Examining Advertising and Sales Promotions' Influence on Brand Equity

This academic paper, published in the Journal of Business Research, investigates the relationship between advertising and sales promotions and their impact on brand equity. The study, based on a survey of 302 UK consumers, explores how advertising spend and attitudes toward advertisements influence brand equity dimensions like awareness, associations, and perceived quality. It also examines the effects of monetary and non-monetary sales promotions, revealing that attitudes toward advertisements significantly impact brand equity, while advertising spend primarily boosts brand awareness. The research further suggests that companies can optimize brand equity management by understanding the interrelationships among different brand equity dimensions. The study builds on existing frameworks, providing insights into the evolving theory of brand equity and offering practical implications for marketing managers. The paper also explores the causal order among brand equity dimensions and highlights the importance of considering consumer-based brand equity measures when analyzing marketing mix effectiveness.

Examining the role of advertising and sales promotions in brand equity creation☆
Isabel Buila,
⁎, Leslie de Chernatonyb, c, 1
, Eva Martíneza, 2
a University of Zaragoza,Spain
b Università della Svizzera italiana,Switzerland
c Aston Business School,UK
a b s t r a c ta r t i c l e i n f o
Article history:
Received 1 June 2010
Received in revised form 1 November 2010
Accepted 1 February 2011
Available online 10 August 2011
Keywords:
Advertising
Sales promotions
Brand equity dimensions
This study explores the relationships between two central elements of marketing communication programs
advertising and sales promotions — and their impact on brand equity creation.In particular,the research
focuses on advertising spend and individuals'attitudes toward the advertisements.The study also inves-
tigates the effects of two kinds of sales promotions,monetary and non-monetary promotions.Based on a
survey of 302 UK consumers, findings show that the individuals' attitudes toward the advertisements play a
key role influencing brand equity dimensions, whereas advertising spend for the brands under investigation
improves brand awareness but is insufficient to positively influence brand associations and perceived qualit
The paper also finds distinctive effects ofmonetary and non-monetary promotions on brand equity.In
addition, the results show that companies can optimize the brand equity management process by consideri
the relationships existing between the different dimensions of brand equity.
© 2011 Elsevier Inc.All rights reserved.
1. Introduction
Both practitioners and academics regard brand equity as an
important concept (Keller and Lehmann, 2006). Elements of a brand's
equity positively influence consumers'perceptions and subsequent
brand buying behaviors (Reynolds and Phillips,2005).Therefore,to
increase the likelihood of such positive contributions and manage
brands properly, companies need to develop strategies which encour-
age the growth of brand equity (Keller,2007). In this context,the
identification offactors that build brand equity represents a central
priority for academics and marketing managers (Baldauf et al.,2009;
Valette-Florence et al., 2011).
Previous research suggests that marketing mix elements are key
variables in building brand equity (e.g., Yoo et al., 2000). As such, one
of the major challenges marketers face is deciding on the optimum
marketing budget to achieve both the highest impact on the target
market (Soberman,2009) and the brand (Ataman et al., 2010).
Although considerable research examines the effectiveness ofdif-
ferent elements of the marketing mix on brand equity,as Keller and
Lehmann (2006,p. 747) state,these researchers “have not typically
addressed the fullbreadth ofbrand equity dimensions”.Few studies
include consumer-based brand equity measures (i.e.,mindset mea-
sures) when analyzing marketing mix effectiveness.One of the ex-
ceptions is Yoo et al.(2000) who explore the relationships between
selected marketing mix elements and consumer-based brand equity.
While their research provides new insights into how marketing ac-
tivities may influence brand equity,these authors advocate further
exploration of the impact of the different marketing mix variables.
Two marketing variables are of particular interest: advertising and
sales promotions.Compared to other forms of marketing activity,ex-
penditures on advertising and promotions are significant. For instance,
these two variables account for approximately 1.5% of the UK's gross
domestic product (West and Prendergast,2009). Despite their impor-
tance, the individual contributions of advertising and sales promotions
to brand equity remain unclear and scholars highlight the need to
further examine the effect of these variables (Netemeyer et al.,2004;
Chu and Keh, 2006). Therefore, this study addresses this request.
Another area for improving understanding about consumer-based
brand equity is the interaction between brand equity dimensions.
Generally,researchers propose associative relationships among the
consumer-based brand equity dimensions (e.g.,Yoo and Donthu,
2001; Pappu et al.,2005; Tong and Hawley,2009).However, several
authors advocate that researchers focus on the ordering among the
brand equity dimensions (Yoo and Donthu, 2001; Keller and
Lehmann, 2006).
Journal of Business Research 66 (2013) 115–122
☆ The authors thank the following sources for their financial help: I + D + I project
(Ref: ECO2009-08283) from the Governmentof Spain and the project “GENERES”
(Ref: S-09) from the Government ofAragon.The authors would also like to thank
Dr José M.Pina for his insightful comments and helpful suggestions.
⁎ Corresponding author at:Department ofMarketing Management,University of
Zaragoza,María de Luna s/n, Edificio Lorenzo Normante,50018 Zaragoza,Spain.
Tel.: [phone]; fax: [phone].
