Revenue Premium as an Outcome Measure of Brand Equity

Abstract

The authors propose that the revenue premium a brand generates compared with that of a private label product is a simple, objective, and managerially useful product-market measure of brand equity. The authors provide the conceptual basis for the measure, compute it for brands in several packaged goods categories, and test its validity. The empirical analysis shows that the measure is reliable and reflects real changes in brand health over time. It correlates well with other equity measures, and the measure's association with a brand's advertising and promotion activity, price sensitivity, and perceived category risk is consistent with theory.

The Role of Big Data and Predictive Analytics in Retailing

“…Second, the amount of information about each product need not be limited now to a small set of attributes thus increasing the column-width, if you will, about the product information matrix. Product information along these two dimensions alone (at the store level) can enable a host of downstream analyses -such as that of brand premiums (e.g., Ailawadi, Lehmann andNeslin 2003, Voleti andGhosh 2013), or of product similarities and thereby grouping structures and subcategory boundaries (e.g., Voleti, Kopalle and Ghosh 2015).…”

Integrated Marketing Communication to Increase Brand Equity: The Case of a Thai Beverage Company

“…RESEARCH FRAMEWORK Fig. 1 [3], and Aaker [4] views brand equity as the set of assets and liabilities linked to a brand"s name and symbol that adds to or subtracts from the value provided by a product or service to a firm and/or that firm"s customers while Kotler and Keller [5] puts forth a somewhat narrower perspective, contending that a brand has positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified than when it is not. In particular, Aaker [6] noted that brand equity is composed of five dimensions which are brand awareness, brand"s perceived quality, consumer association, and brand loyalty.…”

Practice Prize Paper—BRAN*EQT: A Multicategory Brand Equity Model and Its Application at Allstate

“…First, we extend models that treat brand equity as price or revenue premiums (Ailawadi et al 2003, Dubin 1998, Hjorth-Anderson 1984, Holbrook 1992 by incorporating cash flows that truly reflect the financial value of the brand. Second, we build on models of volume premiums based on consumer choice models estimated using scanner panel data (Kamakura and Russell 1993) by including cash flows, separating the effects of multiple marketing variables, and including spillover effects across categories.…”

“…Brand equity has recently been the focus of academic research and managerial practice (Aaker 1996, Ailawadi et al 2003, Keller 2003, Srinivasan et al 2005. Brand equity can be defined as the net present value of the incremental cash flows attributable to a brand name and to the firm owning that brand relative to an identical product with no brand name or brand-building efforts (Shocker and Weitz 1988).…”

“…Table 1 provides a summary of the basic principles, categories of application, and the major limitations of selected approaches, including the approach used in this paper. Ailawadi et al (2003) and Dubin (1998) compute brand equity as a revenue premium over a generic product's revenues. Kamakura and Russell (1993) calculate brand equity as a volume premium based on a choice model estimated on scanner panel or survey data.…”