An Evaluation of the Effects of Brand Equity on Consumer Willingness to Pay Price Premium
Keywords:
Brands, Brand Equity, Consumer Responses, Consumer-Based Brand Equity.
Abstract
The purpose of this study is to evaluate the outcome of brand equity on consumer responses by specifically investigating the effects of the overall brand equity on consumer willingness to pay premium price. The paper also empirically investigated the causal relationship among brand awareness, brand association, perceived quality, and brand loyalty as antecedents of brand equity. Using the automobile product category in Malaysia as stimuli, cross-sectional survey data were collected and analyzed using partial least square structural equation modeling technique. Result showed that brand equity plays a significant role in firms by creating and developing additional value to organizations and their products. A causal relationship among the antecedents of brand equity was also established. Among the antecedents of brand equity, brand loyalty was found to be the dominant driver of overall brand equity. Moreover, the effect of brand equity on consumers’ willingness to pay price premium was substantiated and found to be positive. The limitation of the paper is that the study used a single high involving product category. Future studies should use product categories with short consumption length and high purchase frequency. Findings of this study provide more insight to managers on how to manage brand equity. Outcomes of brand equity can be used to measure the performance of brand in the market. The study also provides additional clarification to the existing literature on the need for managers to develop a post-brand equity marketing strategy in order to achieve sustainable competitive advantage.
References
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Aaker, D.A. (1991) Managing brand equity. capitalizing on the value of brand name, The Free Press, New York, NY
Aaker, D.A. (1996). “Measuring brand equity across products and markets”, California Management Review, 38(3), 102-20.
Ailawadi, K., Lehmann, D. &Neslin, S. (2003). “Revenue premium as an outcome measure of brand equity”, Journal of Marketing, 67(4), 1-17
Alba, J. W., & Hutchinson, J. W. (1987).Dimensions of consumer expertise.Journal of Consumer Research, 411-454.
Bravo, R., Fraj, E. & Martinez, E. (2007). “Family as a source of consumer-based brand equity”, Journal of Product and Brand Management, 16(3), 188-99.
Broyles, S.A., Leingpibul, T., Ross, R.H. & Foster, B.M. (2010). “Brand equity’s antecedent/consequence relationships in cross-cultural settings”, Journal of Product and Brand Management, 19(3), 159-69
Buil, I., Martínez, E., & de Chernatony, L. (2013).The influence of brand equity on consumer responses.Journal of Consumer Marketing, 30(1), 62-74.
Cavana, R. Y., Delahaye, B. L., & Sekaran, U. (2001). Applied business research: Qualitative and quantitative methods.John Wiley & Sons Australia.
Cobb-Walgren, C., Ruble, C.A. & Donthu, N. (1995). “Brand Equity, Brand Preference and Purchase Intent”, Journal of Advertising, 24(3), 25-40.
Davcik, N. S., Vinhas da Silva, R., & Hair, J. F. (2015). Towards a Unified Theory of Brand Equity: Conceptualizations, Taxonomy and Avenues or Future Research. Journal of Product & Brand Management, 24(1), 3-17.
De Chernatony, L., & Riley, F. D. O. (1997). The chasm between managers' and consumers' views of brands: the experts' perspectives. Journal of Strategic Marketing, 5(2), 89-104.
Erdem, T., & Swait, J. (1998). Brand Equity as a Signaling Phenomenon. Journal of Consumer Psychology, 7(2), 131-157.
Erdem, T., Swait, J., & Valenzuela, A. (2006). Brands as signals: A cross-country validation study. Journal of Marketing, 70(1), 34-49.
Farquhar, P. H., Han, J. Y., & Ijiri, Y. (1991).Recognizing and Measuring Brand Assets.Report/Marketing Science Institute (USA).
Farquhar, P. H., Han, J. Y., Herr, P. M., & Ijiri, Y. (1992). Strategies for leveraging master brands: How to bypass the risks of direct extensions. Marketing Research, 4(3), 32.
Fetscherin, M. (2010). The determinants and measurement of a country brand: the country brand strength index. International Marketing Review,27(4), 466-479.
