hoeffler & keller (2003) the marketing advantages of strong brands

minds of consumers — individuals ororganisations — as the source orfoundation of brand equity. For ex-ample, one view of brand equity is ‘thedifferential effect that brand knowledgehas on consumer response to marketingactivity’.4,5 According to this view, abrand is thought to have positiveequity to the extent that consumersrespond more favourably to marketingactivities when the brand is identified,compared to when it is not. Differen-tial response may be reflected indifferences in consumer perceptions,preferences or behaviour, and may bemanifested in response to any type ofmarketing activity for the brand.

Understanding how brand

INTRODUCTIONBrand equity has been defined in anumber of different ways for manydifferent purposes.1–3 No matter how itis used or measured, however, thevalue of a brand — and thus its equity— must ultimately be derived in themarketplace from the words and ac-tions of consumers. That is, consumersdecide with their purchases, based onwhatever factors they deem important,which brands have more equity thanother brands. Thus, although thedetails of the approaches to brandequity may sometimes differ, they tendto share a common core: all definitionseither implicitly or explicitly rely onbrand knowledge structures in the

! HENRY STEWART PUBLICATIONS 1350-231X BRAND MANAGEMENT VOL. 10, NO. 6, 421–445 AUGUST 2003 421

Steve HoefflerKenan-Flagler School of Business,University of North Carolina,Campus Box 3490, McCollBuilding, Chapel Hill, NC 275993490, USA

Tel: !1 919 962 4926Fax: !1 919 962 7186E-mail: [email protected]

The marketing advantages ofstrong brandsReceived (in revised form): 20th January, 2003

STEVE HOEFFLERis an assistant professor at the Kenan-Flagler School of Business, University of North Carolina. His areas ofexpertise include: branding, consumer behaviour, decision making, and preference development. He was formerlythe marketing representative for NCR/AT&T and consultant to Procter & Gamble, IBM, and Fujitsu. ProfessorHoeffler received his PhD from Duke University (2000), his MBA from the University of California Davis (1994)and his BSc from San Diego State University (1985).

KEVIN LANE KELLERis the E.B. Osborn Professor of Marketing at the Amos Tuck School of Business at Dartmouth College, Hanover,USA. His academic resume includes degrees from Cornell, Duke, and Carnegie-Mellon universities withaward-winning research and prior faculty positions at Berkeley, Stanford, and UNC. His textbook, Strategic BrandManagement, has been adopted at top business schools and leading firms around the world and has beenheralded as the ‘bible of branding’.

AbstractBuilding strong brands has become a marketing priority for many organisations. The presumption isthat building a strong brand yields a number of marketing advantages. In this paper, acomprehensive summary of empirical findings is provided from some of the major marketingjournals that reveal how brand strength, operationalised in various ways, can create differentialresponses by consumers to various marketing activities — a well-accepted view of brand equity.Additionally, some underlying theoretical mechanisms on which these findings are based areidentified and organised. Lastly, some current gaps in the literature are identified, and an agendaput forth for future research on the marketing advantages of strong brands.

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and observations made about theprevalence of the marketing advantagesof strong brands, current gaps in themarketing literature concerning theformation and use of brand knowledgeare identified, and an agenda put forthfor future research.

CONSUMER BRAND KNOWLEDGEThe chief research objective is todocument the authors’ current under-standing of how brand knowledgeaffects consumer response to marketingactivity. Accordingly, in this section, abrief outline is given of some relevantdimensions of brand knowledge andthe authors discuss the different waysin which brand equity has beenoperationalised or addressed in themarketing literature.

In terms of brand knowledge, onewidely adopted conceptualisation in-volves the associative network memorymodel. According to this model, abrand will have a node in memorythat may be associated with a varietyof other nodes. All types of brandnodes may be linked to the brandto make up its brand associations inmemory. Moreover, there are a num-ber of dimensions by which these dif-ferent kinds of associations may becharacterised.

For example, brand associations mayvary according to content and whetherthey are related to the product or not.Non-product associations may relateto user or usage imagery, brand per-sonality, and so on. Brand associationsmay also vary in their level of abstrac-tion, ranging from concrete and speci-fic (for example, product attributes) tomore abstract and general (for example,overall brand attitudes). Brand associa-tions can vary in how strongly they are

knowledge structures are created andhow they influence consumerbehaviour is thus a research priority.Along those lines, there has recentlybeen a call in the marketing literaturefor more comprehensive approaches tounderstanding the underlyingmechanisms associated with theformation and consequences of brandequity.6 Related to this there beendoubts and questions expressed bysenior management in manyorganisations about the value ofbrand-building activities.

Accordingly, there are three pur-poses to this paper. First, the differentdimensions of brand knowledge anddifferent forms of consumer responsesto marketing activities are briefly out-lined. Secondly, some of the majoracademic marketing journals in theUSA and elsewhere are surveyed tocatalogue empirical findings from priorresearch that reveal how greater brandknowledge can:

— lead to fundamental differences inconsumer behaviour

— produce differential responses tospecific marketing activities (ie re-lated to product, extension, price,communications and channels) byconsumers depending on the natureof the brand involved.

To the authors’ knowledge this is thefirst attempt to catalogue some of theunderlying theoretical mechanisms thathave been shown to lead to advantagesfor strong brands. In addition, findingsare also identified that provide market-ing advantages for lesser-known brandsand identify instances where differentialresponses are not found for strongbrands. Thirdly, as a result of thesereviews, some conclusions are provided

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asymmetric promotion effects revealeddifferential responses to marketing ac-tivity according to type of brand, butthese findings were a by-product of theanalysis and not its central thrust.

DIFFERENCES IN CONSUMERBEHAVIOURIn examining relevant past studies tounderstand the marketing advantages ofstrong brands, researchers have iden-tified a number of different theoreticalmechanisms to explain why brandsfor which consumers have greaterbrand knowledge receive a differentialresponse. In this section, an attempt ismade to organise some of the mainproposed theoretical mechanisms into asimple conceptual framework of howbrand knowledge is created and put touse by consumers.

