Determination of Brand-Equity From a Consumer-Oriented Perspective

Citation:

Sigrid Bekmeier (1995) ,"Determination of Brand-Equity From a Consumer-Oriented Perspective", in E - European Advances in Consumer Research Volume 2, eds. Flemming Hansen, Provo, UT : Association for Consumer Research, Pages: 224-236.

European Advances in Consumer Research Volume 2, 1995      Pages 224-236

DETERMINATION OF BRAND-EQUITY FROM A CONSUMER-ORIENTED PERSPECTIVE

Sigrid Bekmeier, University of Paderborn

DISCUSSION OF ALTERNATIVE BRAND-EQUITY CONCEPTS

There can be no doubt - the evaluation of brands is one of the most interesting topics in both recent and current marketing. In times characterized by the growing saturation of world-wide markets, the branding of goods and services conics to the fore as a strategic key factor to success. Although we urgently need an answer to the question of how to assess the value and potential of brands, a commonly used and standardized technique of analysing brand-equity still does not exist. A profound uncertainty concerning the determinants of brand-equity is created by the multitude of fields [Central fields in which the assessment of brand-equity is important arc mergers and acquisitions, licensing of rights to use brands determination of claims for compensation in case of trademark abuse, balancing brand-equity from the point of view of commercial and tax law as well as brand management (brand-equity as means of management control).] in which the value of brands is important as well as by tile numerous research efforts to characterize brands. Depending on the perspective a differentiation can be made between finance-, cost-, price-, market- and consumer-orientation.

FINANCE-ORIENTED BRAND-EQUITY CONCEPTS

With regard to contemporary German studies, the first insights into the nature of brand-equity were gained on the basis of investment theories. Already in 1962, Kern (1962.-p , 26) interpreted "...the value of trademarks as additional profits, discounted to present time." This point of view focuses on the 'flow of payments' and is still represented in the actual theory of business administration or business management, respectively, as with regard to Herp (1982), Kaas (1990) or Sander (1994)[Examples of contemporary American studies are presented by Ourosoff et al. (1992), Farquhar, Han, lrjiri (1992) and Farquhar, Irjiri (1993).]. Herp (1982, p.14) assumes that part of a company's success in selling certain products can be awarded to branding, and that this success wouldn't have been realized without the use of the brand. Kaas' perspective is similar in that he describes brand equity as the cash-value of all surpluses the owner can make in the future due to use of the brand. In comparison with Herp's definition, Kaas is not only interested in present returns, but also underscores the future-oriented potential of realizing returns. The starting point of Sander's brand-equity concept is the consumer: "If the consumer buys a product, Certain proceeds arise front the purchase for tile owner of a brand. These proceeds exceed the (market) value of the physical product characteristics and therefore must tic assigned to the brand as a trademark." For a closer determination of this value, however, Sander's perspective is return-oriented: "The profit which accrues from (brand-) proceeds after the deduction of costs, arising front the branding of products instead of offering anonymous products, represents the brand-equity."

Although all these definitions set up different priorities, what they all have in common is that they start front expected returns or profits. This finance-oriented perspective leads to the assumption that brand-equity is equivalent to future returns. Hence, the problem of how to determine brand-equity corresponds to the question of how to discount expected profits in financial management theory, where adequate methods are available, such as the Rentenbarwertformel (annuity cash value formula) or the rate of capitalization (Kapitalisierungssatz), based on the supposition of an infinite life span. However, the direct coupling of brand-equity with finance-figures is not unproblematic.

Returns, and especially profits are not axiomatic figures, but result from avast array of influencing factors. In the first place, they depend on quantities, prices and costs. At the same time, quantities and prices are influenced by the behaviour of consumers and competitors. Additional influences result from sale-expenditure, the efficiency of the distribution system, and personnel- resources (Steif, 1994, p. 388 f.). The consideration and elimination, of all influences to determine the effect of brand-equity is very difficult and hardly practicable. The takeover of Rowntree is a classical example underscoring the complexity of the determinants of brand equity. For the acquisition of Rowntree, Nestle paid a price which was three times higher than the value of Rowntree's shares at the stock exchange and 26 times higher than Rowntree's returns. The price level can not be explained exclusively by financial management methods. Instead, it reflects considerably the important influence of other factors, such as Nestle's massive strategic interest.

