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

  • Srinivasan, V. "Seenu"

    (Stanford U)

  • Park, Chan Su

    (Korea U)

  • Chang, Dae Ryun

    (Yonsei Business School)

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    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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    File URL: http://gsbapps.stanford.edu/researchpapers/library/RP1685R2.pdf
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    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
    Contact details of provider: Postal: Stanford University, Stanford, CA 94305-5015
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    1. 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.
    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. 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.
    4. 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.
    5. John D. C. Little, 1970. "Models and Managers: The Concept of a Decision Calculus," Management Science, INFORMS, vol. 16(8), pages B466-B485, April.
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