As an organising framework, amodified form of the simple AIDAhierarchy-of-effects model (Attention,Interest, Desire and Action) was used.This has been widely used to modelconsumer behaviour in advertisingsettings and elsewhere. First this paperwill focus on the attention and learn-ing stage, ie the building of brandknowledge structures. Next, this paperwill look at mechanisms associatedwith the interpretation and evaluationof marketing information or brandalternatives, ie the use of brandknowledge. Finally, this paper examinesthe mechanisms that are thought toimpact the actual choice process, ie theapplication of brand knowledge.

Attention and learningStrong brands are thought to have amemory encoding and storage ad-vantage over unknown brands in

linked to the brand and its other as-sociations, how unique or commonthey are, how favourably consumersregard them, and so on.

The customer-based brand equityframework7,8 is used as a means ofidentifying the existence of marketingadvantages for strong brands. In thatframework, brand equity is defined interms of the differential response tomarketing activity that results fromthe existence of strong, favourable andunique brand associations. Researchersstudying the effects of different types ofbrands, however, have used a numberof proxies for ‘strong’ or ‘high equity’brands. In general, high equity brandshave perhaps been most often concep-tualised via familiarity (for example,prior knowledge, ownership or ex-posure to the brand) or through out-come-oriented measures (for example,market share leader, dominant brand orhigh-quality brand). Low equity brandshave been operationalised as either thepolar opposites of high equity brands orvia fictitious brands.

Regardless of the exact means ofdesignating a brand as strong, thispaper uses the concept of ‘differentialresponse to marketing activity’ as thekey selection criteria when decidingwhich papers suggest an advantage forstrong brands. Thus, some papersthat are geared towards understandingbrand equity are not cited because theydo not reveal any clear differentialresponse according to the nature of thebrand involved. With some otherpapers, it was necessary to infer brandequity effects because although thetype of brand was not the main focusof inquiry, it was still manipulated ormeasured in some way and showed upas significant in the analysis. Forexample, many of the early papers on


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Selective attentionStrong brands may find the strength oftheir brand affected at an involuntarylevel by consumers automatically en-coding frequency information (Hasherand Zacks17) as they are exposed tobrand names, symbols, slogans andlogos through various marketing ac-tivities. Non-verbal information aboutthe brand such as symbols, slogans andlogos may be more potent or meaning-ful than verbal cues.18 Strong brandscan also benefit from increased selec-tive attention. Tellis19 contends thatfamiliar brands are selectively givenmore exposure, attention, comprehen-sion and retention by consumers.Similarly, Kent and Allen20 propose thatconsumers will selectively pay moreattention to advertising for well-knownbrands.

In short, it appears that informationabout strong brands is more easilynoticed and the frequency of advertis-ing of strong brands may createfavourable associations even in theabsence of voluntary processing of thebrand information. In addition, con-sumers may give more selective atten-tion to strong brands.

Interpretation and evaluationThere is evidence for both directand indirect mechanisms operating tocreate differences in how consumersinterpret and evaluate brands andrelated marketing information.

Direct effectsDirect effects occur when brand-related information is input directlyinto the decision process. For instance,one conceptual mechanism that ismoderated by differences in brand

building brand awareness and image.Johnson and Russo9 assert that con-sumers familiar with a brand havebetter encoding ability and bet-ter-developed procedural knowledge.Alba and Hutchinson10 also provideevidence consistent with the notionthat more elaborate memory structureswill facilitate the formation of linkagesof new associations. Kent and Allen11

use information organisation modelsand schema research as a basis forinferring that consumers will develop agreater number of stronger links forfamiliar brands. Moreover, becausestrong brands have better developedconsumer knowledge structures, thereis a greater likelihood that the links thatmake up this knowledge will beuniquely associated with the brand.When consumers have less developedknowledge structures, on the otherhand, associations may end up beingstored under the product category andnot the specific brand. In fact, Bowmanand Gatignon12 contend that learningdecreases for brands that are late toenter into a market, because they areseen as having less novel features.

ConsiderationAnother advantage related to brandstrength is differential inclusion ofbrands that are more accessible intoconsumers’ consideration sets. Theaccessibility advantage for brands witha greater number of associations in awide variety of contexts implies famil-iar brands are more likely to bein consumers’ consideration sets.13–15

More attractive brands also receive anadvantage when consumers begin theirsearch with well-known and regardedbrands that are seen as being morelikely to satisfy their needs.16


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general, ambiguity in the decision-making process should favour theincumbent or stronger brand.26

Hoch and Deighton27 propose thatconfirmation biases can lead tofavourable evaluations in the presenceof ambiguous information (for ex-ample, as a result of advertising). Whenevaluating ambiguous stimuli, theprimary determinant of evaluativedirectionality is prior attitudes.28 Withprior positive evaluations, cognitiveevaluations should be more receptiveand less critical29 and richer for brandswith which people have moreexperience in more contexts.30 Finally,consumers may use brand names as asignal of the credibility of productclaims.31

Thus, evaluation advantages —through more elaboration — may helpstrong brands to indirectly create evenstronger and more favourable associa-tions.

ChoicePerhaps the most frequently citedadvantage for strong brands at thechoice stage is the notion of brandrecognition or familiarity as a choiceheuristic.32–35 Essentially, when con-sumers have limited prior knowledgeof a product category, brand name maybe the most accessible and diagnosticcue available.36 Dodds et al.37 furtherpropose that brand name familiarity,in conjunction with a high priceand availability in a store with aquality image, may act as independent,yet related, diagnostic cues for con-sumers. In addition, using a familiarbrand name as a diagnostic cue isthought to be a consumer strategyfor dealing with risk and uncer-tainty especially when consumers have

knowledge is loss aversion.21 With lossaversion, the losses of switching awayfrom a known brand loom larger thanthe potential gains from using another,lesser-known brand (for example, asthe result of a price reduction). Thus,the possibility of a potential loss leadsto an advantage for leading brands.

Consumers may rely on the affectassociated with a familiar brand toaid in their decision-making. Sullivan22

found that the quality reputation of theparent brand affected the relative resaleprices of twin automobiles. Brown andStayman23 maintain that ‘halo effects’related to the positive feelings towardsa brand can positively bias the evalua-tion of advertising of the brand.