Likewise, direct finance orientation implies the difficulty of a differentiation between brand-equity and the product-equity. Product-equity represents the value which would result for an article when it is not positioned asa brand. For example, if a product which is absolutely comparable from the technical point of view with competitive brands, has the same brand-induced costs, but is sold at a higher price, achieves the same or even higher quantities of sales, it clearly indicates an existing and - in comparison with the competitive products - a higher brand-equity (Sander, 1994, p. 46 f.)[An empirical example underlines this fact (see Barry, 1986, p. 16): Hitachi and General Electric sold TV-sets which were produced in the same plant in England and which were absolutely identical despite the different brand labels. Hitachi sales were twice as high, although its price was $75 higher.] In this context, Kaas (1990, p. 48) refers to "brand -specific profits." However, due to the current market situation, the determination of a brand-specific profit is hardly realizable, because it requires a no-name but otherwise identical product for comparison. Barwise (1993, p. 100) formulates a clear example to explain the problem of isolating the brand-oriented return: "in most significant cases we do not know al what price the firm could or would sell the product without the brand (e.g. Heineken?, Nike?, Mercedes Benz?) and even when we do know (as, arguably, with many grocery items) we have little idea of the market share the product would achieve without the brand: what would be the sales of Coke, Tide, Snickers or Green Giant if sold as generics?"

An additional problem corresponds with the strategy of brand transfer, in which the evaluation or consideration of brand potential is particularly relevant. Even against this background, stringent turnover orientation is problematic. This can be demonstrated by the case of Swatch. The published entrepreneurial idea to transfer the brand potential of Swatch onto other products, such as automobiles, lead to the fact that in 1992 more than 30.000 reservations for the Swatch-car were a I ready made, long before the realization of the product (Brabeck, 1992, p. 48). [Within the framework of return-oriented determination of brand equity, the consideration of the costs of brand-equity formation is often demanded. But the determination of this figure is not unproblematic. Likewise, it is difficult to quantify the comparability of expenditures for the positioning of a product as a brand. The success of a branded product does not depend only on the size of the budget, qualitative aspects are also rather important. This can be confirmed by Reemtsma with their brand West, which imitated the "adventure freedom concept" of the market leader (Marlboro) in a battle for market share. Despite the expenditure of more than 50 mio. DM the strategy failed. Later, the "Test the West -campaign" was more spectacular and successful and even less expensive. (Groppel, 1991, p. 39).] This demand can certainly be attributed to the brand effect, but it cannot be registered by return oriented indicators, which are usually based on expost-considerations.

Generally speaking, a determination of the value of brands on the basis of finance-oriented concepts so far only offers rough and partial information about brand-equity. The vast array of existing attempts focuses on final results (return, profit, etc.), which can only be partially added to the calculation of brand equity and which is connected with subjective estimations.

MARKET ORIENTED BRAND-EQUITY CONCEPTS

A more comprehensive reflection of brand-equity has been developed in practice-oriented marketing. Especially in America since the late 1980s, high research activity is evident in the field of brand-equity [Since 1988, the Marketing-Science-Institute (Cambridge) organizes an annual conference concerning brand-equity. The relevance of this topic is underscored by the fact that with regard to research priorities representatives of science and practice ranked repeatedly brand-equity research in the years 1990-1992, 19921994 and 1994-1996 in the first three places (w.r., 1990, 1992, 1994a). Chay (1991, p. 30) emphasizes that "over the past 20 years, few areas of marketing have captured the interest of the business community as has the subject of brand equity."]. An essential result of these brand-equity discussions could be the observation that the actual value of a brand and its future potential is not characterized so Much by assets such as the production facility or process, and that economic indicators give an insufficient, one-sided description. Consequently, the Conceptual idea of brand-equity was expanded and the predominately company-oriented analysis was replaced by an market-oriented approach.