Hair Jr, J. F., Hult, G. T. M., Ringle, C., &Sarstedt, M. (2013). A primer on partial least squares structural equation modeling (PLS-SEM). Sage Publications.
Hakala, U., Svensson, J., & Vincze, Z. (2012). Consumer-Based Brand Equity and Top-of-Mind Awareness: a Cross-Country Analysis. Journal of Product & Brand Management, 21(6), 439-451.
Hoeffler, S. & Keller, K.K. (2003).“The Marketing Advantages of Strong Brands”, Brand Management, 10(6), 421-45.
Holbrook, M. B., & Hirschman, E. C. (1982). The experiential aspects of consumption: Consumer fantasies, feelings, and fun. Journal of consumer research, 132-140.
Hooley, G. J., Greenley, G. E., Cadogan, J. W., &Fahy, J. (2005). The Performance Impact of Marketing Resources.Journal of Business Research, 58(1), 18-27.
Keller, K. L. (1993). Conceptualizing, Measuring, and Managing Customer-Based Brand Equity. The Journal of Marketing, 1-22.
Keller, K.L. & Lehmann, D.R. (2003). “How Do Brands Create Value?”,Marketing Management, May/June, Pp. 27-31
Keller, K.L. (2003). Strategic Brand Management: Building, Measuring, and Managing Brand Equity, (2nd Ed)., Prentice Hall, New York, NY.
Kim, J. H., & Hyun, Y. J. (2011).A model to investigate the influence of marketing-mix efforts and corporate image on brand equity in the IT software sector. Industrial Marketing Management, 40(3), 424-438.
Kotler, P. (2009). Marketing management: A south Asian perspective. Pearson Education India.
Krejcie, R. V., & Morgan, D. W. (1970). Determining sample size for research activities. Educpsychol meas.
Laroche, M., Kim, C., & Zhou, L. (1996). Brand Familiarity and Confidence as Determinants of Purchase Intention: An Empirical Test in a Multiple Brand Context. Journal of Business Research, 37(2), 115-120.
Leone, R.P., Rao, V.R., Keller, K.L., Luo, A.M., Mcalister, L. & Srivastava, R. (2006). “Linking Brand Equity to Customer Equity”, Journal of Service Research, 9(2), 125-138.
Martinez, E. & Pina, J.M. (2009). “Modeling the Brand Extensions’ Influence on Brand Image”, Journal of Business Research, 62 (1), 50-60.
Meyvis, T., & Janiszewski, C. (2004). When are broader brands stronger brands? An accessibility perspective on the success of brand extensions.Journal of Consumer Research, 31(2), 346-357.
Milberg, S.J. & Sinn, F. (2008).“Vulnerability of Global Brands to Negative Feedback Effects”, Journal of Business Research, 61, 684-90.
Myers, C. A. (2003). Managing brand equity: a look at the impact of attributes. Journal of Product & Brand Management, 12(1), 39-51.
Mourali, M., Laroche, M., & Pons, F. (2005).Antecedents of Consumer Relative Preference for Interpersonal Information Sources in Pre‐Purchase Search. Journal of Consumer Behaviour, 4(5), 307-318.
Netemeyer, R., Krishnan, B., Pullig, C., Wang, G., Yagci, M., Dean, D., Ricks, J. & Wirth, F. (2004). “Developing and Validating Measures of Facets of Customer-Based Brand Equity”, Journal of Business Research, 57, 209-24.
Pappu, R., Quester, P.G. & Cooksey, R.W. (2005). “Consumer-Based Brand Equity: Improving the Measurement. Empirical Evidence”, Journal of Product and Brand Management, 14(3), 143-54.
Pappu, R., Quester, P.G. & Cooksey, R.W. (2006). “Consumer-Based Brand Equity and Country-of-Origin Relationships”, European Journal of Marketing, 40(5/6), 696-717.
Park, C. S., & Srinivasan, V. (1994).A Survey-Based Method for Measuring and Understanding Brand Equity and its Extendibility.Journal of Marketing Research, 271-288.
