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ANALYSIS AND MODELLING OF BRAND EQUITY

DATA TO PREDICT THE SUCCESS OF A BUSINESS
Article January 2014

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Journal of Emerging Trends in Engineering and Applied Sciences (JETEAS) 5(7): 66-72
Journal
of Emerging
Trends
in Engineering
Applied
(JETEAS) 5(7): 66-72 (ISSN: 2141-7016)
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ANALYSIS AND MODELLING OF BRAND EQUITY DATA TO PREDICT THE

SUCCESS OF A BUSINESS
Ojeyinka, Taiwo O., and Ajayi, Olusola Olajide
Department of Computer Science, Adekunle Ajasin University
Akungba-Akoko, Ondo State, Nigeria.
Corresponding Author: Ojeyinka, Taiwo O.,
-----------------------------------------------------------------------------------------------------------------------Abstract
Most firms are profit-oriented instead of creating values for their customers. However, with the struggle for market
leadership, firms have come to realize that building brand equity is very important to gain sustained competitive
advantage for products in the market. Studies that focus on brand equity simultaneously as influencer of a firms
performance have research gap. This research was carried out to fill this knowledge gap. Brand equity data is used to
predict the total revenue and the rate of return on investment in order to draw meaningful conclusions between the
marketing activities on a firms products and the success of the firms business. The results of the analysis revealed that
brand equity does contribute to the success of a business but the significance of such contribution is low. It was
observed that product quality goes a long way to promote and strengthen brand equity. The researchers believe that this
kind of measure is consistent with the interpretation of customers behavior and it is in accordance with the
measurement of consumer-based brand equity especially in the case of commodity products in Nigeria.
Keywords: brand, marketing, performance, analysis, customers
INTRODUCTION
Brand equity is foremost and amongst the most valuable
but intangible marketing assets a firm can have. Over the
years, the need to measure the impact of marketing is
intensified as firms feel the increasing pressure to justify
their marketing expenditures, and to be more accountable
for showing how marketing activities link to shareholder
value. According to [VanWaterschoot and Van den Bulte
1992] It is important to know that marketing activities
such as packaging, brand name, density of the
distribution channel, advertising, permanent exhibitions,
sponsoring, press bulletins, among others can help build
long term assets or positions such as brand equity. Also
factors that determine the essence of a firm`s dynamic
capabilities are the organizational processes where
capabilities are embedded, and the position the firm has
gained (for example, assets endowment) from this
perspective. The marketing factors that determine
whether the firm has a competitive edge comes from the
marketing assets such as customer satisfaction and brand
equity (i.e. the marketing positions it has generated). Due
to the necessity in today`s market place to develop,
maintain and use product branding to acquire a certain
level of competitive advantage, many researchers have
been interested in the concept and measurement of brand
equity. The study of brand equity can be approached from
two perspectives; from the perspective of the consumer
and from the perspective of the firm. Studying brand
equity from the perspective of the firm generally involves
the use of observed market data to assess the brand`s
financial value to the firm.
In a marketing environment contemporary marketers
have to face some challenging situation that the new
business environment brings with it. One of them is the
evolution of the business atmosphere from mass
production [Arthur 1996] to the positive feedback
economy known as the increasing returns [Arthur 1990],
66

as well as that of knowledge processing. The aspect of

increasing return has to do with the operational level that
marketing takes up in the organization [Ambler 2000],
while knowledge processing has to do with the rising
importance of short term profits to the board and top
management [Webster et al 2003]. In order for
management to determine how to improve performance
the market has to be studied, particularly the customers
reaction to the firms product. Yet a majority of firms do
not follow this logic. Marketing managers have to
develop tools to quantify marketing contribution to the
firms growth and profitability. Brand equity is a relevant
aspect of marketing that contributes to the firms success
or profitability. This is because it assists the marketing
manager to study the market and give the firm an idea of
how profits are generated. This ultimately leads to the
firms growth. Empirical research on the link between
marketing assets (or positions) and the firms
performance have been done in the past, but studies that
focus on brand equity simultaneously as influencer of a
firms performance has a research gap. The purpose of
the research is to examine if marketing activities on
particular brand can be used to determine brand
performance, and also whether business success can be
measured based on the relationships between brand
equity and brand performance. These relationships are
examined in five different products of the same category
and from three different companies, which constitute the
major markets in Nigeria. Specifically, the purpose of this
research is to determine whether there is a positive
relationship between brand equity and a firms success.
The objectives of this work are meant to provide answers
to certain questions. 1. What are the effects of marketing
activities (such as advertising) on marketing asset (Brand
Equity)? 2. Do marketing activities of the firm affect its
success? 3. Does marketing assets have effects on the
profitability of the firm? (4) To what extent does brand
equity contribute to the success of a firm?

