three essays exploring consumers' relationships with brands and the implications for brand equity

THREE ESSAYS EXPLORING CONSUMERS’ RELATIONSHIPS WITH BRANDS AND THE IMPLICATIONS FOR BRAND EQUITY DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Randle D Raggio, M.B.A., M.A ***** The Ohio State University 2006 Dissertation Committee: Approved by Professor Robert P Leone, Adviser Professor Neeli M Bendapudi Professor Patricia M West Adviser Business Administration Graduate Program Copyright by Randle D Raggio 2006 ABSTRACT During the past 15 years, brand equity has been a priority topic for both practitioners and academics Despite the attention it has received during this period, no consistent measure of brand equity has been adopted In Chapter 2, I propose a new framework for conceptualizing brand equity that distinguishes between brand equity, conceived of as an intrapersonal construct that moderates the impact of marketing activities, and brand value, which is the sale or replacement value of a brand Such a distinction is important because, from a managerial perspective, the ultimate goal of brand equity research should be to understand how to leverage equity to create value In Chapter 3, I develop a measure of brand equity that is consistent with the framework introduced in the previous chapter, but is based on an empirical procedure that utilizes the loadings produced by an unconstrained factor analysis model that is applied to binary consumer response data collected by the Procter & Gamble Company (P&G) for brands from four product categories and five countries (17 total markets) P&G’s survey consists of hundreds of questions, which give a general idea of how favorable consumers' beliefs are about brands What these questions not provide is any insight concerning how consumers arrive at those beliefs, important information that ii brand managers were lacking This chapter introduces an empirical procedure to identify which sources consumers use to develop their beliefs about brands, i.e., high-level brand or detailed attribute sources, and the implications for brand management From these sources, I then develop a measure of brand equity based on consumers' use of the highlevel brand source and show that a significantly smaller number of questions can produce a measure of brand equity that correlates highly with that produced by P&G's current system The benefit to marketing management is the implication that by using the approach described in this paper, other companies also can better understand where their consumers’ brand beliefs come from, and now can develop a measure of brand equity that does not require a large complex instrument In Chapter 4, I seek to understand the strategic implications of the mental sources of information consumers draw from to develop their beliefs about the benefits that brands deliver, as described in Chapter The general hypothesis is that the level of information that consumers currently use to develop their brand beliefs (high-level brand information or detailed attribute information) will moderate the impact of new information, such that a strategic advantage exists for brands when consumers currently use one of the sources instead of the other The results from Chapter demonstrated that the high-level brand source is more closely related to a measure of brand equity The question remains whether the outcomes that are supposed to accrue to a brand with high equity (especially those of greater loyalty and less vulnerability) empirically can be linked with either the high-level or detailed attribute source Chapter describes an iii experiment to test whether consumers’ current use of the high-level brand source or detailed attribute source is associated with less vulnerability to new (negative) information What this study finds is that when subjects receive negative brand-level information second, it has a greater negative impact on overall brand evaluation if the initial information they possess about the brand is also at a brand level Since the second brand-level information does not specifically contradict the initial attribute-level information, consumers would be left to determine the extent to which they will let the new non-performance related information impact their overall brand evaluations On the contrary, when consumers are faced with negative brand-level information that directly contradicts existing brand-level information stored in memory, it is reasonable that this new information would be assimilated with the old, and the overall evaluation fall The results not support a general prophylactic effect of the brand source, but are consistent with existing brand theory and provide a strong foundation for future research iv ACKNOWLEDGMENTS I wish to thank my family, Noel, Jenna and Jack, for their willingness to join me on this journey The completion of this dissertation is a testament to their faithful love, support, and encouragement Words are inadequate to express the love and appreciation I feel for them For all of their teaching, mentoring, encouragement, and support, I wish to thank Neeli Bendapudi and Pat West, and extend a special note of thanks to Michael Browne for his feedback and guidance through the development of the RAMONA statistical procedure Bob Leone deserves special recognition as an adviser, mentor, guide, and collaborator His constant encouragement sustained me in times of doubt and his willingness to share his wisdom and