When - Porter's Force Attack

Journal of Consumer Marketing
Measuring customer-based brand equity

Walfried Lassar, Banwari Mittal, Arun Sharma,
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Marketing, Vol. 12 Issue: 4, pp.11-19, https://doi.org/10.1108/07363769510095270
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Measuring customer-based
brand equity
Walfried Lassar, Banwari Mittal and Arun Sharma
Introduction
Brand equity is regarded as a very important concept in business practice as
well as in academic research because marketers can gain competitive
advantage through successful brands. The competitive advantage of firms
that have brands with high equity includes the opportunity for successful
extensions, resilience against competitors’ promotional pressures, and
creation of barriers to competitive entry (Farquhar, 1989). An indication of
the importance of well-known brands is the premium asset valuation that
they obtain. For example, 90% of the total price of $220 million paid by
Cadbury-Schweppes for the “Hires” and “Crush” product lines of Procter &
Gamble is attributed to brand assets (Kamakura and Russell, 1991;
Schlossberg, 1990). Similarly, major corporations such as Canada-Dry and
Colgate-Palmolive have created the position of brand equity manager to

build sustainable brand positions (Yovovich, 1988).
Two components of In conceptualizing how customers evaluate brand equity, it is viewed as

brand equity consisting of two components – brand strength and brand value (Srivastava
and Shocker, 1991). Brand strength constitutes the brand associations held
by customers. As an example, Ivory may be regarded by its customers as a
mild soap with very good cleansing power. On the other hand, brand values
are the gains that accrue when brand strength is leveraged to obtain superior
current and future profits. As an example, soap, dishwashing liquid,
detergents and shampoo are marketed under the Ivory brand name. Our
emphasis in this article is on the measure of brand strength.
Basically, brand equity stems from the greater confidence that consumers
place in a brand than they do in its competitors. This confidence translates
into consumers’ loyalty and their willingness to pay a premium price for the
brand. As an example, a study by McKinsey & Co. and Intelliquest Inc.
found that consumers tend to buy brands with low brand equity like Packard
Bell only at a price discount when compared to brands such as Compaq and
IBM that can command a price premium (Pope, 1993).
In spite of the increasing importance of the brand equity concept, an

instrument to measure brand equity from a customer perspective has been
lacking. Because the source of brand equity is customer perceptions (Keller,
1993), it is important for managers to be able to measure and track it at the
customer level. Therefore, the purpose of this research is to develop an
instrument to measure customer-based brand equity.
This article is organized into four parts. The next section reviews the
literature on brand equity. We then develop our framework for brand equity
that includes the definition and perceptual dimensions. Next, we develop a
measurement instrument. Finally, we discuss the results and the implications
for managers.
JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995 pp. 11-19 © MCB UNIVERSITY PRESS. 0736-3761 11
Literature review
Financial and customer- Brand equity has been examined from two different perspectives – financial
based perspectives and customer based. The first perspective of brand equity that is not
discussed in this article is the financial asset value it creates to the business
franchise. This method measures the outcome of customer-based brand
equity. Researchers have developed and effectively tested accounting
methods for appraisal of the asset value of a brand name (Farquhar et al.,
1991; Simon and Sullivan, 1992).
The second perspective is customer-based in that consumer response to a

brand name is evaluated (Keller, 1993; Shocker et al., 1994). We focus on
the customer-based perspective for two reasons. First, customer-based brand
equity is the driving force for incremental financial gains to the firm.
Second, managers do not have a customer-based measure to evaluate brand
equity. We could discover only one attempt to measure customer-based
brand equity. However, the dimensionality of the scale was not as expected
and that has reduced the applicability of the scale (Martin and Brown, 1990).
Initially, brand equity was conceptualized as consisting of consumers’ brand

associations that include brand awareness, knowledge and image (Keller,
1991, 1993). As stated earlier, brand equity is regarded as consisting of two
components – brand strength and brand value (Srivastava and Shocker,