E-mail addresses: [e-mail] (I.Buil), [e-mail]
(L. de Chernatony),[e-mail] (E.Martínez).
1 Università della Svizzera italiana,Lugano,Switzerland and Aston Busines School,
Birmingham,UK. Tel.[phone]; fax: [phone].
2 Department of Marketing Management,University of Zaragoza.Gran Vía 2,50005
Zaragoza,Spain.Tel.: [phone]; fax: [phone].
0148-2963/$ – see front matter © 2011 Elsevier Inc.All rights reserved.
doi:10.1016/j.jbusres.2011.07.030
Contents lists available at ScienceDirect
Journal of Business Research

Within this context, the purpose of this article is twofold. First, to
shed more light on two particular drivers of brand equity: advertising
and sales promotions. In particular, the study focuses on advertising
spend and individuals'attitudes toward the advertisements.Simi-
larly, the research investigates the effects oftwo kinds of sales
promotions, monetary and non-monetary promotions.Second,to
explore the relationships among brand equity dimensions.
Building on the framework proposed by Yoo et al. (2000), the current
work goes beyond research on sources of brand equity in several ways.
First,most brand equity studies have simply focused on the influence
that advertising spend and frequency of monetary promotions have
on brand equity (e.g., Yoo et al., 2000; Villarejo and Sánchez, 2005; Bravo
et al.,2007; Valette-Florence et al.,2011).By contrast,this study also
analyzes individuals'attitudes toward the advertisements and non-
monetary promotions.Despite several scholars recognizing that other
advertising characteristicsbeyond just advertising spend,such as
individuals'attitudes toward the advertisements,play an important
role in growing brand equity (Cobb-Walgren et al.,1995; Keller and
Lehmann, 2003; 2006; Bravo et al., 2007; Sriram et al., 2007), research
on brand equity has traditionally ignored these attitudes.Similarly,
recent literature on sales promotions (e.g., Chandon et al., 2000) stresses
the need to differentiate between two types of promotions,monetary
and non-monetary promotions. Surprisingly, academic research into the
effects of non-monetary promotions on brand equity is scarce. Second,
this article analyzes the causal order among brand equity dimensions.
Several studies suggest a hierarchy in terms of the importance of brand
equity dimensions and potential causal order (Agarwal and Rao, 1996;
Maio Mackay, 2001; Yoo and Donthu, 2001; Keller and Lehmann, 2003;
2006).However,few studies have empirically examined how brand
equity dimensions inter-relate. Analyzing all these aspects, this research
advances knowledge by providing more insight about the evolving
theory of brand equity.
This paper opens with a brief,general discussion of brand equity
and marketing mix elements followed by the hypotheses.Then,the
fourth section explains the methodology to testthe model. Next
section presents the results of the study. Finally, the paper concludes
by outlining the conclusions, implications and limitations of the
research.
2. Conceptual framework
2.1.Brand equity
Brand equity is a key issue in marketing.Despite receiving con-
siderable attention,no consensus exists aboutwhich are the best
measures to capture this complex and multi-faceted construct (Maio
Mackay, 2001; Raggio and Leone,2007). Part of the reason is the
different perspectives adopted to define and measure this concept
(Christodoulides and de Chernatony, 2010). The financial perspective
stresses the value of a brand to the firm (Simon and Sullivan,1993;
Feldwick, 1996). On the other hand, the consumer perspective focuses
the conceptualization and measurement of brand equity on individual
consumers (Leone et al.,2006).
Adopting the latter perspective,and from a cognitive psychology
approach,brand equity denotes the added value endowed by the
brand to the product (Farquhar,1989).Aaker (1991,p. 15) provides
one of the most accepted and comprehensive definitions ofbrand
equity: “a set of brand assets and liabilities linked to a brand, its name and
symbol that add to or subtract from the value provided by a product or
service to a firm and/or to thatfirm's customers”.Keller (1993,p. 2)
proposes a similar definition: “the differential effect of brand knowledge
on consumer response to the marketing of the brand”.
Consumer-based brand equity measuresassessthe awareness,
attitudes,associations,attachmentsand loyalties consumershave
toward a brand (Keller and Lehmann,2006). These measures offer
considerable advantages such as the assessment of sources of brand
equity and its consequences, plus a diagnostic capability (Ailawadi et al.,
2003; Gupta and Zeithaml, 2006). In this sense, these measures act as
early evaluation signals about future performance (Srinivasan et al.,
2010).From this perspective,the two main frameworks that concep-
tualize brand equity are those ofAaker (1991) and Keller (1993).
According to Aaker (1991), brand equity is a multidimensional concept
whose first four core brand equity dimensions are brand awareness,
perceived quality,brand associations and brand loyalty.Brand equity
research omits the fifth of Aaker's dimensions, other proprietary brand
assets,since this component is not pertinent to consumers.Keller's
(1993) conceptualization focuses on brand knowledge and involves two
components: brand awareness and brand image.
Drawing on these theoretical proposals,a large number of studies
conceptualize and measure brand equity using the dimensions of brand
awareness, perceived quality, brand associations and brand loyalty (e.g.,
Cobb-Walgren et al.,1995; Yoo et al.,2000; Yoo and Donthu,2001;
Washburn and Plank, 2002; Ashill and Sinha, 2004; Pappu et al., 2005;
2006; Konecnik and Gartner,2007; Tong and Hawley,2009; Lee and
Back, 2010).
