How Well Does Consumer-Based Brand Equity Align with Sales-Based Brand Equity and Marketing-Mix Response?

Hannes Datta, Kusum L. Ailawadi and Harald J. van Heerde
Article Snapshot
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Consumer Brand Equity Aligns with Sales Equity and Marketing Mix Response
Key Takeaways

​What? Companies spend billions of dollars to build brand equity but may not be allocating investments optimally.

So What? Research shows that the brand equity dimensions of awareness, relevance, esteem, and differentiation have a distinct impact on consumer sales response depending on characteristics of the product category.

Now What? Brands in fragmented product categories (e.g., frozen dinners) with high social value (e.g., beer) and less emphasis on experiential attributes (e.g., diapers) should focus on awareness, relevance, and esteem. Differentiation should be a primary focus for brands in product categories with the opposite characteristics.

Full Article

​Article Snapshot: Executive Summaries from the Journal of Marketing

The equity of consumer product brands in the hearts and minds of consumers carries over into equity in the marketplace and in doing so results in a better response to the brand's marketing activity.


For categories that have high social value, are fragmented, and/or are less hedonic, it especially pays off to focus on Relevant Stature. Brands that are in hedonic or concentrated categories or those with lower social value should enhance differentiation.

The results caution against a broad-brush assumption that brand equity enhances all marketing mix response. Reality is more nuanced – both along the dimensions of consumer based brand equity and across marketing mix elements.


Research Question

Despite the importance of brand equity in marketing theory and practice, and the fact that firms spend considerable sums of money to track Consumer-Based Brand Equity (CBBE) and Sales-Based Brand Equity (SBBE), no empirical study to date has systematically investigated the link of CBBE with SBBE or with marketing mix response. The main hypothesis is that the CBBE dimensions have nuanced relationships with (i) SBBE, varying across product categories and with (ii) marketing responsiveness, varying across the marketing mix.

Methods

The authors studied 10 years of data on 290 consumer packaged goods brands across 25 categories to examine the association between the two most popular metrics for brand equity -- a sales-based measure estimated from marketplace data and a consumer-based measure reflecting the image of the brand in the hearts and minds of consumers.

Findings

There is a fairly strong positive association of a brand's sales based equity in the marketplace with its Relevance and Stature in consumers' minds, especially in categories that have high social value, are fragmented, and/or are less hedonic. Not so for Differentiation, which only translates into sales based equity for brands in hedonic and concentrated categories. Relevant and high stature brands also get higher promotion and advertising response though they benefit less from increased distribution. Differentiated brands only get better advertising response.


Implications

Consumer Packaged Goods companies like P&G, Coca-Cola, Clorox, Heinz, etc. can learn which CBBE dimensions to prioritize contingent on the category. High social value categories (e.g., beer, cigarettes), fragmented categories (e.g., frozen pizza and dinners) and less hedonic categories (disposable diapers) should focus on Relevant Stature instead of highlighting differences. Brands that are in hedonic (e.g., coffee) or concentrated categories (e.g., ketchup), should highlight or enhance Energized Differentiation, while not ignoring Relevant Stature.


 

 Related Content: AMA Scholarly Insights

 
  • Are You Managing Brand Equity Incorrectly?

    Are You Managing Brand Equity Incorrectly?

    Brands in fragmented product categories (e.g., frozen dinners) with high social value (e.g., beer) and less emphasis on experiential attributes (e.g., diapers) should focus on awareness, relevance, and esteem. Differentiation should be a primary focus for brands in product categories with the opposite characteristics.


Questions for the Classroom

  • How can a brand's equity be estimated using a market share response model? 

  • How does a brand's equity as perceived by consumers relate to its marketing mix responsiveness, specifically price, promotion, advertising, and distribution elasticities? 

  • How do category characteristics moderate the relationship between a brand's equity as perceived by consumers and a brand's equity in the market place?

Article Citation: Hannes Datta, Kusum L. Ailawadi, and Harald J. van Heerde (2017) How Well Does Consumer-Based Brand Equity Align with Sales-Based Brand Equity and Marketing-Mix Response?. Journal of Marketing: May 2017, Vol. 81, No. 3, pp. 1-20.

doi: http://dx.doi.org/10.1509/jm.15.0340


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Author Bio:

 
Hannes Datta, Kusum L. Ailawadi and Harald J. van Heerde
Hannes Datta is Assistant Professor of Marketing, Department of Marketing, Tilburg University. Kusum L. Ailawadi is Charles Jordan 1911 TU’12 Professor of Marketing, Tuck School of Business, Dartmouth College. Harald J. van Heerde is Research Professor of Marketing & MSA Charitable Trust Chair in Marketing, School of Communication, Journalism & Marketing, Massey Business School, Massey University; and Extramural Fellow, CentER at Tilburg University.
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