1991). Our interest is in brand strength, which constitutes the brand
associations held by the brand’s customers. Some researchers view brand
equity as perceived brand quality of both the brand’s tangible and intangible
components (Kamakura and Russell, 1991).
Brand loyalty and brand Brand equity is of interest to managers because of brand loyalty and brand
extensions extensions. Brand equity has a positive relationship with brand loyalty.
Brand extensions are an area that are affected by the original brand’s equity
(Bridges, 1992). A current brand extension when compared to a new brand
name has lower advertising costs and higher sales because of consumer
knowledge of the original brand (Smith, 1991; Smith and Whan Park, 1992).
Interestingly, it has been found that consumers accept brand extensions more
when the quality variations across the product line are small rather than large
(Dacin and Smith, 1994). This suggests that consumers do not trust brands
whose quality varies. In fact it is critical for brand managers not to lose
brand equity by launching substandard products. In a similar vein, brand
extensions are more acceptable for products where the customer-based brand
associations are salient and relevant (Broniarczyk and Alba, 1994). For
example, consumers will more readily accept a mouthwash extension of
Close-up than of Crest because Close-up is associated with breath freshening
whereas Crest is associated with dental protection.
A framework for measuring customer-based brand equity

Definition of brand equity
Customer-based brand Customer-based brand equity has been defined as the differential effect of
equity brand knowledge on consumer response to the marketing of the brand
(Kamakura and Russell, 1991). Thus brand equity is conceptualized from the
perspective of the individual consumer and customer-based brand equity
occurs when the consumer is familiar with the brand and holds some
favorable, strong, and unique brand associations in the memory (Kamakura
and Russell, 1991). Based on this definition, we believe that there are five
important considerations to defining brand equity. First, brand equity refers
to consumer perceptions rather than any objective indicators. Second, brand
equity refers to a global value associated with a brand. Third, the global
12 JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995

value associated with the brand stems from the brand name and not only
from physical aspects of the brand. Fourth, brand equity is not absolute but
relative to competition. Finally, brand equity positively influences financial
performance.
In view of these characteristics, we operationalize brand equity as “the

enhancement in the perceived utility and desirability a brand name confers
on a product”. It is the consumers’ perception of the overall superiority of a
product carrying that brand name when compared to other brands.
Perceptual dimensions of brand equity: the proposed model

Five dimensions of Although there have been product-specific measures of customer-based
brand equity brand equity (Park and Srinivasan, 1994), there exists only one study on
empirical measurement of customer-perceived brand equity (Martin and
Brown, 1990). However, this scale has not been used extensively. Previous
researchers have conceptualized brand equity as having five dimensions to
brand equity, namely perceived quality, perceived value, image,
trustworthiness, and commitment (Martin and Brown, 1990).
To develop a better scale, the authors and their academic colleagues

examined the previous research and made the following changes. We
replaced the quality dimension with performance that is more focussed.

We use “performance” as an inclusive term, to refer to the totality of the
physical job. We define performance as “a consumer’s judgment about a
brand’s fault-free and long-lasting physical operation and flawlessness in
the product’s physical construction”. The reason brand name is used by
consumers to “infer” quality of an unfamiliar product is because that brand
name has built, based on its association with other quality products carrying
that name, a value or utility; that is, beliefs about quality (i.e. performance)
have gone into that brand name’s value or equity, as our model explicitly
states (Brucks and Zeithaml, 1991).
Second, we limited the reference of the image dimension to the social

dimension, calling it social image. We define social image as “the
consumer’s perception of the esteem in which the consumer’s social group
holds the brand. It includes the attributions a consumer makes and a
consumer thinks that others make to the typical user of the brand”.
Third, since it was our intention to measure perceptual rather behavioral