Following these two approaches,this research uses a consumer-
based brand equity measure that consists of four dimensions: brand
awareness,perceived quality, brand associations, and brand loyalty.
2.2.Marketing mix elements
Marketing mix elements influence consumers'equity perceptions
toward brands (Pappu and Quester, 2008). These variables are impor-
tant not only because they can greatly affect brand equity but also
because they are under companies' control, enabling marketers to grow
brand equity through their marketing activities (Keller,1993; Berry,
2000; Yoo et al., 2000; Ailawadi et al., 2003; Herrmann et al., 2007).
Within the discipline of marketing dynamics, numerous studies use
financial and product–market measures of brand equity to analyze the
short- and long-term effects of marketing actions and polices, such as
advertising and price promotions (Leeflang et al.,2009; Ataman et al.,
2010; Srinivasan et al., 2010).
From the consumer-based brand equity perspective, which
this research follows,Yoo et al. (2000) find that high advertising
spend,high price,high distribution intensity and distribution through
retailers with good store image would help build brand equity.By
contrast, frequent price promotions would harm brand equity. Villarejo
and Sánchez (2005) also focus their study on advertising spend and
price promotions,while Bravo et al.(2007) add to these variables the
effect of the price.
This study focuses on the role of two specific marketing com-
munications tools: advertising and sales promotions. These two
marketing elements account for at least 25% of UK marketing budgets
(Chartered Institute of Marketing,2009). Despite their importance,
the influence of these variables on brand equity still remains unclear
(Netemeyer et al.,2004; Chu and Keh, 2006). This research responds
to this gap by exploring their effects on consumer-based brand equity.
3. Research hypotheses
Fig. 1 shows the conceptualframework underlying this research.
This study addresses how advertising spend and individuals' attitudes
toward the advertisements influence brand equity dimensions.Simi-
larly, the study focuses on two kinds of sales promotions, monetary and
non-monetary. Based on the literature, this research also hypothesizes
relationships among brand equity dimensions.
3.1.Advertising
Advertising is one of the most visible marketing activities.
Generally,researchers posit that advertising is successful in building
consumer-based brand equity,having a sustaining and accumulative
116 I. Buil et al./ Journal of Business Research 66 (2013) 115–122

effect on this asset (Wang et al.,2009).However,advertising effects
depend on both the amount invested and the types of messages
communicated (Martínez et al.,2009).
Several authors have investigated how actual and perceived
advertising spend influences brand equity and its dimensions (Simon
and Sullivan, 1993; Cobb-Walgren et al., 1995; Yoo et al., 2000; Villarejo
and Sánchez,2005; Bravo et al.,2007).Both approaches find positive
relationships between advertising spend and brand equity. Researchers
conclude that perceptions ofhigh advertising spend contribute to
developing a more positive perception of brand quality,higher brand
awareness and stronger brand associations (e.g., Yoo et al., 2000).
Advertising expenditure can influence brand equity dimensions in
several ways. When judging the product's quality,consumers use
different intrinsic and extrinsic cues (Rao and Monroe, 1989). Perceived
advertising spend is one such extrinsic quality cue (Milgrom and
Roberts,1986; Kirmani and Rao,2000).Using laboratory experiments
several studies report positive relations between perceived advertising
spend and perceived quality (Kirmani and Wright, 1989; Kirmani, 1990;
1997; Moorthy and Hawkins, 2005). This result is also evident through
work in shopping environments (Moorthy and Zhao, 2000). Thus, con-
sumers generally perceive highly advertised brands as higher quality
brands (Yoo et al., 2000; Bravo et al., 2007).
Similarly,large advertising investments can favor correctbrand
recall and recognition. Brand advertising spend can increase the scope
and frequency of brand appearance, and as a consequence, the level of
brand awareness (Chu and Keh, 2006; Keller, 2007). As such, the higher
advertising spend, the higher awareness levels are likely to be (Yoo et al.,
2000; Villarejo and Sánchez, 2005; Bravo et al., 2007).
Finally, advertising can also create favorable,strong and unique
brand associations (Cobb-Walgren et al., 1995; Keller, 2007). Like brand
awareness,brand associations arise from consumer-brand contact.As
such, advertising can contribute to brand associations through its ability
to create,modify or reinforce associations with each new contact.
Hence,the higher a brand's advertising spend,the stronger and more
numerous will be the associations in the consumer's mind (Bravo et al.,
2007). All these arguments lead to the following hypothesis:
H1. Consumers'perceptions ofa brand's advertising spend have a
positive influence on: a) perceived quality; b) brand awareness and
c) brand associations.
Researchers recognize that individuals'attitudes toward adver-
tisements can also play an important role influencing brand equity
(Cobb-Walgren et al.,1995; Keller and Lehmann,2003; 2006; Bravo
et al., 2007; Sriram et al., 2007). However, these issues have received
little attention in brand equity research.
