THE EFFECT OF ADVERTISING AND SALES

PROMOTIONS ON BRAND EQUITY ∗

Isabel Buil
Assistant Professor
Department of Economy and Business Studies
University of Zaragoza
María de Luna s/n. Edificio Lorenzo Normante
50018 Zaragoza
Spain
Tel: Int Code: +34 976 761000
Fax: Int Code: +34 976 761767
Email: ibuil@unizar.es

Leslie de Chernatony
Professor of Brand Marketing
Università della Svizzera italiana, Lugano and Aston Business School
Tel: Int Code: +44 7905088927
Fax: Int Code: +44 121 449 0104
Email: dechernatony@btinternet.com

Eva Martínez
Professor in Marketing
Department of Economy and Business Studies
University of Zaragoza
Gran Vía, 2
50005 Zaragoza
Spain
Tel: Int Code : +34 976 762713
Fax: Int Code: +34 976 761767
Email: emartine@unizar.es

February 2010

Paper accepted by the 6th Thought Leaders in Brand Management International

Conference

∗
The authors would like to thank the following sources for their financial help: CICYT (Ref: ECO2009-08283) and the
project “GENERES” (Ref. S-09) from the Government of Aragon.
 THE EFFECT OF ADVERTISING AND SALES PROMOTIONS ON
BRAND EQUITY

ABSTRACT
This study explores the relationships between two marketing mix elements -advertising and
sales promotions- and brand equity creation. In particular, the study focuses on advertising
from a quantitative (advertising spending) and qualitative (general perceptions of advertising)
perspective. Similarly, the study investigates the effects of two kinds of sales promotions, i.e.
monetary and non-monetary promotions. Based on a survey of 411 UK consumers, findings
show that the content of advertising plays a key role influencing brand equity dimensions,
whereas advertising spend improves brand awareness but it is not enough to positively
influence brand associations. The paper also finds distinctive effects of monetary and non-
monetary promotions on brand equity. In addition the results show that companies can
optimise the brand equity management process by considering the relationships existing
between the different dimensions of brand equity.

KEYWORDS
Advertising; Sales promotions; Brand equity dimensions.

1
 THE EFFECT OF ADVERTISING AND SALES PROMOTIONS ON BRAND EQUITY

1. Introduction
Brand equity has become a top priority for many organisations (Keller and Lehmann,
2006). As a significant asset, research has focused on understanding how to build, measure,
and manage it. As well as developing further insights into the measurement of consumer-
based brand equity, it is therefore important to examine the sources of brand equity. This
enables managers to identify the drivers that contribute to the strengthening of brand equity
and those that adversely affect performance.
This study examines the relationships between two marketing mix elements -advertising
and sales promotions- and brand equity creation. In particular, the study focuses on
advertising from a quantitative (advertising spending) and qualitative (general perceptions of
advertising) perspective. Similarly, the study investigates the effects of two kinds of sales
promotions, i.e. monetary and non-monetary promotions.
This research builds on the framework proposed by Yoo, Donthu and Lee (2000) and
extends it in several ways. First, it examines in depth marketing communication tools’ effects
on brand equity dimensions. Unlike previous works which have simply studied the influence
of advertising spending and monetary promotions (Yoo et al., 2000; Villarejo, 2002; Bravo,
Fraj and Martínez, 2007), this research analyses other advertising characteristics, such as
advertising’s content, and non-monetary promotions, which have received less attention in the
literature. Second, it analyses the causal order amongst brand equity dimensions. Despite
some studies suggesting the existence of 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), few have empirically examined
how brand equity dimensions might be related.
The paper opens by developing the hypotheses, based on the literature. The research
methodology and findings are provided. Finally, the overall implications and limitations of
the research are considered.