Journal of Emerging Trends in Engineering and Applied Sciences (JETEAS) 5(7): 66-72 (ISSN: 2141-7016)
The only value a company creates is the value that
comes from customers. (Kotler et al 2006). This can be
attributed to the reason why brands that have strong
equity succeed more than brands that creates mere
satisfaction. Customer`s choices are made on the
marketing offer that gives them the most values. They
buy from the firms that offer the highest value, thereby
making value creation an important issue in satisfying
customers need since customers usually base their
judgments on the value of marketing offered to them.
Most times their expectation is based on their past buying
experiences, friends and associates opinion, marketers
and competitor information and promises. For marketers
to succeed, they must be able to identify the right level of
expectations because if the expectations are low they are
likely to satisfy only a few buyers. Again, if high
expectations and delivering performance do not match
they are also likely to be disappointed.

and arrive at predictable financial reports for measuring

business success, which in turn can be compared with
actual financial reports from stock market analysis to
determine the extent to which the hypothesis is usable.
The following sequence is observed.
a. Assessment of current knowledge base: A good
assessment of current knowledge of brewed products in
Nigerian market, and the countrys cultural and socioeconomic drivers of products sales was understudied.
This includes a review of the countrys stock market
reports and an evaluation of primary (from customers)
and secondary (from financial analysis) data sources.
b. Qualitative exploratory method: The use of
qualitative approach generated awareness to the brand
attributes, as well as external factors to motivate decision
making and enables the construction of effective survey
questions that would generate the desired information.
This information is used to develop a quantitative
instrument that is more focused to marketing activities
and brand performance data.
c. Quantitative method: The quantitative phase of this
project is designed to identify and measure brand
performance based on customers perception and behavior
as aftermath of firms marketing activities. To achieve
this goal the entire problem is broken into segments with
directed flow linking one segment to another. Starting
with the organization marketing activities, a measure of
the efforts by the organization and the effects of their
activities on different brands are obtainable. Measures of
marketing activities and brand performance were
collected from different consumers of brand products.

Brand equity is the positive differential effects by

customers/clients on products; the effects that knowing
the brand name have on the customer response to the
product or services. In order for customers to respond
positively to a product, it must have higher brand loyalty,
name awareness, perceived quality, strong brand
association and other assets such as trademarks patents
and channel relationship. This research was motivated by
hypothesis that predicts the possible influence of brand
equity as a situational variable that guarantees
profitability/success in a business.
The following hypothesis is given:
Brand Equity in Major Market does Guaranty success
in Nigerian Market.
The alternative hypothesis in case the original hypothesis
proves to be wrong is:
Brand Equity in major Market does not guaranty
Success in the Nigerian Market.

Marketing Activities and Brand Performance

The famous and the most common among the lager beer
products in Nigeria, are Star, Harp, Gulder, 33 and
recently Heineken. These products are manufactured by
two of the several breweries: Nigeria Breweries (NB) Plc
and Guinness Breweries Nigeria (GBN) Plc. Table 1.
While some breweries which offer other brand of beer
have stopped operating, the NB and Guinness Nigeria Plc
remains strong and popular in Nigeria

METHODOLOGY
The approach adopted in order to prove the hypothesis is
to collect useful data from the firms marketing activities
Table 1: Brand Categories and Manufacturers

Table 2: Metrics for brand performance measurement

The research study is based on the six lager beer products

Star, Harp, Gulder, 33, Legend and Heineken. These
brands represent over 90% market share in the lager beer
category of drinks in Nigeria.

customer or prospect. Some marketing activities of NB

Plc. in recent times are viewed as important and
consistent with the firm marketing campaign. These
activities are included in the design of questionnaire to
include: TV, Radio & Print Advertisement, TV Reality
Shows, Event /Sport Sponsorship, Promo Donations /
Gift Items, Social media network (Face book, Twitter,
etc.), and One-to-one contacts.