Advertising is a powerful way of communicating a brand's func-
tional and emotionalvalues (de Chernatony,2010). In general,the
effectiveness of this communication tool depends on its content (i.e.,
the message), the execution or how the ad conveys the message, and
the frequency with which a consumer sees the advertisement (Batra
et al.,1996; Kotler,2000).As mentioned earlier,advertising creates
brand awareness,links strong,favorable,and unique associations to
the brand in consumers'memory,and elicits positive brand judg-
ments and feelings (Keller,2007).However to achieve these results,
the advertising needs a suitable design and execution.In particular,
one of the main concerns devising an advertising strategy relates to
the creative strategy (Kapferer, 2004; Keller,2007).
Through an originaland innovative advertising strategy,organi-
zations may be more likely to capture consumers'attention.In turn,
consumers'attention can lead to higher brand awareness, higher per-
ceived quality and contribute to forming strong, favorable and unique
associations (Lavidge and Steiner,1961; Aaker, 1991; Kirmani and
Zeithaml, 1993; Villarejo, 2002). In short, besides increasing consumers
familiarity with a brand, advertising can shape consumers' perceptions
of quality and other brand associations (Moorthy and Hawkins, 2005).
The following hypothesis synthesizes the above arguments:
H2. Individuals' attitudes toward the advertisements undertaken for
a brand have a positive influence on: a) perceived quality; b) brand
awareness and c) brand associations.
3.2.Sales promotions
Sales promotions are also a key marketing tool in communication
programs that influence brand equity (Valette-Florence et al.,2011).
However,different types of promotionaltools (e.g.,monetary and
non-monetary promotions) may have different effects on sales,
profitability or brand equity (Srinivasan and Anderson, 1998).
Most previous researches on sales promotions focus on monetary
promotions,such as price discounts and coupons.Although some dis-
cussion about the effect of this tool on brand equity still exists
(Palazón-Vidal and Delgado-Ballester,2005; Joseph and Sivakumaran,
2008), the empirical evidence suggests that monetary promotions have
a negative impact on brand equity (e.g., Yoo et al., 2000).
Focusing on the direct effects on brand equity dimensions, monetary
promotions are likely to have a negative influence on perceived quality
and brand associations. The reduction in the internal reference price is
one of the main reasons why monetary promotions have a negative
influence on perceived quality. Consumers use price as an extrinsic cue
to infer product quality (Milgrom and Roberts, 1986; Rao and Monroe,
1989; Dodds et al., 1991; Agarwal and Teas, 2002). As such, the influen
Brand
awareness
Perceived
quality
Brand
associations
Brand
loyalty
Advertising
spend
Non-monetary
promotions
Monetary
promotions
Attitudes toward
advertisements
H5
H6
H8
H7
H4a
H4b
H3a
H3b
H1a
H1bH1c
H2a
H2b
H2c
Fig. 1. Conceptual model.
117I. Buil et al./ Journal of Business Research 66 (2013) 115–122

of price discounting on consumers'reference price can lead to un-
favorable quality evaluations (Mela et al., 1998; Raghubir and Corfman,
1999; Jørgensen et al., 2003; DelVecchio et al., 2006).
Similarly, monetary promotions can erode brand associations.
Martínez et al.(2007) and Montaner and Pina (2008) reported that
monetary promotions have a negative impact on brand image. In addi-
tion, monetary promotion campaigns are too short to establish long-
term brand associations and can create uncertainty about brand quality
(Winer, 1986), which results in more negative brand perceptions.
In short, the frequent use of price promotions has a negative
impact on perceived quality and brand association dimensions
because this toolleads consumers to think primarily about price,
and not about the brand (Yoo et al., 2000). Hence, the third hy-
pothesis states:
H3. Consumers' perceptions of a brand's monetary promotions have a
negative influence on: a) perceived quality and b) brand associations.
Non-monetary promotions, such as free gifts, free samples, sweep-
stakes and contests,are becoming increasingly important in promo-
tional strategies (Palazón and Delgado-Ballester,2009).Surprisingly,
academic research into the effects ofnon-monetary promotions on
brand equity is scarce.
Recent studies show that non-monetary promotions may help
reinforce brand equity (Palazón-Vidaland Delgado-Ballester,2005;
Montaner and Pina, 2008). Unlike monetary promotions, non-monetary
promotions do not influence consumers'internal reference prices
(Campbelland Diamond,1990), and consequently are less likely to
create a negative influence on perceived quality.
Likewise, non-monetary promotions can help differentiate brands,
communicating distinctive brand attributes and contribute to the
improved brand equity (Papatla and Krishnamurthi, 1996; Mela et al.,
1998; Chu and Keh, 2006). While monetary promotions primarily
relate to utilitarian benefits, non-monetary promotions relate to
hedonic benefits (Chandon et al., 2000). These benefits,such as
entertainment and exploration,are similar to experiential emotions,
pleasure and self-esteem.Non-monetary promotions can therefore
evoke more associations related to brand personality, enjoyable
experiences,feelings and emotions. Furthermore,they link more
favorable and positive brand associations to the brand (Palazón-Vidal
and Delgado-Ballester,2005).
Non-monetary promotion strategies can enhance brand equity
(Montaner and Pina,2008),positively influencing perceived quality
and brand associations,as the following hypothesis postulates:
H4. Consumers' perceptions of a brand's non-monetary promo-
tions have a positive influence on: a) perceived quality and b) brand
associations.