dimensions of brand equity, we distinguish between commitment as a feeling
versus commitment as action. We view only the feeling as a component of
brand equity, judging behavior to be a consequence of brand equity rather
than brand equity itself. The feeling interpretation of commitment is
subsumed in our framework under the rubric of identification/attachment.
We define it as “the relative strength of a consumer’s positive feelings
toward the brand”.
Definition of value Finally, we define value as “the perceived brand utility relative to its costs,
assessed by the consumer and based on simultaneous considerations of what is
received and what is given up to receive it”. We define trustworthiness “as
“the confidence a consumer places in the firm and the firm’s communications,
and as to whether the firm’s actions would be in the consumer’s interest”.
In proposing these components, we regard brand equity as associations

consumers hold. We conceptualize and measure these associations at a more
abstract level that captures cross-product generality rather than at a level that
JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995 13

would apply to a particular product class only. For example, rather than the
brand association “Brand X is an effective teeth whitener” or “Brand Y cleans
clothes whiter”, we assess the association “Brand Z does its physical job
effectively”.
The rationale for including the five components of brand equity is as follows.
Performance is of critical essence for any brand. If a brand does
not perform the functions for which it is designed and purchased, consumers
would not buy the product and the brand will have very low levels of brand
equity. Social image is value-adding because of the social reputation associated
with owning or using a brand. For example, although Timex and Swatch
watches may perform equally, the Swatch brand name connotes greater value
among the American youth. Social image contributes more to a brand’s equity
in product categories such as designer clothing and perfumes.
Price/value is included because consumer choice of a brand depends on a

perceived balance between the price of a product and all its utilities. Some
brands have higher brand equity because of their price value. As an example,
Honda cars have brand equity because of their price value (i.e. performance
when compared to price) whereas Lexus cars have their equity due to their high
performance and social image.
Consumers value Trustworthiness is included because consumers place high value in the brands
trustworthiness that they trust. As an example, consumers’ trust in Nordstrom has translated into
a higher level of equity for Nordstrom stores. Conversely, distrust in a brand
negatively affects brand equity. Sears automobile repair service briefly lost its
consumer franchise in the wake of revelations that it made unnecessary repairs.
Identification/attachment is included because consumers come to identify with

some brands and develop sentimental attachment with those brands. The
vehement protests which the brief removal of “old” Coca-Cola brought forth by
its loyal fans exemplify this dimension and its power in augmenting a brand’s
utility.
Scale development
Research process
Branded versus generic To begin the research, we asked 22 consumers open-ended questions as to why
products most people prefer a brand name product over unbranded or generic products.
Responses were sought for branded versus generic products in general, followed
by specified product categories (different product categories for different
respondents). A review of these responses combined with academic and
practitioner literature as well as our own reflections served as a guide to the
delineation of the five dimensions of brand equity and some of their measures.
Following the first step, we generated 83 measurement items. In order to

establish content validity of subsequent scales we gave these measurement items
and our construct definitions to three marketing professors. These experts
provided a content-based screening process by assigning individual items to the
construct category they thought the item best indicated. Items which did not get
classified in the construct categories were eliminated. The resulting shorter list
contained about five to eight measurement items for each construct.
Pilot study one

We administered the item pool to 75 consumers for a set of existing products
(one product per respondent) with their brand names specified. The products
were sport sneakers (Asics and Reebok), telephone answering machines

(AT&T), and television monitors (RCA). Through statistical analysis we
reduced the items to 58.
Pilot study two

Two brands We collected further data with this reduced set of items, but this time we asked
respondents themselves to choose two brands of specified product categories
(pens for some and jeans for others) with which they were familiar. The
rationale for this modification was to reduce the halo effects across dimensions.
This approach worked, though not entirely, and we were able to reduce the
number of items further to 26.
Pilot study three