2. Conceptual framework
Focusing on a consumer perspective, a large number of studies have drawn on different
dimensions to conceptualise and measure brand equity. Following Aaker’s (1991, 1996) and
Keller’s (1993) conceptual frameworks, the four dimensions of consumer-based brand equity
examined in this study are brand awareness, perceived quality, brand associations and brand
loyalty.
In brand equity research, several factors have been identified as drivers of consumer-
based brand equity: market size and perceived risk (Ailawadi, Lehmann and Neslin, 2003);
order of entry and age of the brand (Simon and Sullivan, 1993); external brand
communications (Berry, 2000); country of origin (Ashill and Sinha, 2004; Pappu, Quester and
Cooksey, 2006); product innovation (Sriram, Balachander and Kalwani, 2007); trust,
customer satisfaction and relationship commitment (Kim et al., 2008), etc. Interestingly, the
marketing mix elements have been identified as one of the main drivers of brand equity.
These elements are imoprtant not only because they can greatly affect brand equity but also
because they are under companies’ control (Keller, 1993; Berry, 2000; Yoo et al., 2000;
Villarejo, 2002; Ailawadi et al., 2003; Herrmann et al., 2007).
This study focuses on the role of two specific marketing communications tools:
advertising and sales promotions. The individual contributions of advertising and sales
promotions to brand equity remain unclear (Chu and Keh, 2006) and scholars have
highlighted the need to examine the effect of these variables (Netemeyer et al., 2004). Thus,
this analysis should better help understand the role of these elements. Specifically this study

2
addresses from a quantitative (advertising spending) and qualitative (general perceptions of
advertising) perspective how advertising influences brand equity dimensions. Similarly, the
study focuses on two kinds of sales promotions, monetary and non-monetary.
Advertising
Several authors have investigated how actual and perceived advertising spending
influence brand equity and its dimensions (Simon and Sullivan, 1993; Cobb-Walgren, Ruble
and Donthu, 1995; Yoo et al., 2000; Villarejo, 2002; Bravo et al., 2007; Sriram et al., 2007).
Both approaches have found positive relations between advertising spend and brand equity.
Advertising spend 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). Several studies have found positive relations between
perceived advertising spend and perceived quality in laboratory experiments (Kirmani and
Wright, 1989; Kirmani, 1990; 1997) as well as in real conditions (Moorthy and Zhao, 2000).
Similarly, advertising spend on a brand can increase the scope and frequency of brand
appearance, and as a consequence, the level of brand awareness (Chu and Keh, 2006; Keller,
2007). Thus, the higher the advertising spend, the higher the awareness levels are likely to be.
Finally, favourable, strong and unique brand associations can also be created by advertising
(Cobb-Walgren et al., 1995; Keller, 2007). Like brand awareness, brand associations arise
from consumer-brand contact. Thus, advertising can contribute to brand associations through
its ability to create, modify or reinforce associations with each new contact. Hence, the higher
the advertising spend of a brand, the stronger and more numerous will be the associations in
the consumer’s mind.
These positive relationships between advertising spend perceived by the consumer and
perceived quality, brand awareness and brand associations have been empirically supported
by Yoo et al. (2000), Villarejo (2002) and Bravo et al. (2007). Thus, we propose:
H1: Consumers’ perceptions of advertising spend undertaken by the brand have a positive
influence on: a) perceived quality; b) brand awareness and c) brand associations.
Researchers recognise that the content, nature and quality of advertising can also play an
important role in brand equity dimensions (Cobb-Walgren et al., 1995; Keller and Lehmann,
2003; 2006; Bravo et al., 2007; Sriram et al., 2007). However, little attention has been paid to
these issues.
Advertising is a powerful way of communicating a brand’s functional and emotional
values (de Chernatony, 2006). In general, the effectiveness of this communication tool
depends on its content (the message), the execution or how the ad conveys the message, and
the frequency with which a consumer sees the ad (Batra, Myers and Aaker, 1996; Kotler,
2000). As mentioned earlier, advertising creates brand awareness, links strong, favourable,
and unique associations to the brand in consumers’ memory, and elicits positive brand
judgments and feelings (Keller, 2007). However to achieve these results, the advertising
needs a suitable design and execution. In particular, one of the main concerns in devising an
advertising strategy is related to the creative strategy (Kapferer, 2004; Keller, 2007). Given
the increasing number of brands competing in the same markets, firms need to develop
creative and original communication strategies. This helps capture consumers’ attention to the
advertisement and contribute to brand equity.
Therefore it is expected that through an original and innovative advertising strategy,
organisations will be more likely to capture consumers’ attention. In turn, this leads to higher
brand awareness, a higher perceived quality and contributes to forming strong, favourable and