Similarly, consumer confidence isanother potential diagnostic cue thatis derived from a well-developedknowledge structure. Consumer con-fidence is increased when consumersget more familiar in a domain.24 Inaddition, consumer confidence maylead to greater use of favourableassociations to facilitate decisionmaking.25

In summary, consumers are likely todirectly use both the confidence as-sociated with familiarity as well asaffect transfer when evaluating andselecting strong brands.

Indirect effectsIndirect effects are perhaps more com-mon and are evoked when there isuncertainty or ambiguity in the deci-sion environment. After brand infor-mation has been acquired, consumersmay interpret and/or evaluate theinformation. This evaluation and en-hancement may be especially criticalif there are ambiguities associatedwith brand-related information. In



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product consumers may be more loyalto the brand and have higher evalua-tions for future brand extensions.

Following on from this con-sideration of underlying theoreticalmechanisms, the consequences ofstrong brands as manifested bydifferential consumer response tomarketing activity will now be focusedon.

DIFFERENTIAL RESPONSE TOMARKETING ACTIVITYThe previous section documented thedifferent ways in which a strong brandcan have an impact on aspects ofconsumer behaviour and consumerdecision-making processes. In this sec-tion, this paper delves into more detailabout how differences in consumerbrand knowledge affect the response ofconsumers to marketing activity. Firstthe advantages of strong brands areoutlined in five areas of marketingactivity (ie product, extensions, price,communications and channels). Thispaper then looks at situations wherethere are advantages for lesser-knownbrands, and highlights some of thelimitations of strong brands.

Product-related marketing activitiesA product or service is made up of abundle of tangible and intangible at-tributes and benefits designed to satisfyconsumer needs and wants. Consumerresponse could differ according to per-ceptions of attributes and benefits aswell as overall preferences and attitudestowards the product or service. Con-sumer response could also differ interms of product-related considerationssuch as brand loyalty, commitment,satisfaction, etc.

limited prior experience.38–41 Hoyerand Brown42 found that the presence ofa known brand limited subjects’ abilityto detect differences in product qualityacross brands, even when subjectssampled other brands. Clearly, one ofthe most effective mechanisms thatprovides advantages to strong brands istheir inherent familiarity and the cor-responding impact of familiarity onconsumer choice.

SummaryThrough these three different stages ofconsumer behaviour — attention andlearning, interpretation and evaluation,and choice — advantages have beendocumented for strong brands. Manyof the mechanisms cited above aredrawn from the research findings thatfollow and are reported in Tables 1-6.One way to think about how a strongbrand could have an impact ondifferent aspects of consumer behaviouris to think about a consumer who isentering a new product category forthe first time. In the information-gathering stage, a new consumer maypay more attention to, and learnmore about, a brand with whichthey are familiar. While interpret-ing and evaluating information, brandknowledge in many cases could haveboth ‘direct’ and ‘indirect’ effects —brand-related information could beinput directly into the decision processor may influence impressions of otherinformation that is input into thedecision process in various ways. Abrand’s strength will be completelyemployed during the choice process ifa new consumer skips a thoroughexamination and simply relies on brandname familiarity as a choice heuristic.Lastly, having finally purchased the


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Table 1 Differential response to product-related marketing activity

Consumerresponse

Brandknowledge Reference Differential response

New productevaluation

Corporateimage

Dacin and Browna Subjects’ knowledge structures influence their beliefsabout and attitudes towards new productsmanufactured by that company.

Brandpurchase rate

Full-linenationalbrands

Day andDeutscherb

Subjects who mentioned a full-line national brand ofappliance during an initial interview were more likelyto actually purchase the mentioned brand thansubjects who mentioned a specialist brand.

Market share Brandimage anddominance

Smith and Basuc Higher market share observed for a dominantbrand, eg Thailand’s imported Scotch whisky market.

Brand qualityperceptions

Brand namereputation

Dodds et al.d Brand name had a positive influence on subjects’perceptions of quality in all conditions.

Productevaluation

Brandpronunciation

Leclerc et al.e Subjects rated yoghurt better on hedonic qualitieswhen it was pronounced with French highlights.



Rao and Monroef Reviewed 34 studies and found a significant effectfor the relationship between brand name and quality.In addition, the effect of brand name as a quality cuewas greater than the effect of size or price as aquality cue.


Brandexperience

Wernerfeltg If consumers use the experienced quality of aknown brand as an indicator of the quality of a new‘experience’ good, then known brands have anadvantage over new brands.

Brandpreference andmarket share

Uniquefeatures

Feinberg et al.h Results from a computer simulation based on aconceptual model show that increasing the uniquefeatures of a brand increases preference and marketshare for the brand.

Consumerconfidence andpurchaseintention

Brandfamiliarity

Laroche et al.i Familiarity with a brand increases consumers’confidence with the brand and affects intention tobuy. In addition, attitude towards the brand isaffected by familiarity.

Productevaluation

Priorexposure toadvertising

Smithj Advertising was able to mitigate the effects ofsubjects’ negative trial experiences.

Productevaluation


Tse and Leek A strong positive brand image can overcomeunfavourable country-of-component-origin effects.

aDacin and Brown, ref. 43; bDay and Deutscher, ref. 44; cSmith and Basu, ref. 48; dDodds et al., ref. 32; eLeclercet al., ref. 46; fRao and Monroe, ref. 47; gWernerfelt, ref. 49; hFeinberg et al., ref. 50; iLaroche et al., ref. 24;jSmith, ref. 53; kTse and Lee, ref. 54.


categories.57,58 In addition, the amountof brand equity has been shown to becorrelated with the highest or lowestquality member in the product line forvertical product extensions.59 Researchhas also shown that positively evaluatedsymbolic associations may be the basisof these evaluations,60,61 even if overallbrand attitude itself is not necessarilyhigh.62

Brands with varied product categoryassociations through past extensionshave been shown to be especiallyextendible.63–65 As a result, introduc-tory marketing programmes for exten-sions from an established brand may bemore efficient.66-68 Several studies haveindicated that extension activity hasaided (or at least did not dilute) brandequity for the parent brand. Forinstance, brand extensions strengthenedparent brand associations69 and ‘flagshipbrands’ were highly resistant to dilutionor other potential negative effectsdue to negative experiences with anextension.70,71

Kirmani et al.72 found evidence ofan ownership effect whereby currentowners generally had more favourableresponses to brand line extensions.Finally, extensions of brands thathave both high familiarity and posi-tive attitudes have been shown toreceive higher initial stock marketreactions.73

Price-related marketing activitiesConsumers may differ in terms of theprice they are willing to pay and thepremium that can be supported versuscompetitive brands. Consumers mayalso differ in terms of how theyrespond to price increases and decreaseson either a permanent or temporarybasis.

