Journal of Business, Industry and Economics

Volume 13, Fall 2009 Kevin Mason, Alice Batch

BRAND LEVERAGING

Mason, Kevin, Arkansas Tech University

Batch, Alice, Arkansas Tech University

ABSTRACT

Strong brand equity provides to relative advantage in the marketplace. Two studies were
completed to explore consumers’ perceptions and expectations of products as a function of brand equity.
The first study, a survey, shows that well known brands have leverage over comparable lesser known
brands with respect to consumers’ expectations of product performance, quality, and value. The second
study, an experiment, measured the effect of brand equity on specific consumer performance perceptions.
Stronger brands were found to have relative advantage leverage over weaker brands. Together these
findings empirically demonstrate the importance of building brand equity as a means of gaining marketing
place leverage over comparable products that lack brand equity.

INTRODUCTION

William Shakespeare once wrote, “What’s in a name? That which we call a rose by any other
name would smell as sweet.” On the contrary, the name of an object may have important perceptional
implications. In marketing, consumers’ perceptions about products are often influenced by the brand names
(Tom et al., 1987). In many cases a brand is more than just a name, a log, a symbol, an identity or a
trademark, it represents all that a business stands for (Prasad, 2000).
Consumers form perceptions about products based upon cues, such as brand names, packaging,
and colors. For example, Toro Corporation found that consumers’ perception of the lightweight snow
thrower, “Snow Pup” lacked an image of power; therefore, sales were disappointingly lower than projected.
After Toro switched the name from “Snow Pup” to “Snow Master”, sales drastically increased (Tom et al.,
1987).
Marketers continually subject consumers to marketing promotions. These promotions lead
consumers to form product perceptions, which impact consumers’ evaluation of a given product. Few
product evaluation perceptions are made solely upon the information that is physically present during an
evaluation (Alba, Hutchinson & Lynch, 1991; Celsi & Olson, 1988; Costly & Brucks, 1992). Rather,
consumers usually develop heuristics to evaluate products from generalized information contained in their
memories (Pechmann & Ratneshwar, 1992).
According to Tom et al. (1987), brand expectations result from a four-stage process. First, brands
are characterized according to general features of the brand’s product category. Next, the consumers form
expectations based upon the relevant cues associated with a particular brand. During the third stage the
consumer performs a confirmation check, whereby he/she attempts to match formulating brand perceptions
with pre-existing knowledge (stored in memory) about the brand/product category. As such, consumer
perceptions of brand performance are subjective and may be heavily influenced by cues such as brand
name, packaging, color, price, etc. which are under the control of the marketer. For example, a noisy
blender may not be more powerful than a quieter blender, but if consumers perceive a noisier blender as
being more powerful, then, in effect, it is more powerful.
This paper examines the effects of cues on consumers’ brand evaluations from two empirical
studies. In the first study, a survey was used to assess consumers’ perceptions about brands based upon the
price and brand equity. The results indicated that well-known brands are perceived in a more favorable
light. Therefore an experiment was conducted to test the differences in consumers’ brand performance
evaluations when they knew the brand being tested versus not knowing the brand.

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Journal of Business, Industry and Economics
Volume 13, Fall 2009 Kevin Mason, Alice Batch
STUDY ONE: SURVEY METHODS AND RESULTS
Using a systematic random sampling technique, a total of 130 shoppers in a southwestern mall
were surveyed. Participants provided their expectations about a brand’s overall performance, overall
quality, and value based upon whether the brand was well known or not (see the complete survey in
Appendix A). Responses were coded using a seven-point scale where higher values indicated more
favorable brand expectations (i.e., better performance, higher quality and value).
The average brand perception responses for well-known national brands versus lesser-known
generic brands are provided in Table 1. These results indicate that in the realm of consumer expectations,
well-known brands have competitive advantages over lesser-known brands. That is, well-known brands are
perceived as being more of higher quality and value, and as having higher performance than lesser-known
brands.