3
unique associations (Aaker, 1991; Kirmani and Zeithaml, 1993; Villarejo, 2002). The
following hypothesis synthesises the above arguments:
H2: Consumers’ perceptions of advertising undertaken by the brand have a positive influence
on: a) perceived quality; b) brand awareness and c) brand associations.
Sales promotions
Most previous research on sales promotions has focused on monetary promotions.
Although there is still some discussion about the effect of this tool on brand equity
(Garreston, Fisher and Burton, 2002; Palazón and Delgado, 2005), past literature has mainly
proposed that monetary promotions have a negative impact on brand equity.
Focusing on the direct effects on brand equity dimensions, it is expected that monetary
promotions will have a negative influence on perceived quality and brand associations. Price
is one of the most important cues used by consumers to infer the quality of a product
(Milgrom and Roberts, 1986; Rao and Monroe, 1989; Dodds, Monroe and Grewal, 1991;
Agarwal and Teas, 2002). Price promotions may reduce reference prices, which in turn can
lead to unfavourable quality evaluations (Mela, Gupta and Jedidi, 1998; Raghubir and
Corfman, 1999; Suri, Manchanda and Kohli, 2000; Jørgersen, Taboubi and Zaccour, 2003;
DelVecchio, Henard and Freling, 2006). Similarly, monetary promotions can erode brand
associations. Martínez, Montaner and Pina (2007) and Montaner and Pina (2008) find that
these type of promotions have a negative impact on brand image. In addition, these campaigns
are not long enough 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 tool leads consumers to think primarily about
price, and not about the brand (Yoo et al. 2000). Thus the following hypothesis is proposed:
H3: Consumers’ perceptions of a brand’s monetary promotions have a negative influence on:
a) perceived quality and b) brand associations.
Although non-monetary promotions are widely used in marketing, they have been
insufficiently investigated. Recent studies have shown that non-monetary promotions may
help to reinforce brand equity (Palazón and Delgado, 2005; Martínez et al., 2007; Montaner
and Pina, 2008). In the case of non-monetary promotions the incentive is not directly seen in a
lower purchase price. Therefore it is more difficult for this type of promotion to influence the
internal reference price (Campbell and Diamond, 1990). Consequently, when consumers are
exposed to non-monetary promotions, it is less likely that such promotions negatively
influence perceived quality and brand associations.
Similarly, non-monetary promotions can differentiate brands and communicate distinctive
brand attributes, contributing to the development and reinforcement of brand equity (Papatla
and Krishnamurthi, 1996; Mela et al., 1998; Chu and Keh, 2006). While monetary promotions
are primarily related to utilitarian benefits, non-monetary promotions are more related to
hedonic benefits (Chandon, Wansink and Laurent, 2000). These benefits, such as
entertainment and exploration, are related to experiential emotions, pleasure and self-esteem.
Non-monetary promotions can therefore evoke more associations related to brand personality,
enjoyable experience, feelings and emotions. Furthermore they link more favourable and
positive brand associations to the brand (Palazón and Delgado, 2005).
Thus it is expected that non-monetary promotions will have a positive influence on
perceived quality and brand associations, as postulated in the following hypothesis:
H4: Consumers’ perceptions of a brand’s non-monetary promotions have a positive influence
on: a) perceived quality and b) brand associations.

4
Relationships amongst brand equity dimensions
Brand equity dimensions are closely interrelated. While some studies propose associative
relationships amongst them (e.g., Yoo et al., 2000; Atilgan Aksoy and Akinci, 2005; Pappu et
al., 2005; 2006), others posit causal relations between some brand equity dimensions (e.g.,
Kirmani and Zeithaml, 1993; Villarejo, 2002; Ashill and Sinha, 2004; Esch et al., 2006;
Bravo et al., 2007; Martínez, Polo and de Chernatony, 2008).
This study builds on the traditional hierarchy of effects model. Although this framework
has been challenged by some researchers who have proposed alternative hierarchy models
(Krugman, 1965; 1966; Ray et al., 1973; for a review see Barry, 1987), this theory has been
proposed as a useful framework for studying the causal order amongst 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;
Roberts et al., 2004; Tolba and Hassan, 2008). According to this paradigm (Lavidge and
Steiner, 1961; Solomon, Bermossy and Askegaard, 2002), behaviour is divided into three
components: cognitive, affective and conative. Therefore, the evolution of brand equity can be
depicted as a learning process on the part of the consumer consisting of these stages:
consumers’ awareness of the brand leads to attitudes (e.g., perceived quality and brand
associations), which in turn will influence attitudinal brand loyalty (Gordon, Calantone and di
Benedetto, 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 develop a set of brand associations later (Aaker, 1991).Then
brand awareness affects the formation and also the strength of brand associations, including
perceived quality (Keller, 1993; Pitta and Katsanis, 1995; Aaker, 1996; Na, Marshall and
Keller, 1999; Villarejo, 2002; Keller and Lehmann, 2003; Konecnik and Gartner, 2007).
When consumers acquire a more positive perception of the brand, loyalty results (Oliver,
1999). Thus high levels of perceived quality and positive associations can enhance brand
loyalty (Keller, 1993; Chaudhuri, 1999; Keller and Lehmann, 2003; Pappu et al., 2005). We
therefore postulate:
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.
Figure 1 shows the conceptual framework developed above.
Figure 1 here.

