in improving the brand’s portfolio.

Brand health can be affected by three major factors, which is brand equity perceptions, consumer involvement and price/value relationship (Walker, 2002).The brand equity measure review consumer opinion on five dimensions, which are familiarity, uniqueness, relevance, popularity, and quality (Walker, 2002). The involvement measure the sensitivity of consumer towards variety of brand and how a brand stands out among others (Walker, 2002). Price measures the perceived price/value relationship (Walker, 2002).

According to Hallward (2001) in his research on “The Creators of Brand Equity”, it is learned that advertising had the least impact on brand equity when it is compares with the product performance, packaging performance, the artwork/logo/”look” or brand name. Walker (2002) argued that there is a possibility that consumer are unaware of the effect from the advertisement, therefore, chooses other factor instead. Besides that, Walker also argues that advertisement quality and level varies among brand, thus, this might cause unbalance distribution of attention. All in all, Hallward’s research confirms the relationship between advertising and brand equity.

Cite past research studies using Walker’s model.

2.2 Dependant Variable

2.2.1 Familiarity

According to Hallward (2000) understanding the brand and what it represents is familiarity. Hallward (2000) mentioned besides increasing brand loyalty, familiarity is the first step in establishing brand equity too. The direct as well as the indirect experience of a consumer with a brand is known as brand familiarity (Alba & Hutchinson, 1987; Kent & Allen, 1994).

The awareness and experience or knowledge the consumers have with the brand is defined as familiarity by Gelb Consulting Group. It is believed that familiarity goes further than awareness, it is about noticing and the ability to recognize a brand. According to Hallward (2007) it is not so useful if a brand only manage to build up brand awareness alone. In order to build brand equity, a brand needs to build up brand understanding and brand familiarity (Hallward, 2007).

In the past research conducted, the relationship between familiarity and brand loyalty is directly related (Hallward, 2000), thus, it is important to build brand familiarity among the consumers. According to the brand equity pyramid that was built by Quarles, familiarity and awareness of the brand forms the basis of brand equity. If a brand is left unnoticed by consumer, it will not achieve brand equity.

Hallward (2007) state that there is a need to create high levels of reach among the target group so as to achieve brand familiarity, as, the consumer can only gain brand familiarity after they had been exposed with the advertisement. Without exposure and awareness on brand, consumer will not have the opportunity to get to know the brand better and thus in time to come, getting familiar with the brand itself.

In addition, Hallward (2007) adds on that it is important to achieve high reach for new brands entering the market, or existing brands that is advertising new benefits as it needs to create awareness as well as familiarity to the consumer. On the other hand, the advertisement should be repeated at different time in order to reach out to larger group of consumer for the mature brand (Hallward, 2007).

2.2.2 Relevance

Familiarity is the basis of brand equity, however, relevance is the element that contributes the most in the Equity Builder Model (Hallward, 2000). According to Hallward (2000) research, it is found that relevance score the highest among the other four components, which are familiarity, uniqueness, popularity and quality for brand users, however, it score the lowest among non-brand users.

According to Aaker (2011), two different strategies, which are brand preferences and brand relevance, can be used to create branding for a brand. Brand relevance strategy has a more competitive advantage position in this dynamic market. New categories or subcategories are created under the same brand, and, this will change how and what the consumer will purchase (Aaker, 2011). A brand can win under brand relevance strategy due to the selection of consumer that prefers the new category or subcategories that the competitors are not strong in it (Aaker, 2011).

In order to take lead in this dynamic market, it is necessary to offer new categories or subcategories of product that the competitors could not offer for a period of time, thus, making them irrelevant and improve sales (Aaker, 2010). It is a must for companies to be innovative and transformative in offering new category or subcategory (Aaker, 2010). According to Aaker (2010), the challenge in achieving brand relevant is to create a new category or subcategory that the consumer will be interested with and thus making the competitor’s brand irrelevant for an extended time.