Marketing Activities
Measuring the impact of marketing is based on the
evaluations of some type of attitudinal analysis. This
study assumes that customers attitudes and opinions lead

Consumers Behaviour and Brand Performance

In this study, a quantitative assessment of customer
perception is linked to purchasing behavior using the

directly to desired behaviors. Marketing campaigns need

to be able to quantify visible, measurable actions by the

67

Journal of Emerging Trends in Engineering and Applied Sciences (JETEAS) 5(7): 66-72 (ISSN: 2141-7016)
brand performance metrics to determine the financial
profitability of each brand on a relative basis. The
marketing activities of firms products may have
significant contributions to the perceived attitudes of
customers. Customers attitude can be derived from how
customers perceive the products and their feelings on
them. Changes can occur over time on the attitudes of
consumers. While these changes can be used to model the
process of evaluating customers behavior, its attributes
cannot be good enough to measure the performance of
products in the marketplace. Brand performance requires
analysis of customers behaviour over certain product.
Each attribute of band performance has a form of
economic implications on the product. The quantitative
phase of a brand equity market research study is designed
to measure selected attributes from Aakers Brand Equity
Ten. These attributes were tracked separately based on
Aakers recommendation

Table 3: The attributes of brand equity and the factors

responsible for the success of a business

measure of the brands market share among other

brands of the same category.
Brand Equity (BE): is measured as the average of
the mean scores of the Marketing Asset variables
(Knowledge of Product (PK), Effect of Brand Name
and Product Patronage).
Market Revenue (MR) is a variable that is used to
portray the success of business.
Business Success: It was not possible to collect
profitability data of each product from the Nigeria
Breweries Plc and Guinness Plc. As a result, the study
uses market share and average price to compute the
associated revenue that represents a measure of how
successful a business could be based on the
performance of its products in the market place.
Market share is calculated as the percentage of a
market accounted for by a product. The Unit market
share gives the units sold by each company as a
percentage of total market sales, measured in the
same units, and is measured below. Market share is
calculated as a function of average brand price for
each product.

The variables Brand Name Effect, Knowledge of Product

and Product Quality are used to represent marketing
assets since they all constitute the strength of the brand.
Measuring the profitability of each product is not feasible
with available data. However, a way round this situation
is to measure the likely level of profit a product can yield
the firm relative to other products. Here, the price
premium is used. By this, the average price is deducted
from the price of each product and the Unit Market Share.
Every product is multiplied with what is left of the price
difference.
RESEARCH DESIGN AND ANALYSIS
Data Collection and Administration
A survey research was designed using structured
questionnaire as data collection tool to extract required
information from respondents. Such questions were
constructed to indicate if brand equity contributes to the
success of the firm. The questionnaire was designed to
collect data on four areas and from three target audiences:
(1) marketing personnel (for data on marketing
activities), (2) consumers (for data on customers
perception and behavior, economic and financial experts
for data on economic and financial implications based on
the behavior of customers), and (4) finance/audit
personnel (for financial reports on each brand
represented).
Probability
(systematic)
sampling
techniques were employed. The questionnaires were
issued out to the marketing staffs of the brewery
companies and a group of final consumers. Each of the
marketing brand and financial associations has a five item
scale i.e. from 0 to 4. For the systematic sampling
techniques employed, a total of 232 questionnaires were
returned out of 250 that were distributed, 9 questionnaires
were either rejected, or unusable due to incomplete
responses because respondents could not notice the said
attributes, or the questionnaires were not returned by the
respondents. 223 usable questionnaires were returned
representing 89.2% response rate. The incomplete

DEFINING THE BASIC VARIABLES

The variables used for the study are discussed below:
Marketing Activities (MA): This is the marketing
efforts of the company to sell its products to
customers. Activities represented in the study
comprise of TV, Radio & Print Advertisement, TV
Reality Shows,
Event
/Sport
Sponsorship,
Promotional activities, Donations / Gift Items, Social
media network (Face book, Twitter, etc.), and Oneto-one contacts. The combined effects of these
activities are studied against the brand performance.
Knowledge of Product (KP): This variable concerns
customers perception of brands in terms of
awareness, familiarity and identification of brand
name and image.
Effect of Brand Name (BNE): variable is used to
gather respondents answers to their actions based on
the brand name of the product.
Brand Quality/Value (BQ): It is used as one of the
marketing assets alongside Knowledge of product and
Effect of Brand Name.
Product Patronage (PP): This variable is used to
represent customers purchasing and persistent buying
of product. It is also used, in this context, as a

