Testing cross‐cultural invariance of the brand equity creation process
| Date | 01 November 2002 |
| DOI | https://doi.org/10.1108/10610420210445505 |
| Pages | 380-398 |
| Published date | 01 November 2002 |
| Author | Boonghee Yoo,Naveen Donthu |
| Subject Matter | Marketing |
Testing cross-cultural
invariance of the brand equity
creation process
Boonghee Yoo
Associate Professor of Marketing, Department of Marketing and
International Business, Frank G. Zarb School of Business, Hofstra
University, Hempstead, New York, USA
Naveen Donthu
Katherine S. Bernhardt Research Professor of Marketing, Department
of Marketing, J. Mack Robinson College of Business, Georgia State
University, Atlanta, Georgia, USA
Keywords Brand equity, National cultures, Marketing, USA, Korea
Abstract The purpose of this study is to explore the cross-cultural generalizability of Yoo
et al.'s brand equity creation process model. A two-step approach is introduced and used
to test the factorial invariance of the model cross-culturally. The results reveal which
marketing efforts and brand equity dimensions have invariant effects on brand equity
across the US and Korean samples. Specifically, brand loyalty and perceived product
quality do not have an invariant effect on brand equity, while brand awareness/
associations have an equivalent effect. Price and store image show an equivalent, positive
effect on perceived quality; distribution intensity has an equivalent, positive effect on both
perceived quality and brand loyalty; and price deals have an equivalent, negative effect
on both perceived quality and brand awareness/associations. But advertising has a quite
different effect on brand equity. The between-group differences in the brand equity
formation process are explained from a cultural perspective.
Introduction
Brand equity is known to create customers' blind preference for a brand over
its competing brands (Farguhar et al., 1991; Simon and Sullivan, 1993) and
increase the firm's value by affecting merger and acquisition decision
making (Mahajan et al., 1994), stock market responses (Lane and Jacobson,
1995), and the extendibility of a brand name (Rangaswamy et al., 1993). But
little research has investigated the antecedents of brand equity. Responding
to Shocker et al.'s (1994, p. 157) call for a systems view of the brand equity
creation process, Yoo et al. (2000) investigated the relationships between
selected marketing mix elements and the creation of brand equity among US
consumers. Their framework was an integration and expansion of previous
brand equity literature.
Yoo et al.'s (2000) structural model of brand equity formation consists of
three components: marketing mix elements selected from the traditional ``4
P'' marketing activity (i.e. price, store image, distribution intensity,
advertising spending, and price deals), brand equity dimensions (i.e.
perceived product quality, brand loyalty, and brand awareness/associations),
and overall brand equity. According to the model, marketing managerial
efforts can be classified into two types: brand-building activity and brand-
harming activity. Specifically, frequent use of price promotions is an
example of a brand-harming activity, whereas high ad spending, high price,
distribution through retailers with positive store image, and high distribution
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Brand equity
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An executive summary for
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readers can be found at the
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intensity are examples of brand-building activity. Brand-harming activity
affects brand equity dimensions negatively, whereas brand-building activity
affects brand equity dimensions positively. Next, each of the dimensions is
positively related to overall brand equity. In summary, brand equity is
created, maintained, and expanded by strengthening the dimensions of brand
equity, which result from particular marketing activities.
Yoo et al.'s (2000) structural model of the brand equity creation process has
important implications for marketing managers. Knowing how the certain
marketing activities contribute to build or hurt brand equity will enable
marketing managers to develop effective marketing plans. Managers need to
promote brand-building activities and decrease or avoid brand-hurting
activities. While the model of brand equity formation worked well as shown
in its acceptable goodness-of-fit indices, one question that arises is ``whose
brand equity creation process was investigated?'' Because the model was
based on a particular market, that is, the US market, its generalizability
across different markets needs to be validated. Recent emphasis in marketing
is creating global brands that compete across countries and cultures. Thus, to
ensure success in building strong brands (high brand-equity brands) in
international markets, an understanding of the brand equity creation process
in the target market is necessary. A relevant question to ask is whether there
are any cultural differences in the brand equity formation process. A cross-
cultural validation of the brand equity formation process is important to
formulate a marketing strategy in international markets.
The main purpose of the present study is to explore the generalizability of
Yoo et al.'s (2000) brand equity formation process and verify the model's
factorial invariance in a culture that may be regarded as distinctively
different from that of the USA. Korea has been popularly selected for cross-
cultural validity study (e.g. Choi et al., 1999) as she has developed the
opposite Eastern culture, a different language, and a different history in
comparison with most Western countries including the USA (Hofstede,
2001). In summary, the intent of the study is to test the extent to which the
structural model of brand equity formation is invariant across US and Korean
consumers.
Method
Sample and procedure
As required for cross-cultural comparability, the Korean sample was drawn
to match the type of Yoo et al.'s (2000) US sample, that was students (n=
569; mean age = 23.7 years) enrolled at a major state university in a
metropolitan city. The US sample's ethnic origins were Caucasian (66
percent), African-US (23 percent), Hispanic (2 percent), Asian (6 percent),
and of other ethnic origins (3 percent). The Korean sample (n= 624; mean
age = 22.0 years) was drawn from two Korean universities, one in Seoul, the
largest city in Korea, and the other in a moderately large city. The Korean
sample of the present study was different from Yoo et al.'s (2000) US
sample in certain aspects. For example, the Korean sample had more male
students (69 percent) than the US sample (47 percent); less full-time or part-
time working status (19 percent) of the US sample (50 percent). Also, the
Korean sample's household size (4.2 members) was larger than the US one
(3.2 members). However, such a difference may be a natural reflection of the
college student populations of the USA and Korea.
Important implications
Cross-cultural
comparability
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 11 NO. 6 2002 381
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