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Effect of Brand Equity on Consumer Perception of Brand

Paper Type: Free Essay Subject: Marketing
Wordcount: 5535 words Published: 16th Jan 2018

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Brand equity plays an important role in the firms in creation and development of both product and company brand strategy. The study aim to analyze the relationship of different variables of brand equity with the purpose of providing the relationship between effectiveness of brand equity and customer perception of the brand the research focuses on the dimensions of brand equity which involve brand awareness, brand image, brand quality, brand loyalty and brand association However the researches examine relationship between dimension of brand equity and consumer perception of the brand

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Primary and secondary data source will be used so as to be able to achieve the objectives questionnaires will be constructed to provide answers to research question. Also interview and focus group will be among the secondary data In this study, eighty (1o0) questionnaires will be distributed, The study will make a survey for these dimensions of consumer’s based-brand equity and their perception of brand so as to determine the accuracy and validity of the research for current and future use.

Key words: consumer perception on brand, brand equity, loyalty, image quality and association


This chapter of the project present a brief discussion about background to the research ,followed by problem statement ,aim and objectives ,justification for the research methodology and conclusion of the chapter


Based on the rapid changes in the global market and high competition between firms or companies the concept of brand management has become more important .Because good brand management bring about clear different between products and services provided by different companies “brand management is important because it ensure strong brand equity which help customers especially when customers need to purchase product or services”.

Concept of brand equity has received a great deal of research interest in the past 18 years and continues to be one of the most appealing fields of marketing for private and public sector firms. Brand equity issues are important in the design and development of a company and its product or service offerings(Keller ,2004)

However academics have not achieved a widely accepted methodology of measuring firms brand equity or the effect of different variables of brand equity on the valuation of a brand.

Researchers have also found that brands with high brand equity receive a considerable purchase price, even when a company has declared bankruptcy (Kaikati 2003) “suggesting that high brand equity can provide rewards even when a company is in a poor financial position” Brand equity is recognized in the name and symbols associated with a company and the very act of social responsibility is believed to be a significant driver for Building strong brand

Despite many other factors that global and local brands of different products use brand equity as measurement of its effectiveness to their customers

Prasad and Dev,(2000) “presented some factors which are the simplest way for hotel industries to recognise and distinguish between themselves in the mind of their customers is through strong brand equity .(Low and Lamb,2000) “also stated that in the service market the main brand is firms brand while the packaged goods market the main brand is seen to the product brand itself.”

As research shows a powerful brand enhance customer’s attitude and strength toward brand. According to (Keller, 2004) “customer awareness and association influences attributes of perceived quality and finally result to brand loyalty especially when customers are satisfied with product or service they purchase.”

Strong brands allow its customers to have better perception of brand regardless either intangible or tangibility. Branding has been conducted for centuries as a means for producers to distinguish their goods against those of competitors by creating a recognizable and memorable image. Aaker, D.A Kumar and Day (2007)

Kotler p (2002) states “A brand is a name, symbol, design, or mark that enhances the value of a product beyond its functional purpose”. The term brand equity focuses on the added value with which a brand endows

Brands such as coca cola their brand equity is difficult to measure because the company extended their product with strong brand awareness. This is same as TBL drinks ( alcohol and non alcohol ) the company have extended their brand within the country and out of the country .

Aaker, D.A Kumar and Day (2007) “As far as brand associations are concerned researchers narrated a minimum of nine brand associations that can affect brand effectiveness toward consumer perception brand association communicate the approach or the meaning of product in specific term on how consumer needs can be fulfilled in any competitive environment

Additional research has revealed that companies will pay a premium to acquire or merge with a competitor that has recognized high brand equity as a means of hedging against new product costs (Aker 2004) “Purchasing a company or product line with high brand awareness has a high potential for carryover to the new parent company, as long as the brand name remains effective and consumers do not see a visible reduction in performance”

Researchers such as (Merrilless and Millers 2008)”state that loyal customers who perceive higher brand image tend to act more favourably toward rebranding because when the company face any down fall they can make innovation or rebranding and improve some factors that will make the brand more known to create top mind and mind recall.”Marketers should enhance some core peripheral brand concept to build up connections between the initial brand image to attract the target customers and this is importance especially when the competition is high

Although several brands within different product and service categories used different method to measure brand equity .Also other researchers (Prasad and Dev ,2000:23)”state that relatively limited research on brand equity within the hotel industry” and other companies has been conducted and more others by different researchers where they shows some gapes from different research conducted which indicate the importance of strong brand equity on customers perception of the brand