Persson, N. (2010). An exploratory investigation of the elements of B2B brand image and its relationship to price premium. Industrial Marketing Management, 39(8), 1269-1277.
Romaniuk, J., & Nenycz-Thiel, M. (2013). Behavioural brand loyalty and consumer brand associations. Journal of Business Research, 66(1), 67-72.
Sanchez-Franco, M. J. (2006). Exploring the influence of gender on the web usage via partial least squares. Behaviour & Information Technology,25(1), 19-36.
Sasmita, J., &Suki, N.M. (2015).Young consumers’ insight on brand equity.International journal of retail & distribution management, 44(3), 276-292
Shugan, S. M. (1980). The cost of thinking. Journal of consumer Research, 99-111.
Sinha, A., & Pappu, R. (1998).Parcelling of the Sub-Components Of Consumer-Based Brand Equity Using Factorial Survey: An Empirical Investigation in The New Zealand Consumer Electronics Sector. In Proceedings, Australia New Zealand Marketing Academy Conference (ANZMAC), University Of Otago, Dunedin,(December) (Pp. 156-57).
Srivastava, R. K., Fahey, L., & Christensen, H. K. (2001). The Resource-Based View and Marketing: The Role of Market-Based Assets in Gaining Competitive Advantage. Journal of Management, 27(6), 777-802.
Torres, P. M., Augusto, M. G., &Lisboa, J. V. (2015).Determining the causal relationships that affect consumer-based brand equity: The mediating effect of brand loyalty. Marketing Intelligence & Planning, 33(6), 944-956.
Wang, H., Wei, Y. and Yu, C. (2008). “Global brand equity model: combining customer-based with product-market outcomes approaches”, Journal of Product and Brand Management, 15(5), 305-16.
Yasin, N.M., Noor, M.N. & Mohamad, O. (2007). “Does Image of Country-of-Origin Matter to Brand Equity?”,Journal of Product and Brand Management, 16 (1), 38-48.
Yoo, B. & Donthu, N. (2001).“Developing and Validating a Multidimensional Consumer-Based Brand Equity Scale”, Journal of Business Research, 52, 1-14.
Yoo, B., Donthu, N. & Lee, S. (2000). “An Examination of Selected Marketing Mix Elements and Brand Equity”, Journal of the Academy of Marketing Science, 28(2), 195-211.
Zikmund, W., Babin, B., Carr, J., & Griffin, M. (2013). Business research methods. Cengage Learning.
Aaker, D.A. (1991) Managing brand equity. capitalizing on the value of brand name, The Free Press, New York, NY
Aaker, D.A. (1996). “Measuring brand equity across products and markets”, California Management Review, 38(3), 102-20.
Ailawadi, K., Lehmann, D. &Neslin, S. (2003). “Revenue premium as an outcome measure of brand equity”, Journal of Marketing, 67(4), 1-17
Alba, J. W., & Hutchinson, J. W. (1987).Dimensions of consumer expertise.Journal of Consumer Research, 411-454.
Bravo, R., Fraj, E. & Martinez, E. (2007). “Family as a source of consumer-based brand equity”, Journal of Product and Brand Management, 16(3), 188-99.
Broyles, S.A., Leingpibul, T., Ross, R.H. & Foster, B.M. (2010). “Brand equity’s antecedent/consequence relationships in cross-cultural settings”, Journal of Product and Brand Management, 19(3), 159-69
Buil, I., Martínez, E., & de Chernatony, L. (2013).The influence of brand equity on consumer responses.Journal of Consumer Marketing, 30(1), 62-74.
Cavana, R. Y., Delahaye, B. L., & Sekaran, U. (2001). Applied business research: Qualitative and quantitative methods.John Wiley & Sons Australia.
Cobb-Walgren, C., Ruble, C.A. & Donthu, N. (1995). “Brand Equity, Brand Preference and Purchase Intent”, Journal of Advertising, 24(3), 25-40.
Davcik, N. S., Vinhas da Silva, R., & Hair, J. F. (2015). Towards a Unified Theory of Brand Equity: Conceptualizations, Taxonomy and Avenues or Future Research. Journal of Product & Brand Management, 24(1), 3-17.