To examine the 26 items and reduce the items to a manageable scale,
we carried out another study. Here, we used a “synthetic” stimulus with a
hypothetical brand name. An information sheet on a new line of Avani watches
was prepared and given to students along with the watch pictures taken from a
catalog. Forty-five consumers answered the survey. The details of the
confirmatory factor analysis are presented in Appendix 1. The resulting scale
was also significantly correlated with an overall measure of brand equity (p <
0.001). In our debriefing of the respondents, they had problems with semantic
differential scales. Accordingly, we changed the scales to agree/disagree scales

for the major study. Also, instead of evaluating one brand, respondents were
more comfortable comparing brands. The resulting scale had 17 items
individualized for a brand of television and they are presented in Table I.
Study
Comparison of Once we had the 17 items of the scale, we tested the scale in two categories. The
three brands first was television monitors and the second was watches. Recall that brand
equity is a concept that can be measured only in comparison with other brands
in the same category. We created a questionnaire that consumers could use to
compare three brands simultaneously. The top portion of the questionnaire is
presented in Appendix 2. The questions were randomized and the orders of the
brands in the questionnaire were also changed. We compared three brands of
television monitors (Sony, RCA and Goldstar) and three brands of watches
(Seiko, Bullova and Timex). The questionnaires were administered to 113
consumers.
We first summed the scale ratings for each of the three brands. From this sum
we calculated the average brand equity rating. We then collected the prices of
similar product items from the three brands. The brand equity ratings and the
prices are shown in Table II. In television monitors, Sony was rated the highest
and also had the highest prices. RCA was rated next. Goldstar was rated the
lowest and also had the lowest price. In watches, Seiko was rated the highest
and also had the highest prices. Although Bullova and Timex had similar
ratings, we found Bullova prices to behigher than Timex. The implication of this
result is discussed next.
Managerial implications and recommendations

In this article we developed and presented a scale to measure customer-based
brand equity. This scale was developed after four studies in which we narrowed
our initial scale of 83 items to a scale of 17. The resulting scale was significantly
correlated with an overall measure of brand equity. We also tested the scale in
two product categories – television monitors and watches. In general we found
that prices reflected the equity associated with the brand. The implications for
managers are discussed in the next sections.

Performance
P1 From this brand of television, I can expect superior performance
P2 During use, this brand of television is highly unlikely to be defective
P3 This brand of television is made so as to work trouble free
P4 This brand will work very well
Social image
I1 This brand of television fits my personality
I2 I would be proud to own a television of this brand
I3 This brand of television will be well regarded by my friends
I4 In its status and style, this brand matches my personality
Value
V1 This brand is well priced
V2 Considering what I would pay for this brand of television, I will get much more than my
money’s worth
V3 I consider this brand of television to be a bargain because of the benefits I receive
Trustworthiness
T1 I consider the company and people who stand behind these televisions to be very
trustworthy
T2 In regard to consumer interests, this company seems to be very caring
T3 I believe that this company does not take advantage of consumers
Attachment
A1 After watching this brand of television, I am very likely to grow fond of it
A2 For this brand of television, I have positive personal feelings

A3 With time, I will develop a warm feeling toward this brand of television
Table I. Brand equity scale – measurement items
Televisionsa Sony RCA Goldstar

Brand equity ratings (on a seven-point scale) 6.32 4.43 3.11
Market prices (27-inch stereo TV) $549 $399 $349
Watchesb Seiko Bullova Timex

Brand equity ratings (on a seven-point scale) 5.98 3.65 3.56
Market prices (plain man’s watch) $89 $29 $17
Notes:
a All brand equity differences were significant at p < 0.01
b Brand equity of Seiko was significantly higher than brand equity of Bullova and Timex at
p < 0.01
Table II. Brand equity evaluation and market prices
Brand equity Measurement of brand equity

measurement will help It is recommended that firms measure the equity associated with their brands
marketing on a regular basis. We provide a simple paper and pencil instrument to
measure brand equity. The advantage of this scale is not only the small
number of items but also the ability to measure the individual dimensions of
brand equity. Thus the measurement of brand equity will enable companies to
evaluate their marketing programs. Also, if the brand equity is seen to suffer,
further feedback can be obtained from consumers. This feedback will aid in:
identifying product performance problems; identifying advertising/
positioning problems; and providing feedback to the firm’s employees on
where improvements need to be made.
Dimensions of brand equity