Table 1 summarises the findings ofprevious research with respect to thedifferential response to product-relatedmarketing activity. As this Table shows,research has demonstrated that differenttypes of brand associations — if seen asfavourable — can affect consumerproduct evaluations, perceptions ofquality, purchase rates and marketshare.43–48 This tendency may be espe-cially apparent with difficult-to-assess‘experience’ goods49 and as the unique-ness of brand associations increases.50 Inaddition, familiarity with a brand hasbeen shown to increase consumerconfidence, positive attitudes towardsthe brand and purchase intention,51,52

and mitigate the potential negativeimpact of a negative trial experience53

or unfavourably evaluated country oforigin.54

Extension-related marketing activitiesAdditions to existing product lines areoften branded and positioned under anexisting brand name as brand exten-sions. Consumer response could differaccording to how favourably con-sumers evaluate such extensions andthe amount of marketing supportnecessary to achieve a satisfactory levelof extension acceptance with con-sumers.

Table 2 summarises the findings ofprevious research with respect to thedifferential response to extension-re-lated marketing activity. Because of theemerging interest in brand equity,much research has been conducted tounderstand how consumers’ knowledgeof a parent brand can affect evaluationsof a proposed extension. These studieshave shown how well-known andwell-regarded brands can extend moresuccessfully55,56 and into more diverse


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Table 2 Differential response to extension-related marketing activity

Consumerresponse


Extensionacceptance

Qualityperceptions

Aaker and Kellera Subjects gave a brand extension a higher evaluationwhen the original brand was high in quality and therelationship or ‘fit’ between the original brand andthe extension was high.

Extensionacceptance

Qualityperceptions

Bottomley andDoyleb

Replicated Aaker and Keller (1990)a cross-culturally.

Extensionacceptance

Parent brandreputation

Gronhaug et al.c Parent brand evaluations positively correlated withbrand extension evaluations.

Breadth ofbrand extension

High-qualitybrand

Keller and Aakerd Subjects indicated that a high-quality brand can bestretched farther (more diverse product categories)than an average-quality brand.

Extensioncapabilities

Highlyvalued brands

Rangaswamy et al.e Higher valued brand names had higher purchaseintentions when extended to a distant brand.

Vertical productline extension

Price premiumof the brand

Taylor et al.f Showed a positive correlation for the amount ofbrand equity in different segments of the market.High-quality segment brand equity correlated withhighest quality member of line and low-qualitysegment correlated with lowest quality member.

Brandextensionevaluation

Symbolicvalue

Reddy et al.g Measure of the symbolic value of the brand hadpositive effects on extensions.

Breadth ofbrandextension

Symbolicassociation

Park et al.h Symbolic brands can be extended into a widervariety of contexts.

Brand specificassociations

Brandknowledge

Broniarczyk andAlbai

For high-knowledge subjects, brand-specificassociations moderated the effect of brand affectwhen consumers were evaluating a brand extension.

Positiveassociationsand consumerconfidence

Breadth ofbrandextension

Dacin and Smithj Subjects had more positive associations and greaterconfidence in those associations when a brand hadmore successful products in different categories.

Favourableevaluations

Positiveaffect andbrand breadth

Sheinin andSchmittk

Subjects favoured brands with positive affect whenthe concept was moderately or extremelyincongruous. In addition, subjects gave expansivebrands greater latitude to extend into differentconcepts than high-affect brands.

Pioneeringadvantage ormarket share

Existingbrand

Kerin et al.l Order of entry effects were larger for brandextensions for scanner panel members. In addition,when a new product class is established, theorder-of-entry effects for brand extensions arelarger for each of the marketing mix variables thanthe effects for new brands.


found for households that are moreloyal.86

Advertising may play a role in thedecreases in price sensitivity.87 Bould-ing et al.88 claim that unique advertisingmessages (for example, product dif-ferentiation for high-quality productsand low-price messages for low-priceleaders) lead to a reduction in thesusceptibility to future price competi-tion. Erdem et al.89 show that brandcredibility decreases price sensitivity.Lastly, Sullivan90 used the resale pricesof twin automobiles (the same physicalautomobile with two different brandnames) to show how consumers coulduse information about the parent brandwhen making inferences about the

Table 3 summarises the findings ofprevious research with respect tothe differential response to price-related marketing activity. Althoughthis only constitutes indirect evidence,as this table shows, several studies havedemonstrated that brand leaders cancommand greater price differences74–

77 and are more immune to priceincreases.78 In a competitive sense,brand leaders draw a disproportionateamount of share from smaller sharecompetitors.79–81 At the same time,prior research has demonstrated thatmarket leaders are relatively immune toprice competition from these smallshare brands.82–85 In addition, lowerlevels of price sensitivity have been


Table 2 (Continued)

Consumerresponse


Strength ofparent brandassociations

Dominantbrands

Morrinm Exposing consumers to brand extension informationstrengthened rather than weakened parent brandassociations in memory, especially for dominantbrands.

Resistance todilution

Flagshipproduct

Roedderet al.n

Showed that consumer beliefs about flagshipproducts (product most closely associated withbrand name, eg Johnson & Johnson baby shampoo)were highly resistant to dilution.

Resistance toa negativeexperience

Brandfamiliarity

Sheinino Brand beliefs and attitudes were unchanged followinga negative (or positive) experience with a brandextension.

Brand lineextensions

Ownership ofthe brand

Kirmani et al.p Found evidence of an ownership effect wherebyowners’ attitude towards the parent brand led tomore favourable responses to brand line extensions(except for downward stretches of prestige brands).

