Executive summary of “A cross-product category CBBE study: item response theory perspective”

Citation

(2014), "Executive summary of “A cross-product category CBBE study: item response theory perspective”", Journal of Product & Brand Management, Vol. 23 No. 3. https://doi.org/10.1108/JPBM-04-2014-0564

Executive summary of “A cross-product category CBBE study: item response theory perspective”

Article Type: Executive summary and implications for managers and executives From: Journal of Product & Brand Management, Volume 23, Issue 3

This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefits of the material present.

Research attention afforded to brand equity has been considerable for several decades. The concept is widely acknowledged as accounting for a sizeable percentage of the total value of many firms. Brand equity has a positive impact on organizational profitability and serves as a proven means of sustaining a competitive edge.

It is pointed out that brand equity is the value that a brand name bestows on a product or service. Studies of brand equity generally fall into finance, economics or psychological dimensions. The first two are perceived as objective because of their consideration of variables like advertising and price. This enables brand performance to be measured at either brand level or individual level in the respective form of, for example, market share or consumer purchase behavior.

Limitations are evident though, as brand performance cannot be directly affected by price and advertising. Because the psychological approach is based on consumer response to brands in “cognitive, emotional and behavioral” terms, it is deemed a truer indicator of brand equity, as these elements are its “real sources”. A common assumption of this approach to brand equity is that among an organization’s most critical assets is the knowledge and information stored about a brand in the minds of consumers. Such information is vital in prompting positive reactions to the firm’s marketing activities, thus leading to a likely boost to sales.

Various conceptualizations of what is termed consumer-based brand equity (CBBE) have arisen and contain the same or similar dimensions. Included are dimensions such as brand awareness, brand familiarity, brand popularity, brand associations, perceived quality, perceived brand value, brand uniqueness, brand loyalty and willingness to pay a price premium among others. Some scholars perceive dimensions like brand awareness and brand associations as being virtually identical and have subsequently condensed the number included in their framework. Models attempt to reveal causal relationships among the dimensions of CBBE and show any direct and indirect influences on consumer purchase intention and actual purchase behavior relating to the brand.

Survey is the conventional approach to measuring CBBE, with consumers evaluating a single brand or occasionally several brands from the same product category. To date, however, academics have not proposed a workable method for comparing brand equity across different product categories. Such scope is vital for businesses, especially given that an increasing number of larger organizations now operate within a diversity of categories. With the substantial marketing investment that this extensive activity involves, firms naturally seek effective performance indicators. Nestlé and P&G are examples of corporations with a presence in multiple product areas, and whose leaders would benefit from having the means to measure not only what has been accomplished financially but also in terms of CBBE.

Wang and Finn comment on what appear possible ways to examine cross-category CBBE. The first would involve asking consumers to evaluate a larger set of brands in each category under consideration. Such a process would not be viable though because measuring multiple brands on various dimensions would necessitate response to an excessively unrealistic number of questions. Randomly allocating consumers to different brands and using mean scores from their answers is a second option. In this case, individuality of consumers would weaken process reliability. The difference in, for example, perceptions, expectations, mental capacities and understanding of the response range used would merely provide information on how certain consumers react to certain brands. Using this approach, CBBE would reflect how a brand is perceived by each individual consumer whose differences are not factored into calculations.

Firms in reality require a methodology which enables inferences to be made about CBBE from the perspective of the general population. The authors aim to address this void using a model based on multi-facet item response theory (MFIRT), a more sophisticated variant of the item response theory (IRT) approaches many analysts have recently started to deploy. While IRT generally incorporates consumers and items as its facets, MFIRT is able to consider additional facets such as brands and their dimensions. Wang and Finn detail the proposed model, which is also graphically illustrated in a more simplified form.

In this study, the model is applied to soft drink brands and car brands. Data for the eight soft drink brands were obtained in 2008 by North American undergraduates. Evaluation was based on response to 25 statements relating to five dimensions of CBBE. The dimensions used were brand awareness, brand associations, brand loyalty, perceived quality and uniqueness. For the nine car brands or sub-brands, data were collected in 2009, prior to General Motors filing for bankruptcy. North American undergraduates again participated in the brand evaluation process.

Software was used to analyze the data on the assumption that the process would be less complex for managers than adopting a “more advanced modeling approach”. Data sets were first examined separately, and CBBE estimates for the soft drink brands reflected what the authors anticipated. For instance, Coke had the highest positive values as its position as the strongest soft drink brand would indicate. The lowest CBBE was Diet Coke with Splenda, a brand newly introduced locally at the time. Consumer perception of Toyota as the leading car brand in North America was also upheld by the model. Fit statistics for both soft drinks and cars confirmed that any variation in CBBE from prior expectations was insignificant.

In the second stage of the process, the two data sets were combined. Results here confirmed the “measurement invariance” that was evident when soft drink and car product categories were scrutinized separately. A similar outcome prevailed when the authors randomly removed 75 per cent of the data relating to soft drink brands. This confirmed the suitability of the method for consumers to examine only brands they are highly familiar with. Any data left out of calculations could also be incorporated, making it possible to consider larger numbers of brands without overwhelming study participants.

It is claimed that this approach permits CBBE of brands that are dependable and not influenced by contextual factors. This is attributable to the fact that “item heterogeneity” is allowed by the approach. That individual differences are identified is another advantage. The authors believe that the ability of MRFIT to enable “finer level” examination of data helps provide specific details on the different facets involved.

Wang and Finn assert that estimates can be further utilized to check how CBBE can impact on performance at brand and business levels. This can then help in the creation of action plans and strategies geared toward eliciting improvements.

Use of larger sample sizes and more brands is advised before firmer conclusions can be drawn. The authors also question the “unidimensionality” of facets assumed in the study and will address this issue in future work. Additional research might also consider the distinction between corporate brands and product brands.

To read the full article, enter 10.1108/JPBM-11-2013-0440 into your search engine.

(A précis of the article “A cross-product category CBBE study: item response theory perspective”. Supplied by Marketing Consultants for Emerald.)