P Graduate Sch Stanford

The authors propose EQUITYMAP, a new approach for measuring, analyzing, and predicting a brand’s equity in a product market. It defines brand equity at the firm level as the incremental profit per year obtained by the brand in comparison to a brand with the same product and price but with minimal brand-building efforts. At the customer level, it determines the difference between an individual customer’s overall choice probability for the brand and his or her choice probability for the underlying product with merely its push-based availability and awareness. The approach takes into account three sources of brand equity – brand awareness, attribute perception biases, and non-attribute preference – and reveals how much each of the three sources contributes to brand equity. In addition, the proposed method incorporates the impact of brand equity on enhancing the brand’s availability. The method provides what-if analysis capabilities to predict the likely impacts of alternative approaches to enhance a brand’s equity. The survey-based results from applying the method to the Korean digital cellular phone market show that the proposed approach has good face validity and convergent validity, with brand awareness playing the largest role, followed by attributebased equity.