The market-oriented perspective primarily considers judgements of the consumer and it defines brand-equity as "the set of associations and the behaviour oil the part of a brand's customer, channel numbers, and parent corporation that permits the brands to earn greater volume or greater margins than it could without the brand name and that gives the brand a strong, sustainable, and differentiated competitive advantage." (Srivasta and Shocker, 1991, p. 5)

Aaker (1992, p. 31) presents a similar argument, but he primarily underlines the brand as a formal sign and he can also imagine a negative brand-equity: "Brand-equity comprises a collection of advantages and disadvantages which are connected with a brand, the brand's name or symbol and which increases or decreases the value of a product or service from a company's or customer's perspective. If these characteristics should be the basis of brand-equity, they must be linked with the name and/or symbol of the brand."

This definition seems to describe the complex "brand equity" phenomenon comprehensively, but even in this case problems of operationalization and measurement remain. Not only do the answers to the question of how to register brand-equity prove unsatisfactory so far, but additional problems are caused by the connection of the different levels of brand-equity.

CONSUMER ORIENTED BRAND-EQUITY CONCEPTS

These problems lead to the fact that the analysis of brand equity was frequently incomplete. Today, the behaviourist science oriented marketing research especially focuses on investigations of brand-equity from the consumers' perspective. The reason for this is that brands receive their value primarily by the evaluation of the consumer. Kapferer (1992, p. 9) simplifies this by talking about "brand-equity in the minds of the prospective consumer." The crucial point is that consumers are regarded as the source or origin of brand-equity evolution, whereas in a second step the returns achieved by the brand are capitalized.

Concerning the term brand-equity, [The monetary (capital -oriented) character of the brand-equity discussion is emphasized by Kaas (1990, p. 48), who translates brand-equity as "brand-capital." Even the customary term "brand-value" in Germany has a capital-theoretic aspect in business administration. In this sense, Wohe (1993, p.1097) talks about "values... as rationally explainable realizations according to the practical value, the exchange value or the "Ertragswert" of goods. Usually, these realizations lead to an estimation of the discussed object in monetary units."] one could think about a monetary quantitative figure. Instead, the consumer-oriented perspective can be regarded as being qualitative. Therefore, terms like "Markenstarke" (Bekmeier, 1994), "Markenkraft" (Maretzki and Wildner, 1994), " Markenvitalitat" (Rosenkaimer, Stark et al., 1992) or "brand-strength" (Srivastava and Shocker, 1991) and "brand-power" (Aaker and Biel, 1993, p. 3) can be found in contemporary German as well as Anglo-Saxon studies to characterize the qualitative components of brand-equity. Although these terms focus on di fferent aspects, they can be defined in a wider sense as"the totality of consumers' associations, imaginations, ideas and reflections with regard to a brand, which are initiated or evoked by branding a product and which are expressed in a certain esteem for a brand." In this context, brand-strength (Bekmeier, 1994) should by no means be understood in the sense of the activities of processing information, which are frequently defined as an attitude towards a product or image. Instead, the concept of brand-strength focuscson the incremental assessment and memorization of a product

- which is specifically connected with the brand,

- which refers to elements in the human memory beyond general classification,

- which can be enriched by the consumers' subjective experiences,

- which has a strategic orientation, and

- which represents the potential for strategies of expansion, currently and in the future.

In addition, the images should differ from competitive brands. The unique and independent brand-associations which are not the assessment of brands can be proved by the following concrete shared with other brands arc specially interesting.

Within the scope of the consumer-oriented perspective there is common agreement about the aspect, that "brand-strength" is caused by hypothetical and not directly observable constructs. But this still does not answer tile question to which extent certain psychic processes are responsible in tile formation of "brand strength" and of how to validly measure these factors. This is demonstrated by the vast array of differing constructs and indicators. For example: [For further examples, see Rangaswamy, Burk and Oliva (1993), Kamakura and Russel (1991), Srivastava and Shocker (1991), Keifer (1993), Barwise (1993)and Rossiter and Lawrence (1993).]

"...a utility not explained by measured attributes and a differentiated, clear image that goes beyond simple product preference" (Shocker and Weitz, 1988);

"...the added value that a brand endows a product, the brand being a name, symbol, design or mark that enhances the value of a product beyond its functional purpose" (Farquhar, 1989);

"...the differential effect, that brand knowledge has on consumer response to the marketing of that brand." (Keller, 1993)

Even though no agreement about the constituent variables of brand-equity formation has been reached, there is no doubt that the successful formation of brand-equity on the level of the consumer is an absolutely necessary condition for monetary brand success. The following reasons account for the consumer-oriented perspective of brand-equity determination:

The brand-equity concept belongs to the strategic, future oriented indicators for success. On the basis of the scientific theory, an explanation of tile phenomenon is a cogent condition for a profound prognosis. Whereas finance-oriented concepts of brand equity determination arc guided by residual figures of human behaviour, consumer-oriented concepts try to explain brand-equity development and to depict the causes and effects. Only if tile factors causing brand-equity and their general conditions are known, conclusions concerning the development of values in the future call be drawn.