Stock marketresponse

Brandfamiliarity andbrand attitude

Lane andJacobsonq

Stock market responds most favourably toextensions of brands that have both high familiarityand positive attitudes.

aAaker and Keller, ref. 55; bBottomley and Doyle, ref. 56; cGronhaug et al., ref. 133; dKeller and Aaker, ref. 57;eRangaswamy et al., ref. 58; fTayloret al., ref. 134; gReddy et al., ref. 18; hPark et al., ref. 61; iBroniarczyk andAlba, ref. 62; jDacin and Smith, ref. 25; kSheinin and Schmitt, ref. 65; lKerin et al., ref. 35; mMorrin, ref. 69;nRoedder et al., ref. 70; 0Sheinin, ref. 71; pKirmani et al., ref. 72; qLane and Jacobson, ref. 14.

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Table 3 Differential response to price-related marketing activity

Consumerresponse


Price sensitivity Equity overtime

Simona Looked at changes in price elasticities over time andfound that consumers had more inelastic responsesto price increases and elastic responses to pricedecreases with leading brands over time.

Lower pricesensitivity(loyalty)

Strongbrand

Agrawalb Customers loyal to a strong brand require a largerprice differential in favour of the rival brand beforethey will switch away from their favourite brand.

Market shareand pricepremium

Familiarbrand name

Park andSrinivasanc

Brand name products command both a market shareand price premium, in addition to equity associatedwith brand extensions.

Response toprice cut

High marketshare brand

Sethuramand Store-level supermarket scanner data indicated thatthe leading brand gets the majority of a boost fromdiscounting when the discounted price is still abovethe price of other brands.

Categorychoice andbrand choice

Nationalbrands

Sivakumar and Raje Scanner panel data indicates that higher-qualitybrands are less vulnerable to losses when prices areincreased.

Market shareand pricesensitivity

High-qualitybrand

Allenby and Rossif Rotating indifference curves were used to show thatif switching up to high-quality brands is more likelythan switching down, then there will be asymmetricresponses to price promotions.

Market shareand loyalty


Grover andSrinivasang

Scanner panel data indicated that when the leadingbrand promoted its products, it drew a significantshare from the two follower brand’s brand loyalsegments. Follower brands could not attract theleading brand’s loyal segment with promotions.

Market share High marketshare brand

Russell andKamakurah

Scanner panel data indicated that the largest marketshare brand had a greater influence on competitorswhen discounted.

Market share High pricedbrand

Bemmaor andMouchouxi

In a psuedo experiment with store data,higher-priced brands were less affected byreductions in the price of lower-priced brands.

Market share High-qualityand highpriced-brand

Blattberg andWisniewskij

Store-level scanner data indicated that whenhigher-price, higher-quality brands were promoted,they stole share from other brands in the sameprice-quality tier and from brands in the tier below.Lower-price, lower-quality brands did not stealsignificant share from the tiers above.

Market share High marketshare brand

Bucklin et al.k Scanner panel data indicated that the leading brandcould be better insulated against price cuts ofcompetition.


differential response to communica-tions-related marketing activity. Anumber of effects have been attributedto well-known and liked brands.91 Forexample, consumers are more likely tohave a negative reaction to repetitionof advertisements with unknownas opposed to strong brands.92,93

Familiar brands appear to betterwithstand interference from competi-tive advertisements.94 Similarly, con-sumers appear to have a more negativereaction to advertising tactics such ascomparative advertisements,95 depend-ing on the nature of the brandinvolved. Humour in advertisementsseems to be more effective for familiaror already favourably evaluated brandsthan for unfamiliar or less-favourablyevaluated brands.96–98

used car quality. She found thatparent brand quality reputation affectedthe relative resale prices of twinautomobiles.

Communications-related marketingactivitiesMarketing communications activitiestake all forms — advertising, consumerand trade promotions, public relationsand event sponsorship, personal sellingetc. Broadly, consumers may differ intheir willingness to attend to a com-munication, the manner by which theyprocess a communication, and theirlater ability to recall the content of ortheir reactions to a communication.

Table 4 summarises the findings ofprior research with respect to the


Table 3 (Continued)

Consumerresponse


Lower pricesensitivity

Loyalcustomers ofbrand

Krishnamurthi andRajl

Diary panel data were used to show that loyal panelmembers were less price sensitive in the choicedecision than non-loyal members.

Lower pricesensitivity

High levels ofadvertising

Kanetkar et al.m Scanner panel data indicated that, under high levelsof advertising exposure, it is possible for ahousehold’s brand choice price sensitivity todecrease.

Consumerpricesensitivity

Brands withuniquemessages

Boulding et al.n Unique messages (product differentiation forhigh-quality products and low-price messages forlow-price leaders) led to a reduction in thesusceptibility to future price competition.

Consumerpricesensitivity

Brandcredibility

Erdem et al.o Brand credibility decreases price sensitivity.

Price premiumfor used autos

Parent brandqualityreputation

Sullivanp Analysed the used car sales trends of used ‘twin’automobiles and found that brands with a higherquality reputation had higher resale prices.

aSimon, ref. 74; bAgrawal, ref. 75; cPark and Srinivasan, ref. 76; dSethuraman, ref. 77; eSivakumar and Raj, ref. 78;fAllenby and Rossi, ref. 79; gGrover and Srinivasan, ref. 80; hRussell and Kamakura, ref. 81; iBemmaor andMouchoux, ref. 82; jBlattberg and Wisniewski, ref. 83; kBucklin et al., ref. 84; lKrishnamurthi and Raj, ref. 86;mKanetkar et al., ref. 87; nBoulding et al., ref. 88; oErdem et al., ref. 89; pSullivan, ref. 22.

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Table 4 Differential response to communications-related marketing activity

Consumerresponse


Advertisingresponse

Brandfamiliarity

Sawyera Response to advertising is stronger, exposure isnon-linear and stronger for subjects who are familiarwith the message or brand.

Productevaluation

Familiarbrands

Calder andSternthalb

Subjects’ response to ad repetition differed forfamiliar and unfamiliar brands. Subjects had morepositive evaluation for familiar brands and a morenegative evaluation for an unfamiliar brand inresponse to ad repetition.