3. Methodology
Hypotheses were tested by collecting data through a survey of 411 consumers in the UK.
Product categories and brands were selected based on the Best Global Brands 2006
ranked by Interbrand. The use of rankings and secondary research to select product categories
and brands is usual in brand equity research (Cobb-Walgren et al., 1995; Krishnan, 1996;
Netemeyer et al., 2004). From this published list, the authors chose four diverse product
categories: soft drinks, sportswear, consumer electronics and cars. The categories reflect a
broad set of consumer products to provide some generalisability. They differ in terms of
associated risk, price and purchase frequency. For each of the product categories, two strong
mature brands were selected: Coca-Cola and Pepsi for soft drinks; Adidas and Nike for
sportswear; Sony and Panasonic for consumer electronics; and BMW and Volkswagen for
cars. All these brands are widely available and well-known to UK consumers, which is
desirable to understand brand equity (Krishnan, 1996).

5
 Data was collected at several locations in the city of Birmingham using quota sampling
(by age and sex). In total 417 completed questionnaires were collected. Amongst these, 411
were considered valid and were used for empirical analysis. Eight different questionnaires
were designed, one for each brand. Each subject considered only one brand. Customers were
asked to answer questions with respect to brand equity, its antecedents and consequences and
some demographic questions.
The measures for the marketing mix elements and brand equity dimensions were adapted
from previous research. Only the scale used to measure the general perception of advertising
was developed by the authors, since no adequate measures were available. All the variables
were measured using 7-point Likert-type scales. The Appendix describes all the scales.

4. Results
Prior to testing the hypotheses, the multi-item scales were evaluated using exploratory
and confirmatory techniques to assess reliability, dimensionality and validity. To assess the
reliability of the measures Cronbach’s alpha and the item-to-total correlation for all scales
were used. Results from exploratory factor analyses, using varimax rotation principal
components analysis suggested that the corresponding items of each scale grouped into a
single factor with significant factor loadings and the explained variance exceeded 60% in each
case. Only the items 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 are related to organisational associations).
We followed Anderson and Gerbing’s (1998) two-step approach for structural equation
modelling. EQS 6.1 and the robust maximum-likelihood estimation were used (Bentler,
1995). Confirmatory factor analysis (CFA) suggested deleting item ASS6 since the R2 was
below 0.4. After this, CFA of the multi-item scales produced an acceptable fit to the data, as
shown in the Appendix. All factor loadings are above 0.5 and statistically significant.
Likewise, the coefficients have a clear relation with the underlying factor (R2>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). Results also show that the
confidence interval around the correlation estimate between any two factors do not include
one, suggesting that discriminant validity is supported.
We next examined the hypothesized paths in the proposed model. Previously, since brand
associations dimension loaded on three different factors, individual items scores were
averaged under each of these three factors. Then, scores were used as indicators to derive the
brand association dimension. Results are shown in table 1.
Table 1 here.
With respect to the effect of the perception of advertising spend on perceived quality,
brand awareness and brand associations (H1a, H1b and H1c), results obtained only confirm
hypothesis 1b (β = 0.370, t = 4.34). Thus, the higher the advertising spend, the higher the
awareness levels are likely to be. Contrary to our expectations, advertising spend has a
negative influence on perceived quality (β = -0.285 t = -2.83), and brand associations (β = -
0.199, t = -1.94). Therefore, we did not find support for hypotheses H1a and H1c.
The content of advertising seems to play an important role in brand equity dimensions. As
such, consumers’ perceptions of advertising characteristics have a positive and significant
influence on perceived quality (β = 0.345, t = 3.52), as predicted in hypothesis 2a. Perceived
quality (β = 0.208, t = 2.31) and brand associations (β = 0.491, t = 4.79) are also notably
dependent on consumers’ perceptions of advertising, which supports hypotheses 2b and 2c.
Our findings also support H3a. Monetary promotions have negative effects on perceived
quality (β = -0.109, t = -1.96). H3b suggested that monetary promotions would have a
negative effect on brand associations. However, no empirical evidence is found for this