Table 1: Mean Brand Perceptions by Brand Equity

Characteristic Well-Known Brands Lesser Known Brands

Performance 4.99 3.90
Overall Quality 4.95 3.22
Overall Value 2.96 3.84

STUDY TWO: EXPERIMENT METHODS AND RESULTS

If consumers are predisposed to have more favorable perceptions towards more familiar brands,
they may also tend to be more lenient when evaluating the actual performance of established brands and
more critical when evaluating other less established brands. To test this belief, an experiment was
conducted to measure the effect of brand name on consumer perceptions of brand performance.
Arrangements were made at a restaurant bar to intercept consumers who would enter the bar while waiting
for an available table in the restaurant (in this way we felt that the subjects would not be in a great hurry,
the restaurant operations would not be inconvenienced, and we provided a diversion of sorts for the
customers while they waited for a table in the restaurant). For two nights we conducted our data collection.
As customers entered the bar, we invited them to participate in the study. A total of seventy-seven
consumers (all of legal drinking age) were randomly assigned to one of two experimental conditions.
Forty-two subjects participated in the treatment group and thirty-five subjects were assigned to the control
group. In the treatment group setting, the brands of the respective products were disclosed to the subjects.
In the control group, brands of the products were not disclosed.
All subjects were allowed to taste a small sample (3 ounces) of a national name brand light beer
(Bud Light) as well as a lesser-known (somewhat generic) brand beer (Schell Light). The subjects were
also given a sample (3 chips) of a national name brand potato chip (Lays Potato Chips) and a lesser-known
(generic) brand potato chip (Kroger). In the control groups setting (the first night of data collection) the
product packaging labels were concealed, whereas in the treatment condition (the second night of data
collection) the brand packaging was made apparent to the subjects. Immediately after tasting both brands of
a given product type, the subjects were asked to evaluate the respective brands in terms of taste and quality
(Appendix B illustrates an example of the questionnaire used to assess the subjects’ brand evaluations).
Brands were evaluated using a seven-point semantic differential scale where higher values represented
more favorable product evaluations (better taste, higher quality). The sequences of the taste tests were
random. That is, in a random fashion, some subjects in each group (control and treatment) tasted the well-
known brands first and others tasted the lesser-known brands first. The beer tasted was keep cool
(immersed in ice) until the time of the taste test.
Table 2 illustrates that well-known brands may have an objective competitive performance
advantage over their lesser-known generic brand counterparts. Specifically, the mean taste ratings were
higher for Bud Light and Lays brands were higher than for Schells and Kroger brands, respectively, when
the consumer knew the brand being evaluated as well as when the consumer did not know the brand in
question. In other words, the well-known brands may objectively taste better. But, interestingly, Bud Light

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Journal of Business, Industry and Economics
Volume 13, Fall 2009 Kevin Mason, Alice Batch
and Lays brands had higher taste ratings when the brand was known (verses unknown) to the subject and
taste rating for Schells and Kroger brands were lower when the brand was know (verses unknown).
Consumer perceptions of a given product going up or down depending on whether the brand is revealed to
the consumer implies subjective processes that impact consumer brand perceptions and evaluations. In
other words, the findings of this experiment imply that well-known brands provide a built-in positive bias
by consumers, whereas, lesser-known brands may have a built-in negative bias working against consumers’
perceptions and evaluations of products.
This subjective relative advantage enjoyed by stronger brands is evidenced by the significant
differences between the evaluations of brand taste when the brand names were known as well as opposed to
when they were not known. With regards to the better-known national brands (Bud Light and Lays), the
brands evaluations were much higher if the consumer knew what brand was being evaluated. Specifically,
the taste of Bud Light was evaluated more favorably when the brand name was known (mean = 5.85) than
when it was not known (mean = 5.04, t for difference = 2.67; p = .0096). In like manner, the taste of Lays
potato chips were rated higher when the brand name was known (mean = 6.28) than when the brand name
was not disclosed (mean = 4.88, t for difference = 4.45; p= .0001).
However, with respect to the lesser-known generic brands, knowing the brand being evaluated
appears to have an inverse effect on consumers’ brand performance perceptions. That is, consumers who
knew that they were evaluating Kroger brand potato chips gave significantly lower ratings for the brand’s
taste (mean 3.15) than did those consumers who tasted the Kroger potato chips without knowing the brand
(mean 4.51; t for difference = 3.38; p = .0012). While no significant difference was observed for the
consumers’ taste test ratings of the generic light beer (Schell), the mean rating provided by consumers in
the treatment group (brand name known) was lower than by consumers in the control group (brand name
not known).