68

Journal of Emerging Trends in Engineering and Applied Sciences (JETEAS) 5(7): 66-72 (ISSN: 2141-7016)
questionnaires were discarded to avoid misleading
results.
ANALYSIS AND INTERPRETATION OF DATA
Linear regression of brand equity as a function of
marketing activities is calculated for each product in
order to test if apparent changes were significant. The
analyses of the hypotheses follow. For summarization,
the mean scores for knowledge and quality are calculated
for each attribute and for each brand.

H1. Marketing activities have significant effect on

marketing asset in the breweries industries in Nigeria.
Using Table 8 the values of R2, constant (a), and
coefficients associated with Brand Equity and Marketing
Activities are obtained with their respective standard
errors and values of p. Values of R and R2 are .886 and
.786 respectively. Value of b is positive and significant
(.045), showing that for these products brand equity
increased significantly with increases in marketing
activities.

Table 4: Marketing Activities versus Brand Equity

Brand Equity Score per Brand = 0.333 * Brand Name

Effect + 0.333 * Knowledge of Product + 0.333 * Quality

Brand Equity = 0.778 * Marketing Activities + 2.475

The challenge in growing a business is in building assets
daily. Marketing expenses should generate assets.

Using the 0.95 Confidence Interval of rho, it could be

said that Marketing Activities is a significant predictor of
H2: Marketing activities of the firm affect business
Brand Equity in this model.
success
Significant variables are shown below:
Increase in marketing assets increases the total revenue
Adjusted R square = .714; F = 11.002, p < 0.045
which in this context is to represent the profitability of
(using the Enter method).
the business.
Predictor Variable Beta p
Unit market share (%) = 100 * Unit sales (#) / Total
Market Unit Sales (#)
Standardized Marketing Activities score: .886 p
<0.045
The regression equation can be written as
follows:
Table 5: Marketing Activities in relation to Total Revenue Table 6: Measurement of Business Success as Return on
Sales estimates

The Model Summary provides the R value as 0.972 and

R2 as 0.925 values, which represent the simple correlation
and, therefore, indicates a high degree of correlation. The
R2 value indicates how much of business success can be
explained from marketing efforts. In this case, 92.5% can
be explained, which is very large. The ANOVA indicates
that the regression model predicts the outcome variable
significantly well. The Sig. column indicates the
statistical significance of the regression model that was
applied. Here, P =0.006 which is less than 0.05 and
indicates that, overall, the model applied is significantly
good enough in predicting the outcome variable.
H3: Marketing asset does have an effect on the
profitability of the firm

69

The product of these variables gives an estimate of

Return on Sales which is one of the financial metrics that
can be used to determine the success of business.
Return on Sales (based on Brand difference) = Unit
Sales * (Price Premium Least Price)
The Correlations part of the output shows the correlation
coefficients. This output is organized differently than the
output from the correlation procedure. The correlation
between Return_on_Sales and Brand_Name_Effect,
Knowledge_of_Product, and Product Quality are .751,
.764 and .853 respectively. The three independent
variables considered, Product Quality have significant
contributions to return on sales and can serve as
significant predictors for return on sale variable.

Journal of Emerging Trends in Engineering and Applied Sciences (JETEAS) 5(7): 66-72 (ISSN: 2141-7016)
H4: Brand equity contribute less significantly to the
success of a firm

the outcome variable. Both the constant and brand equity

variables contribute less significantly to the model (by
looking at the Sig. column). Significant variables are
shown below:
Adjusted R square = .729; F = .695, p > 0.05 (using the
Enter method).

The Model Summary table provides the R value as

0.854 and R2 as 0.729 values, which represent the simple
correlation and, therefore, indicates a high degree of
correlation. The R2 value indicates how much of business
success (now in terms of Return on Sales) can be
explained from brand equity. In this case, 72.9% can be
explained, which is very large.