6
hypothesis (β = -0.062, t = -1.01). Similarly, we did not find a significant effect of non-
monetary promotions on the perceived quality (β = 0.063, t = 1.03), failing to support H4a.
By contrast, hypothesis 4b, which suggested that non-monetary promotions were positively
related to brand associations, is supported (β = 0.122, t = 1.87).
Hypotheses 5 and 6 predicted that brand awareness, one of the brand equity dimensions,
is an antecedent of perceived quality and brand associations. Results reveal a significant
positive relation between brand awareness and perceived quality (β = 0.546, t = 8.54) and
brand awareness and brand associations (β = 0.429, t = 6.27). Hence, H5 and H6 are
supported. In H7, perceived quality was proposed as having a positive impact on brand
loyalty. However, the relationship is weak and insignificant (β = -0.041, t = -1.03). Thus,
hypothesis 7 is not supported. Finally hypothesis 8, which posited that brand associations
enhance brand loyalty, shows a positive and significant coefficient (β = 0.746, t = 14.87),
supporting this hypothesis.

5. Conclusions
Brand equity is one of the most important assets in any business. It is therefore critical to
understand its key drivers. The purpose of this study was to examine the impact of advertising
and sales promotions on brand equity. We approached this objective by studying advertising
from a quantitative and qualitative perspective, as well as analysing both monetary and non-
monetary promotions. In addition, the research attempted to understand how the underpinning
brand equity dimensions are related amongst themselves.
With respect to the effect of advertising on brand equity dimensions, interestingly, results
showed that the qualitative facet of this marketing communication tool is important when
creating brand equity. Findings showed that by using an original, creative and different
advertising strategy, companies can develop higher brand awareness and positive perceptions
of their brands. Our research also revealed that perceived advertising spend has a positive
effect on brand awareness. However, it does not necessarily enhance perceived quality and
brand associations. This result can be explained by the fact that advertising spend can reach a
saturation point beyond which it does not significantly contribute to creating brand equity
(Chu and Keh, 2006). Thus, consumers can perceive that a brand is intensively advertised or
seems to spend a lot on its advertising compared to competing brands. Nevertheless, these
perceptions cannot contribute to the improvement of perceived quality and brand associations.
In addition, Keller and Lehmann (2003) posit that the amount of financial investment in
marketing does not guarantee success in terms of brand equity creation. By contrast, these
authors state that the key factor to increase brand equity lies in the qualitative aspects of the
marketing program. Thus, as our research shows, the content of advertising plays 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 were found to
negatively influence perceived quality whereas non-monetary promotions had a positive
effect on brand associations. Despite the fact that monetary promotions and non-monetary
promotions had a non-significant impact on brand associations and perceived quality,
respectively, these results are interesting. In the literature there is still some discussion about
the effect of sales promotions on brand equity (Sriram et al., 2007). By studying both types of
sales promotions, this study further contributes to knowledge.
Finally, the results indicated that brand equity dimensions are related amongst themselves.
Brand awareness was found to have a positive influence on perceived quality and brand
associations, which in turn influenced brand loyalty. Contrary to our predictions, perceived
quality did not have any influence on brand loyalty. Other studies have not supported this