3.3.Relationships among brand equity dimensions
Brand equity dimensions inter-relate.While some studies pro-
pose associative relationships among brand equity dimensions (e.g.,
Yoo et al.,2000; Pappu et al.,2005; 2006; Tong and Hawley,2009),
few researchers posit causalrelations among them (e.g.,Ashill and
Sinha, 2004; Bravo et al.,2007).
This study builds on the traditional hierarchy of effects model
to propose hypotheses about the relationships among brand
equity dimensions. This model, also known as the standard learning
hierarchy, follows the theory of reasoned action (Fishbein and Ajzen,
1975; Ajzen and Fishbein,1980). This theory posits that attitudes
and subjective norms influence intentions, which in turn affect
behavior. Approaching a product decision as a problem-solving pro-
cess, this hierarchy model suggests thatconsumers form beliefs
about a product by seeking information about relevant attributes.
Consumers then evaluate these beliefs and develop feelings about the
product resulting in buying or rejecting the brand (Solomon et al.,
2006). The traditional hierarchy of effects model assumes that
consumers are highly involved in making their decision. According to
this model, consumers are motivated to seek out information,
evaluate alternatives and make a considered decision (Solomon et
al., 2006).
Although some researchers challenge this framework and
propose alternative hierarchy models (Krugman,1965; 1966; Ray
et al., 1973; Barry et al., 1987; Solomon et al., 2006), most researchers
posit that this theory is a useful framework for studying the causal
order among the dimensions of brand equity from the perspective of
the consumer (Cobb-Walgren et al.,1995; Agarwal and Rao,1996;
Maio Mackay, 2001; Yoo and Donthu, 2001; Keller and Lehmann,
2003; 2006; Tolba and Hassan, 2009).
This framework depicts the evolution of brand equity as a consumer
learning process: consumers' awareness of the brand leads to attitudes
(e.g.,perceived quality and brand associations),which in turn will
influence attitudinal brand loyalty (Lavidge and Steiner, 1961; Gordon
et al., 1993; Konecnik and Gartner, 2007).
The process of building brand equity begins with increasing brand
awareness.Consumers must first be aware of a brand to later have a
set of brand associations (Aaker,1991).Brand awareness affects the
formation and the strength of brand associations, including perceived
quality (Keller, 1993; Pitta and Katsanis, 1995; Aaker, 1996; Na et al.,
1999; Keller and Lehmann, 2003; Konecnik and Gartner, 2007). Thus,
brand awareness is important as an antecedent to brand associations
and perceived quality (Pitta and Katsanis, 1995; Keller and Lehmann,
2003).
When consumers acquire a more positive perception of a brand,
loyalty results (Oliver, 1999). As such, brand associations and perceived
quality are the previous step leading to brand loyalty (Keller and
Lehmann,2003).Thus,high levels ofperceived quality and positive
associations can enhance brand loyalty (Keller, 1993; Chaudhuri, 1999;
Keller and Lehmann, 2003; Pappu et al.,2005). The following hypoth-
eses summarize these arguments:
H5. Brand awareness has a positive influence on perceived quality.
H6. Brand awareness has a positive influence on brand associations.
H7. Perceived quality has a positive influence on brand loyalty.
H8. Brand associations have a positive influence on brand loyalty.
4. Methodology
4.1.Sample selection and data collection
The data to test the hypotheses came from a consumer survey in
the United Kingdom.This study uses a sample of consumers unlike
other studies that examine the influence of marketing communica-
tion elements on brand equity on student samples (e.g.,Yoo et al.,
2000).
Following previous works in this area (e.g., Yoo et al., 2000;
Netemeyer et al.,2004), two criteria guide the selection of product
categories and brands. The first criterion is to select product categories
and brands that are widely available and well-known by UK con-
sumers.This enables consumers to provide more valid and reliable
responses and assures the reliability of the scales (Parameswaran and
Yaprak,1987). The second criterion is to choose product categories
and brands that reflect a broad set of consumer products and provide
some generalizability.
The use of rankings and secondary research to select product
categories and brands is common in brand equity research (Cobb-
Walgren et al.,1995; Krishnan, 1996; Netemeyer et al., 2004). Thus,
this study used the Best Global Brands ranking by Interbrand.
118 I. Buil et al./ Journal of Business Research 66 (2013) 115–122

Following the criteria noted above,the empirical research is based
on three product categories,within each of which there are two
mature brands, selected from the Interbrand ranking (i.e., six brands
in total were chosen).All the brands selected are valuable but have
different positions in the ranking. They also represent different
marketing characteristics (e.g., price, market share, marketing
strategies,etc.), which enhance the generalizability ofthe results
(Yoo et al., 2000; Netemeyer et al., 2004). The brands are Adidas and
Nike for sportswear,Sony and Panasonic for consumer electronics,
and BMW and Volkswagen for cars.All brands are familiar and well
known to UK consumers, which is an important criterion to
understand brand equity (Krishnan,1996). In addition, the variety
of categories selected enhances the generalizability of the findings.
Previous studies recognize these three categories as high involve-
ment product categories (e.g., Chen, 2007; Ko et al., 2007).