Advertisingrepetitioneffects

Knownversusfictitiousbrands

Campbell andKellerc

Established brands were more resistant to wear-outeffects than fictitious brands under high ad repetitionconditions.

Advertisingclaim recall

Brandfamiliarity

Kent and Allend Exposure to competitive advertising had little effecton claim recall from ads for well-known brands. Inaddition, subjects had better memory for newproduct information for familiar brands.

Consumerattitude andproduct choice

Positive priorbrandattitude

Chattopadhyayand Basue

When the prior brand attitude was positive, ahumorous ad was more effective than anon-humorous ad in changing subjects’ attitudes andchoice behaviour.

Advertisingeffectiveness

Familiarbrand

Stewart andFursef

Brand-differentiating messages were more effectivefor more extensively used or familiar brands.

Advertisingevaluation

Existingbrands

Weinberger andGulasg

Humour was more successful with existing products.

Competitor adevaluation

Favourablebrandattitude

Belchh With comparative advertising, the more favourablethe attitude for the existing brand, the less tolerantsubjects were for repetition of the new brand.

Frequency ofpurchase

Brandloyalty

Raji In a frequently purchased product class, panel diarymembers of high loyalty increased brand purchasewhen advertising for that brand increased.

Advertisingresponse

Brandfamiliarity

Hsu and Liuj Consumers with higher perceptions of fluid milkadvertising tended to prefer well-known brands.

Increasedattention

Brandawarenessand brandfeature recall

Dhar andSimonsonk

Attractiveness and choice probabilities are enhancedif an option is the focus of comparison. Brands withgreater awareness and recall of features are morelikely to be the focus of attention.

Increasedattention

Mostattractivebrand

Simonson et al.l Information about the most attractive brand wasacquired earlier when making a choice.


As Table 5 reveals, comparativelylittle research has addressed the ques-tion of channels-related marketing ac-tivity and brand equity. Montgomery106

found that products that were from thetop firms in an industry had a muchhigher chance of being accepted in thechannel and gaining shelf space insupermarkets. Fader and Schmittlein107

proposed that differences in retailavailability may be a key component ofhigher repeat purchase rates for higher-share brands. Also, research suggeststhat stores are more likely to featurewell-known brands if they are trying toconvey a high-quality image.108

The marketing advantages oflesser-known brandsThere are several studies that provideevidence about areas where non-lead-ing or even new brands have ad-vantages over established brands (seeTable 6). As would perhaps be ex-

In addition, consumers who arehighly loyal to a brand have beenshown to increase purchases whenadvertising for the brand increased.99,100

Other advantages associated with moreadvertising include increased likelihoodof being the focus of attention101,102 andincreased ‘brand interest’.103 Ahluwaliaet al.104 demonstrated that consumerswho have a high level of commitmentto a brand are more likely to counter-argue with negative information. Thismay be the reason why strong brandswere shown to be better able toweather a product-harm crisis.105

Channels-related marketing activityDistribution activities are thosedesigned to manage the channelstructure. The response of consumersmay differ in terms of their willingnessto seek the brand within a store, acrossstores, or by any other means by whichthe brand can be acquired.


Table 4 (Continued)

Consumerresponse


Attention to ad Maturebrands

Machleit et al.m Brand interest is created for mature brands. Brandinterest means the consumer now sees the brand ina new light (eg a consumer would think twice aboutthe brand or maybe would think of ‘re-trial’ of thebrand).

Acceptance ofnegativeinformation

Highcommitmentconsumers

Ahluwalia et al.n Consumers who have a high level of commitment toa brand are more likely to counter-argue withnegative information.

Loss of brandequity

Strong andweakexpectationbrands

Dawar and Pillutlao Consumer interpretations of firm response to aproduct-harm crisis are moderated by priorexpectations. Strong brands with positiveexpectations are more resilient to a product harmcrisis.

aSawyer, ref. 91; bCalder and Sternthal, ref. 92; cCampbell and Keller, ref. 93; dKent and Allen, ref. 11;eChattopadhyay and Basu, ref. 28; fStewart and Furse, ref. 97; gWeinberger and Gulas, ref. 98; hBelch, ref. 95;iRaj, ref. 99; jHsu and Liu, ref. 100; kDhar and Simonson, ref. 21; lSimonson et al., ref. 13; mMachleit et al., ref.103; nAhluwalia et al., ref. 104; oDawar and Pillutla, ref. 105.

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vantage as their segments holdtogether better, thus allowing formore accurate targeting.

— Blair and Innis115 demonstrated thatconsumers deemed a warranty animportant signal of product qualityfor unfamiliar brands, but not famil-iar brands.

— New product features improvedthe relative value more forlesser-known brands than top-tierbrands.116

— With consumer learning, classicalconditioning effects were strongestfor unknown and moderatelyknown brands.117

Finally, there are some differential ef-fects associated with known brandsthat could adversely affect their perfor-mance. For example, some studies indi-cate that once a brand is establishedin memory it is difficult to changehow consumers think of the brand.118–

120 Meyers-Levy121 found that large

pected, several studies show a greaterimpact for unknown brands in responseto advertising, brand extensions andconsumer learning.— Derbaix109 showed how unfamiliar

brands are more easily influenced bythe affective reactions generated bytheir advertisements.

— With comparative advertising, lessfamiliar brands were later seen asmore similar to brand leaders andadvertisements were more effectiveafter a delay.110,111

— For brand extensions, Morrin112

found that recall of non-dominantparent brands was improvedthrough extension activity. Inaddition, Broniarczyk and Alba113

showed how second-tier brandsmay have unique extensionopportunities based on the specificbenefits that are associated with thebrand.

— Bucklin et al.114 showed that smallerbrands may have a targeting ad-


Table 5 Differential response to channels-related marketing activity

Consumerresponse


Retailavailability


Fader andSchmittleina

Part of the explanation of ‘double jeopardy’ forlow-share brands is the existence of an extremelybrand-loyal segment for high-share brands. Anotheraspect of the advantage to high-share brands is inthe increased availability at retail locations (smallerstores that carry fewer brands are likely to carrythe high-share brand).