Table 2: Mean Taste Evaluations

Brands Condition 1: Condition 2:

Brand Name Brand Name P-Value for
Not Known Known Condition Difference
Bud Light 5.04 5.85 .0096
Schell Light 4.49 4.38 .7460

P-Value for Brand

Difference .0756 .0001

Lays Potato Chips 4.88 6.28 .0001

Kroger Potato Chips 4.51 3.15 .0012

P-Value for Brand

Difference .1568 .0001

As shown in Table 3, the brand quality evaluation results paralleled the brand taste results. Again,
the well-known brands quality evaluations were higher for Bud Light that for Schells and the Lays potato
chips were rated higher than the Kroger brand under both experimental conditions (when the consumer
knew the brand being evaluated as well as when the consumer did not know the brand). Also consistent
with the taste performance findings, the better-known brands (Bud Light and Lays) quality evaluations
were much higher for those subjects who knew what brand was being evaluated as opposed to quality
ratings for the same brands where subjects did not know the brand being evaluated. Specifically, the quality
of Bud Light was evaluated more favorably when the brand name was known (mean = 6.14) than when it
was not known (mean = 5.23, t for difference = 3.44; p = .0010) as was the quality of Lays potato chips
when the brand name was known (mean = 6.52) than when the brand name was not disclosed (mean = 4.94,
t for difference = 5.19; p= .0001).

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Volume 13, Fall 2009 Kevin Mason, Alice Batch
For the lesser-known generic brands, knowing the brand name seemed to result in more critical
ratings. Specifically, subjects who knew that they were evaluating Kroger brand potato chips gave
significantly lower ratings for the brand quality (mean 3.47) than did those consumers who did not know
they were sampling Kroger brand chips (mean 4.51; t for difference = 2.28; p = .0255). The mean rating
provided by subjects who knew they were tasting Schell Light beer (mean 4.57) was lower than that ratings
provided by subjects who did not know the brand prior to the rating task (mean 4.83). However this
observed difference was not statistically significant. Overall, these findings indicate that brand equity can
play a powerful role in the perceptions that consumers form about product characteristics and attributes.
Positive brand equity can provide marketing leverage and negative brand equity can be a marketing
inhibitor.

Table 3: Mean Quality Evaluations

Brands Condition 1: Condition 2:

Brand Name Brand Name P-Value for
Not Known Known Condition Difference
Bud Light 5.23 6.14 .0010
Schell Light 4.83 4.57 .4793