Furthermore, scientific research supplies evidence for the influence of consumer behaviour on economic figures, such as the return. One of the best known examples is the PIMS-study (Profit Impact of Marketing Strategy) [The PIMS-database contains information about numerous variables, such as return oil capital, assessed quality, market share and relative price level of over 3000 companies. Some of the firms have been submitting data since 1970 (Buzzel, 1987, p. 81).] which proves that the consumers' perceived quality of products basically influences the profit. (Buzzel, 1987, p. 81)

Moreover, Aaker and Jacobsen (1994) were able to prove a positive correlation between the consumers' evaluations of quality and the development of quotations at tile stock exchange. Long term empirical studies verify that changes in the quality of products perceived by the consumer (100 brands of different product categories were analysed) reliably indicate the long-term development of the quotations. From the perspective of financial management, quotations are frequently mentioned as a direct indicator for brand equity.

In addition, the primary influence of consumer behaviour on the assessment of brands can be proved by the following concrete examples:

- The production of the brand "Persil" was stopped during World War Il because of technical problems. It is only due to the sustained consumers' esteem that the brand could be re-introduced successfully after the war and that it could resume its former brand-status in the market without any delay (Schone, 1988, p. 229).

- The soft drink"Bluna" exists since 1939 as a trademark, but it can not be found in the stores since the end of the 1970's. Nevertheless, at the end of 1994 the Mineralbrunnen AG (Dortmund, Germany) has spared no expenses or efforts to acquire this brand, although no actual return from the brand was realized. (Erst-Motz, 1994, p. 63 f.)

Finally, the consumer-oriented perspective on brand-equity is multidimensional. It encompasses market-potentials such as possibilities to grow (e.g. brand expansion), cost-structures (e.g. efficiency of marketing) or even retail-related aspects of brand-equity, whereas finance-oriented concepts often only target return-related Figures.

In summary one can say that an effective formation of brand equity on the consumers' level can be regarded as an absolutely necessary condition for monetary brand success. Only in the second step does the owner of the brand have the possibility to exploit this incremental value-component monetarily.

METHODS OF BRAND-EQUITY MEASUREMENT

In theory and practice, numerous attempts to evaluate brands can be found. Sattler (1994, p.7) presents a comprehensive classification, differentiating between 512 measurement variations. The following figure (Figure 1) shows a collection of selected measurement concepts discussed in the studies. The horizontal axis displays the temporary development, whereas the vertical axis distinguishes between consumer-oriented and quantitative finance-oriented approaches.

The figure not only demonstrates the rising number of concepts to measure brand-equity, but also illustrates the increasing consumer-orientation. However, no dominant measurement concept is established, measuring brand-equity is still afflicted with a vast array of problems:

One of the elementary problems is that the different measurement concepts lack of a theoretical basis. Only a few studies ask how to explain brand-equity evolution or how brand-equity is developed. As one of the rare exceptions, Rossiter and Lawrence (1993) must be mentioned, as they attempt to illustrate the formation of brand-equity on the consumers' level in a retrograde analysis. For this purpose, they compare the psychic processes, which can be registered with regard to products of high brand-equity, with products that have a low brand-equity.

An additional difficulty for the development of a standardized measurement concept arises from the different objectives and perspectives of brand-equity measurement. This is certainly the reason for the increasing number of extremely heterogeneous measurement concepts, which differ not only concerning their basic ideas and methods, but also their numerous results. A classical example for this is the assessment of "Coca Cola's" brand-equity. (Figure 2).

The unsatisfactory quality assessment of the different measurement-concepts represents an additional problem. In almost all concepts, criteria such as validity, reliability, practicability and universality of the method arc missing. Even if this lack of information can be understood from the commercial point of view, the concepts can not be assessed without the criteria of quality or fit.