experience has helped me navigate the often tortuous course I have learned much more than marketing or research from him, and my future colleagues and students will benefit from his influence I am forever indebted to Jim Morrison, who, as a graduate teaching assistant at the University of Southern Mississippi, ignited within me a passion for reading and writing, v and to David Rados, who, as a professor at Vanderbilt University, helped me discover a love of marketing Without the influence of either of these, this journey never would have begun Many thanks to those students who preceded me into the program and guided the way: Yancy Edwards, Sam Min, Tim Gilbride, Priyali Rajagopal, and Ling-Jing Kao; and to those who joined in the journey along the way: Jenny Klett, Sandeep Rao, and Jeff Dotson, with special thanks to Nicole Votolato and Doug Bosse for their friendship, encouragement, collaboration and support The data for Chapter came from the Procter and Gamble Company through the generous efforts of Andreas Onnen and John Myers; I am grateful for their insights and guidance during the development and implementation of the procedure vi VITA February 7, 1969 Born – New Orleans, Louisiana 1991 B.S.B.A., Management Information Systems, University of Southern Mississippi 1991-1994 Information Systems Consultant, Andersen Consulting, New Orleans, Louisiana 1994-1995 Information Systems Consultant, Raggio & Associates, Mandeville, Louisiana 1997 M.B.A., Vanderbilt University 1996-1997 Marketing Manager, Kidpower, Brentwood, Tennessee 1997-1999 Marketing Director, Kidpower, Brentwood, Tennessee 1999-2002 Instructor, Belmont University College of Business Administration, Nashville, Tennessee 2000-2002 Director of Graduate Programs, The Jack C Massey Graduate School of Business, Belmont University, Nashville, Tennessee 2002-present Graduate Teaching and Research Associate, Department of Marketing and Logistics, The Ohio State University FIELDS OF STUDY Major Field: Business Administration Minor Field: Quantitative Psychology vii TABLE OF CONTENTS Page Abstract……………………………………………………………………………… ii Acknowledgments…………………………………………………………………… v Vita…………………………………………………………………………………… vii List of Tables ………………………………………………………………………… xi List of Figures………………………………………………………………………… xiii Chapters: Introduction…………………………………………………………………… Implications of the Theoretical Separation of Brand Equity and Brand Value… 2.1 Introduction……………………………………………………………… 2.2 Why Did Researchers Gravitate to Outcomes? 2.3 What’s Wrong With Using Outcome Measures? 2.3.1 Not specific to a particular market, usage occasion or group of consumers……………………………………………….… 11 2.3.2 Ignores non-customers and future potential………………… 12 2.3.3 Makes Incorrect Comparisons………………………………… 14 2.3.4 Assumes same goals/objectives across firms……………… 17 2.3.5 Puts emphasis on short-term effects that may be “vulnerable” 18 2.4 Non-Outcome Measures Also Present Theoretical Problems………… 19 2.5 Additional Considerations…………………………………………… 21 2.6 Developing a New Theory of Brand Equity and Brand Value…….…… 22 2.6.1 Brand Equity vs Brand Value………………………………… 22 2.6.2 Brand Value…………………………………………………… 27 2.6.3 Brand Equity…………………………………………………… 40 2.6.3.1 Brand Equity Defined……………………………… 43 2.6.3.2 Thresholds…………………………………………… 48 viii 2.6.3.3 Private Label………………………………………… 2.7 The Proposed Brand Equity Conceptual Model .……… 2.8 The Model……………………………………………………………… 2.9 Conclusion and Future Research Opportunities ……………………… 50 52 56 61 Producing a Measure of Brand Equity by Decomposing Brand-Benefit Beliefs Into Brand and Attribute Sources…………………………………………… 66 3.1 Introduction……………………………………………………………… 66 3.2 Sources of Consumers’ Brand-Benefit Beliefs…………………………… 70 3.2.1 Sources of Brand Ratings Conceptualization………………… 71 3.2.2 Prior Theoretical Literature……………………………………… 74 3.3 The Model………………………………………………………… 78 3.3.1 Ratings Scales Versus Check Boxes…………………… 82 3.3.2 Simulation Studies……………………………………… 83 3.3.3 Model Reliability and Stability………………………… 92 3.3.4 Estimation……………………………………………… 99 3.4 Data……………………………………………………………………… 100 3.5 Results………………………………………………………………… 101 3.5.1 Scenarios………………………………………………………… 102 3.5.2 Case Examples………………………………………………… 105 3.6 Brand Benefit Loading Relationship With Equity……………………… 110 3.7 Discussion………………………………………………………………… 115 3.7.1 Summary of Findings and Discussion………………………… 115 3.7.2 Conclusions………………………………………………….… 117 3.7.3 Further Research……………………………………………… 119 The Moderating Effect of Source of Prior Information on the Impact of New Information…………………………………………………………………… 122 4.1 Overview………………………………………………………………… 4.2 Background and Rationale……………………………………………… 4.3 Pre-Test Procedures……………………………………………………… 4.3.1 Research Design……………………………………………… 4.3.2 Sample………………………………………………………… 4.3.3 Measurement/Instrumentation………………………………… 4.3.4 Data Analysis………………………………………………… ix 122 123 125 125 128 128 129 157 158 159 160 161 162 163 BIBLIOGRAPHY Aaker, David A (1991), Managing Brand Equity, New York: Free Press (1996), Building Strong Brands, New York: The Free Press Agarwal, Manoj K., and Vithala R.Rao (1996), “An Empirical Comparison of ConsumerBased Measures of Brand Equity.” Marketing Letters, (3) 237-47 Ailawadi, Kusum L., Donald R Lehmann, and Scott A Neslin (2001), “Market Response to a Major Policy Change in the Marketing Mix: Learning from Procter & Gamble's Value Pricing Strategy,” Journal of Marketing, Vol 65 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