the impact of advertisement on brand equity (propsal)
TRANSCRIPT
First of all we’ll discuss about topic and the definaition of the topic so the reader can easily
understand the meaning of the topic
What is advertisement ?
Advertising is a form of communication used to influence individuals to purchase products or
services or support political candidates or ideas. Frequently it communicates a message that
includes the name of the product or service and how that product or service could potentially
benefit the consumer. Advertising often attempts to persuade potential customers to purchase
or to consume a particular brand of product or service. Modern advertising developed with the
rise of mass production in the late 19th and early 20th centuries(1)
The American marketing association defines advertising as “any paid form of non-personal
presentation and promotion of ideas, goods or services by an identified sponsor”. Advertising
doesn’t change the physical properties of the product but than also it is the most compulsory
expense for creating demand for the product.
What is branding??
The branding started in sweden in the middle age between (475-1492). . Entomology tells us
that the word“brand” is a degenerate of the old Norse word “brandr”. The Vikings may have
spread the word “brandr” in England, where it was finally integrated into daily language. This is
how the word band came into being. In trade law, the word trademark is used as an alternative
of the word “brand”. Patents and Trademarks were legally known for the first time with the
establishment of the Venetian Patent law in 1474.(1) The meaning of a brand was later
registered in the dictionary in 1552 as “identifying mark made by a hot iron” 5. It was in
between the mid 16th century and the beginning of the 19th that the word “brand” began to
be related to trade, emotions and trust. A trademark was a symbol that would differentiate the
goods between manufacturers.
Start of brand advertising ?
One of the first advertising agencies was founded in New York in 1864 as Carlton and Smith, an
advertising agent buying and selling space in the popular religious journals of the nineteenth
century, the firm was purchased and renamed by James Walter Thompson in 1878(3). It is said
that as early as 1874 William Hesketh Lever, one of the founders of Unilever, began advertising
and selling a soap called Lever’s Pure Honey in Europe(4). Similarly in the US five years later
(1879), Harley Procter, one of the founders of Procter and Gamble (P&G), branded a white soap
with the name “ivory”. Ivory’s ad from 1881 is one of the earliest copy ads identified today. This
ad from P&G highlighted the attributes and functional benefits of the product. Stating that the
“ivory soap” “floated” and that it was “99 44/100% pure,” a dual claim which today is one of
the oldest and most famous ad slogans ever(4)
What is brand equity?
It is not clear who invented the expression of brand equity, but few uses of it have been traced
before the mid-eighties (Ambler & Styles 1995)(5).but in early 80s Kevin Lane
Keller start reading the memory factors and their importance in advertisment and its relation
with consumer brand evaluations in the moment of purchase, “Memory Factors in Advertising:
the effect of advertising Retrieval Cues on Brand Evaluations, 1987”.
In the early 90s David A. Aaker and Keller published articles such as “Consumer Evaluations
ofBrand Extensions” 1990; and Managing Brand Equity: The Impact of Multiple Extensions”
1990”. These two articles were followed by the now classic book Managing Brand Equity by
David A. Aaker 1991. In this book Aaker presented the idea of brand equity accompanied by
diffirent historical examples and cases. The model of brand equity was presented by Aaker
following the need to manage brands strategically by creating, developing and exploiting each
of the five assets that would create value; namely: Brand Loyalty, Brand Awareness, Perceived
Quality, Brand Associations and other proprietary brand assets. This model would finally come
to clarify for managers exactly how brand equity contributes to value.
Reference:
1. http://www.jpo.go.jp/seido_e/rekishi_e/nenpyoe.htm
2. Online Etymology Dictionary, © 2001 Douglas Harper
3. http://library.duke.edu/specialcollections/hartman/guides/jwt-history.html
4. Wally Olins, On Brand, Wally Ollins (2003) pg., 54
5. Paul Feldwick, What is brand equity anyway, and how do you measure it? Best Paper
Award, Market Research Society Conference 1996
PURPOSE STATEMENT
The primary purpose of this study is to determine the impact of advertisement on brand
equity.and secondly to find out the relationship between advertisement and brand equity how
a good advertisement can create brand awareness,brand perceived quality and brand loyalty
and association.
SIGNIFICANCE OF THE STUDY
This study will help marketers for developing the better brand equity in the minds of
customers.On which area they should work more and also this will explain them how they can
make brand awareness in order to In order to build strong brand equity effectively, managers
must invest in the advertising sector to get more and more profits.this study will help managers
how they can make their brands more popular and get more brand equity. The importance of
brand equity consists in many benefits for companies that own brands. Brand equity has
positive relationship with brand loyalty. Moreexactly, brand equity increases the probability of
brand selection, leading tocustomer loyalty to a specific brand (Pitta and Katsanis, 1995). One of
the benefits provided by high brand equity is the possibility of brand extension to other product
categories. Generally, brand extension is defined as the use of an existing brand name for entry
into a new product category (Aaker and Keller, 1990). Whencompared to new brand names,
brand extensions have lower advertising costs and higher sales (Smith and Park, 1992).