P-Value for Brand

Difference .1325 .0001

Lays Potato Chips 4.94 6.52 .0001

Kroger Potato Chips 4.51 3.47 .0255

P-Value for Brand

Difference .1023 .0001

DISCUSSION

Brands that capture the imagination of consumers have increased value or equity. In other words,
brand equity is the overall perceptions of quality and image attributed to a product, independent of its
physical features. A brand is an expectation of certain benefits between a company and its customers. For
example, Mercedes and BMW have established their brand names as synonymous with high-quality,
luxurious automobiles. Years of marketing, image building, brand nurturing, and quality manufacturing has
lead consumers to assume a high level of quality in everything they produce. Consumers are likely to
perceive Mercedes and BMW as providing superior quality to other brand name automobiles, even when
such a perception is unwarranted. Therefore, brand equity adds value to products; consequently, consumers
develop more favorable perceptions of well-known brands. Surprisingly, the actual contents, formula or
qualities of products are not as important to consumers as their perception of the brand. That is, brand
equity built up by years of advertising and cultural encrustation is important for marketing success. After
all “Coca-Cola and Kentucky Fried Chicken by any other name would just be sugar-water and gizzards,”
(Pendergrast, 2001, Sec. A, p.22).
Brand equity/value is an important tool in the marketing effort. Although we are familiar with the
four “Ps” of the marketing mix – product, price, promotion, and place, the importance of another “P”,
perception, cannot be overemphasized in this consumer savvy, message-saturated age (Dignam, 2000).
Many companies are spending more on advertisements to enhance the equity of their offerings such as,
delivering the message clearly, communicate quickly, project credibility, and striking an emotional chord
with the consumer (Frankle, 2001). Brands must gain general awareness, evoke acceptance, and sustain

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Volume 13, Fall 2009 Kevin Mason, Alice Batch
commitment, in order to be credited with valuable brand equity. It is affected positively or negatively by
the intentional and unintentional messages form the company, but it cannot be arbitrarily changed,
improved, or “managed” without the participation of the customer, (Frankle, 2001).
The advantage of having high brand equity is evident. Consumers often choose pick the same
brands on a repetitive basis. A good example is ways consumers purchase soft drinks. Coca-Cola is a very
well known manufacturer of soft drinks. They produce many different types and lines of drinks. There are
also many different brands of cheaper generic soft drinks with very similar contents. Consumers tend to
purchase the brands with high brand equity because they perceive the product as a greater value. Examples
of potential marketplace relative advantage leverage that may be enjoyed by stronger brands include:

 The product can be marketed at higher prices.

 The product commands more advantageous shelf space.
 The product maintains higher market awareness, thus increasing product trials and repeat purchase
behavior.
 Consumers perceive the brand as being higher quality.
 Consumers may perceive a decreased perceived risk of the product.

CONCLUSION

Interestingly, even though the subjects in the experiment rated the well-known brands more
favorably, in terms of taste and quality, the evaluations for these brands were significantly higher when the
brand name cues were observable prior to product evaluations. Inversely, the lesser-known brands received
more favorable evaluations when the brand name cues were not observable to the subjects. These results
highlight the impact of brand name leverage, in the formation of consumers’ product performance beliefs.
Favorable cues such as an established brand name (one that has high social acceptance and
consumer confidence) lead consumers to more favorable impressions of the product. However, less
favorable cues, such as generic store brands, may lead consumers to take more critical views of the
product’s performance. Hence, it is extremely important for marketers to be concerned with brand equity
leverage– the added perceived/subjective value of a well-known brand.
These results emphasize the importance of effective branding and brand image. Successful
branding can increase the perceived value of products. Conversely, weaker brand equity (lesser-known
brands) can adversely impact consumers’ perceptions of a given product (Schell and Kroger brands were
perceived better when consumers did not know the brand of the product and less favorably evaluated when
consumers knew the brand being evaluated).
The purpose of the article was to examine the effect of brand name as a cue that moderates
consumers’ expectations and ultimately their evaluations of brand performance. Overall, the survey
provides evidence that consumers have favorable pre-conceived notions about well-known brands. The
results of the reported experiment demonstrate that consumers tend to be less critical of the performance of
well-known brands and more critical of brands for which they are less familiar. Thus, it is not necessarily a
brand’s actual performance that may lead to competitive advantage or disadvantage.
To build stronger brands, marketing managers need to make brand value one of the company’s key
concerns, on par with profits and customer satisfaction. Examining the brand value of a marketer’s offering
inevitably will raise fundamental questions about brand strategy: is the company striving to dominate the
right dimensions? Is it deploying sufficient resources to the activities that will enable it to dominate those
dimensions? Should the company settle for being best in class or does it need to push the brand value
horizon to increase brand value? To be able to increase the value of its brand, a company must develop a
fact-based understanding of the underlying drivers of brand value. In the end brand equity leverage or lack
thereof may determine success of the degree of success that a product enjoys in the marketplace.