The empirical study used six questionnaires,one for each brand.
Each respondent only completed one version of the questionnaire and
evaluated only one brand.To be eligible for the study,respondents
needed to be aware of the focal brand on their questionnaire.
Collection of data took place at severallocations in the city of
Birmingham using quota sampling (by age and sex).Field workers
collected the data during different times of the day and on different
days.Of the 307 received questionnaires,302 valid questionnaires
were completed and the data from these 302 were analyzed.The
profile of the sample represented the population ofBirmingham,
which is akin to the general national population of the United
Kingdom. As such, 24.3% of respondents are 15 to 24 years old; 37.5%
are 25 to 39 years old and the remainder are 40 to 69 years old. Males
represent 50.9% of respondents.
4.2.Measurement
A review of previous studies provided the basis for the selection of
the measures for the marketing communication tools and brand
equity dimensions.The respondents assessed allitems on seven-
point Likert-type scales ranging from 1 (strongly disagree) to 7
(strongly agree).
Given that consumers have little knowledge ofactualmarketing
efforts, measures of marketing communications rely on perceived mar-
keting efforts (Yoo et al., 2000). These measures also link more directly
with consumer psychology (Yoo et al.,2000; Valette-Florence et al.,
2011). This study measures perceived advertising spend by adopting the
scale proposed by Yoo et al.(2000).To measure individuals'attitudes
toward the advertisements,this research proposes a three-item scale.
The brand equity literature recognizes that the degree to which con-
sumers perceive advertising as creative,original and different from
other competing brands are important success factors for advertising
(Kapferer, 2004; Keller, 2007). Interviews with experts also supported
this view.Previous scales,however,did not include these three char-
acteristics (e.g., LaTour et al., 1990; Henthorne et al., 1993). Therefore,
the three-item scale used to measure individuals' attitudes toward the
advertisements takes into accountinsights from the brand equity
literature and experts' opinion. To measure the perceived monetary and
non-monetary promotion intensities the study employs and adapts the
three-item scale of Yoo et al.(2000).Specifically,price discounts and
gifts were used as they are increasingly importantin promotional
strategies (Raghubir, 2005; Palazón and Delgado-Ballester, 2009).
The measurement ofbrand equity is consistent with the multi-
dimensionalconceptualization proposed within the consumer-based
perspective.Drawing from the literature (Lassar et al.,1995; Aaker,
1996; Yoo et al., 2000; Netemeyer et al., 2004; Pappu et al., 2005; 2006),
this research usesfive items to measure brand awareness, four items to
assess perceived quality,nine items to gauge brand associations and
three items to measure brand loyalty.
Table 1 lists the items used to measure each construct.
5. Results
5.1.Measurement model
Exploratory and confirmatory techniques serve to assess the reli-
ability, dimensionality and validity of the multi-item scales. Cronbach's
alpha for all the constructs were above 0.70.Furthermore,the item-
to-total correlations were all above the threshold of 0.30. Subsequently,
exploratory factor analyses using principalcomponents analysis and
varimax rotation method suggested that the corresponding items of
each scale grouped into a single factor (Hair et al., 2006). Only the item
of brand associations dimension loaded on three different factors (items
ASS1,ASS2 and ASS3 refer to perceived value; items ASS4,ASS5 and
ASS6 refer to brand personality; and items ASS7, ASS8 and ASS9 refer t
organizationalassociations).All the indicators were significant,with
factor loadings higher than 0.5 and no cross loading.The explained
variance exceeded 60% in each case.
This study follows Anderson and Gerbing (1988) two-step
approach for structural equation modeling.The analysis uses the
robust maximum-likelihood estimation method in EQS 6.1.Confir-
matory factor analysis (CFA) suggested deleting item ASS6 since the
R2 was below 0.4.After this deletion,CFA of the multi-item scales
produced an acceptable fit to the data (Table 1). All factor loadings are
above 0.5 and are statistically significant.Likewise,the coefficients
have a clear relation with the underlying factor (R2N 0.3). In addition,
the average variance extracted (AVE) and composite reliability (CR)
values are greater than 0.5 and 0.7 respectively (Bagozzi and Yi, 1988),
which guarantee the internalvalidity of the measurementmodel.
Results also support the discriminant validity of the scales. First, none
of the confidence intervals around the correlation estimate between
any two factors included one (Anderson and Gerbing, 1988). Further,
the variance extracted for any two constructs was always greater than
the squared correlation estimate (Fornell and Larcker, 1981).
5.2.Structural model
The next stage was to examine the hypothesized paths in the
proposed model. Previously, since brand association dimension loaded
on three different factors,the study employed averaged indicators of
the three constructs (Baldauf et al., 2009).
The model conceptualized in Fig.1 yielded a good overall fit.
Table 2 shows the results.
With respect to the effect of the perception of advertising spend
on perceived quality,brand awareness and brand associations,H1a,
H1b and H1c respectively,the results only support hypothesis H1b.
Thus, the higher the advertising spend,the higher the awareness
levels are likely to be.One of the more noteworthy findings is the
failure to support hypotheses H1a and H1c. Contrary to expectations,
advertising spend has an insignificant influence on perceived quality
and brand associations.