De Chernatony, L., & Riley, F. D. O. (1997). The chasm between managers' and consumers' views of brands: the experts' perspectives. Journal of Strategic Marketing, 5(2), 89-104.
Erdem, T., & Swait, J. (1998). Brand Equity as a Signaling Phenomenon. Journal of Consumer Psychology, 7(2), 131-157.
Erdem, T., Swait, J., & Valenzuela, A. (2006). Brands as signals: A cross-country validation study. Journal of Marketing, 70(1), 34-49.
Farquhar, P. H., Han, J. Y., & Ijiri, Y. (1991).Recognizing and Measuring Brand Assets.Report/Marketing Science Institute (USA).
Farquhar, P. H., Han, J. Y., Herr, P. M., & Ijiri, Y. (1992). Strategies for leveraging master brands: How to bypass the risks of direct extensions. Marketing Research, 4(3), 32.
Fetscherin, M. (2010). The determinants and measurement of a country brand: the country brand strength index. International Marketing Review,27(4), 466-479.
Hair Jr, J. F., Hult, G. T. M., Ringle, C., &Sarstedt, M. (2013). A primer on partial least squares structural equation modeling (PLS-SEM). Sage Publications.
Hakala, U., Svensson, J., & Vincze, Z. (2012). Consumer-Based Brand Equity and Top-of-Mind Awareness: a Cross-Country Analysis. Journal of Product & Brand Management, 21(6), 439-451.
Hoeffler, S. & Keller, K.K. (2003).“The Marketing Advantages of Strong Brands”, Brand Management, 10(6), 421-45.
Holbrook, M. B., & Hirschman, E. C. (1982). The experiential aspects of consumption: Consumer fantasies, feelings, and fun. Journal of consumer research, 132-140.
Hooley, G. J., Greenley, G. E., Cadogan, J. W., &Fahy, J. (2005). The Performance Impact of Marketing Resources.Journal of Business Research, 58(1), 18-27.
Keller, K. L. (1993). Conceptualizing, Measuring, and Managing Customer-Based Brand Equity. The Journal of Marketing, 1-22.
Keller, K.L. & Lehmann, D.R. (2003). “How Do Brands Create Value?”,Marketing Management, May/June, Pp. 27-31
Keller, K.L. (2003). Strategic Brand Management: Building, Measuring, and Managing Brand Equity, (2nd Ed)., Prentice Hall, New York, NY.
Kim, J. H., & Hyun, Y. J. (2011).A model to investigate the influence of marketing-mix efforts and corporate image on brand equity in the IT software sector. Industrial Marketing Management, 40(3), 424-438.
Kotler, P. (2009). Marketing management: A south Asian perspective. Pearson Education India.
Krejcie, R. V., & Morgan, D. W. (1970). Determining sample size for research activities. Educpsychol meas.
Laroche, M., Kim, C., & Zhou, L. (1996). Brand Familiarity and Confidence as Determinants of Purchase Intention: An Empirical Test in a Multiple Brand Context. Journal of Business Research, 37(2), 115-120.
Leone, R.P., Rao, V.R., Keller, K.L., Luo, A.M., Mcalister, L. & Srivastava, R. (2006). “Linking Brand Equity to Customer Equity”, Journal of Service Research, 9(2), 125-138.
Martinez, E. & Pina, J.M. (2009). “Modeling the Brand Extensions’ Influence on Brand Image”, Journal of Business Research, 62 (1), 50-60.
Meyvis, T., & Janiszewski, C. (2004). When are broader brands stronger brands? An accessibility perspective on the success of brand extensions.Journal of Consumer Research, 31(2), 346-357.
Milberg, S.J. & Sinn, F. (2008).“Vulnerability of Global Brands to Negative Feedback Effects”, Journal of Business Research, 61, 684-90.
Myers, C. A. (2003). Managing brand equity: a look at the impact of attributes. Journal of Product & Brand Management, 12(1), 39-51.