FIGURE 1

SELECTED CONCEPTS OF BRAND-EQUITY MEASUREMENT

Recently, there is an increasing trend towards a two-step measurement of brand-equity, which is increasingly employed in practice. In the first step, a brand-strength indicator is determined on the basis of point-allocation methods.

In the second step, this indicator is connected with internal data of the brand producers. The easy handling of the models and their diagnostic possibilities can be emphasized. Hence, it is possible to use these models for brand-controlling and -management purposes in marketing. Even if these methods are already employed in practice, Hamman (1992, p. 225) is correct to point out the lack of empirical quality-indicators and occurrence of measurement problems: for example, the determination and assessment of the different criteria, the interdependencies between the criteria, etc. The relevance of these problems is also mirrored in the following study which investigates the formation of brand-strength on the level of the consumer.

FORMATION OF BRAND-STRENGTH

Behaviourist science concepts examine psychic processes to analyse the brand-strength. Within the scope of the neobehaviourist research paradigm the formation of b rand- strength can be portrayed as a stimulus-organism-response-scheme: The stimulus-variable is the brand which is perceived and this initiates psychic processes in the individual which, evoke the formation of brand-strength. In this context, central influences can come from three directions: the personal-, the product- and the social level. Figure 3 indicates the causes and effects.

Level of personality:

On the level of personality people are distinguished by their basic preferences for the consumption of brands. Kapferer and Laurent (1992, p. 43) consider a person sensitive for brands, if he or she tends to prefer a branded product. Schottmar (1982, p.112) distinguishes between different types of brand-mentality. This brand-mentality ranges from non-reflected belief in brands [The consumer believes in the principle, qualitative superiority of the brand-product.] (with an influence on the behaviour) to a mentality which leads to a systematic search for the cheaper item, and finally to principle, critical weighing of the branded product with regard to the respective aim of' the purchase.

FIGURE 2

COLLECTION OF COCA COLA BRAND-EQUITY STATEMENTS

FIGURE 3

FORMATION AND PROCESSING OF BRAND-STRENGTH

FIGURE 4

OPERATIONALIZATION OF THE EXOGENOUS VARIABLES

Product level:

Aaker (1992) deals with the product-specific versions of brand-formation and shows that the evaluation of a product influences the formation of brands in a cognitive as well as in an emotional respect. Simultaneously, he resumes numerous examples taken from practice, examining old and successful brands, such as Kellogg's (Cornflakes), Gilette (shaver), Colgate (toothpaste) or Kodak, and rating this as a proof for the importance of age concerning the formation of brands. In 1933, Kodak already possessed the largest market share in England and kept this position over 50 years.

Social level:

Thorstein Veblen (1899/1986) is regarded as one of the early experts in this field for he analysed the connection between social oriented motives of individuals (social appreciation) and the products' social performances. Based on his publications, many studies verify that branded products especially address the incremental value components.

The presented studies are characterized by their monocausal perspective. The simultaneous analysis of all mentioned description-variables was carried out in an empirical study at the University of Paderborn. [By means of written interview from 6.7. to 9.7.1992, 418 people were asked about the formation of brand-strength. The following product-categories and brands were examined: Convenience Goods - the sparkling water brands "Mumm" (n=55) and "Sohnlein" (n=56); Shopping Goods - the watch brands "Swatch" (n=51) and "Citizen" (n=48); Specialty-Goods - the hifi brands"Sony" (n=58) and "Schneider" (n=51).] The influence of personality-, product- and social factors oil the formation of brand-strength was analysed in different categories of products.

By means of causal-analysis the researchers discussed how personality and product variables and social determinants contribute to explaining the formation of brand-strength. Within the scope of the analysis, all three factors are defined as latent exogenous variables of the causal structure-model. Because they are not directly observable, they must be measured by means of indicators. Different item batteries served for measurement purposes which were condensed by means of factor analysis. [With regard to the condensation of the factors, the Kaiser-criteria and the Varimax-rotation were employed. Only factor loads of more than 0,5 are interpreted.] Concerning the personal influences, two factors were extracted. With regard to the product-related influences three factors can be found, and the social influences are mirrored by two factors. The items with the highest factor-load in each factor-dimension form the indicating variables of the latent exogenous variables. (Figure 4).