Successful brand extensions contribute to higher brand equity of the original brand (Dacin and
Smith, 1994; Keller and Aaker, 1992)
RESEARCH QUESTIONS OR RESEARCH HYPOTHESES
H1: Advertising affects brand equity
H1a: Advertising is positively related to brand awareness.
H1b: Advertising is positively related to perceived quality.
H1c: Advertising is positively related to brand loyalty
Literature review
Brand equity has been described as the added value endowed by the brand to
The product (Farquhar, 1989). It means brand equity is the asset of the company. Brand
Managers realize that similarity exists in most categories as a result of ``copy cat’’ or look-alike
advertising and the creation of me-too brands (Aaker,b 1991; Cobb-Walgren et al., 1995). Price
competition through the over use of short-term price promotions has led to a reduction in the
profitability of brands (Aaker, 1991; Cobb-Walgren et al., 1995). This has led retailers and
Manufacturers to examine ways to enhance loyalty or brand equity toward their brands. A
brand is a name, symbol, design, or mark that enhances the value of a particular product or
service (Farquhar, 1989; Cobb-Walgren et al., 1995). A review of the literature on brand equity
shows that at the
Conceptual level there is extensive agreement as to what is meant by brand and brand equity.
Most authors provide definitions of brand equity that are generally similar to Farquhar’s (1989)
definition of equity as the value added by the brand to the product (e.g. Srinivasan, 1979;
Aaker, 1991; Kamakura and Russell, 1993; Keller, 1993; Simon and Sullivan, 1993).
Brand equity, a measure of the overall value of a brand (Keller, 1998), is a key concept in brand
management. Brand equity has been identified as a valuable source of competitive advantage
for many organizations (Aaker, 1991; Bharadwaj, Varadarajan and Fahy, 1993; Keller ,1998).
Keller (1993) conceptualizes brand equity as “the differential effect of brand knowledge on
consumer response to the marketing of the brand”. Furthermore, Keller (1) proposes brand
knowledge as central to the definition of brand equity and contends that high levels of brand
knowledge increase the probability of brand choice, and (2) defines brand knowledge in terms
of brand awareness and image. Keller conceptualizes brand awareness as “the strength of the
brand trace in memory that is reflected by the consumer’s ability to identify the brand under
different conditions” and defines brand image as “perceptions about a brand as reflected by the
brand associations held in consumer memory”. The customer-based brand equity is a set of
brand-related associations held by the consumer in memory (e.g., Keller, 1993). Under this
perspective, brand equity is regarded as being largely attitudinal in nature, composed of beliefs,
affect, and other subjective experiences related to the brand (i.e., brand attitude, brand image,
etc.) In addition, existing research on brand equity is used to identify four cognitive
“components” of customer-based brand equity. These are labeled as global brand attitude,
strength of preference, brand knowledge, and brand heuristic (Girish and Clayton, 2004).
Others have tried to further extend brand equity by including constructs, such as brand loyalty,
brand awareness, perceived quality, in addition to brand associations (e.g., Aaker, 1991; Keller,
1993)
Brand equity is defined as a set of assets and liabilities linked to the brand, which add value to
or subtract value from a product in its relationship with customers (Aaker, 1991). Aaker
believed that the value of brand equity came from five brand equity assets(brand loyalty, brand
awareness,
perceived quality, brand associations and other proprietary brand assets), in which perceived
quality and brand associations were two most important assets. All these brand equity assets
could bring value for the enterprise and customer. The brand loyalty based on client can defend
the attack of competitor’s marketing, and the effect of competitive manufacturer’s marketing
efforts to attract the loyal customer of other brand is always unsatisfactory. Brand awareness
can provide the familiarity to a brand and the signal of substantiality and promise if the
customer knows the brand; while it will influence the consideration of customer to brand and
further influence the selection of customer on brand when the brand is memorized. The
perceived quality can influence the purchase decision and brand loyalty directly, especially
when the customer has not been stimulated by inducement or can’t make detailed analysis.
Brand association can assist customer to deal with or memorize information and become the
base of product difference and product extension, which will provide a purchase reason for
customer and arise positive feeling.
From the viewpoint of Aaker, the study can find that brand equity can bring value for both
client and manufacturer, and the client value from brand equity is the base to create
manufacturer value. In five assets of brand equity, brand loyalty may be influenced by other key
dimensions (brand awareness, perceived quality and brand associations) of brand equity;
therefore brand loyalty can be regarded as the primary base of brand equity and independent
from other dimensions.
In five assets, other proprietary brand assets (patent, trademark and distributors etc.) are
harder to measure the perspective of customer. In this case, this make perceived quality, brand
loyalty, brand awareness and brand associations as the measure variables of brand equity
based on the achievements of above scholars (e.g., Aaker, 1991; Keller, 1993).
