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An Approach to the Measurement, Analysis, and Prediction of Brand Equity and Its Sources

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Author Info

  • V. Srinivasan

    ()
    (Graduate School of Business, Stanford University, Stanford, California 94305)

  • Chan Su Park

    ()
    (Korea University Business School, Seoul, 136-701, Korea)

  • Dae Ryun Chang

    ()
    (Yonsei Business School, Seoul, 120-749, Korea)

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    Abstract

    The authors propose a new approach for measuring, analyzing, and predicting a brand's equity in a product market. Brand equity is defined as the incremental contribution ($) per year obtained by the brand in comparison to the underlying product (or service) with no brand-building efforts. The incremental contribution is driven by the individual customer's incremental choice probability for the brand in comparison to his choice probability for the underlying product with no brand-building efforts. The approach takes into account three sources of brand equity---brand awareness, attribute perception biases, and nonattribute preference---and reveals how much each of the three sources contributes to brand equity. This is done by taking into account not only the direct effects of these three sources on choice probabilities, but also the indirect effects through enhancing the brand's availability. The method provides what-if analysis capabilities to predict the likely impacts of alternative strategies to enhance a brand's equity. The survey-based results from applying the method to the digital cellular phone market in Korea show that the proposed approach has good face validity and convergent validity, with brand awareness playing the largest role, followed by nonattribute preference.

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    File URL: http://dx.doi.org/10.1287/mnsc.1050.0405
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 51 (2005)
    Issue (Month): 9 (September)
    Pages: 1433-1448

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    Handle: RePEc:inm:ormnsc:v:51:y:2005:i:9:p:1433-1448

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    Related research

    Keywords: brand; brand equity; brand choice; cellular telephones;

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    Cited by:
    1. Subhani, Muhammad Imtiaz & Osman, Ms. Amber, 2011. "A study on the association between brand awareness and consumer/brand loyalty for the packaged milk industry in Pakistan," MPRA Paper 34801, University Library of Munich, Germany.
    2. Basu, Sandip & Phelps, Corey & Kotha, Suresh, 2011. "Towards understanding who makes corporate venture capital investments and why," Journal of Business Venturing, Elsevier, vol. 26(2), pages 153-171, March.
    3. Ludwig von Auer & Mark Trede, 2010. "The Dynamics of Brand Equity: A Hedonic Regression Approach to the Laser Printer Market," CQE Working Papers 1210, Center for Quantitative Economics (CQE), University of Muenster.
    4. Ludwig von Auer & Mark Trede, 2010. "The Dynamics of Brand Equity: A Hedonic Regression Approach to the Laser Printer Market," Research Papers in Economics 2010-03, University of Trier, Department of Economics.
    5. Burmann, Christoph & Jost-Benz, Marc & Riley, Nicola, 2009. "Towards an identity-based brand equity model," Journal of Business Research, Elsevier, vol. 62(3), pages 390-397, March.
    6. Mert Bilgin, 2012. "The PEARL Model of Sustainable Development," Social Indicators Research, Springer, vol. 107(1), pages 19-35, May.
    7. Martínez-Garmendia, Josué, 2010. "Application of hedonic price modeling to consumer packaged goods using store scanner data," Journal of Business Research, Elsevier, vol. 63(7), pages 690-696, July.

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