In addition, brand-equity needs to be operationalized as an endogenous variable of the structure-model. Consumer-oriented factors serve as indicators which are frequently quoted in marketing literature. In this context, Aaker (1992) highly emphasizes the price-bonus for branding and Kroeber-Riel (1992) underlines the intensive perception-sensitiveness of strong brands. Tauber(1988) mainly underscores the transfer potential of strong brands, whereas Kapferer (1992) recognizes a better bargain-position for the producer of brands with high equity in vertical marketing. (Figure 5).

In order to make the procedure clear, Figure 6 depicts the relationship between the latent variables and the observed indicators. The direction of effects between the variables corresponding to the discussed hypotheses (marked by + or-) is included within the path-diagram.

The path-diagram displays the assumed relations of brand strength formation. In analysing the model, product-categories and brands are regarded separately. Hence, six causal-analyses were necessary. Because the indicator "acceptance of a raised price" as an endogenous variable only represents the brand-strength, this Lambda is fixed at 1. All other relationships in the model are estimated. Table I presents the parameter-figures divided by product-categories and brands.

The observed parameters of the model (g,l) confirm the assumed direction of the influence of the variables. Moreover, the explained variances of the endogenous variable brand-strength are generally acceptable. However, a comparison of the influences of the exogenous constructs between the different product-categories proves a different importance of personality, product-assessment and social effects for the formation of brand-strength. Whereas social effects dominate with regard to Mumm (y=0,57), product-assessment is most important concerning Swatch (y=0.53) and for Hifi-equipment of the brand Sony social effects are of special relevance. At first, the results suggest the assumption of a product specific formation of brand-equity. However, a comparison between the formation-factors within a single product-category of two brands reveals that this assumption must be rejected. Hence, the findings demonstrate that for the brand-strength formation of Sohnlein social effects are not dominating (y=0,17) in contrast to Mumm, but the product-assessment has a stronger influence (y=0,58). One can paint a similar heterogeneous picture concerning the factors of the brand-strength formation of watches and hifi-equipment.

FIGURE 5

OPERATIONALIZATION OF BRAND-STRENGTH

FIGURE 6

PATH-DIAGRAM OF BRAND-STRENGTH FORMATION

Looking at the measurement of brand-equity, the findings underpin the already mentioned problem of selecting and assessing the relevant criteria of brand-formation. It shows that it is not possible to make a general measurement of brand-strength by analysing the factors of brand-formation. Even a focus on a sector specific investigation is not helpful with regard to the different, brand-specific importance of the influences. It must rather be assumed that the factors of brand-strength formation are different due to the consumers' subjective perception and individual filters of processing. In extreme cases, even brand-specific formation factors exist. Therefore, a categorized attempt to measure brand equity, which tries to take the different description-variables and their corresponding importance into account, will hardly allow a valid measurement of brand-equity. Neither is a universal selection of formation-factors be possible, nor can the weight of each single formation-factor be standardized.

TABLE 1

RESULTS OF THE CAUSAL ANALYSIS OF BRAND-STRENGTH-FORMATION

PROCESSING AND MEMORIZING OF BRAND STRENGTH

The process of brand-strength-formation follows the processing and memorizing of brand-strength (compare figure 3). [In this context, Esch (1994, p. 220) discusses the learning-concept of the brand-equity.] In this context, the level of memorizing can be interpreted as the result of perceiving and assessing the brand from the consumers' perspective: i.e., it represents the subjective interpreted information of brand- know I edge. The individual can be more or less aware of this information, they can be more or less cognitive or emotional and rather objective or subjective in nature. Following Keller's example (1993), Esch (1994) also starts out from a representation of this brand-knowledge in the form of semantic networks. Semantic networks are based on the notion, that the human long-term memory consists of a network or mesh of knots and links. The knots represent terms, situations and events. The links, which can be distinguished by nature, direction, and intensity, depict the relationship between the knots, for example, the relationship between objects and their characteristics or between events and their causes. (Behrens, 1988, p. 143) Figure 7 illustrates an exemplary network of the brand Mumm.

