What Drives Brand Equity? A Comprehensive Study of Price and Volume Premiums

Abstract

This study examines the empirical relationship between four broad antecedents of brand equity (branding strategy, brand structure, brand positioning and target market) and two separate dimensions of revenue premium: price premium and volume premium. Our modeling framework aims to explain how different antecedents of brand equity influence the realized velocity and margin of branded product sales, key drivers of operating cash flow. Our generalizable empirical analyses are based on a representative dataset of over 6,500 brands, across 200 consumer-packaged goods categories, spanning three years. We find that only 20% of brands command revenue premiums, for which volume premiums are the critical determinant. Branding strategies and brand structure primarily impact volume premium. In contrast, brand positioning has little effect. Target market substantially affects both premiums. Overall, these four elements account for 73% and 69% of the explained variations in price and volume premiums, respectively. This study provides generalizable, important, and novel insights for the theory and practice of brand management regarding price positioning and extending brands into new categories.

Citation

Zhu, J.(., Gruca, T.S. and Rego, L.L. (2021), "What Drives Brand Equity? A Comprehensive Study of Price and Volume Premiums", Kumar, V. and Stewart, D.W. (Ed.) Marketing Accountability for Marketing and Non-marketing Outcomes (Review of Marketing Research, Vol. 18), Emerald Publishing Limited, Leeds, pp. 75-109. https://doi.org/10.1108/S1548-643520210000018004