The customer-based brand equity scale is based on the five underlying
dimensions of brand equity: performance, value, social image,
trustworthiness and commitment. One of the major implications of this
research is that companies have to manage all of the elements to enhance

brand equity. Interestingly, our pilot studies showed that consumers
demonstrate a halo across dimensions of brand equity. This suggests that if
consumers evaluate a brand to perform well, consumers also expect the brand
to have high levels of value, or be more trustworthy. However, if the brand
fails on a single dimension (e.g. social image), consumers do not evaluate the
other dimensions (e.g. performance) highly. As stated earlier, the performance
of Swatch and Timex may be similar in an objective sense. However, Swatch
may be evaluated as having better performance because of the perceived
higher social image. Also, recovery may be critical to maintaining brand
equity. The trustworthiness of the Tylenol brand increased after the product
tampering case was handled to the satisfaction of the consumer.
Brand equity and the marketing mix

Relationship between The measurement of brand equity may aid in the evaluation of the marketing
price and equity mix elements of a brand. As an example, we saw a relationship between
price and the equity associated with the brand. In the study, although Timex
and Bullova had similar brand equity, the price of a Bullova was found to be
70% higher than Timex. To be competitive Bullova needs to either reduce
prices or increase their brand equity.
Promotion is critical in developing equity. Promotion can be used to develop

performance expectations (e.g. Lexus cars), increase trustworthiness (e.g.

FedEx), increase social image (e.g. Michelob), increase commitment (e.g.
Saturn), and increase value (e.g. Honda). After measuring the brand equity,
dimensions that need more promotional support can be identified. Finally,
distribution of high social image products (i.e. upscale stores) is different
from the distribution of low image products (i.e. discount stores).
(For a copy of the scales used in this article, please contact Arun Sharma,
Department of Marketing, University of Miami, PO Box 248147, Coral
Gables, Florida 33124-6554, USA.)
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Appendix 1: Results
Pilot study three
First, we examined intercorrelations among the items designed for each scale. After removing
uncorrelated items from each measurement, we then conducted exploratory factor analysis to
determine the scales’ unidimensionality. Finally, we computed coefficient alphas; each of the
scales had strong internal consistency. We also calculated coefficient alphas for the scales
which were 0.75 for performance, 0.77 for image, 0.77 for value, 0.79 for trust, and 0.83 for
attachment/feeling. All reliability coefficients exceeded the 0.70 threshold and therefore
represent good internal validity.
Measurement validation
Initially, the set of measurement items corresponding to each theoretical scale construct was
examined by item-to-total correlations and exploratory factor analysis (see Table AI). After the
initial analysis, the remaining set of measurement items was subjected to confirmatory factor
analysis to verify discriminant validity. The measurement model was estimated using LISREL
7.16. The overall fit of the model is acceptable with a chi-square of 161.17 (df = 109; p < 0.001)
and Bentler’s comparative fit index (CFI) = 0.87 (see Table AII). In sum, the measurement
model provides satisfactory evidence of unidimensionality for the individual scales.
Appendix 2: Sample questionnaire

In the following questionnaire we would like to evaluate three brands of televisions. We would
like you to evaluate each statement on a 7-point scale with respect to each brand of television.
Please list a 7 if you strongly agree with a statement, a 1 if you strongly disagree with a
statement, and a 4 if you neither agree nor disagree with a statement. As an example, you
strongly agree (7) with a statement as far as Sony is concerned, strongly disagree with the
statement as far as RCA (1) is concerned, and neither agree nor disagree (4) with the statement
for Goldstar. In this case you would put 7, 1 and 4 in the respective columns.
1 2 3 4 5 6 7
Strongly Strongly
disagree agree
Statement Sony RCA Goldstar
After watching this brand of television, I am very likely

to grow fond of it
Considering what I would pay for this brand of television,
I will get much more than my money’s worth
During use, this brand of television is highly unlikely to be defective