For the company to archive “a sustainable competitive advantage in the marketplace one has to value the importance of building strong brand ” (Kim , Kim An 2003,Parasa and Decade 2000) this is by maintaining and improving brand to ensure customers satisfaction is high compared to what your competitors do

Conclusively the most important or best way of building strong brand value and support product or service performance will is to ensure effective brand management and strong brand equity because if the brand management and brand equity is poor then it will have great effect to the customers as researchers suggest there should be effective brand equity to ensure that all the measurement of brand are active to avoid effects to customers especially when they make perception or decision of what brand to purchase.

Therefore the company need to have effective brand equity because consumer perception on a brand is based on the brand equity (Kotler, P and Armstrong, 2002)

THE PROBLEM STATEMENT………………………………………………………………………………

The failure of companies in maintaining effectiveness of their brand which as a result it affect customers perception of brand this is because companies try to come up with different brand which keep them different from other competitors but some of them they fail to perform well despite that they have brand.

While the failure of the company to build effective brand equity will actually leads to the failure in achieving the desired organization goals because even if the company have brand but if the brand can not compete then the firm will not do well. .

This is because brand equity play an important role in maintaining customer loyalty and organization performance in the market place. So Having the brand itself is not enough the company should have strong brand effectiveness because brand equity have great effect on consumer perception of brand

When reading through literatures researches shows different gaps regarding customer base brand equity in service industry and most focus on relationship between firm performances using brand awareness and image as a moderating effect. Also I noticed that most researches {Aaker (2001), Keller (2003), cob-walgren et al (2005), Lasser et al (2005), Yoo et al (2003) Yoo and Donthun (2001) “surveyed these dimension of brand equity and determine their effect to the customers especially when the brand is not well managed

More over due to the fast change in consumer wants and high competition has influence brand management to ensure better performance of the company because brand equity has great effect on consumer perception of the brand (kotler P. 2002).”

Therefore I have chosen to carry out this research to indicate the effectiveness of brand equity on customer perceptions of a brand and examining their effect on customer perception and organization performance. Accurate method of data collection will be primary and secondary data in which I will base on literature review, interviews and questionnaires to get the validity and reliability of the problem.


The project has to do with the effectiveness brand equity on customer’s perception of brand the main objective will base on the following:

Determine relationship between brand awareness and customer perception of brand

Analyze the effect of brand image to the customer perception of the brand

Examine the relationship between brand quality on customer based- brand equity and their perception of brand

Determine the effectiveness of brand association in brand equity to the customer perception of brand

Analyze the effect of brand loyalty to customers and customer perception of the brand

Lastly the findings will show or tell what dimension seems to have least or lower consideration when customers make perception about the brand .this will be used as one of the recommendation for this research for the companies and future research on what they should focus on for the future


The following model demonstrates that brand equity is developed based on the five dimensions of brand loyalty, name awareness, perceived quality, brand associations, and other proprietary brands assets (example distribution system). How the brand performs on these dimensions is what leads consumers to develop an overall, intangible rating of brand equity. This equity then provides value to the consumer and the firm in the outlined ways. The model by Aaker was one of the first seminal works in the field of brand equity and led to future research in the area.

KEY CONCEPT Figure: Aaker’s Brand Equity Model 2002.


Kotler et al (2005, p.549) “state that brand is a name, term, sign design or a combination of all of these factors that identify different product or marketers of any product or any service”. According to (Kapferer (2004) “a brand is a name that has power to influence a buyer he also said that these influences could be the result of strong brand association and relationship built up over time among customers or distributers”.

Brand Equity

Aaker (2004) “stated that brand equity is a set of brand assets and liabilities linked to a brand example brand name and symbols that add or subtract from the value provided by produce or services to a firm direct to its customers”.

Brand loyalty

“Aaker (2004) Brand loyalty is the attachment that customers has to the brand” or is the consumers preference to purchase a particular brand in a product class and this is due to consumers awareness about the product or the quality and image of the product or customers satisfaction .all of these add to customers loyalty

Brand image

Keller (2005) “Brand image is consumers perception about the brand or how they view the brand”. Also brand image is symbolic construct created within the mind of consumers and it consist all the information and expectation that customers expect to get from a certain brand of Product or service

Brand awareness

“(Aydin and zer, 2005).Brand awareness refers to “the ability for a buyer to recognize or recall a brand is a member of a certain product category”

“Rossiter and Percy (1987) ” state that brand awareness is essentials for communication because good brand awareness create top mind which help to make marketers’ work more simplified when customers are aware of the product . Without brand awareness no communication effect can occur for customers to buy a brand they must be aware of it”.


