Defining brand equity from a customer standpoint

Keller’s (1993) key contribution was providing a definition of brand equity from a customer standpoint and identifying a novel way of tying together the macro and micro perspectives on brand equity. Much of the literature until then had focused on brand equity either from a valuation perspective (e.g., Simon and Sullivan 1993) or from a choice modeling/brand loyalty perspective (e.g., Guadagni and Little 1983). Subsequent research on customer equity (e.g., Rust et al. 2004) has taken this idea of customer-based brand equity and demonstrated its role in tying consumer preferences and choices to financial returns that accrue to a firm. Keller and Lehmann (2001) have also investigated the value creation process by articulating how the brand value chain connects the marketing investments to customer loyalty.

Differential effects of a brand (vs. product)

Inherent in the definition of brand equity is the idea of differential effects created by a brand (versus a generic product). This notion has been embraced by subsequent research that outlines how brand equity can be measured. For instance, Ailawadi et al. (2003) introduced the idea of a revenue premium, which builds on Keller (1993) and proposes a method for measuring brand equity based on comparing a brand’s revenues to those of a private label product. This approach has its conceptual underpinnings in the idea of differential effects created by a brand. Ailawadi et al. (2003) demonstrate how this idea can be implemented successfully using widely-available scanner panel data, and they provided a valuable tool that can be used to track brand health over time; Erdem et al. (1999) suggested that brand equity amplifies the role of a brand on all aspects of the consumer’s evaluation and choice process. Much of the research on brand equity measurement is limited by data availability. The methodology outlined by Ailawadi et al. (2003) relies on availability of scanner panel data, and in many non-packaged goods categories the lack of availability of such data may limit the use of these approaches to measurement of brand equity. Still other approaches which are based on financial, stock-market based measures may rely on the assumption of monobrand firms, which again limits our ability to utilize these approaches. With increasing data availability, and new advances in modeling of big data, researchers should consider how the preceding approaches could be adapted and expanded to measure consumer-based brand equity.

Brand knowledge

A key piece of the CBBE definition is that of brand knowledge. As Keller (1993, 2016) has noted, the notion of brand knowledge could pertain to a range of measures including awareness, attitudes, experiences, thoughts and feelings. Research has examined these aspects of brand knowledge in different ways, and proposed novel measures of several aspects of brand knowledge including identifying dimensions of brand associations (Krishnan 1996); understanding and measuring brand experience (e.g., Brakus et al. 2009); and different antecedent factors such as scents (Morrin and Ratneshwar 2003) that influence brand knowledge Further, novel methods such as eye-tracking have been proposed as ways of measuring brand memory (Wedel and Pieters 2000). Brand knowledge has also been shown to influence consumers’ interactions and behaviors. For example, Aggarwal and McGill (2012) demonstrate that priming an anthropomorphized brand can trigger goals of social interactions among consumers.

The aforementioned studies have provided novel insights on one or more specific aspects of consumer-brand relationships, however, more research needs to be done in combining these individual findings and creating a comprehensive overall framework of how brand equity is created. For example, to what extent does brand anthropomorphism or brand scent influence overall brand equity when combined with other drivers of brand knowledge or brand equity? Further, it should be understood that some aspects of brand equity are not within the control of the marketing managers; brand equity can be altered as a result of consumers’ word-of-mouth, competitive actions and broader marketplace trends. Therefore, more work needs to be done in combining these different sources of brand equity and incorporating the role of environmental factors within an overarching framework.