Mourali, M., Laroche, M., & Pons, F. (2005).Antecedents of Consumer Relative Preference for Interpersonal Information Sources in Pre‐Purchase Search. Journal of Consumer Behaviour, 4(5), 307-318.
Netemeyer, R., Krishnan, B., Pullig, C., Wang, G., Yagci, M., Dean, D., Ricks, J. & Wirth, F. (2004). “Developing and Validating Measures of Facets of Customer-Based Brand Equity”, Journal of Business Research, 57, 209-24.
Pappu, R., Quester, P.G. & Cooksey, R.W. (2005). “Consumer-Based Brand Equity: Improving the Measurement. Empirical Evidence”, Journal of Product and Brand Management, 14(3), 143-54.
Pappu, R., Quester, P.G. & Cooksey, R.W. (2006). “Consumer-Based Brand Equity and Country-of-Origin Relationships”, European Journal of Marketing, 40(5/6), 696-717.
Park, C. S., & Srinivasan, V. (1994).A Survey-Based Method for Measuring and Understanding Brand Equity and its Extendibility.Journal of Marketing Research, 271-288.
Persson, N. (2010). An exploratory investigation of the elements of B2B brand image and its relationship to price premium. Industrial Marketing Management, 39(8), 1269-1277.
Romaniuk, J., & Nenycz-Thiel, M. (2013). Behavioural brand loyalty and consumer brand associations. Journal of Business Research, 66(1), 67-72.
Sanchez-Franco, M. J. (2006). Exploring the influence of gender on the web usage via partial least squares. Behaviour & Information Technology,25(1), 19-36.
Sasmita, J., &Suki, N.M. (2015).Young consumers’ insight on brand equity.International journal of retail & distribution management, 44(3), 276-292
Shugan, S. M. (1980). The cost of thinking. Journal of consumer Research, 99-111.
Sinha, A., & Pappu, R. (1998).Parcelling of the Sub-Components Of Consumer-Based Brand Equity Using Factorial Survey: An Empirical Investigation in The New Zealand Consumer Electronics Sector. In Proceedings, Australia New Zealand Marketing Academy Conference (ANZMAC), University Of Otago, Dunedin,(December) (Pp. 156-57).
Srivastava, R. K., Fahey, L., & Christensen, H. K. (2001). The Resource-Based View and Marketing: The Role of Market-Based Assets in Gaining Competitive Advantage. Journal of Management, 27(6), 777-802.
Torres, P. M., Augusto, M. G., &Lisboa, J. V. (2015).Determining the causal relationships that affect consumer-based brand equity: The mediating effect of brand loyalty. Marketing Intelligence & Planning, 33(6), 944-956.
Wang, H., Wei, Y. and Yu, C. (2008). “Global brand equity model: combining customer-based with product-market outcomes approaches”, Journal of Product and Brand Management, 15(5), 305-16.
Yasin, N.M., Noor, M.N. & Mohamad, O. (2007). “Does Image of Country-of-Origin Matter to Brand Equity?”,Journal of Product and Brand Management, 16 (1), 38-48.
Yoo, B. & Donthu, N. (2001).“Developing and Validating a Multidimensional Consumer-Based Brand Equity Scale”, Journal of Business Research, 52, 1-14.
Yoo, B., Donthu, N. & Lee, S. (2000). “An Examination of Selected Marketing Mix Elements and Brand Equity”, Journal of the Academy of Marketing Science, 28(2), 195-211.
Zikmund, W., Babin, B., Carr, J., & Griffin, M. (2013). Business research methods. Cengage Learning.
Published
2018-03-12
How to Cite
Aminu, S. G., & Ahmad, N. (2018). An Evaluation of the Effects of Brand Equity on Consumer Willingness to Pay Price Premium. International Journal of Marketing Research Innovation, 2(1), 64-72. https://doi.org/10.46281/ijmri.v2i1.106
Section
Original Articles/Short Communications
Copyright (c) 2018 Suleiman Garba Aminu, Norzieiriani Ahmad
This work is licensed under a Creative Commons Attribution 4.0 International License.