Image Value Trust Attachment Performance
Image 1.00
Value -0.51 1.00
Trust 0.30 -0.40 1.00
Attachment -0.77 0.61 -0.35 1.00
Performance 0.47 -0.48 0.94 -0.39 1.00
Note: Bagozzi and Phillips (1982) tests of discriminant validity (between factors) were
supported for all factors despite high correlations between some factors
Table AI. Construct correlations
Item Performance Image Value Trust Attachment
P1 0.71
P2 -0.73
P3 -0.61
P4 0.66
I1 0.55
I2 0.81
I3 0.65
I4 0.68
V1 0.67
V2 -0.73
V3 -0.88
T1 0.83
T2 0.74
T3 -0.69
A1 0.67
A2 0.92
A3 0.80
Chi-square with 109 degrees of freedom = 161.17 (p < 0.001) (N = 49)
Table AII. Maximum likelihood LISREL estimates for five-factor model
Walfried Lassar is Assistant Professor of Marketing and Arun Sherma is Associate

Professor of Marketing at the University of Miami, Florida, and Banwari Mittal is
Associate Professor of Marketing at Northern Kentucky University, Highland Heights,
Kentucky, USA.

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Journal of Consumer Marketing

Measuring customer-based brand equity

Review, Vol. 32 Iss 3/4 pp. 307-328 <a href="https://doi.org/10.1108/IMR-10-2013-0242">https://doi.org/10.1108/

*Related content and download information correct at time of download.

Colgate-Palmolive have created the position of brand equity manager to

Two components of In conceptualizing how customers evaluate brand equity, it is viewed as

In spite of the increasing importance of the brand equity concept, an

The second perspective is customer-based in that consumer response to a

Initially, brand equity was conceptualized as consisting of consumers’ brand

components – brand strength and brand value (Srivastava and Shocker,

A framework for measuring customer-based brand equity

12 JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995

In view of these characteristics, we operationalize brand equity as “the

Perceptual dimensions of brand equity: the proposed model

To develop a better scale, the authors and their academic colleagues

replaced the quality dimension with performance that is more focussed.

Second, we limited the reference of the image dimension to the social

Third, since it was our intention to measure perceptual rather behavioral

In proposing these components, we regard brand equity as associations

JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995 13

Price/value is included because consumer choice of a brand depends on a

Identification/attachment is included because consumers come to identify with

Following the first step, we generated 83 measurement items. In order to

Pilot study one

14 JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995

Pilot study two

Pilot study three

differential scales. Accordingly, we changed the scales to agree/disagree scales

Managerial implications and recommendations

JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995 15

A2 For this brand of television, I have positive personal feelings

Table I. Brand equity scale – measurement items

Televisionsa Sony RCA Goldstar

Watchesb Seiko Bullova Timex

Table II. Brand equity evaluation and market prices

Brand equity Measurement of brand equity

Dimensions of brand equity

16 JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995

Brand equity and the marketing mix

Promotion is critical in developing equity. Promotion can be used to develop

performance expectations (e.g. Lexus cars), increase trustworthiness (e.g.

JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995 17

Appendix 2: Sample questionnaire

Statement Sony RCA Goldstar

After watching this brand of television, I am very likely

18 JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995

Table AI. Construct correlations

Item Performance Image Value Trust Attachment

Chi-square with 109 degrees of freedom = 161.17 (p < 0.001) (N = 49)

Table AII. Maximum likelihood LISREL estimates for five-factor model

Walfried Lassar is Assistant Professor of Marketing and Arun Sherma is Associate

JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 4 1995 19

Consumer-Based Brand Equity 118-150. [Crossref]

Applied Industrial Engineering 2:1, 1-13. [Crossref]

management on educational brand equity 1-5. [Crossref]

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