When a consumer perceived that the particular brand was the only solution to their need and wants, that brand had achieved success in branding (Frankel, 2000). Frankel had also highlights that awareness and relevance are crucial for effective branding. According to Sevier (2000), a brand is of no use if there is no relevance with the consumer’s needs. The ultimate goal of branding is to yield sales. The initial step of branding is to be noticed by consumer, yet, it can only yield sales when the brand offers products or services that are relevant to the consumer’s needs.

2.2.3 Uniqueness

According to Goi and Salleh (2010) uniqueness is an element or characteristic that makes a brand stand out from the other brands in the same product category. Uniqueness is defined as being distinct or different in illustration or features (Hallward, 2000).

Uniqueness makes a brand stand out from its competitors and increase purchase behavior. Unique characteristics and features help in developing competitive advantage for a brand (Goi and Salleh, 2010). The million dollar question is how unique a brand needs to be in order to stand out among the rest? Based on the research conducted by Hallward (2000), it was found that too much uniqueness in a brand actually affects consumer’s loyalty. Brands which become too unique will become niche and thus putting themselves into a specific market instead (Hallward, 2000).

According to Keller (1993) brand awareness, brand images and brand associations which are favorable, strength and unique are keys in developing brand equity. Brands which manage to be associated with favorable, strong and unique images are brand which had successfully position themselves in the market. Hersey’s Kisses is one of the brand that manage to create favorable, strong and unique image for the brand and thus position themselves as the highest rated brand among all categories (Harris EquiTrend, 2010). Kisses have unique and easy to identify shape and packaging which makes it stands out among the rest of the comfort foods (The ARF 2010 David Ogilvy Awards, 2010).

It is a tough challenge in creating uniqueness in a brand. Right amount of uniqueness is good for the brand, yet, when the uniqueness is high and makes itself relevant to certain group of consumer, it becomes a niche (Hallward, 2000).

2.2.4 Popularity

Popular is view as the acceptance from the general public, or majority of people by WordNet (2011). According to Hallward (2005) based on the Equity Builder model and past research conducted, the key to achieve success in branding is popularity. Popularity is the key to achieve success, yet, acceptance and favor of one country might not imply to another country. A brand might be perceived differently in different parts of the world, thus, it is crucial for marketers to examine the familiarity, popularity, image and fit of the brand to the market (Walker, 2005).

Based on Oxford (2011) definition on popular, which is like or admire by a group of people, popular website are defined as websites which are like and admire by large group of people. Website growth is said to follows the power laws that state the growth of website is mathematically predictable (Adamic & Huberman, 2001). According to Cho and Roy (2004) that search engines show result based on popularity rankings, thus, creating biased towards the popular websites. This theory is similar with the theory of the rich become richer and the poor remain poor. Popular website are show at the top of the search results and resulting in higher probability of being click and discover by others, this increases their popularity further (Cho & Roy, 2004). Search engine users usually falls into the biased rankings created and therefore will learn about the popular websites more than the unpopular ones (Kavassalis, Lelis, Rafea & Haridi, 2004).

Popularity of a website is measured by the traffic of the websites. The traffic of the website can be measured using automated software (Scowen, 2007). Nielsen Netratings, Go Stats, Stat Counter, and, Alexa is one of the few that offer traffic counting service. Besides using website traffic as an indicator of popularity, PageRank system that is created by Brin and Page (1998) is another indicator of popularity. Some website links are often linked at other webpage or forums by users to suggest others to look at it (Scowen, 2007). PageRank ranking list are based on other website and data that is link to it (Google, 2011).

Google uses PageRank as one of their signals to order the websites (Google, 2011), in order to reduce the possibility of showing popular, yet, might not be relevant webpage to users.

2.2.5. Quality

Oxford (2011) defines quality as a standard of measurement of one thing to other similar thing. According to BusinessDictionary.com (2011), quality is said to be the measurement of excellence of the product. The product should be flawless and able to perform in such a way that meets the customer’s requirement (BusinesDictionary.com, 2011). Beyond that, according to International Organization for Standardization (ISO) states that the sum of the characteristics of a product or services which satisfy the user by serving its purpose are quality in ISO 8402-1986.