Storeadvertising

Familiarbrands

Lal andNarasimhanb

Consumers use highly familiar brands to help themgauge the pricing levels of stores. Thus stores aremore likely to advertise these brands to convey afavourable image to consumers.

Productacceptancein channel

Top four orfivecompanies

Montgomeryc Products that were from the top four or five firmshad a much higher acceptance rate withinsupermarkets.

aFader and Schmittlein, ref. 107; bLal and Narasimhan, ref. 108; cMontgomery, ref. 106.


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Table 6 Marketing advantages of lesser-known brands

Consumerresponse


Advertisingreaction

Brandfamiliarity

Derbaixa Unfamiliar brands are more easily influenced by the affective reactiongenerated by the advertisement.

Brandsimilarity

Categoryleader

Gorn andWeinbergb

Comparative advertising by a challenger (eg a brand not the category leader)resulted in increased brand similarity between the challenger and leader. Theresults held whether an ad for the leader was present or not.

Brandattitudes

Brandfamiliarity

Chattopadhyayc Showed that comparative ads do have an advantage over non-comparative adswhen looking at the effects on brand attitudes after a delay. The increasedeffectiveness of comparative ads was limited to less-familiar brands.

Brand-nameaccessibility

Dominantbrands

Morrind Non-dominant parent brands may benefit more from extension activity thandominant parent brands.

Brand-specificassociations

Brandknowledge

Broniarczyk andAlbae

A less favourable brand may still be able to extend to some categories thatthe leader could not (eg Close-up toothpaste). Close-up breath mints wereevaluated more favourably than Crest breath mints.

Pricesensitivity


Bucklin et al.f Smaller brands may have a targeting advantage as their segments hold togetherbetter.

Relative value Top of linemodels

Nowlis andSimonsong

New product features improved the relative value more for lesser-knownbrands.

Product qualityperceptions

Knownbrands

Blair and Innish Consumers evaluated warranty as an important signal of product quality forunfamiliar brands, but not familiar brands.

Advertisingclassicalconditioningeffects

Familiarbrands

Shimp et al.i Classical conditioning effects were strongest for unknown and moderatelyknown brands and were also stronger when the conditioning was embeddedwith familiar brands.

Recall andrecognition ofbrandassociations

Highfrequencywords asbrand names

Meyers-Levyj A large number of associations was not necessarily advantageous and couldproduce interference effects and lower memory performance.

Specificassociations

Marketleaders

Farquhar and Herrk If a brand is seen as representing or exemplifying a category too much, it maybe difficult for consumers to think of the brand in any other way. Thus marketleaders may have strong concrete associations that may not transfer as broadlyto extension categories as more abstract associations.

Perceivedquality, valueand fair price

High equitybrand

Buchanan et al.l Evaluations of a ‘high-equity’ brand could be diminished by an unfamiliarcompetitive brand when: 1) a mixed display structure led consumers to believethat the competitive brand was diagnostic for judging the high-equity brand2) the precedence given to one brand over another in the display madeexpectations about brand differences or similarities accessible3) the unfamiliar competitive brand disconfirmed these expectations.

aDerbaix, ref. 109; bGorn and Weinberg, ref. 110; cChattopadhyay, ref. 111; dMorrin, ref. 69; eBroniarczyk and Alba, ref. 62; fBucklin et al.,ref. 84; gNowlis and Simonson, ref. 116; hBlair and Innis, ref. 115; iShimp et al., ref. 117; jMeyers-Levy, ref. 118; kFarquhar and Herr, ref.119; lBuchanan et al., ref. 135.

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by identifying studies where differentialresponse to marketing activity of abrand was shown. The theoreticalmechanisms that were hypothesised tosupport the findings of differentialresponses accorded to strong brandswere then extracted and catalogued.This section focuses on insights gainedand makes several summary commentson the findings from this literaturereview.

Broad scope of effectsFirst, the broad scope and sheerpervasiveness of the findings arenoteworthy (see Figure 1). Differencesin consumer response due to dif-ferences in brand knowledge werefound:

numbers of brand associations couldlead to interference effects and lowermemory performance. Farquhar andHerr122 contend that market leadersmay have concrete associations thatmay not transfer as easily as abstractassociations for brand extensions.

SUMMARY

Discussion and implicationsThis paper documented academic re-search from some of the major market-ing journals that sheds light onto themarketing advantages of strong brands.A comprehensive literature review wasperformed and research summarisedthat either supported or refuted thecustomer-based view of brand equity


Figure 1 Brand strength summary

Brand strength Consumer behaviour Differentialmarketing efforts

familiarity

Awareness

Attentionand learning

Consideration Selective attention

Product

More favourable attribute andbenefit perceptions

Overall preferenceBrand

knowledge

Strong, favourable andunique brand associations

High-quality brand

Interpretationand evaluation

Direct Indirect

Extensions

More favourable consumer response More efficient marketing programme

Brandperformance

Market share leader Dominant brand

Choice

Heuristic

Price Greater price premiums More favourable response to price

increases and decreases

CommunicationsPost-purchase

Extension evaluation Loyalty

Pay greater attention React more positively Retain more information

Brand


and ultimately have greaterretention of messages whencommunicating brand informa-tion.

Theoretical mechanismsSeveral mechanisms are cited as possibletheoretical mechanisms underlining thedevelopment of brand equity. Again,this is the first known attempt tocatalogue the mechanisms from whichbrand equity advantages are derived.Yet very few studies actually testthe mechanisms directly. Often, themechanisms are put forth as potentialprecursors to brand equity, but themanifestation of brand equity is what istested in the study. For instance, thetransfer of affect or ‘halo effect’ isthought to drive many of the advantagesassociated with brand extensions. So far,the amount of research directly inves-tigating or manipulating how affect istransferred during the evaluation ofbrand extensions is sparse.

Consumer uncertaintyThe findings also suggest that theseeffects are especially likely to occur inthose circumstances where consumersfeel uncertain,123 for example, whenambiguity prevails in the choice ordecision setting, or where there is notenough information available.124 Inthose situations where consumers lackconfidence, a strong brand can providemany direct and indirect benefits. Forinstance, in low involvement set-tings where consumers lack either themotivation or ability to arrive at adeliberate, well-reasoned decision, theymay rely on brand knowledge as aheuristic or allow it to colour theirimpressions in various ways.