Brand equity and responsiveness to marketing

Another key idea included in Keller’s (1993) definition of CBBE is that of the differential response that a brand elicits from consumers. Having a brand name enables a firm to market its offerings in a relatively more efficient manner, or in a way that enhances its cash flows, and thus results in greater shareholder value. Subsequent research on financial effects of marketing assets (e.g., Bharadwaj et al. 2011), have shown that unanticipated changes in brand quality result in greater shareholder wealth, thereby lending support to the idea of differential effect, although this differential effect manifests in varying shareholder reactions. More recent research by Newmeyer et al. (2016) demonstrates that transfers of brand assets in brand acquisition contexts also yield greater shareholder returns than transfers of product (non-brand) assets, thereby further supporting the important role of brands in eliciting differential responses from both consumers and the shareholders of a firm (see also Bahadir et al. 2008). Mizik and Jacobson (2009) examined how brand attributes can enhance valuation accuracy based on incorporating perceptual brand attributes into a valuation framework—a method that is called the conditional multiplier approach. Mizik and Jacobson (2008) used data from Young and Rubicam’s Brand Asset Valuator database, in which brands are rated on differentiation, relevance, esteem, knowledge and energy by a large panel of consumers on an annual basis. This research further expands on the notion of customer-based brand equity and how consumer mindset measures (such as the Y&R brand asset pillars of differentiation, relevance, esteem, knowledge and energy) can ultimately create value for the firm. Again, much of the research on financial impacts of brands and brand equity is dependent on the availability of data. If the firm is not a monobrand firm, or if the firm is not listed on the stock exchange, or if mindset metrics are not available, we are not able to utilize these approaches to measuring the financial value of brands. We need a new set of methods that can utilize available datasets to measure and track brand equity, which are less subject to data availability concerns.

Brand resonance model

The resonance model is another key contribution of the Keller (1993) paper. This model outlined specific building blocks that create customer-based brand equity, beginning with salience, followed by performance-imagery, judgment-feelings and finally resonance. The key idea is that most great brands embrace a duality—emotional and rational—which can result in greater brand equity. Consistent with this broad idea, subsequent research has investigated emotional brand attachment. For instance, Thomson et al. (2005) proposed and validated a scale that measures emotional brand attachment. Further testing or validation of these scales for measurement of brand attachment will be needed in order to evaluate their robustness. For example, examining how brand attachment varies across cultures will be an interesting extension of the previous research on brand attachment.

Points of difference and brand associations

Identifying key points of difference (PODs) and building unique, favorable and strong brand associations is at the heart of CBBE. Much of the subsequent research focused on how these PODs and associations can be leveraged to introduce brand and line extensions. For instance, Broniarczyk and Alba (1994) demonstrated that brand associations may dominate brand affect and category similarity thereby influencing the success of a brand extension. While the research by Broniaczyk and Alba demonstrates the importance of brand associations as a basis of fit, other research by Chun et al. (2015) suggests that there are significant benefits associated with low-fit extensions, as consumers tend to process low-fit extensions more deeply. These findings suggest that adding new associations via brand extensions may strengthen perceptions of innovativeness, particularly in some categories, e.g., high-tech. Further, based on Chun et al. (2015), a parent brand with a strong reputation for innovativeness will be in a better position to extend the use of novel associations, without suffering the downsides of a low-fit extension. Future research could examine the broader set of outcome variables to examine when and why brand association-based fit is beneficial to brands.

Brand extensions and Co-branding

As noted by Keller, numerous papers on brand extensions have appeared in the literature, and have emphasized the role of brands in enhancing perceptions of new products introduced using an existing name, i.e., line and brand extensions. Factors influencing the success of brand extensions have been studied extensively using experimental methods (e.g., Gürhan-Canli and Maheswaran 2000; Keller and Aaker 1992; Loken and Roedder-John 1993; Roedder-John et al. 1998) as well as secondary data (e.g., Swaminathan et al. 2001). This research has examined brand spillover effects (Keller and Sood 2003) as well as factors that influence the success of a brand extension, primarily from a cognitive perspective. Interestingly, research on cobranding also has demonstrated spillover effects as well as potential impact of competition (e.g., Kumar 2005). Again, using cognitive psychological perspectives, Swaminathan et al. (2015) investigated the role of thinking styles (relational linking and property mapping) on how complementarity between partner brands can influence consumers’ evaluations of cobranded products. Monga and John (2007) investigated the role of thinking styles in influencing brand extension evaluations. Janiszewski and van Osselaer (2000) used a connectionist model to articulate how consumers learn about brands, and argue that sub-branding and ingredient branding can protect brands from dilution. This extends our understanding of the role of spreading activation models in knowledge acquisition about brands and suggests that an alternative approach, i.e., connectionist model, may explain how consumers learn about brands. Thus, cognitive processes and theories have proven to be helpful in our understanding of how brands influence consumers.

While a number of theories have been proposed to explain the success of brand extensions, it is unclear how these theories can be combined into an overarching framework of when and why brand extensions are successful. Which theories offer the best explanation for successful brand extension? How do these theoretical predictions hold in cross-cultural contexts and across multiple demographic groups? These are important questions that need further investigation.

