Drivers of Brand Equity

Factor analysis summarizes the 22 attributes into 5 factors.

Exhibit 2.11   Image attributes — Supermarket shopping. Factor analysis summarizes the 22 attributes into 5 factors.

While it yields additional insights, knowledge of how much equity your brand commands, does not reveal the factors contributing to the improvement or the decline in equity. Only if you know the factors that drive equity, can you recommend a course of action to enhance your brand’s equity.

Brand equity, as mentioned earlier, is derived from the thoughts and feelings that the brand evokes. Ultimately it is brand awareness, perceptions, imagery and attitudes that drive equity (Exhibit 2.0). To determine what people think about a brand, we need to track consumers’ perception of brands using a multitude of statements that describe different aspects or attributes relating to perceived benefits, imagery, symbols and attitudes.

Exhibit 2.11, which pertains to supermarket shopping, depicts 22 attributes (perceived benefits, imagery, symbolism and attitudes) that portray a banner’s image. Taking the same approach as that for brand image tracking, each banner is rated by respondents, on the attribute statements using a 5-point rating scale, where:

  • 1: “Strongly disagree”
  • 2: “Disagree”
  • 3: “Neither agree nor disagree”
  • 4: “Agree”
  • 5: “Strongly agree”

Typically, a collection of attributes like those listed in Exhibit 2.11, comprises a number of attributes that are interrelated. Factor analysis reduces these attributes to a smaller set of unobservable independent dimensions called factors. Those attributes that are highly correlated (i.e., fluctuate together) are grouped into the same factor, and those that exhibit low or zero correlation with each other, fall into different factors. Factor loading represents the weight of the attribute on the factor. Attributes with high loading help define the factors.

The factors are named post analysis — usually the researcher chooses an intuitively appealing name based on the attributes that define a factor. For instance, in Exhibit 2.11, the factor comprising attributes “product availability”, “one stop shop”, “comfortable to shop” etc. is labelled “Variety and Store Experience”.

Deriving the factors’ contribution to brand equity

Exhibit 2.12   Deriving the factors’ contribution to brand equity.

Relative importance of attributes driving brand equity

Exhibit 2.13   Relative importance of attributes in driving equity obtained from factor weights and attribute loading on factor

The importance of factors in driving brand equity is obtained by regressing the equity index on the factors. And the importance of the attributes is derived from the factor weights and factor loading. The below steps summarize the process as a whole:

  • Brands are rated by respondents, on the set of attributes.
  • The relatively large number of attributes is reduced to a small number of independent factors, using factor analysis.
  • Brand equity index is regressed on the factors, plus awareness (% spontaneous awareness) and consideration (% who consider purchasing), to determine the importance of each of the factors driving brand equity.  $$ Equity \, Index = f(Factor_1,\,Factor_2,\,...Factor_n,\,Awareness, \,Consideration)$$ $$ \qquad = \alpha_1 Factor_1+\alpha_2 Factor_2\,...+\alpha_n Factor_n+\beta_1 Awareness+\beta_2Consideration$$
  • The standardized coefficients (α1, α2, α3 ...) obtained from the multiple regression, reflect the importance of the factors. These coefficients have been rebased in Exhibit 2.12 to reflect relative importance.
  • The importance of the individual attributes is derived from the factor weights and factor loading.  The results for this example are shown in Exhibit 2.13.


Whenever habits play a key role in brand choice, consideration becomes an important driver for brand equity. It signals that consumers have made up their minds which brand they want to buy, and their repertoire of brands is limited.

The importance of consideration is also high if the inertia to move from one product offering to another is high. When this is the case, some brands will tend to have relatively high proportion of tenuous consumers. These are the customers who remain behaviourally loyal due to the inertia to change, even though their emotional loyalty is low.


Salience is likely to be important in low-involvement, habit-driven categories where consumers are less likely to make comparative assessments. In the context of behavioural loyalty, awareness is also important wherever purchases are made over the counter, as is the case with traditional retail channels in many developing countries.

Marketers boost brand awareness or salience with higher frequency advertising, and with the use of brand cues or shortcuts that link to the brand via visuals, sounds or expressions. A brand name and icon, mascot, slogan, music, colour, celebrity etc. can serve as cues. McDonald’s, for instance, uses multiple cues including its brand name and icon, golden arches, clown, and its slogan “I’m lovin’ it”.

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