The figure shows special and rather subjective experiences with the product, such as if it is easy to obtain, the different sizes of the package, the variety of the product, etc., as well as own experiences, such as in purchasing, using or giving the product as a present, in addition to product associations' [Standardized images of a product which are present in the memory by word or picture are called "schemes/Schemata" (Kroeber-Riel, 1993, p. 146). Numerous consumers, for example, associate contents of the well-known television advertisement with the brand "Milka", such as the "purple cow", the lyrics, the melody of the jingle, etc.] frequently induced by the marketing-mix, such as the exclusiveness, the black and white label, etc.

FIGURE 7

SEMANTIC NETWORK OF THE BRAND MUMM (SPARKLING WINE)

FIGURE 8

DIMENSIONS OF THE BRAND-KNOWLEDGE

Following the dual-coding theory of Paivio (1971, 1975, 1977), subjective brand-worlds, which develop considering this amount of information, can be memorized in a rather verbal oriented and/or image- (or graphic-) oriented processing-system. While the verbal system contains linguistic representations, the visual system is, above all, responsible for developing and memorizing pictures, the so-called imageries, in the memory. Although both processing-systems are connected with each other, they can carry put independent memory-procedures. Regarding the previous example of the brand Mumm (compare network-figure 7), one could imagine that associations like weddings, image of a girlfriend, the white Mumm-label, etc. are memorized as pictures and descend from the imagery-system, whereas associations like the price or alcoholic content originate from the verbal memory. In both systems the structures of the memory can either be primary emotional or cognitive in nature and the individual can be more or less aware of them.

Here, considering Keller's studies (1992), a knowledge-oriented model to measure brand-strength will be presented. In this instance the focus, in contrast to Keller, is not on the associations but on the dimensional orientation of the memory-contents. The dimensional orientation considers the power or strength of an association. The different types of associations itself, for example product-related attributes or experience-related contents are not of interest but rather the mental power of these different images.

The model proceeds on the assumption that the information of the brand-strength are memorized in the image- and/or verbal memory. Starting out from this structure, brand-knowledge can be viewed front the dimensional perspectives shown in Figure 8.

Regardless of' whether pictoral or verbal brand-memorizing occurs, the following dimensions are important to characterize brand-strength:

Access-capability on associations: In his studies, Paivio (1968) already emphasized the importance of the availability of learned memory-contents for the behaviour. To determine brand strength it can be assumed that the faster a brand association is activated and the faster the individual can have access to them, the stronger the brand-strength.

Moreover, the quality and intensity of an association are important. Thus, a brand can evoke a number of associations with different strengths and qualitative directions. For example, associations concerning the sparkling wine Mumm, like "sparkling refreshment drink", "own wedding ceremony" or "expensive sparkling-wine brand", can not only be felt with unequal intensity, but can also be assessed in a completely different positive or negative way. A no less important dimension is the uniqueness of the associations. This dimension refers to what extent an association is especially evoked by the considered brand, or if it can also be caused by a competitive brand. Particularly in times characterized by increasing market saturation and interchangeable product-quality, this dimension of brand-memorizing is of crucial importance. Thus, in the prior example the specific association "own wedding ceremony" can be exclusively evoked by the brand "Mumm", whereas the association "sparkling refreshment drink" also arises with regard to other sparkling-wine brands. Only if an association is analysed in relation to these dimensions of assessment, can statements be made to assess the importance of the association for the brand-strength. Effects on the behaviour can hardly be expected from associations with low intensity, a neutral nature and low specific content (Kroeber-Rid, 1992, p. 353 f.). Again, one proceeds from the assumption that brand-strength increases by a positive quality, rising intensity and increasing uniqueness of associations.

An empirical study carried out in Paderborn (Germany), scrutinized the relevance of the depicted dimensions of associations for brand-strength-measurement. For this purpose, consumers were asked about their associations with the brands Mumm, Sohnlein, Swatch, Citizen, Sony and Schneider (compare chapter 4 for the design of the Study). In each case, both verbal and visual brand associations were examined.

Open questions were used for the verbal measurement of associations. The interviewees were invited to give information about their different brand associations. By means of linguistic deduction-analysis, the open associations were subsequently assigned to the association-dimensions "intensity" (from I=very weak to 5=very strong association) and "direction" (from ]=less positive to 5=very positive association). [Unfortunately, due to data-technical reasons the dimension "access-capability" was not considered.]