Individuals' attitudes toward the advertisements seem to play
an important role in brand equity dimensions.As such,individuals'
attitudes toward the advertisements have a positive and significant
influence on perceived quality, as predicted in hypothesis H2a. Brand
awareness and brand associations are also notably dependenton
individuals'attitudes toward the advertisements,which support hy-
potheses H2b and H2c.
The findings also support H3a.Monetary promotions (i.e.,price
discounts) have negative effects on perceived quality. H3b suggested
that monetary promotions would have a negative effect on brand
associations. However, the data reveals a non-significant effect of this
marketing element on brand associations.By contrast,results show
that non-monetary promotions (i.e., gifts) have a positive and signif-
icant influence on perceived quality, supporting H4a. Similarly, results
support hypothesis H4b,which suggested that non-monetary pro-
motions positively relate to brand associations.
119I. Buil et al./ Journal of Business Research 66 (2013) 115–122

Results reveal a significant positive relation between brand
awareness and perceived quality and brand awareness and brand
associations,in support of H5 and H6.By contrast,the relationship
between perceived quality and brand loyalty is negative and
significant.This finding fails to support hypothesis H7.Finally, hy-
pothesis H8 posited that brand associations enhance brand loyalty
Table 2
Structural model results.
Hypotheses Standardized β (t)
H1a Advertising spend → Perceived quality −0.12 (−1.28)
H1b Advertising spend → Brand awareness 0.27⁎⁎ (2.72)
H1c Advertising spend → Brand associations 0.02 (0.21)
H2a Attitudes toward the advertisements → Perceived quality 0.20⁎⁎ (2.05)
H2b Attitudes toward the advertisements → Brand awareness 0.21⁎⁎ (2.01)
H2c Attitudes toward the advertisements → Brand associations 0.37⁎⁎ (3.72)
H3a Monetary promotions → Perceived quality −0.11⁎ (−1.75)
H3b Monetary promotions → Brand associations −0.10 (−1.55)
H4a Non-monetary promotions → Perceived quality 0.13⁎ (1.82)
H4b Non-monetary promotions → Brand associations 0.18⁎⁎ (2.68)
H5 Brand awareness → Perceived quality 0.56⁎⁎ (8.02)
H6 Brand awareness → Brand associations 0.42⁎⁎ (5.30)
H7 Perceived quality → Brand loyalty −0.11⁎⁎ (−2.02)
H8 Brand associations → Brand loyalty 0.71⁎⁎ (9.90)
Fit indices
S-Bχ2= 630.04 (308) (p b 0.001) CFI = 0.94 NFI = 0.88
RMSEA=0.06 IFI = 0.94 NNFI = 0.93
⁎⁎ p b 0.05.
⁎ p b 0.1.
Table 1
Constructs and measurements results.
Constructs and measurement λ (range) CR AVE
Perceived advertising spend Yoo et al.(2000)
ADS1 Brand X is intensively advertised 0.82–0.89 0.90 0.75
ADS2 Brand X seems to spend a lot on its advertising compared to advertising for competing PC brands
ADS3 The advertisements for brand X are frequently shown
Individuals'attitudes toward the advertisements Ad hoc scale
ATA1 The advertisements for brand X are creative 0.81–0.92 0.91 0.76
ATA2 The advertisements for brand X are original
ATA3 The advertisements for brand X are different from the advertisements for competing brands of PC
Monetary promotions Yoo et al.(2000)
MPR1 Brand X frequently offers price discounts 0.79–0.95 0.92 0.80
MPR2 Brand X often uses price discounts
MPR3 Brand X uses price discounts more frequently than competing brands of PC
Non-monetary promotions Yoo et al.(2000)
NMPR1 Brand X frequently offers gifts 0.79–0.94 0.91 0.78
NMPR2 Brand X often uses gifts
NMPR3 Brand X uses gifts more frequently than competing brands of PC
Brand awareness Yoo et al.(2000); Netemeyer et al.(2004)
AWA1 I am aware of brand X 0.76–0.86 0.90 0.64
AWA2 When I think of PC,brand X is one of the brands that comes to mind
AWA3 X is a brand of PC I am very familiar with
AWA4 I know what brand X looks like
AWA5 I can recognize brand X amongt other competing brands of PC
Perceived quality Pappu et al.(2005,2006)
PQ1 Brand X offers very good quality products 0.88–0.93 0.93 0.77
PQ2 Brand X offers products of consistent quality
PQ3 Brand X offers very reliable products
PQ4 Brand X offers products with excellent features
Brand associations Lassar et al. (1995); Aaker (1996); Netemeyer et al.(2004); Pappu et al.(2005,2006)
ASS1 Brand X is good value for the money 0.78–0.91 0.87 0.73
ASS2 Within PC I consider brand X a good buy
ASS3 Considering what I would pay for brand X, I would get much more than my money's worth
ASS4 Brand X has a personality 0.84–0.93 0.87 0.69
ASS5 Brand X is interesting
ASS6 I have a clear image of the type of person who would use the brand Xa
ASS7 I trust the company which makes brand X 0.88–0.90 0.92 0.80
ASS8 I like the company which makes brand X
ASS9 The company which makes brand X has credibility
Brand loyalty Yoo et al. (2000)
LOY1 I consider myself to be loyal to brand X 0.79–0.89 0.89 0.73
LOY2 Brand X would be my first choice when considering PC
LOY3 I will not buy other brands of PC if brand X is available at the store
Fit indices
S-Bχ2= 706.11 (419) p b 0.001; RMSEA = 0.05; CFI = 0.95; IFI = 0.95; NFI = 0.90; NNFI = 0.95
Note: λ: range of standardized factor loading.PC: product category.
a Eliminated during validation process.