The research consists of five (5) chapters.

The first chapter based on brief discussion about background to the research, followed by problem statement, aim and objectives, justification for the research methodology and conclusion of the chapter

The second chapter present the theoretical frame work with theories which are relevant to the study literature review has been structured in the following way starting by consumer behaviour ,brand ,brand equity conceptualization of brand equity brand equity in service industries and finally dimension of brand equity and conclusion of the chapter

Chapter three presents the method which will be used in data collection. It explains the research design that has been used, also research approaches, data collection method, source of data, reliability and validity and lastly limitation of the research

The fourth chapter present data analysis and result of the findings

Finally chapter five deals with conclusion, recommendations and suggestion for the companies and future research, the references and appendix are presented at the end of the research


This chapter put together what other researchers have Witten about this topic which is addressed in the title. this include literature reviews from different research which will help to identify gaps and limitation from previous research also literature review help to add on the body of knowledge to support the problem oh hand


Consumer behaviour

For better understanding about brand equity on customers perception about brands , it is necessary to start with consumer behaviour.

Belch and Belch (2004) “defined consumer behaviour as the process and activities people engage in especially when searching ,or selecting ,or purchasing the product ,it involve evaluating and disposing of product and services to satisfy their needs and desire”.

Dalqvist and Linde (2002) characterized consumer behaviour into four bases which include rational, learned, unconscious and social behaviour and they are represented in three ways KNOWLEDGE ATTITUDE ACTION

Rational behaviour: (Dalqvist and Linde 2002) “customers with rational behaviour, first they get some knowledge about the product and what in offers then they get attitude toward the product and finally they may act to buy or not to buy the product” .This is usually when customers purchase expensive product Example cars (KNOWLEDGE ATTITUDE ACTION)

Unconscious behaviour: consumers with unconscious behaviour start with an attitude toward the product this attitude may either be from emotional or feeling .then consumer find more information about the product and then get knowledge about it and finally they may choose to buy or not (ATTITUDE KNOWLEDGE,ACTION)

Learned behaviour: this is when consumers do not plan their choice of product they do it by habit example of this habit is when buying a newspaper (ACTION KNOWLEDGE ATTITUDE)

Social behaviour : consumers with social behaviour tends to choose theirs product as the result of social environment which they live in .the status, lifestyle and other influences they may influences the product they may buy ( ACTION ATTITUDE KNOWLEDGE)



Cultural factors: this may include factors such as culture, subculture or social classes in which a consumer identifies his or her self with

Social cultures :this may include factors such as family ,reference group, and consumer role and status example religious leader Like pastor

Personal factors :this include factors such as lifecycle ,status, and age of consumers also the economic situation, occupation self-concept and consumer personality

Psychological factors include perceptions ,motivational ,learning attitude and belief of consumers .These factors have great effect on consumer perception

The above factors have great effect on customer perception of the product this is because people differ in geographical location and the norms and conduct differ so this can affect the purchasing of product due to customer perception


According to s”derlund (2001) “consumers buying behaviour include attitude, intention, preference, strength and commitment of consumer to purchase a product”. Consumers buying behaviour this may be called buying behaviour of the final product.


From the diagram above it shows stages that consumers pass through when they want to buy a product but these stages also may depend with a product and if its a first time customers to purchase that product “(kotler p 2004) proposed five stages that consumers go through when they need a product, need recognition, information search ,evaluation of information, purchase decision , post purchase”


Need recognition: this is when consumers define their need or their problem .this may be due to internal stimulus or external stimulus Example of internal stimulus is when you need a drink as a result of hunger .External stimulus arise due to many things example commercial on television about something my force or influence a certain need “(Kotler, 2005) Therefore it is importance that marketers find out what stimulus attracts interest in their brand”.

Information search: ” (kotler p ,2005) this is when customers find information’s from different sources based on their need example sources such as commercial source, personal source, and experiential source” these sources are important to enhance knowledge and awareness of any available brand

Alternative evaluation: this is where consumers evaluate and rank alternatives from the obtained information example of evaluation may base on quality price, warrant and package and other information

Purchase decision: this is where consumers purchase product that they want, their perception may be influenced by unforeseen factors and attitude of others.