Predictor Variable Beta p

Standardized Brand Equity score: .020, -.9.061, and .891
p > 0.05

The ANOVA table indicates that the regression model

predicts the outcome variable significantly well. The Sig.
column indicates the statistical significance of the
regression model that was applied. Here, P =0.0005
which is less than 0.05 and indicates that, overall, the
model applied is significantly good enough in predicting

The hypothesis is true.

From the Unstandardized Coefficients column, it can be
presented that the regression equation is:
Return-on-sale = 8.92 Product Quality 0.515
Knowledge_of_Product + 0.290 Brand_Name_Effect
14.936

Fig. 1: Outputs from the analysis collected data

Equation of the model (Variable Return on Sales):
Return on Sales = -87430.0728834617 + 28646.5904335373 * Brand Equity Score per Brand
products to consumers, the price premium and some
social factors may have significant impact on the
financial success of a product. Product availability is a
crucial factor in this sense especially in situations where
readily-available products can be substituted for the
required product

RESULTS
Marketing assets contribute significantly and positively to
the return on sale and by extension to the profitability of
the business. The coefficient of success on a product may
differ from product to product of the same category.
Other factors such as how readily available are the

70

Journal of Emerging Trends in Engineering and Applied Sciences (JETEAS) 5(7): 66-72 (ISSN: 2141-7016)

Fig. 2: Measurement of business success using return on sales estimates

The results of the analysis reveal that brand equity does
contribute to the success of a business but the
significance of this contribution is very low. As can be
seen from the result, sig. =.632 which is higher than 0.05.
It could be noted that certain metrics of brand equity such

as the quality of the product has higher contribution to

return on sales than others. It further reveals that having
the knowledge of the product or knowing the brand name
by consumers is good but it may not automatically affect
the companys success.

Fig. 3a
Fig. 3a & 3b: Results indicating the Success level of brand products
Results also indicate that no guarantee can be deduced on
the success level of the products by inferring the
hypothesis from the brand equity point of view. In this
case, the original hypothesis has been proved to be wrong
and hence the alternative hypothesis holds: Brand
equity in major market does guaranty success in the
Nigerian market, but significance of such contribution
is low.

Fig. 3b

CONCLUSION
While it is observed that brand equity has positive
contributions towards the success of a business, it
generally cannot be used as the sole determining factor.
In this case, other attributes of products come into play.
Comparing the products investigated here, it is apparent
that Heineken and Gulder are much more brandable in
Nigeria than 33 and Harp. Heineken is priced much
more than Gulder but still with high brand value; hence
its level of success based on return on sales is much,
much higher compared to Gulders. This is interpreted to
mean that Heineken has strong brand performance which
results in high rate of acceptance by consumers such that
despite its high price, it is highly patronized by buyers. It
may be argued that low quality product will benefits well
from marketing, however, it will not take long before it is
discovered, causing great drop on sales volume. Example
of such product in this study is 33 which despite

From the results obtained, one can easily discover the

relevance of marketing activities on the success of a firm.
All efforts on marketing of a product have positive
impact on the success of the business. However, these
efforts have small contributions on business
achievements especially if the product quality is poor.
The success of the business becomes determinable from
all marketing campaigns if there is appreciable increase
in the quality of the product.

71

Journal of Emerging Trends in Engineering and Applied Sciences (JETEAS) 5(7): 66-72 (ISSN: 2141-7016)
marketing efforts could not yield higher sale than others.
In the case of Gulder with the highest quality among the
brand products considered in this research, it was lagged
by Heineken due to Heinekens higher sales volume.
Traditionally in Nigeria, Gulder has always been
regarded as the beer of high quality the fact that is also
supported by this work. Some managerial implications of
this study are discussed. Firstly, it may not be a good
decision to expend lots of marketing efforts on products
of low quality. Taken together, such results demonstrate
that the relationships between consumer-based brand
equity and business success depend upon the context in
which they occur. This corroborates the argument in
favor of emphasizing the influence of price variable,
availability and widespread distribution.

Sheth, J.N., R.S. Sisodia, and A. Sharman (2002).

Market Productivity: Issues and Analysis. Journal of
Business Research, Vol. 55, 349-362.

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