Following Ruge (1989), the pictoral imagination of a brand was registered by an item-battery of the dimensions clarity, quality and intensity. [In the context of the image measurement, no data was available concerning the dimension "uniqueness." Instead, the dimension "clarity" is considered in addition.] By means of rating-scales, the interviewees were asked to depict their internal picture of the brand in their memory with regard to the dimensions. For the purpose of causal-analysis, the item-battery was condensed by means of a factor analysis. The item with highest factor-load was selected for each dimension. The access-capability on the internal pictures was directly measured by asking the interviewees how easy it was to generate the internal brand-picture (five-level rating scale).

Again, selected value-indicators, such as the acceptance of extra charges, the brand-transfer potential or future expectations of the brand, served to operationalize brand-strength (compare chapter 3, figure 5). The following structure-model (Figure 9) shows the investigated relationship between processes in the memory and brand-strength and presents an overview concerning the employed measurement-variables and latent model -variables.

The analysis of the model was conducted separately for product-categories and brands. Corresponding to the foregoing procedure, six causal-analyses are necessary again. Analogous to the brand-equity formation, the indicator "acceptance of a raised price" as an endogenous variable is fixed at 1. All other relations are estimated in the model also. Table 2 presents the parameter figures of the path-diagram for each product-type and brand.

The findings confirm the assumed effects with regard to all latent variables. Moreover, the path-coefficients (0,26: < y < 0,63) prove that brand-strength depends heavily on the visual and verbal dimensions of brand-associations. The explained variance is acceptable; Special product- or brand-influences are not recognizable. The findings rather demonstrate that for all the analysed products and brands the dimensional measurement-concept of processed brand-knowledge shows a close relationship to brand strength. This offers the possibility of a universal measurement of brand-strength.

Moreover it is advantageous that the dimensional measurement-approach comprehends a vast array of influencing factors of brand-strength formation, which can be different in origin or nature, for example social motives, personality factors, etc. The diverse facets of these formation -factors are taken into consideration, as well as their subjective significance for the consumer. Measurement of processed and memorized associations includes an assessed treatment of information, whereby the classical problem of weighing is no longer of importance.

Within the scope of the user-oriented brand-equity discussion, which tends to be divided in a diagnostic (Esch, 1994) and a monetary (Sander, 1994), this block concept of dimensional measurement of associations can be helpful for both sides. Information concerning the memorized images or associations of a brand may serve a signals for the marketing-manager with regard to communication- or product-policy. For example, weak or negative association measures indicate that it is necessary to check the communication strategy.

In contrast, the quantitative dimensional consideration of associations allows a transformation of qualitative into quantitative figures. The metric scale-level of the measurement concept permits numerous proceeding calculations which allow considerable condensation of data and facilitate the transfer of consumer-oriented brand assessment into economic figures.

SUMMARY AND OUTLOOK

It is necessary to include both the consumer's and the company's point of view to built a comprehensive concept of brand-equity. In fact, the central source of an equity-evolution is the consumer's mind and, consequently, an analysis should start out from what can be called the consumer-oriented strength of brands ("Markenstarke"). After this step it is the task of the management realize the return emerging from the strength of brands on the market.

Empirical studies generally show that the formation of brand strength is influenced by a vast array of factors differing from product to product. The analysis of brand-strength processing and memorizing reveals, however, that brand-strength is expressed to a very high degree by brand associations which exist in the verbal and image memory of the human mind. Moreover, the explained method can be regarded as an universal measurement approach for the determination of brand-strength. Findings of this method are easy to interpret and are relevant for diagnostic purposes of brand control. Hence, they offer a starting-point for the determination of the monetary value of brands.

FIGURE 9

STRUCTURAL MODEL OF MEMORIZING BRANDS

TABLE 2

CAUSAL-ANALYTICAL RESULTS OF BRAND-MEMORIZING

Against this background, an additional topic which further research might address profitably is to what extent it is possible to connect measures of brand-strength with economic indicators. For example, one can consider the development of a sector-oriented catalogue of brand-equity measurement which would not only include the relevant consumer- and company-oriented measurement-criteria, but also document the monetary value of these criteria.

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