The Effects of Brand Attitudes and Brand Loyalty on Brand Performance

ABSTRACT - Almost all conceptualizations of brand equity agree today that the phenomenon involves the value added to a product by consumers’ associations and perceptions of a particular brand name (Aaker, 1996; Baldinger, 1990; Baldinger & Rubinson, 1996; Bello & Holbrook, 1995; Dyson, Farr & Hollis, 1996; Keller, 1993; Park & Srinivasan, 1994; Winters, 1991; see also special issue of Journal of Advertising Research on Brand Equity, 1997). This, in turn, results in greater value for the brand name from the firm’s perspective. Thus, there are two aspects to brand equityBone from the point of view of the firm and the other from that of the consumer. The firm/trade aspect of brand equity appears to be built around brand performance measures such as price and shelf facings, whereas customer-based brand equity (Keller, 1993) appears to have attitudinal associations at its core.

Citation:

Arjun Chaudhuri (1999) ,"The Effects of Brand Attitudes and Brand Loyalty on Brand Performance", in E - European Advances in Consumer Research Volume 4, eds. Bernard Dubois, Tina M. Lowrey, and L. J. Shrum, Marc Vanhuele, Provo, UT : Association for Consumer Research, Pages: 276.

European Advances in Consumer Research Volume 4, 1999      Page 276

THE EFFECTS OF BRAND ATTITUDES AND BRAND LOYALTY ON BRAND PERFORMANCE

Arjun Chaudhuri, Fairfield University, U.S.A.

ABSTRACT -

Almost all conceptualizations of brand equity agree today that the phenomenon involves the value added to a product by consumers’ associations and perceptions of a particular brand name (Aaker, 1996; Baldinger, 1990; Baldinger & Rubinson, 1996; Bello & Holbrook, 1995; Dyson, Farr & Hollis, 1996; Keller, 1993; Park & Srinivasan, 1994; Winters, 1991; see also special issue of Journal of Advertising Research on Brand Equity, 1997). This, in turn, results in greater value for the brand name from the firm’s perspective. Thus, there are two aspects to brand equityBone from the point of view of the firm and the other from that of the consumer. The firm/trade aspect of brand equity appears to be built around brand performance measures such as price and shelf facings, whereas customer-based brand equity (Keller, 1993) appears to have attitudinal associations at its core.

However, what, if any, is the nature of the relationship between customer based brand equity (attitudinal associations, etc.) and brand performance measures from the point of view of the firm? It has been suggested that consumer associations of a brand, such as brand attitudes, account for brand performance measures such as price (Aaker, 1996; Bello & Holbrook, 1995; Keller, 1998). However, the role that brand loyalty plays in the relationship of brand attitudes to brand performance measures has not been explicitly considered in the literature. It is suggested in this paper that brand loyalty is a separate construct from brand attitudes and that it plays a crucial intervening role in the relationship of customer-based brand equity to brand performance measures such as shelf facings and price.

Brand loyalty is a concept whose importance has been recognized in the marketing literature for many years. Howard and Sheth (1969) pointed out that greater brand loyalty among consumers leads to greater sales of the brand (p. 232). Aaker (1991) discussed the role of brand loyalty in the brand equity process and he specifically noted that brand loyalty leads t certain marketing advantages such as reduced marketing costs, more new customers and greater trade leverage. Additionally, Dick and Basu (1994) suggest other marketing advantages as a result of brand loyalty such as favorable word of mouth and greater resistance among loyal consumers to competitive strategies. Thus, brand loyalty is obviously an important element in the brand equity process. Yet, our present conceptualizations of brand loyalty mainly emphasize only the behavioral dimension of the concept and there is generally a need to understand in more detail its relationship with other variables at both the consumer and market levels. To cite Dick and Basu (1994):

Even though many marketers have emphasized the need to define brand loyalty beyond operational measures (mostly sequence of purchases), the nomology of brand loyalty in behavioral theory (i.e., its relationships with other concepts in the expanding vocabulary of marketing research) requires stronger integration. (p. 99)

Thus, it is the goal of the present study to explore the relationship between consumer level variables (specifically, brand attitudes) and firm level brand performance measures (shelf facings and price), and to also understand the role of brand loyalty in this regard. More specifically, the objectives of this study are first, to determine the direct effects (if any) of brand attitudes on both shelf facings and price; and second, to determine the indirect effects (if any) of brand attitudes on shelf facings and price with the indirect path occurring through the concept of brand loyalty. If these relationships exist, then consumer level measures can be included in the assortment of current brand valuation techniques. Also, marketing managers can justify expenditures on promotions, which create long term attitudinal effects, such as brand loyalty, on consumers. Moreover, our overall understanding of brand equity is enhanced if we are able to better relate the consumer and market based aspects of the construct.

This paper uses a causal modeling approach to analyze the direct and indirect influences of brand attitudes and brand loyalty on brand performance measures such as shelf facings and price. A model concerning these relationships is developed, tested and replicated in two separate studies. Results indicate that brand attitudes are directly and indirectly related to shelf facings and price, with the indirect path occurring through brand loyalty. The results are shown to replicate adequately when using different samples of shoppers and products. The implications of the study are discussed in terms of their significance for managers.

For more details on this paper please contact:

Arjun Chaudhuri

School of Business

Fairfield University

Fairfield, CT 06430 U.S.A.

ACHAUDHURI@FAIR1.FAIRFIELD.EDU

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