ama intelligence SCHOLARLY INSIGHTS
Are You Managing
Brand Equity Incorrectly?
Depending on product category, brands should leverage
different non-functional features
BY LANCE A. BETTENCOURT
B
rand equity refers the value of
a brand beyond what can be
explained by a product’s functional
features. Brand equity leads to greater
consumer preference, loyalty and profits.
Not surprisingly, companies spend
billions of dollars to build the equity of
their brands.
They use advertising, celebrity
endorsers, high-profile events and sales
promotions to generate awareness of
the brand and its identity, to create
understanding of the relevance of the
brand in consumers’ lives, to build esteem
for the quality of the brand among
consumers and to develop differentiation
from competitors.
In fact, awareness, relevance, esteem
and differentiation are four critical
dimensions of consumer perception
of brand equity that are measured by
marketing research and consulting
organizations. But should equal emphasis
be given to each brand equity dimension?
Is each dimension equally beneficial to all
product categories?
These questions prompted the research
in a May 2017 article in the Journal of
Marketing, “How Well Does Consumer-
Based Brand Equity Align with Sales-
Based Brand Equity and Marketing-Mix
Response?” The article, written by Hannes
Datta, Kusum Ailawadi and Harald
van Heerde of Tilburg University and
Dartmouth College, presents the results
of an analysis of 290 brands across 25
consumer packaged goods categories
over a 10-year time span. Brands in the
analysis included both well-known and
emerging brands such as Coca-Cola,
18 MARKETING NEWS | SEPTEMBER 2017
Lysol, Doritos, Budweiser, Tide, Fat Tire,
Axe, Ajax, Marlboro, Secret and Folgers.
The research team brought together
consumer perceptions of brand equity
from Young & Rubicam’s Brand Asset
Valuator with sales-based brand equity
and marketing mix elasticities that were
estimated from SymphonyIRI scanner
data.
Some Brand Equity Dimensions
Matter More than Others
Rather than finding that all dimensions
of brand equity are equally impactful
on sales response in all situations, the
research reveals that which dimensions
matter most depends on characteristics
of the product category. This has
important implications for marketing mix
investments.
Specifically, the research shows that
perceived product differentiation—
though it has little impact on overall
sales—has a considerable positive impact The researchers also investigated the
in highly concentrated product categories impact of the brand equity dimensions
(e.g., diapers) and in experiential product on marketing mix elasticities. They
categories where sensory attributes and found that brands with higher awareness,
overall image drive consumer choice relevance and esteem get more value
rather than function (e.g., sodas and with added investments in advertising,
coffee as opposed to razor blades and retail displays and promotional price
laundry detergent). changes. The authors conclude that
In contrast, the analyses revealed brands high on these three brand equity
that the brand equity dimensions of dimensions have a large pool of potential
awareness, relevance and esteem have customers in the market who are ready
a bigger impact on sales response in to buy when the brand is brought to
more social/visible product categories their attention. In contrast, these same
with many competitors (e.g., beer and brands benefit less from investments in
cigarettes in comparison to condiments distribution coverage, perhaps because
and soup). The analyses demonstrated consumers are willing to expend effort to
that these same three dimensions were acquire them.
less critical to sales success for highly Brands high on perceived
experiential product categories. differentiation, in contrast, face a very
 SCHOLARLY INSIGHTS ama intelligence

Brand equity
focus should
be awareness,
relevance and
esteem for brands in
fragmented product
categories with
high social value
and less emphasis
on experiential
attributes. Greater
attention should
be given to
differentiation
among brands
that are higher
in experiential
attributes, lower
different marketing scenario. These to differentiation among brands that
in social value
brands also get more bang for the buck are higher in experiential attributes and higher in
from investments in advertising, but they (e.g., coffee), lower in social value
get less return from promotional price (e.g., mustard, ketchup) and higher in competitive
reductions because they appeal to buyers competitive concentration (e.g., razor
who value their differences more than low blades). These brands will benefit more concentration.
price. from investments in advertising while
also ensuring adequate distribution
Building Brand Equity Through coverage for their target market. m
Wise Marketing Mix Investments
Overall, the results make it clear that LANCE A. BETTENCOURT is a co-founder
the brand equity focus should be and managing partner of LIFT PhD,
awareness, relevance and esteem for a service that matches corporate
brands in fragmented product categories decision-makers with the expertise
(e.g., frozen dinners) with high social of business school professors. He is a
value (e.g., beer) and less emphasis on distinguished marketing fellow at the
experiential attributes (e.g., diapers). Neeley School of Business at Texas
These brands should also emphasize price Christian University and author of Service
discounts and retail display prominence. Innovation: How to Go from Customer
Greater attention should be given Needs to Breakthrough Services.

SEPTEMBER 2017 | MARKETING NEWS 19

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