Post purchase decision: this is when consumers compare their expectation and the actual perceive performance “(Kotler et al (1999) “stated that they get satisfied when their expectations are the same with the product performance” Consumer’s behaviour may depend on type of the product consumer is buying

Kotler (2001) designed a buying behaviour model which consisted of four different buyer behaviours.


Complex buying behaviour: when consumers buy a high quality brand and before making purchase they seek more information about it .This is high consumer involvement example when a person want to buy a car other electronic product like laptop they need significant differences between brands.

Habitual buying behaviour: when customers purchase a product out of habit these customers have low involvement with the brand

Variety seeking buying behaviour: when customers go around the shopping mall and experiment with variety of product

Dissonance reducing buying behaviour: this is when customers are highly involved with buying product as a result of fact that is expensive or rare Example buying Apple laptop or buying a car like BMW



Perception is a process by which the information is received, selected evaluated, organised and interpreted by an individuals when they need to purchase product. (Kotler 2005).

Factors influencing customers perception


Influence by others: influences by others play an important role when one need to buy something .consumers have habit of consulting each other regarding a new brand that they need to purchase to seek their advice .some advice are very strong and help buyers to buy quality brand these influence my be from friends, cultural value behaviour and preference or socially like small group like family or membership group. So these influences can make someone buy a product which he or she was not planned to buy. (Derlund 2000)

Quality: this is the strongest factors which consumers take into account when making their choice on what to purchase .According to (Uggla (2001) “quality is an integrals part of brand identity”.

Price: is used as an exchange of product or services, price can be used as a reason for a choice of a certain product or service example guying at lower cost to escape financial cost or risk or highest product to get good quality. (Derlund 2000) “price place and brand are the three important factors when deciding consumers purchase choice in every product.”

Advertising: the ain of advertisement is to create top mind and awareness to the target customers target consumer about the product or service. Advertisement is a major way of communication .According to (Aaker 2002)” advertising, promotion and packaging empress are the key factors to influence customers to purchase your brand because advertisement create top of mind and brand recall.”

Packaging: this is designing the cover of the brand or product that will help to attract and influence customers (Kotler 2001) packaging is a form of advertisement in the sense that it sales duties such as attracting customers describing and selling the product”.

Convenience :the brand should have things that can convince buyers , conveniences of brand has significant effect on consumers because in a real sense no one can buy product which have no easy access or no store available ,sellers must create ways to customers to get product in easy way to avoid unnecessary cost (Lin and chang 2003).



Kotler et al (2005 p.5490) “state that brand is a name, term, sign design or a combination of all of these factors that identify different product or marketers of any product or any service”.

According to (Kapferer (2004) “a brand is a name that has power to influence a buyer he also said that these influences could be the result of strong brand association and relationship built up over time among customers or distributers”.

Brand is a means where sellers can be differentiated because everyone can produce a product but to make them different the branding is very important.

(Jones and Slater 2003) “They sum up these added value that develop from different experiences that customers may have from the brand which rise as the result of using the brand which could be as a result of consumer association with the brand

Having strong brand companies not only could facilitate the differentiation of their product to with their competitors .but with branding companies are able to create confidence and loyalty in their firm performance (Halverson & Revaz, 2006).


According to (Dave Dolak 2003) strong brand will create the following benefit amongst others

Build name and brand recognition for your product or the company which may influence consumer buying behavior decision

Build trust and emotional attachment to firm product or services

Make purchase decision more easy and it will enable customers to have trust toward the brand and create belief as result they become loyal to your brand even without knowing the uniqueness of your brand

Any strong brand can create the consumer attitude toward a particular product and services and the strength of such attitude is developed through experience with such brand

A strong brand enjoys the benefit such as reduced competitive advantages, premium price, customer loyalty, profitability, reduced the perceived risk of consumers who are not so sure of their decision


Concept of brand equity has received a great deal of research interest in the past 18 years and continues to be one of the most appealing fields of marketing for private and public sector firms. Brand equity issues are important in the design and development of a company and its product or service offerings. However academics have not achieved a widely accepted methodology of measuring firms brand equity or the effect of different variables of brand equity on the valuation of a brand

