Measuring brand equity: a comparison between a global brand and a national

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1 Measuring brand equity: a comparison between a global brand and a national brand. Track: Brand equity issues Key words: brand equity, marketing mix, Brand comparisons, Partial least squares structural equations. The present study undertakes a comparative analysis of the brand equity between a Portuguese brand (Salsa) and a global brand of jeans (Levi s) by means of the application of the brand equity scale developed by Yoo et al., (2000), which explores the relationships between the composite of marketing-mix and the creation of brand equity. Ever since the appearance of the designation of brand equity in the 1980s the interest in the subject has been increasing among the academia and marketing professionals (Walgren et al., 1995). Initially associated to the notion of brand image (Gardner & Levy, 1955) the term brand equity had been considered, until the 1980s, as a peripheral concept in the field of marketing and lacking the proper development that would allow its inclusion in the professional language and practices (Feldwick, 1996). According to Nunes & Haigh (2003), the alteration in the perception of the term is due to the major mergers and acquisitions that took place in the previous decades, which caused investors and companies to realize that intangible goods, such as brands, could represent sources of value to the businesses.

2 The interest in the study of brand equity has been particularly active in the beginning of the millennium (e.g., Yoo et al., 2000; Keller, 2001; Yoo and Donthu, 2001; Kapferer, 2004). Rust (2004) claims that the models of brand equity should be considered priority subjects in marketing research. Rajh (2005) also refers that, with the exception of Yoo et al., (2000), there was a dearth in research focussed on the form the individual elements of marketing-mix affect the creation of brand equity. Nonetheless, the term brand equity still raises a degree of controversy, since Agarwal & Rao, (1996) and Erdem & Swait (1998) refer that the overall theoretical instruments have not yet been created that allow a totally unanimous definition of the concept of Brand Equity. The main contributions for this conceptualization come from Aaker (1991) and Keller (1993), who define brand equity from the viewpoint of the consumer, (it has to provide the same value for the company and for the consumer). However, there are some differences in the form these two authors define the concept. For Aaker (1991), brand equity is the set of actives or passives connected to a brand, its name and its symbol, which are added or subtracted, of the value perceived by a consumer as to a product or service. Aaker (1991) was the first author to propose an evaluation model based on the consumer, which was used as the basis of subsequent research (Atilgan, et al. 2005; Kim & Kim, 2004; Yoo et al., 2000). It is his conceptualization that allows the development of the scale by Yoo et al. (2000) and Yoo & Donthu (2001), which will be applied in the present analysis. Yoo & Donthu (2001) develop this scale because they consider that, despite the many studies carried out in the area of brand equity, the focus of the research was not centered on the effective development of an effective measurement instrument which could be used to render it operational. The study by Yoo et al. (2000) had the purpose of verifying the existence of relationships between the

3 elements of the marketing mix and the creation of brand equity, by means of a conceptual model of the brand value, which seeks to represent an extension of the conceptual model by Aaker (1991). Yoo et al. (2000) and Yoo & Donthu (2001) perfected their earlier study (Yoo & Donthu, 1996) equally based on the dimensions of Aaker (1991, 1996) and Keller (1993), where the scale appears in its more consolidated version. Since then, this scale has been applied in several studies (i.e., Atilgan, et al. 2005; Kim & Kim, 2004). However, its study is not consensual yet. Grinberg & Luce (2000), Schultz (2001), and Washburn & Plant (2002) point out that there does not exist a universal scale that can be accepted by all, nor adequate instruments have been established to measure brand equity. Therefore, it is still necessary to undertake further studies in different sectorial and cultural contexts on this subject, and which apply the scale developed by Yoo et al. (2000) and Yoo & Donthu (2001). The main aim of this study is to investigate the relationships between the three dimensions of brand equity (perceived quality, brand loyalty and brand awareness/brand ) in the formation of brand value; the relationships of the marketing mix (price, shop image, intensity of distribution, advertising and promotions) in the formation of brand value and, lastly, the study of the relationships between the three dimensions of brand equity. In this sense, the scale by Yoo et al., (2000) will be tested against the undertaking of a comparative study of the Salsa and Levi s brands. Hypotheses investigated in the present study: H1: The level of brand equity is positively related with the quality of the brand displayed in the product.