— With different operationalisations ofbrand strength: The most frequentoperationalisations of brand strengthwere either simple familiarity withthe brand (in pure experimentalsettings) or the leading marketshare brand (mostly for quantitativepapers). In addition, specific typesof brand knowledge were used asindicators of brand strength. Thesestrong, favourable and unique as-sociations included image, reputa-tion, high-quality brands, highlyvalued brands, positive prior at-titudes and prior ownership.

— Across different aspects of con-sumer behaviour: One reason whythese brand knowledge effects areso widespread is due to themany different means by whichknowledge effects can emerge.Knowledge can affect seemingly allstages and aspects of consumerbehaviour. Consequently, there aremultiple routes by which brandequity effects can be manifested.

— Across different types of marketingactivities: Nearly every type ofmarketing activity is affected by astrong brand. On the product side,strong brands get preferentialevaluations of attribute and benefitinformation (higher perceivedquality) as well as generally higheroverall preference. Brand exten-sions of strong brands are shownto have higher preference levelsand more efficient utilisation ofresources in all aspects of themarketing programme. The pric-ing advantages include greaterpremiums as well as morefavourable responses to both priceincreases and decreases. Lastly,strong brands garner more atten-tion, have more positive reactions


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Future research prioritiesThe literature review also suggestsseveral areas where additional researchis needed. In a broad sense, there needsto be a more detailed understanding ofhow specific dimensions of brandknowledge affect different aspects ofconsumer response. This deeper levelof analysis will not be easy, however,because different dimensions of brandknowledge are often correlated. Forexample, high-equity brands often areboth well known and well liked.Distinguishing which aspect of brandknowledge — familiarity or affect — iscreating the differential response in aparticular setting could, therefore, bequite difficult.

New brandsFirms need better information whilemaking brand-building decisions. Re-search should explore the optimalstrategies for new and lesser-knownbrands to break into the marketplaceand better compete with brands thathave amassed more brand equity.What are the best options available forthem? The early decisions firms makewhen positioning brands will havea lasting impact on the associa-tions consumers hold for the brand.A better understanding of conse-quences associated with the trade-offsfirms launching new brands face isneeded. The advantages, for instance,of building familiarity versus theadvantages of creating a strong,favourable or unique association whendeveloping a new brand need to beclearly spelled out. For example,many of the now defunct dot comcompanies chased familiarity withoutpaying enough attention to whatassociations were being built. Brand

Consumer brand developmentBrands may play a critical role whenyoung consumers are making their‘initial’ choices in a variety of newdomains. As most people with youngchildren (who may prefer ‘happymeals’ at an early age) can at-test, brands affect consumers at anearly age. When examining theconsumer socialisation of children,Roedder125 catalogued how the useof brands changes in young con-sumers as they grow older. Youngconsumers move from pure familiarityto more sophisticated symbolic repre-sentations. Specifically, Achenreinerand Roedder126 show that, foryounger children, brand familiaritymay provide the most advantages forproducts while, for older children,the specific associations attached tothe brand become more important(see also Nguyen and Roedder127 andZhang and Sood128). If existing strongbrands play a critical role in thecrucial preference-development phasethen these brands should have long-term advantages as new consumersenter the marketplace. In fact, brandloyalty has been shown to be morestable for brands that are marketleaders (Dekimpe et al.129).

SummaryIn short, brand advantages can bemanifested in many different ways.Moreover, the more ‘difficult’ thesituation that consumers face, the morelikely it is that these brand advantageswill be evident. At the same time,lesser-known brands do have severalof their own advantages, althoughprimarily these reflect the fact thatthese types of brand have much ‘roomfor improvement.’



decision making, consider the use ofemotions in processing brand-relatedinformation, and so on.

Effects on attention and learningThere appears to be less emphasis inthe literature on understanding thebrand knowledge advantages in atten-tion and learning. How do strongbrands benefit from more developedknowledge structures in marketingactivities designed to build brandequity? Almost every paper in thisreview focused on the consequences ofbrand equity once it was eitherestablished in the market (knownbrands) or developed in the contextof an experiment (fictitious brands).While there has been a fair amount ofwork on topics around the building ofbrand equity, it would be worthwhileto better understand which brand-building techniques lead to the largestdifferential responses once brand equityis established. The answer may dependon whether the brand is an entirelynew brand or an existing brand that istrying to reposition to better fit theneeds in the market.

ChannelsFrom the perspective of a marketingprogramme, the most neglected re-search area appears to be how differentlevels of brand equity affect the ef-fects of various channel strategies andtactics. A number of different issuesare relevant here — channel accept-ance of new products depending onbrand strategy and the equity involved,how national brands affect the equityof retailer brands and vice versa, andso on. Along those lines, one usefulresearch study would be to update

managers at these companies may haveheld the incorrect belief that all theadvantages of brands are built by beingwell known.130 In addition, a morethorough understanding is needed ofthe differences between abstract andconcrete associations and the limita-tions of each type of association. Ingeneral, more information is neededabout how best to build strong brandswhose advantages will be the mostresistant to changes brought on by theintroduction of new products orchanges in the preferences of con-sumers.

Theoretical mechanismsAs the discussion of the mechanismsindicated, many of the potential causalmechanisms have not been testeddirectly. For instance, one area thatneeds to be carefully investigated isbrand affect. The popular press is rifewith examples of companies that arechanging their advertising in anattempt to create an emotional bondwith their customers. In just the lastsix months, firms in industries asvaried as motor vehicles, insuranceand pharmaceuticals have publiclystated their goal of increasing theemotional tie with consumers. With-out fully understanding the antece-dents and consequences of potentialemotional bonds, these firms havelittle research to guide them. A goodstart towards understanding the an-tecedents of brand affect is providedby Chaudhuri and Holbrook.131 Moreknowledge is needed of how affect isgenerated and how it influencesconsumer behaviour and response tomarketing activity. In particular, suchresearch should more closely examinethe affect-transfer process in consumer


HOEFFLER AND KELLER

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