Effect of Brand Equity on Firms Financial Performance in Consumer Goods Industries

Abstract

This study aims to find empirical evidence linking consumer based brand equity (CBBE) with financial performance of firms. Aaker's CBBE approach is adopted and this equity is measured using a questionnaire developed from scales in existing literature. Differing from the extant literature, this study relates CBBE and firms' performance by taking a direct approach in measuring financial performance by utilizing independently audited financial statements. A face-to-face survey study encompassing 28 companies from a variety of consumer goods industries was carried out in Turkey arriving at 505 valid responses. Firms' financial performance was assessed using ten different performance indicators derived from financial statements submitted to Istanbul Stock Exchange. Following an exploratory factor analysis to reveal CBBE dimensions, a multiple regression analysis was carried out to test potential effects of CBBE factors on financial performance indicators. As an outcome of the analysis it has been seen that the components of CBBE positively affect most of the financial performance indicators to varying extents. Perceived quality dimension appears to be the major driver of financial performance followed by the composite factor encompassing brand awareness and brand association components. INTRODUCTIONThe performance of a firm is intuitively expected to be improved as a result of a stronger brand and higher brand equity. However 'brand equity' is defined in many different ways and there is no generally accepted standard way of measuring it. In this study a consumer based perspective is adopted in examining the brand equity concept. Consumer based brand equity approaches adopt a cognitive psychological point of view in assessing the brand and the value created by it. Consumer based brand equity helps marketers in many ways as discussed in the following sections however it is a difficult task to relate it with financial performance. Consequently there are few empirical studies available in the existing literature that link consumer based brand equity and actual financial performance of firms creating a research gap in this important field.Consumer based brand equity (CBBE) and its elements help customers in interpreting and processing information, create confidence in purchasing decisions and also enhance

Critical Review of Literature on Brand Equity and Customer Loyalty

“…Further, organization can influence the behaviour of individuals by running advertisements, sales promotions, public relations programs and direct marketing campaigns. Also as suggested by Kim, Woo, and Jeong (2003) evaluative tendency among consumers comprises the instrumental and utilitarian attitudes. Further, consumers are always determined to learn new information and behaviours after consuming products.…”

Corporate Social Responsibility And Brand Equity Of Malaysian Top 100 Brand Companies

“…The brand definition became well known and an important instrument for business success in the 1980s (Aydin & Ulengin, 2015;Pakseresht, 2010) as it conveyed and told a product to both company managers and customers. The product name became a sign of a commitment by following a product brand that the expectation of the consumer would be fulfilled and served as a protection against rivals copying or imitating the product (Aydin & Ulengin, 2015).…”

“…The brand definition became well known and an important instrument for business success in the 1980s (Aydin & Ulengin, 2015;Pakseresht, 2010) as it conveyed and told a product to both company managers and customers. The product name became a sign of a commitment by following a product brand that the expectation of the consumer would be fulfilled and served as a protection against rivals copying or imitating the product (Aydin & Ulengin, 2015). Brands are to generally add benefits and the figure of these values forms equity (Pakseresht, 2010), a point completely endorsed by Wang (2010), who defined the additional economic value that a brand provides to a business, specifically from an economic perspective, as a result of BE.…”

“…Brands are to generally add benefits and the figure of these values forms equity (Pakseresht, 2010), a point completely endorsed by Wang (2010), who defined the additional economic value that a brand provides to a business, specifically from an economic perspective, as a result of BE. As a well-recognized brand can also bring tremendous corporate value and have a positive impact on clients' minds, it is advisable to perceive brand growth as an opportunity for future returns (Aydin & Ulengin, 2015). Furthermore, in the long term, a brand offers a valuable intangible financial asset that allows a company to build trust and loyalty among its customers (Pakseresht, 2010).…”

“…As a result, it is https://doi. org/10.15405/epsbs.2020.12.05.6 Corresponding Author: Elinda Esa Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN: 2357-1330 50 anticipated that a business with a strong brand and high BE would have improved corporate results (Aydin & Ulengin, 2015;Bajic & Yurtoglu, 2018).…”