According to Minerva project conducted in the year 2005 it had listed ten Quality Principles which acts as a guidance on implementation as well as assessment for websites. The principles are general and can be applied to most of the website (Ingberg, 2005).

A quality websites must be transparent, as it is important for the user to know the purpose of the websites and the organization or person that created and manage the website (Ingberg, 2005). Besides that, effectiveness is the second principles in ten Quality Principles. Effectiveness of a websites can be achieve when the information that is valid and correct are well-presented in a way which user can easily navigate the information (Ingberg, 2005). A websites that’s updated with the latest relevant information is a websites that is well maintained. Maintaining the website is one of the ten Quality Principles.

A websites which are perfect yet inaccessible is useless, as it is vital that the user can navigate through the website at ease to grab the piece of information needed. One of the main key in creating a quality websites is to be user-centered and cares about the needs of users (Ingberg, 2005). The next principle listed is responsiveness. A quality websites must be responsive to users’ usage.

Multi-linguality websites which provides more than one language choice for the users, are taken in as one of the principles which improves the websites qualities. The eighth principles would be being interoperable with networks which lead user to search for content and information easier (Ingberg, 2005). A quality websites are often manage in respect to legal issues and stated the terms and condition clearly to avoid any mislead in information (Ingberg, 2005). The last principles on quality websites would be on the preservation work conducted to maintain the websites for a long period of time.

2.3 Elaboration Likelihood Model (ELM)

Elaboration Likelihood Model (ELM) explains that there are two routes of persuasion when a consumers or user is exposed to a message (xxx). It depends on the person’s individual preferences on the product that influences which routes of persuasion will he/she takes on. The two routes of persuasion are central routes and peripheral routes.

Various research had been conducted to support ELM, these research bring to a general conclusion that highly involved consumers looks for the actual and main idea of the arguments presented, while less involves consumers affected by the packaging and as well as endorsements.

2.3.1 Central Route

If a consumer have actively thinking and considering the information reach out to him/her, this is high-involvement processing which undergo the central route to persuasion (xxx). This occurs when one finds the piece of information relevant to themselves or somewhat interesting their mind on it. When consumers respond to the message, they will start with thinking about the arguments presented by the marketers, this process is known as cognitive response.

Through the cognitive response, the consumer might supports the argument or in the other way, oppose the arguments with other information. Generally, when ones produce supporting information to support the argument, they are more likely to purchase the product; while on the other hand, when ones produce counterarguments, they are less likely to purchase the product (xxx).

Following the traditional hierarchy of effects, beliefs and attitudes on the product will be form. The quality of arguments presented by marketers as well as prior knowledge on the product influences beliefs of the consumer. The beliefs and attitudes we have in the product will influence our behavior and changes our buying pattern too (xxx).

2.3.2 Peripheral Route

Under low-involvement processing, the consumer will undergo peripheral route. Consumer are not motivated to think through the marketer’s arguments as either they find the information not too related to themselves or the information does not appeal to them. When consumer access the message via peripheral route, the packaging, the source of message or the form of message influences the consumer’s decision (xxx). These types of information are known as peripheral cues, as it is surrounding the actual message yet, irrelevant to the actual message presented by the marketer (xxx).

When one undergo peripheral route of persuasion, he/she are less likely to care about the product while emphasis on the packaging or the style of product more (xxx). An interesting packaging, having popular spokesperson or better shopping environment will contribute to the change in belief of the consumer on the product. Follows by belief change, the behavior of the consumer and the attitude of consumer towards the product will change too.

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2.4 Attributes

Thefreedictionary.com (2011) had defined attributes as quality or elements that act as the characteristic of a person or a product or a service. Attributes are used to shape a consumer’s perception on a product (Veale, Quester & Karunaratna, 2006). Attributes are divided into two major groups, which are intrinsic attributes and extrinsic attributes (Zeithaml, 1988; Steemkamp, 1997).

