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

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Author Info

  • Srinivasan, V. "Seenu"

    (Stanford U)

  • Park, Chan Su

    (Korea U)

  • Chang, Dae Ryun

    (Yonsei Business School)

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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 or her 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 non-attribute 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 non-attribute preference.

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    Bibliographic Info

    Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 1685r2.

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    Date of creation: Mar 2005
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    Handle: RePEc:ecl:stabus:1685r2

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    References

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    1. John D. C. Little, 1970. "Models and Managers: The Concept of a Decision Calculus," Management Science, INFORMS, vol. 16(8), pages B466-B485, April.
    2. V. Srinivasan, 1979. "Network Models for Estimating Brand-Specific Effects in Multi-Attribute Marketing Models," Management Science, INFORMS, vol. 25(1), pages 11-21, January.
    3. Carol J. Simon & Mary W. Sullivan, 1993. "The Measurement and Determinants of Brand Equity: A Financial Approach," Marketing Science, INFORMS, vol. 12(1), pages 28-52.
    4. Abel P. Jeuland, 1979. "The Interaction Effect of Preference and Availability on Brand Switching and Market Share," Management Science, INFORMS, vol. 25(10), pages 953-965, October.
    5. Nedungadi, Prakash, 1990. " Recall and Consumer Consideration Sets: Influencing Choice without Altering Brand Evaluations," Journal of Consumer Research, University of Chicago Press, vol. 17(3), pages 263-76, December.
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    Cited by:
    1. Mert Bilgin, 2012. "The PEARL Model of Sustainable Development," Social Indicators Research, Springer, vol. 107(1), pages 19-35, May.
    2. 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.
    3. 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.
    4. 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.
    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. 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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