Academic journal article IUP Journal of Brand Management

Determinants of Brand Equity from the Consumer's Perspective: A Literature Review

Academic journal article IUP Journal of Brand Management

Determinants of Brand Equity from the Consumer's Perspective: A Literature Review

Article excerpt

Introduction

In today's ever-changing and highly competitive world, corporations have to continuously change in order to grow and sustain their businesses. To manage this scenario and beat the competition, corporations have a vital asset with them - brand. The success of brands has increased the organization's responsibility along with creating a differentiating value proposition.

A brand is a product with a unique character, for instance in design or image. It is consistent and well-recognized and is a way of differentiating products and services. There are many definitions for the word 'brand' in marketing literature; but very often, Kotler et al. (2013) refer to the definition given by the American Marketing Association as "a name, term, design, symbol, or any other feature that identifies the seller's goods or services as distinct from those of other sellers" (p. 261).

The key for brand management and development is to understand what kind of benefits consumers are looking for. Modern consumers are more demanding and require comfort. They not only concentrate on functional benefits, but also are looking for intangible advantages like status, image, lifestyle, success, personality, and other factors that can also be strongly identified as benefits. Therefore, the psychology of the consumer goes beyond the physical and tangible aspects of the product. This added value or the incremental utility of the product that comes with the brand name is termed brand equity.

The term brand equity was introduced for the first time in the 1980s, although its existence and role had been realized by practitioners for a very long time. Researchers were interested in the total combined effect of the brand and the product, and they did not distinguish the impact of the brand from that of the product until the 1970s. Srinivasan (1979) was the first person who studied and demonstrated the distinct added value of the brand to the product. Since the late 1980s, the importance of brand equity has been recognized, and research has been attempted to define it and conceptualize its dimensions.

What Is Brand Equity?

Since the 1980s, the definition of brand equity has kept evolving with a number of changes from time to time. The early definitions of brand equity include 'the net present value of the incremental cash flows attributable to a brand name' (Shocker and Weitz, 1988) to "set of associations and behavior on the part of the brand's consumers, channel members and parent corporation" (Leuthesser, 1988) to the broader definition given by Farquhar (1989) that brand equity stands for "added value that a brand confers to a product or a service".

The most trusted definition of brand equity was given by Aaker (1991), as "a set of assets and liabilities linked to a brand, its name and symbol, that adds to or subtracts from the value provided by a product or a service to a firm and/or to that firm's customers". The American Marketing Association defines it from the consumer's perspective as "brand equity is based on consumer's attitude towards the brand and favorable consequences of brand use". There have been many conceptualizations of brand equity, since it is a complex concept and has many facets to it.

Benefits of Brand Equity

It has been a mystery as to why brand equity is very important in business. Many researchers have proved that brand equity of a product affects long-term cash flows and future profits (Srivastava and Shocker, 1991); consumer perceptions of product quality (Dodds et al., 1991); the stock prices (Simon and Sullivan, 1993); emphasis on competitive advantage (Bharadwaj et al., 1993); mergers and acquisitions (Mahajan et al., 1994); consumer preference and purchase intention (Cobb et al., 1995); market share (Agarwal and Rao, 1996); and resilience to product-harm crisis (Dawar and Pilltula, 2000).

Brands with high brand equity enjoy high consumer preference, purchase intention, purchase loyalty and even higher stock returns (Aaker and Jacobson, 1994; and Cobb et al. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.