2.4.1 Intrinsic Attributes

Intrinsic attributes are product-related attributes, which can be linked with the central route of persuasion in the Elaboration of Likelihood Model (ELM). Intrinsic attributes are said to be linked with the product itself, if the product is consumable, the attributes will disappear after it is consumed (Olson and Jacoby, 1972). Besides that, Olson and Jacoby (1972) also explained that the intrinsic attributes are related to the nature of the product, thus, when the nature of product changes, so does the intrinsic attributes.

Product-related information such as the product itself, the characteristic and functionality of the product form the intrinsic attributes. As mention earlier in the ELM model, when the consumers repeatedly think over the argument presented, they undergo the central route of persuasion, which the product quality and function are their main consideration.

2.4.2 Extrinsic Attributes

Extrinsic attributes are the information that surrounds the product yet, not the product itself (Olson, 1977; Zeithaml, 1988; Steemkamp, 1997). According to Zeithaml (1988) and Steemkamp (1997) the product’s brand name and brand image are extrinsic attributes, however, Erickson, Johansson & Chao (1984) had argued that the price, supports from authorities and origin place are extrinsic attributes too. In general, extrinsic attributes of a product includes the brand name, brand image, product packaging, pricing, promotion, advertisement, type of selling outlets, supports from authorities, place of origin and other elements that are non-product related.

When a consumer does not undergo active thinking after exposed to a message or argument of the product, they are more likely to undergo peripheral routes of persuasion state in the ELM Model. The extrinsic components are then become the vital part in terms of competition against the competitor’s product (Sanzo, del Rı´o, Iglesias & Va´zquez, 2001). Beside the elements mention above, the labels, design, information about uses and benefits, environmental, social and cultural commitment are extrinsic attributes too (Sanzo et al., 2001).

2.4.3 Combination

Past research by Alba (2000), Kardes, Kim and Lim (2011) had showed that different customers have different level of reliance on the intrinsic and extrinsic attributes. According to Fandos and Flavia´n (2006), customer judges a product over both the intrinsic attributes as well as extrinsic attributes. Fandos and Flavia´n (2006) suggests that company should improves the intrinsic attributes of a product, as the good quality of product can improve brand image and reputation of the product, which are the extrinsic attributes.

2.5 Variables

As the technology advances and improves, most of the people have no problem to access to internet daily and it changes the lifestyle of people. One of the changes would be, people start to shop online and online business start to bloom like mushroom after rain. There are e-commerce or e-business activities for almost all the sector. Therefore, it is important for the marketer to learn that which variable increases customer satisfaction and thus emphasis in improving those variables (McKinney, 2004).

The variables related to shopping websites are divided into two categories, which are the internal variables and external variables. Internal variables are product-related information or in other words, the intrinsic attributes in a websites. Links to access to other departments, brands, product types and other information which are found within the shopping websites are internal variables (Turley & Milliman, 2000). Links that can usually be found on the homepage of the shopping sites such as company information, departments’ listings, brand listings and customer service are external variables (Turley & Milliman, 2000).

Based on Alexa.com (2011), the top 10 most visited shopping websites in the world and top 10 most visited Malaysia based shopping websites are listed out. Alexa.com is a subsidiary of the Amazon Company, it provides Internet Explorer users a downloadable too-bar which records traffic information and later turn the traffic record as ratings for most popular websites Sullivan & Matson, 2000). According to Sullivan & Matson (2000), Alexa.com ratings are biased, as the ratings only come from Internet Explorer users. Taken this into consideration, the ratings might be slightly different from real traffic records, yet, Alexa.com ratings are sufficient to be used in this research. The top 10 international shopping sites and top 10 Malaysia based shopping sites are selected in the hope to identify the variables that appear in most of the popular websites.

The four variables that appear in most shopping websites will be fish out and form the internal and external variable of this research. According to Aizen and Fishbein (1998), there is a limitation on human’s storing memory. A person is believed that he/she can only interpret a few beliefs at a given moment. Generally, a person can only interpret five to nine beliefs at one goal (Aizen & Fishbein, 1998). Following the study of Aizen and Fishbein (1998), a total eight variables, four from internal varia

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