4 H2: The level of brand equity is positively related with the brand loyalty displayed in the product. H3: The level of brand equity is positively related with the brand and awareness displayed in the product. H4: The perceived quality of the brand is positively related with the perception of high price. H5: The perceived quality of the brand is positively related with the distribution in stores with an upscale image. H6: The brand are positively related with the distribution in stores with an upscale image. H7: The perceived quality of the brand is positively related with the intensity of distribution in stores. H8: The brand loyalty is positively related with the intensity of the distribution in stores. H9: The brand are positively related with the intensity of distribution in stores. Conceptual model of the research:

5 The present article is structured as follows: firstly, it undertakes a literature review, where the present understanding of the concept is discussed, as well as the different perspectives and mensuration models, its dimensions and connection between brand equity and the marketing elements. Afterwards, the methodology adopted is exposed, followed by the presentation and analysis of results. Lastly, the results are obtained are discussed and the implications of this study for the area of marketing are presented. Table 1. Summary of the methodology employed Geographical coverage Portugal Data gathering method Quantitative on-line questionnaire Survey Date of data gathering May 2010 January 2011 Sample type and size Convenience sample 464 validated questionnaires Scale Used Scale by Yoo et al., (2000) and Yoo & Donthu (2001) Constructs and dimensions measured Method and programmes of analysis Dimensions of brand equity: perceived quality, brand loyalty and brand /awareness. Composite of marketing mix: price, store image intensity of distribution, advertising and promotions. OBE (overall brand equity). Descriptive and Paired Comparisons T test (IBM SPSS ) e Structural equation modelling (SmartPLS 2.0, Ringle et al., 2005). The results indicate that the Levi s scale presents, in all its dimensions, higher averages than the Salsa scales. An analysis to the dimensions of brand equity allows us to conclude that both scales present the lowest average in the dimension brand loyalty. On the other hand, the dimensions of perceived quality and brand awareness/association present the highest values and reveal less distancing between themselves. The OBE construct presents, in both scales, values below the average value of the scale. We have also observed significant differences between the averages of both scales (p<001), with the sole exception of the dimension advertising (p=.275), with the brand Levi s consistently presenting the highest values.

6 We have also verified that the scale used is more appropriate for brands with higher notoriety, which, in the present case, would be Levi s. The scale of measurement of brand equity presents measurement problems, especially in the dimension awareness/. These data contradict the results of Yoo et al., (2000) who have obtained positive values in all dimensions in their research. Unlike the above mentioned authors, who have identified relationships between all variables of the marketing mix composite and the dimensions of the brand equity, this study has just verified the existence of five positive amidst the proposed hypotheses. Table 2. AVE, Composite Reliability and R 2 AVE SALSA Composite Reliability R Square AVE LEVI S Composite Reliability R Square Perceived Quality 0, , , , , , Brand Loyalty 0, , , , , , Brand awareness/ 0, , , , , , Price 0, , , , Store Image 0, , , , Distribution intensity 0, , , , Advertising 0, , , , Promotions 0, , , , Brand value 0, , , , , , Table 3. PLS bootstrap and Path coefficients. Perceived Quality Brand Loyalty SALSA Brand awareness/ Brand value Perceived Quality Brand Loyalty LEVI S Brand awareness/ Brand value Bootstrap Perceived Quality 13, , , , , , Brand Loyalty 6, , , , Brand awareness/ 0, , Price 1, , Store Image 15, , , , Distribution intensity 0, , , , , , Advertising 0, , , , , , Promotions 0, , , , Path Perceived Quality 0, , , , , , Brand Loyalty 0, , , , Brand awareness/ 0, , Price -0, , Store Image 0, , , , Distribution intensity -0, , , , , , Advertising 0, , , , , , Promotions 0, , , , The path coefficients analysis reveals that all trajectories between dimensions present values above 0,05, to the exception of the dimension brand awareness/ in

