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This study explores the relationships between selected marketing mix elements and the creation of brand equity. The authors propose a conceptual framework in which marketing elements are related to the dimensions of brand equity, that is, perceived quality, brand loyalty, and brand associations combined with brand awareness. These dimensions are then related to brand equity. The empirical tests using a structural equation model support the research hypotheses. The results show that frequent price promotions, such as price deals, are related to low brand equity whereas high advertising spending, high price, good store image, and high distribution intensity are related to high brand equity.
Brand equity is the incremental utility ar value added to a product by its brand name, such as Coke, Kodak, Levi's, and Nike (Farquhar, Han, and Ijiri 1991; Kamakura and Russell 1993; Park and Srinivasan 1994; Rangaswamy, Burke, and Oliva 1993). Accordingly, research has suggested that brand equity can be estimated by subtracting the utility of physical attributes of the product from the total utility of a brand. As a substantial asset to the company, brand equity increases cash flow to the business (Simon and Sullivan 1993). From a behavioral viewpoint, brand equity is critically important to make points of dif ferentiation that lead to competitive advantages based on nonprice competition (Aaker 1991).
Despite tremendous interest in brand equity, little conceptual development or empirical research has addressed which marketing activities build brand equity (Barwise 1993). The focus has been on the exploration of brand equity, not its sources and development. Shocker, Srivastava, and Ruekert (1994) indicated that they
believe more attention is needed in the development of more of a "systems view" of brands and products to include how intangibles created by the pricing, promotional, service, and distribution decisions of the brand manager combine with the product itself to create brand equity and affect buyer decision making. (P. 157)
In response to such a call, this study investigates the relationships between selected marketing mix elements and the creation of brand equity. We explore how these marketing actions increase or decrease brand equity. The findings provide insights into how marketing activities may be controlled to generate and manage brand equity. As the first study of this kind, this article provides a good...