Utility-Based Models of Brand Equity

Utility-Based Models of Brand Equity

Tülin Erdem

NYU

43rd AMA Sheth Foundation Doctoral Consortium June 6, 2008

Extant Approaches to Brand Equity Measurement

Source-Oriented: Customer-Based Component Based Aaker (1991, 1996), Keller (1993, 1998) Outcome-Oriented: Firm-based (or trade-based) Keller (1993, 1998)

Holistic Utility based (cross-sectional): Swait et al (1993) Park & Srinivasan (1994) Utility based (panel-data): Static: Kamakura & Russell (1993) Dynamic: Erdem (1998) Utility based (time series): (Kartuno and Rao 2007, Goldfarb, Lu, Moorthy 2007) Financial Value (Inter-firm analysis): Simon & Sullivan (1993) Financial Value (Intra-firm analysis): Farquhar et al (1991) Profits-Revenue (Ailawadi et. al. 2003)

A Utility-Based Modeling Framework for Customer-Based Brand Equity

Preferences (utility weights) Perceptions about attributes Uncertainty about attributes Functional form of utility Decision rules Consideration/ choice sets Choice

Brand Equity-Generalized Impact of Brand on Choice

X * (μ ,σ 2 ) pjt

* X ijt ( μ , σ 2 )

X * (μ ,σ 2 ) pkt

βpjt βpkt

X * (μ ,σ 2 ) plt

βpit

εpit

Upit Upjt

εpjt

Upkt

εpkt

εplt

βplt

Uplt

Ct - Choice Set

Decision Rule pt

Choice pt

Legend: p: i,j,k,l: t: X*: β: U:

person brands time period attribute perceptions importance weights utility

Cross-Sectional Models of Customer-Based Brand Equity

Often conjoint & experimental choice data are utilized

Swait et. al. 1993

Price premium

Park and Srinivasan 1994

Objective attributes vs. subjective attributes

Erdem and Swait 1998 and the follow-up work

Measure information economic constructs

Panel Data Models

Often scanner panel data utilized (very few examples of panel data collected through surveys)

Static

Brand-specific constants approach: e.g., Kamakura and Russell (1993)

Dynamic, reduced-form

Brand-specific constant approach with state dependence: e.g., Sriram et. al. (2007)

Dynamic,...