Joffre D. Swait

The Equalization Price: A measure of consumer-perceived brand equity

Abstract Building upon the ideas of information economics and market signalling theory, a formal conceptual framework for explaining the creation, management, transfer and measurement of brand equity has been proposed by Erdem and Louviere. The research presented in this paper is a first step in the operationalization of that framework by developing a method for the measurement of brand equity that is built upon a theory of consumer behavior. Specifically, designed choice experiments that account for brand name, product attributes, brand image and consumer heterogeneity effects are proposed as the method for quantifying a brand equity measure called the Equalization Price (EP). Given an existing market structure, brand images built over time by advertising and product experiences, consumer brand perceptions and preferences, EP is a measure of the implicit value to the individual consumer of the brand in a market in which some degree of differentiation exists vis-a-vis its implicit value in a market characterized by no brand differentiation. The proposed measure can be used for both existing products and proposed brand name extensions, so it can double as a product-concept screening tool. We illustrate the application of the method for measuring brand equity using a convenience sample of Canadian consumers. In each of three product classes (deodorants, jeans and athletic shoes) we defined five existing products and two brand name extensions; these were presented to the respondents in designed choice sets which systematically varied prices over a range actually found in the local market. Concurrently, information related to brand image, previous brand usage and consumer sociodemographic characteristics was collected. The consumer choice data were used to calibrate Multinominal Logit choice models, from which we derive EP estimates for our sample. We discuss the interpretation of the modelling results for our data, illustrating the types of managerially relevant information about brand equity and its transfer that can be obtained from the method.

Stated Choice Methods: Introduction to stated preference models and methods

Introduction This chapter provides the basic framework for stated preference (SP) and stated choice (SC) methods. We first provide a brief rationale for developing and applying SP theory and methods. Then we briefly overview the history of the field. The bulk of attention in this chapter is devoted to an introduction to experimental design, with special reference to SP theory and methods. The next and subsequent chapters deal specifically with the design of (stated) choice experiments, which are briefly introduced in this chapter. Let us begin by discussing the rationale for the design and analysis of stated preference and choice surveys. By ‘survey’ we mean any form of data collection involving the elicitation of preferences and/or choices from samples of respondents. These could be familiar ‘paper and pencil’ type surveys or much more elaborate multimedia events with full motion video, graphics, audio, etc., administered to groups of respondents in central locations or single respondents using advanced computerised interviewing technology. The type of ‘survey’ is dictated by the particular application: relatively simple products which are well known to virtually all respondents usually can be studied with familiar survey methods, whereas complex, new technologies with which most respondents are unfamiliar may require complex, multimedia approaches.

Choice And Temporal Welfare Impacts: Dynamic Gev Discrete Choice Models

Welfare economics is often employed to measure the impact of economic policies or externalities. When demand is characterized by discrete choices, static models of consumer demand are employed for this type of analysis because of the difficulty in estimating dynamic discrete choice models. In this paper we provide a tractable approach to estimating dynamic discrete choice models of the Generalized Extreme Value (GEV) family that addresses many of the problems identified in the literature and provides a rich set of parameters describing dynamic choice. We apply this model to the case of recreational fishing site choice, comparing dynamic to static versions. In natural resource damage assessment cases, static discrete choice models of recreational site choice are often employed to calculate welfare measures, which will be biased if the underlying preferences are actually dynamic in nature. In our empirical case study we find that the dynamic model provides a richer behavioral model of site choice, and reflects the actual choices very well. We also find significant differences between static and dynamic welfare measures. However, we find that the dynamic model raises several concerns about the specification of the policy impact and the subsequent welfare measurement that are not raised in static cases.

Characterizing Brand Effects on Choice and Choice Set Formation Under Uncertainty

This paper examines the effects of brand credibility, a central concept in information economics-based approaches to brand effects and brand equity, on consumer choice and choice set formation. We investigate the mechanisms through which credibility effects materialize, namely through perceived quality, perceived risk and information costs saved. The credibility of a brand as a signal is defined as the believability of the product position information contained in a brand, which depends on consumer perceptions of the willingness and ability of firms to deliver what they have promised. The choice set is defined as the collection of brands that have a non-zero probability of being chosen among those actually available for choice in a given context. Furthermore, we study the impact of brand credibility on the variance of the stochastic component of utility. Choice model parameters not only capture the impact of systematic utility differences on choice probabilities, but the magnitude of this systematic impact is moderated by the relative importance of the stochastic utility component in preference. We term this moderation phenomenon preference discrimination, which we conceptualize as the decision makers capacity to effectively discriminate between products utilities in choice situations. We estimate a discrete choice model of brand choice set formation and preference discrimination on experimental data in two categories (juice and PC) and find strong evidence for brand credibility effects and differential mechanisms through which brand credibilitys impact materializes on brand choice conditional on choice set, choice set formation and preference discrimination.