7 both analyses. The bootstrap analysis shows that the dimension brand awareness/, in both scales, does not present a very significant relationship with brand equity. Unlike Yoo et al., (2000) the results do not allow us to conclude that the dimension brand awareness/ is constitutive of brand equity, rejecting the third hypothesis that the level of brand equity is positively related with brand and awareness of the product. However, the present study has only allowed the confirmation between store image and perceived quality, intensity of distribution and loyalty to the brand, invested advertising and brand awareness/, intensity of distribution and brand awareness/ and between advertising and brand loyalty. The analysis of the brand equity still allows us to conclude that the OBE dimension (overall brand equity) is the one that best explains the formation of brand equity, whereas brand loyalty is the one that contributes the less to the construction of brand value. Bibliography Aaker, David A. (1991). Managing Brand Equity: Capitalizing on the value of a brand name. New York: Free Press. Aaker, David A. (1992). The value of brand equity. Journal of Business Strategy. 13, Aaker, David A. (1996). Measuring Brand Equity Across Products and Markets. California Management Review, 38, Aaker, David A. (1996). Building Strong Brands. The Free Press, New York.

8 Aaker, David A. (1998). Marcas: Brand Equity Gerenciando o Valor da Marca. 2. ed. Negócio, São Paulo. Agarwal, M.K., e Rao, V. (1996). An empirical comparison of consumer based measures of brand equity. Marketing Letters, 7, Atilgan, E., Aksoy, S., e Akinci, S. (2005). Determinants of the brand equity: A verification approach in the beverage industry in Turkey. Marketing Intelligence and Planning, 23, Walgren, C.J., Beal, C., e Donthu, N. (1995). Brand equity, brand preferences. and purchase intent. Journal of Advertising, 24, Erdem, T., & Swait, J. (1998). Brand equity as a signaling phenomenon. Journal of Consumer Psychology, 7, Kapferer J. N. (1992). Strategic Brand Management: New Approaches to Creating and Evaluating Brand Equity. London: Kogan Page. Feldwick, P. (1996). What is brand equity anyway, and how do you measure it? Journal of the Market Research Society, 38, Gardner B. Levy, S. (1955). The Product and the brand. Harvard Business Review, March-April, Grinberg, Cássio S.; Luce, F. (2000). Marketing metrics: um novo desafio para a disciplina de marketing, Paper presented at the 24 ENANPAD Meeting. Keller Kevin Lane (1993). Conceptualizing, measuring, and managing customer-based brand equity. Journal of Marketing, 57, Keller, Kevin Lane (1998). Strategic brand management: building, measuring, and managing brand equity. Upper Sadlle River-NJ: Prentice-Hall Inc. Keller Kevin Lane (2001). Building Customer-Based Brand Equity. Marketing Management, 10,

9 Kim H.; Kim, W. An, J. (2003). The effect of consumer-based brand equity on firm s financial performance. Journal of Consumer Marketing, 20, Kim, W., Kim, H. (2004). Measuring customer-based restaurant brand equity: Investigating the relationship between brand equity and firms' performance. Cornell Hotel and Restaurant Administration Quarterly, 45, Nunes, G.; Haigh, D. (2003). Marca: Valor do Intangível Medindo e Gerenciando seu Valor Econômico. São Paulo: Atlas. Rajh, E. (2005). The effects of marketing mix elements on brand equity. Economic Trends and Economic Policy, 102, Rust, R. T.; Zeithaml, V. A.; Lemon, K. N. (2004), Customer-centered brand management. Harvard Business Review, 82, Shultz, D. E. (2000), Understanding and measuring brand equity: more knowledge of customer loyalty may be the key. Marketing Management, 9, 8-9. Washburn, J. H.; Plank, R. E. (2002), Measuring brand equity: an evaluation of a consumer-based brand equity scale. Journal of Marketing Theory and Practice, 10, Yoo, B., Donthu, N., e Lee, S. (2000). An examination of selected marketing mix elements and brand equity. Academy of Marketing Scienc,. 28, Yoo, B.; Donthu, N., (2001). Developing and validating a multidimensional consumerbased brand equity scale. Journal of Business Research,52, 1-14.

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