Brand awareness
This is an important
foundation to make readers more receptive to other brand building messages. As
previously noted, awareness and familiarity of a “product” affect the consumer’s
perceptions, beliefs, taste, and liking (D. A. Aaker & Joachimsthaler, 2000; Miles Homer,
2006); and brand recognition even leads to positive assumptions about the quality of the
product (D. A. Aaker, 1996a, p. 11), another brand equity component. Universities are
also undoubtedly keen to convey the leadership, success, quality and excitement that
brand visibility brings with it (Joachimsthaler & Aaker, 1999). Consumers also tend to
give more attention, comprehension and retention to familiar brands (Tellis, 1988, as
cited in Hoeffler & Keller, 2003). Recognition and awareness often reflect familiarity
gained from past exposure. Recognition alone can result in liking and more positive
feelings about a brand, sometimes called the ‘halo effect’. One point of concern for
uOttawa should be those readers who were unsure or disagreed that RP sparked their
interest in uOttawa research (total of 86). This group would have been a great source of
information if there had been a method for probing or direct follow up. If there was a
focus group study of RP readers at some point in the future, this group could offer
interesting and valuable information on why the magazine is not generating this
awareness and how it could be accomplished. This would provide insight into whether
this lack of brand awareness creation is based on a URM’s non-effectiveness overall or
due to the content and style of this particular URM. When asked to name three of
Canada’s top five research universities, respondents filled in their own responses, without
being offered any named choices. Therefore, these results provide an indication as to
which universities enjoy the best top of mind awareness among respondents
Perceived Quality:
Perceived quality would be an important brand asset for universities for two
reasons—it is often the major if not principal strategic thrust of its business, and it is
linked to and often drives other aspects of how its brand is perceived (D. A. Aaker,
1996a). Naturally, the quality of teaching and research in universities is one of the topics
of interest to current and potential students, their parents, faculty as well as the media.
Most importantly, it differentiates and positions the brand compared to competitors and
Brand loyalty:
Brand loyalty is at the heart of any brand’s value according to Aaker and
Joachimsthaler (2000). A brand with a small but intensely loyal customer base can have
significant brand equity since loyal customers are more likely to pay a premium, refer
others to the brand and generally spend more money (Reichheld, 1994; as cited in Tom
Duncan & Moriarty, 1998). In fact, Aaker (1996b) asserts that the value of other
measures such as perceived quality and associations often depends on their ability to
influence loyalty. Such loyalty among existing “customers” represents a substantial
barrier to competitors and decreases the vulnerability of a brand since consumers’
favourable attitude towards a brand leads them to buy or stay with that brand (Rubinson
& Pfeiffer, 2005). Brand loyalty in a university context manifests itself in a number of
ways: current undergraduate students enroll in graduate studies at the same university; or
alumni, employees and faculty enroll their children at the university and donate money to
the institution. In 2006, the University of Ottawa introduced a Homecoming Week to
reinvigorate and strengthen the loyalty of alumni to the institution.
Relationship between Advertising and Brand Equity
Advertising expenditure, as the main marketing communications tool in the consumer market,
should be considered when determining the effects of marketing communications on
consumers, and the perceptions that the messages are provoking among different target
individuals (Angel and Manuel, 2005). Keller (2003) notes that the firm’s marketing
communications contribute to brand equity. That is, effective communication enables the
formations of brand awareness and a positive brand image. When consumers perceive high
spending on advertising, this contributes to their perception of the level of confidence that
marketing managers have in the product (Kirmani and Wright, 1989). Perceived advertising
spending has positive effects, not only on brand equity as a whole, but also on each of the
elements it is made up of: loyalty, awareness, perceived quality and brand associations (Cobb-
Walgren, Ruble and Donthu, 1995).
The relationship between perceived quality and spending on marketing communications was
justified by different studies (Milgrom and Roberts, 1986; Kirmani and Wright, 1989; Aaker and
Jacobson, 1994; Archibald, Haulman and Moody, 1983). The work shows the favorable
relationship between marketing communications spending and the firm’s investment in the
brand, which involves a higher perception of quality. The relationship between the investment
in marketing communications and quality affects not only the perceived brand quality, but also
supports the purchase decision by increasing the product value, as shown by Archibald et al.
(1983) — i.e. the recipient of the advertising considers the perceived advertising spending on
the brand as reaffirming the purchase decision.
From the study of former scholars, we can find that scale variables of brand equity such as
“brand awareness” and “brand attitude” can use “exposure effect” to increase the evaluation of
customer to the brand. Zajonc and Markus (1982) pointed out that “exposure effect” mean the
effect when some marketing objective was exposed repeatedly. The masses will have more
positive attitude to the marketing objective if it is exposed regularly. Anand, Holbrook and
Stephens (1988) also proved that “exposure effect” was a key factor to alter the preference and
attitude in the later study. Laroche, Kim and Zhou (1996) also validated the influence of
“exposure effect” on “brand knowledge”, “brand attitude”, “brand familiarity” and purchase
willing and confidence. Archibald et al. (1983) pointed out the relationship between the
investment in marketing communications and quality affects not only the perceived brand
quality, but also supports the purchase decision by increasing the product value. Hence
advertising expenditures are likely to be positively related to brand equity
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