Consumer-brand relationships

As described by Keller (2016), the notion that consumers and brands develop relationships akin to interpersonal relationships has been an important concept in the branding area. Fournier (1998) has made a significant impact by providing a conceptual framework and measures of the strength and type of consumer-brand relationships. This idea took hold in our literature because it paralleled the increasing interest in relationship marketing elsewhere in the business-to-business and inter-organizational context. Researchers built on the ideas proposed by Fournier (1998) in understanding consumer-brand relationships by examining a number of consumer-based variables such as self-construal (Swaminathan et al. 2007), culture (Monga and John 2007; Torelli and Ahluwalia 2012; Kubat and Swaminathan 2015), consumer mindsets (Monga and Gürhan-Canli 2012), and attachment styles (Swaminathan et al. 2009) in influencing the strength and type of consumer-brand relationships. Aggarwal (2004) further built on Fournier (1998) by investigating communal versus exchange relationships, and the role of relationship norms in influencing how consumers build relationships with brands. Thomson (2006) examined brand attachment as a construct, investigated human brands, and derived inspiration from the attachment theory in social psychology. Much of this literature has been rooted in social psychology and interpersonal relationship theory. Further work on identity has also utilized the principles of social identity. For instance, the research of Cuddy et al. (2008) on stereotypes and the warmth/competence dimensions gave rise to more research on how brands can be viewed in regards to warmth/competence dimensions (Kervyn et al. 2012; Brewer and Gardner 1996) which demonstrated how identification with a brand can help mitigate issues of identity threat (e.g., Chan et al. 2011; Dommer et al. 2013).

While past research has shed light on many aspects of brand identity and attachment, as well as how consumers react to transgressions of their favorite brands, with the exception of initial research by Fournier (1998), little research examines how brand attachment evolves over time. Longitudinal studies of how brand relationships form, strengthen and dissolve across different types of brands and consumers can provide very useful insights to managers. Although longitudinal studies are challenging to conduct, they may offer insights that cannot be obtained by single-shot experiments. Further, field experiments on when and how marketing actions can strengthen brand attachment will also be a valuable addition to the extant research.

Future research

Keller (2016) notes that much work remains to be done in the area of branding, and a few of these directions are described below. These potential extensions are categorized below under: (1) Building brand equity; (2) Measuring brand equity; (3) Managing brand equity.

Building brand equity

Creating brand equity involves creating brand awareness and imbuing a brand name with strong, favorable and unique associations (Keller 1993). The number of touchpoints with consumers has grown significantly with the numerous social and digital media that brands can use to connect with consumers. How can a brand increase its salience against the backdrop of increasing number of touchpoints that brands and consumers enjoy, both online and offline? Further, the role of breadth and depth of awareness in building brand equity needs a closer look. How can brands achieve breadth and depth of awareness in the context of shortening attention spans and increasing brand proliferation? How can brands achieve a consistent look and feel when the touch points with consumers have increased tremendously with the growth of digital channels? How can brands retain their appeal when consumers are basing their decisions on internet searches, blogs, and consumer reviews? The idea that the hierarchy of effects is non-linear has been articulated by Keller as an important direction. What do these non-linear paths look like? How do consumers build brand relationships when the decision journey is non-linear?

A key feature of building brand equity is the extent to which a brand “owns” a particular association or a set of associations, which contribute to its unique brand image. Much of the brand image-building is now co-created with consumers. With consumer-to-consumer conversations shaping brand meaning, how can brand managers retain control over their brands and ensure that brands maintain their image? Alternatively, how can brands incorporate consumers’ inputs into shaping brand image? What is the role of content marketing in ensuring relevancy of brands to consumers?

The CBBE framework (Keller 1993) has offered important suggestions regarding how a brand can create brand equity, including the role of marketing mix elements in creating brand equity. In recent years, consumer feedback and participation into various marketing mix aspects has given rise to new questions about whether, when and how consumers should participate in brand-building. Building on this notion of consumers’ involvement in brands, Fournier and Avery (2011) introduced the notion of open-source brands where consumers are involved in various stages of production and consumption of brands. For instance, Starbucks IDEAStorm invites consumers’ suggestions regarding a variety of flavors and incorporates them into their product portfolio.