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“Aaker (1991) defined brand equity as assets and liabilities that add or detract value to a firm and/or its companies”. Brand equity help to increase seals ,price premium and customers loyalty this is because brand equity comprises all the importance element of the brand example brand awareness , brand image , brand quality and other element .so when brand equity is strong it will help the company performance to be good and also influence more customers toward the product or services

In other words brand equity can be said to be an asset or liability connected to brand name that adds or subtract value to the product

This definition of brand equity can be widely described into other three ways which could be based on financial perspective which stress the value of brand to firm, or customers perspective which sees brand equity as the value of brand to consumers and the combination of the two

The study focuses on customers perception .consumer based brand equity can be divide into customer’s perception which based on brand awareness, perceiver quality, image, loyalty and association and their buying behaviour


The following diagram illustrates the measurement of brand equity. Brand equity by reasserting the lack of tangibility and clear definition of the concept Brand equity is due to large sales and a sizeable advertising budget, since consumers are more likely to favour the larger brand names.

Baldinger and Rubinson (2007) “argued against the assertions of Ehrenberg by showing research that customer attitudes can be measured with some level of validity and that brands (large or small) do show a decrease in strength when observed over a long period of time”



Chen (2001) identifies the types of brand associations and examines the relationship between the characteristics of brand associations and brand equity. He uses the research of (Aaker 2001) to develop his model concluding that the underlying value of a brand name is often a set of 11 associations. Chen suggests classifying brand association into product and organizational associations and further sub-associations as outlined in his brand association model.

Chen (2001) provides useable examples for the functional attribute associations and non-functional attribute associations to increase the readers understanding of the framework. He then conducts his research to determine the effect of brand associations on brand equity

Apelbaum, Gerstner, and Naik (2003) highlight the difference in price provided by brand awareness and examine whether quality is as much a price determinant as brand equity. The authors study the variations in product quality between national and store brands from selected Consumer Reports lists and compare the use of premium pricing.

As noted earlier, consumer beliefs about brand attributes and benefits can be formed in different ways. (Ian and Taylor 2002) “Brand attributes are those descriptive features that characterize a product or service.” Also brand benefit are the personal value and meaning that customers attach to the product or service attributes In general, the source of information creating the strongest brand attribute and benefit associations is direct experience.

This type of information can be particularly influential in consumers’ product decisions, as long as consumers are able to interpret their experiences accurately. Word of mouth or other non-commercial sources of information (consumer organizations, the press, etc.) can also create strong associations (Ian and Taylor 2002).

Many authors (Ian and Taylor 2002) as cited by Juan Carlos et al 2001)”find that quality differences between national and store brands vary significantly across product categories and for 25 percent of product categories, the average quality of store brands is higher. In spite of this difference in quality, national brands receive a substantial price premium (30 percent on average) and when the quality of national brands is higher than store brands the price premium increases to 50 percent”

“Both Aaker (1991) and Keller (1993) define brand associations as the information in the

consumers mind linked to the brand” consumers use associated to process and store information in their memories that can be used especially when they need to make decision on what to purchase good association of the brand will take organisation into customers consideration and it can be liked to trust which result to better organisation performance .


Brand awareness can be referred as the degree of consumers familiarity with a brand (Aaker 2001 and Keller 2003 “stated that brand awareness is a vital element of brand” equity in which when the brand is well known it become important to the company since customers may be influenced by the brand (Rossiter and Percy 2007) brand is the ability of customers to distinguish the brand amongst other brand”

Keller (2003) Conceptualized brand awareness as a source of good brand recall and brand recognition .He went further to say that the recall is the ability of customers to remember a brand from their mind when the product class is made known

“Brand awareness is reflected in the consumers ability to identify the brand under different

Circumstances (Keller, 1993)”. Also is considered as important in low involvement product categories .when it come to high involvement product like cars and other expensive and durable product its however likely that customers spend more time when they make their decision on what to buy so when that product is well known and all the specification are known and where to get also it become more convenience for the consumers and hence may customers may favor that particular brand

According to (Aaker, 2001 p 34) there are three level of brand awareness namely:

Brand recognition: is the ability of consumers to identify a certain brand amongst others that is aided as recall situation where bay a person is asked to identify a recognized brand name from a list of brand from the same product class

Brand recall: is a situation where by a customer is expected to name a brand in product class, also it can be referred as “Unaided recall” as they are not given any clue from the product class

Top of mind: this is referred as the first brand that consumers can recall among a given class of product

Different researchers have seen brand awareness as an element that play an important role to both customer and the company ,to custom


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