REFERENCES

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Volume 13, Fall 2009 Kevin Mason, Alice Batch
Alba, Joseph, J. Wesley Hutchinson, and John Lynch, Jr. (1991), “Memory and Decision Making,”
Handbook of Consumer Behavior, Thomas Robertson and Harold Kassarjian (Eds.), Englewood
Cliffs, NJ: Prentice-Hall.
Celsi, Richard, and Jerry Olson (1988), “The Role of Involvement in Attention and Comprehension
Processes,” Journal of Consumer Research, Volume Fifteen, Number Two, 210-224.
Costly, Carolyn, and Merrie Brucks (1992), “Selective Recall and Information Use in Consumer
Preferences,” Journal of Consumer Research, Volume Eighteen, 464-474.
Dignam, C. (2000), “Why Perception Is Now Marketing’s Most Important “P”,” Marketing, Jan, 6, p. 11.
Frankle, Rob (2001), “What is Branding,?” Online: http://www.branding-report.com/whatisbranding.html
Tom, Gail, Teresa Barnett, William Lew, and Jodean Selmants (1987), “Cueing the Consumer: The Role of
Salient Cues in Consumer Perception,” Journal of Consumer Marketing, Volume Four, Number
Two, 23-27.
Pechmann, Cornelia, and S. Ratneshwar (1992), “The Use of Comparative Advertising for Brand
Positioning: Association Versus Differentiation,” Journal of Consumer Research, Volume
Eighteen, 145-160.
Pendergrast, M. (2001), “How to Keep a Corporate Secret,” Wall Street Journal, Feb. 20, A-22.

Prasad, K. (2000), “Managing Hotel Brand Equity: a Customer-Centric Framework for Assessing
Performance, Cornell Hotel and Restaurant Administration Quarterly, vol. 15, pp. 54-67.

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Volume 13, Fall 2009 Kevin Mason, Alice Batch

APPENDIX A: SURVEY INSTRUMENT

Please indicate your level of agreement or disagreement with the statements below by circling the number
that best represents your opinion where:

1. indicates that you strongly disagree with the statement.

2. indicates that you disagree with the statement.
3. indicates that you slightly disagree with the statement.
4. indicates that you are neutral with regard to the statement.
5. indicates that you slightly agree with the statement.
6. indicates that you agree with the statement.
7. indicates that you strongly agree with the statement.

In general, compared to lesser known brands, well-known national brands:

Perform better 1 2 3 4 5 6 7
Are of higher quality 1 2 3 4 5 6 7
Are of higher value 1 2 3 4 5 6 7

APPENDIX B: BRAND EVALUATION INSTRUMENT

Please rate the taste of Bud Light Beer.
Poor ___ ___ ___ ___ ___ ___ ___ Excellent

Please rate the taste of Schell Light Beer.

Poor ___ ___ ___ ___ ___ ___ ___ Excellent

Please rate the overall quality of Bud Light Beer.

Poor ___ ___ ___ ___ ___ ___ ___ Excellent

Please rate the overall quality of Schell Light Beer.

Poor ___ ___ ___ ___ ___ ___ ___ Excellent

Note 1: for the subjects in the control group the brand names were designated as Brand
“A” and Brand “B”.

Note 2: the brand evaluations for the potato chips brands were assess with an instrument
identical to this except that the appropriate brand names were provided to
subjects in the treatment group. Again brand names were designated as Brand
“A” and Brand “B” for the subjects in the control group.

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