How does consumer involvement in co-creating brand meaning influence their engagement with brands? What if consumers do not wish to engage in co-creating brand meaning? How can brand managers ensure that their strategies appeal to both those who wish to participate and those that do not? Are some consumers more interested in participating in meaning co-creation efforts than others? What individual difference variables influence this preference? What is the impact of brand co-creation on price premiums that consumers are willing to pay? How does meaning co-creation or product co-creation influence reactions to a brand transgression? Research by Schreier et al. (2012) investigated this important concept, however, more work remains to be done in understanding co-creation of brands, both from a product and from a meaning standpoint.

A brand can create brand equity by leveraging secondary associations of partner brands via co-branding, advertising alliances, co-sponsorships etc. With digital and social channels becoming increasingly important, an interesting question for research is how the social and digital media are sources of secondary associations. Does a brand’s participation via Facebook provide it with a different set of associations than if a brand were to have a presence on Twitter? As social media channels have brand personalities, they can also become important sources of secondary associations.

An interesting area for future research is to understand how traditional and new advertising models promote the building blocks of customer-based brand equity. What is the impact of online and offline advertising on emotional and rational routes to brand-building? When and how do consumers’ reviews influence brand resonance, and how does brand resonance in turn influence which consumers share information about brands? How are brand conversations online shaped by social media channels? For instance, we could argue that visual channels such as Pinterest, Instagram, and Twitter can have different impacts on brand-building, while YouTube can have a different role altogether in building salience, and loyalty/resonance.

How do online brand communities grow, and what role do these communities have in building brands? How can these communities offer opportunities for product testing and market research? What techniques and tools have to be developed in order to conduct research in these media networks? Researchers should seek answers to these questions in order to develop a deeper understanding of how brands can be created.

Measuring brand equity

One of the key ideas arising from Keller (1993) is measurement of brand equity, using both indirect and direct approaches. Since then, several authors have proposed methods for measuring brand equity. A lot of interesting work remains to be done both in the areas of brand tracking and brand monitoring. The growth of online channels has resulted in numerous challenges to those entrusted with managing these brands, but has also given us the tools to track the hearts and minds of our consumers, and of monitoring their conversations. This should surely offer us the opportunity to build and test rich models of brand equity measurement and tracking.

Managing brand equity

As technology enables managers to become hyper-targeted in their offerings, it also gives rise to a challenge—How can brands remain consistent in their appeal while at the same time providing customized offerings to consumers across segments? What is the optimal brand architecture that would ensure the right balance of consistency of offerings as well as uniqueness of appeal to different segments of consumers?

Given the popularity and rise of social media networks, interesting issues need to be addressed regarding brand transgressions, and their impact on managing brand equity. As recent episodes of Volkswagen and Chipotle demonstrate, reactions to these transgressions are immediate and on a large-scale. How can brand managers mitigate the impact of online social media’s instantaneous spread of information following a transgression? What interventions succeed and which ones are not effective? These are important issues that are worthy of greater attention.

Importantly, another related question has to do with organizing the brand management function in the context of social media. Given the need to react fast to information posted online about your brand, how can brand managers create an organization that responds at least as fast as the speed with which information is shared by consumers about brands? This may require an entirely separate organization that is dedicated to monitoring brands and online sentiment. However, the issue remains as to how this level of responsiveness can be achieved without compromising the brand promise and brand vision. How can we ensure that brand content online has the same level of consistency of theme and message as the carefully crafted ad campaigns of the past? How does an organization ensure that content provided to consumers adheres to the brand’s positioning while at the same time appealing to ever-changing cultural norms? These are important and interesting questions that future researchers should address.

Further research will also be helpful in examining how brands can be managed in a global and connected marketplace. How can brands transcend cultural diversity and ensure that their appeal to consumers is both global as well as local? What is the impact of mobile devices in building brand resonance and in crossing language and cultural barriers? These are interesting issues for future research to investigate.

Conclusion

In conclusion, customer-based brand equity is an important concept that has formed the basis for much research on branding. However, we live in an increasingly connected, global and mobile world which has brought with it new challenges and opportunities for research on branding. How current models of brands are created, measured and managed needs to be expanded to incorporate these new challenges and realities. We also need to embrace new methodologies and techniques (e.g., big data, neuroimaging) to help us discover novel insights into consumer-based brand equity. In doing so, we will be able to broaden our ability to understand the complex world that surrounds us, and generate even better understanding of the role of brands in consumers’ lives.