Product Analysis

What's in a Brand Name?

Cox Professor Measures the Power of Positive Association

By Kathleen Tibbetts

Imagine buying Coca-Cola from a vending machine and getting an unmarked can of pop with no familiar logo, no red-and-white markings, nothing to identify it as a soft drink, let alone as the Real Thing. Would that product still be Coke as we know it? And would consumers purchase this product without its world-famous packaging?

The truth is, the only physical product that the Coca-Cola Company sells is soft drink syrup to bottlers - not the bottles and cans of Coke that consumers buy. The company's greatest success comes from selling its brand, says William Dillon, associate dean for academic affairs and Herman W. Lay Professor of Marketing and Statistics in SMU's Cox School of Business. Dillon's research helps to differentiate among the threads of association and bias that affect consumer product choices and enables companies to make sense of where and why their products achieve their market positions.

To find these results, Dillon says, it's important to distinguish among the factors involved in consumer decisions and how they affect aspects of a brand's identity. He first makes the distinction between brand equity and brand valuation. Brand equity, like equity in a home, "is meant to reflect appreciation - the good things and positive associations that accrue because the brand has delivered on its stated promises," Dillon says. "Equity is the brand's asset." Brand valuation, as determined through such exercises as Interbrand's annual top 100 brands list published in Business Week, attempts to attach a measurable value to that asset.

"Strong brands build emotional attachments. They attempt to develop a relationship," says William Dillon of Cox School of Business.

"Typically, one looks at the market share of the brand and the price premium that the brand commands," Dillon says. "The notion is that brands that have created equity command a price premium in the marketplace." Hence consumers may pay $1.89 for a cup of Starbucks coffee when they could purchase the same volume for about 69 cents at another coffee shop. Most equity research tries to assess the strength of a brand through price premium or market share, he says.

One simple way of assessing this is to "equalize the products, label them, and then see how much someone is willing to pay," Dillon says. For example, a coffee company may put the same brew in two containers - one labeled "Starbucks" and the other, perhaps, "Bill's Fresh Coffee." If consumers prefer the Starbucks coffee and will pay more for it simply because of the label, their choices appear to be determined by their positive associations with the Starbucks' name.

Such methods encounter obstacles, however, when it comes to finding an unbranded alternative to use as a base case. Typically, the benchmark is a product with no brand effect, such as a store brand or an unmarked generic. "But there really aren't unbranded products any more," Dillon says. Many in-house and regional brands have established strong presences in the modern marketplace.

To manage such dilemmas, Dillon's work separates the brand effect from the product effect. The brand effect demonstrates that a consumer will pay extra for a cup of Starbucks coffee simply because it's Starbucks, and not because the product is intrinsically better. On the other hand, if consumers believe that Starbucks uses a higher-quality bean, or that its brewing methods produce a better-tasting coffee, their choices are based on the product effect - a perception that Starbucks coffee is fundamentally better than that of its competitors.

A consumer may rate a product on a favorable characteristic - strength for a pain reliever, or decay prevention for a toothpaste - on a scale of 1 to 10. Dillon's models separate the customer's rating into two components: the Brand-Specific Association (BSA), or the actual linkage between the attribute and the brand; and the General Brand Impression (GBI), or the consumer's general like or dislike of the brand itself. This breakdown allows companies to understand the weight that general impressions can carry in driving consumer choice.

Dillon's summary of this work, co-written with Cox Associate Professor of Marketing Amna Kirmani, won the 2002 Paul E. Green Award, given each year to the paper published in the Journal of Marketing Research during the previous year that shows or demonstrated the most potential to contribute significantly to the practice of marketing research and research in marketing.

A benefit of Dillon's model is that it accommodates brand ratings as they typically are gathered in customer tracking surveys - for example, the 1-to-10 unfavorable-or-favorable scale. In addition, the model "provides information about the extent to which a brand has achieved superiority or 'ownership' of specific brand attributes," the authors write. A larger BSA rating indicates stronger consumer identification with a positive characteristic, while a larger GBI component indicates that a brand's overall image is playing the primary role in the customer's rating.

The ways in which