120 I. Buil et al./ Journal of Business Research 66 (2013) 115–122

and the findings show a positive and significant coefficient support-
ing H8.
6. Conclusions
Brand equity is a key indicator of brand success.Understanding
the drivers that contribute to and detract from the strengthening
of brand equity is therefore critical.The purpose of this study was
to examine the impact of advertising and sales promotions on brand
equity. The research analyzed both advertising spend and indi-
viduals' attitudes toward the advertisements.Similarly, the study
addressed promotions from both monetary and non-monetary per-
spectives.In addition, the study attempted to understand how the
underpinning brand equity dimensions inter-relate.
This study shows that individuals'attitudes toward the adver-
tisements, which have received little research attention in the brand
equity context,are important when building brand equity.Findings
show that by using an original, creative and different advertising
strategies, companies can develop higher brand awareness and posi-
tive perceptions of their brands.
This research also reveals that perceived advertising spend has a
positive effect on brand awareness.However, advertising invest-
ments do not necessarily enhance perceived quality and brand asso-
ciations.Severalfactors can explain this noteworthy finding.First,
advertising spend can reach a saturation point beyond which further
spend does not significantly contribute to creating brand equity
(Chu and Keh, 2006). In this sense, Wang et al. (2009) find negative
effects of advertising spend in brand equity. The erosion of traditional
advertising to the new media and over-advertising can explain this
negative effect (Wang et al.,2009). Further, Keller and Lehmann
(2003) posit that the amount of financial investment in marketing
does not guarantee success in terms ofgrowing brand equity.By
contrast,these authors state that the key factor to increase brand
equity lies in the qualitative aspects of the marketing program.
That is, advertising strategies can be ineffective in terms of ad-
vertising quantity vs.quality (Eastlack and Rao, 1989).Thus, as this
research shows,individuals' attitudes toward the advertisements
play a key role influencing perceived quality,brand awareness and
brand associations.
As suggested in the literature,the effect of sales promotions on
brand equity differs according to the type of promotional tool used.
Monetary promotions (i.e., price discounts) have a negative influence
on perceived quality whereas non-monetary promotions (i.e.,gifts)
have a positive effect on perceived quality and brand associations.
Despite the factthat monetary promotions have a non-significant
impact on brand associations, these results are interesting.
Finally, findings indicate that brand equity dimensions inter-relate.
Brand awareness has a positive influence on perceived quality and
brand associations, which in turn influence brand loyalty. Contrary to
predictions,perceived quality has a small but negative influence on
brand loyalty.This finding indicates that,consistent with previous
studies (e.g.,Bravo et al.,2007),quality is not a guarantee of a suc-
cessful brand.
Severalmanagerialimplications arise from these results.First,
advertising is an important marketing communication tool for com-
panies influencing brand equity dimensions.The higher consumers
perceive a brand's advertising spend,the more likely the brand is to
have a higher awareness.However,investments in this variable are
not sufficient to positively influence the associations related to the
brand. In this context, companies should pay attention to the design of
their advertising campaigns, ensuring they are original and creative.
Second, marketing managers should be attentive to the effects that
promotional actions have on consumers' perceptions of brand equity.
While price promotions are common, the results of this study indicate
that frequent use of monetary promotions dilutes some brand equity
dimensions. Consequently, brand managers should be cautious about
using this type of promotion. By contrast, using non-monetary
promotionaltools, such as gifts,seems wiser as they contribute to
growing brand equity.
Finally,findings imply that managers should pay attention to the
causalorder among brand equity dimensions.Managers should first
build brand awareness as a means ofanchoring the different asso-
ciations consumers have of a brand, such as perceived value, personalit
or perceived quality.Later, and as a way of generating greater loyalty,
managers should focus on brand associations.
As with any research, several limitations exist. First, future research
could examine additional antecedents of consumer-based brand equity
to better understand the brand equity creation process. Second, future
studies could combine actual measures of marketing mix elements with
perceptual measures. Likewise, future research could include additional
aspects related to individuals' attitudes toward the advertisements and
different types of sales promotions. Third, the high involvement product
categories,brands studied and their characteristics (e.g.,country of
origin) are likely to influence the results. Further research could extend
these findings by considering low involvement product categories and
different brands. Similarly, future studies could test the model employ-
ing product categories or brands as a unit of analysis. Such a study wou
require a large sample size for each unit of analysis to reach reliable
results.Finally, future research should consider the applicability of
findings in other countries and cultures.
This study is a step toward a fuller understanding of the role of
advertising and sales promotions in the brand equity creation process.
Despite the limitations, the findings reported in this paper contribute
to the literature and offer some new insights into how managers can
manage this important intangible asset.
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