7
relationship (Bravo et al., 2007). A possible explanation for this non significant effect could
be that all the brands analysed are of high quality.
Based on the study results, there are several managerial implications. First, advertising is
an important marketing mix tool for companies influencing brand equity dimensions.
However, due to the growing number of brands competing in the markets with the same
elements, advertising spend perceived by consumers improves brand awareness but it is not
enough to positively influence the associations related to the brand. In this context, companies
should pay special attention to those aspects related to the design of their advertising
campaigns in the media, trying to develop original and creative strategies. Second, marketing
managers should be aware of the effects that promotional actions have on consumers’
perceptions. Findings here hold significant implications for brand managers. 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
aware of the dangers of using this type of promotion. By contrast, it would be wiser to use
non-monetary promotional tools, since they appear to be more consistent with the brand
equity creation strategies. Finally, findings imply that attention should be paid to the causal
order amongst brand equity dimensions. Companies can optimise the brand equity
management process by considering the relationships existing between the different
dimensions of brand equity. In this respect, managers should first build brand awareness as a
means of anchoring the different associations that consumers have of the brand, such as those
related to perceived value, personality or organisation, as well as the evaluations of perceived
quality. Later, attention should also be paid to associations as a way of generating greater
loyalty.
There are several limitations to our research. Given our findings, it would be useful to
investigate further the relationships between marketing mix elements and brand equity
dimensions. For example, actual measures of marketing mix elements could be used with
perceptual measures such as those employed in this study. Additional antecedents of
consumer-based brand equity might be also included in the model to reach a better
understanding of the brand equity creation process. Moreover, this study could be extended
by considering different product categories and brands.

8
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 Figure 1. Conceptual model

Advertising
spending H1a Perceived
quality
H1c H1b
H7
Perception H2a H5
advertising H2b
H2c Brand Brand
awareness loyalty
H3a
Monetary
promotions H6
H3b
H8
H4a Brand
Non-monetary H4b associations
promotions

Table 1. Structural model results

Hypotheses Standardised β (t)
H1a Advertising spending Æ Perceived quality -0.285** (-2.83)
H1b Advertising spending Æ Brand awareness 0.370** (4.34)
H1c Advertising spending Æ Brand associations -0.199* (-1.94)
H2a Perception advertising Æ Perceived quality 0.345** (3.52)
H2b Perception advertising Æ Brand awareness 0.208** (2.31)
H2c Perception advertising Æ Brand associations 0.491** (4.79)
H3a Monetary promotions Æ Perceived quality -0.109** (-1.96)
H3b Monetary promotions Æ Brand associations -0.062 (-1.01)
H4a Non-monetary promotions Æ Perceived quality 0.063 (1.03)
H4b Non-monetary promotions Æ Brand associations 0.122* (1.87)
H5 Brand awareness Æ Perceived quality 0.546** (8.54)
H6 Brand awareness Æ Brand associations 0.429** (6.27)
H7 Perceived quality Æ Brand loyalty -0.041 (-1.03)
H8 Brand associations Æ Brand loyalty 0.746** (14.87)
Fit Indices
S-B χ2= 817.47 (308) (p<0.001) CFI = 0.927 NFI = 0.888
RMSEA = 0.063 IFI = 0.927 NNFI = 0.916
Note: **p<0.05; *p<0.1

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 Appendix. Constructs and measurements results
Constructs and measurement λ (t) R2 CR AVE
Perceived Advertising Spending Yoo et al. (2000)
ADS1 Brand X is intensively advertised 0.890 - 0.792 0.898 0.747
ADS2 Brand X seems to spend a lot on its advertising compared to advertising for 0.814 (24.41) 0.663
competing PC brands
ADS3 The advertisements for brand X are frequently shown 0.886 (28.67) 0.784
General Perception of the Advertising Ad hoc scale
PAD1 The advertisements for brand X are creative 0.928 - 0.861 0.904 0.760
PAD2 The advertisements for brand X are original 0.886 (29.92) 0.785
PAD3 The advertisements for brand X are different from the advertisements for 0.796 (23.74) 0.634
competing brands of PC
Monetary Promotions Yoo et al. (2000)
MPR1 Brand X frequently offers price discounts 0.936 - 0.877 0.930 0.817
MPR2 Brand X often uses price discounts 0.963 (34.28) 0.927
MPR3 Brand X uses price discounts more frequently than competing brands of PC 0.804 (23.09) 0.646
Non-monetary Promotions Yoo et al. (2000)
NMPR1 Brand X frequently offers gifts 0.930 - 0.864 0.943 0.792
NMPR2 Brand X often uses gifts 0.953 (34.63) 0.909
NMPR3 Brand X uses gifts more frequently than competing brands of PC 0.777 (16.82) 0.603
Brand Awareness Yoo et al. (2000); Netemeyer et al. (2004)
AWA1 I am aware of brand X 0.785 - 0.616 0.900 0.642
AWA2 When I think of PC, brand X is one of the brands that comes to mind 0.740 (18.90) 0.548
AWA3 X is a brand of PC I am very familiar with 0.772 (15.69) 0.596
AWA4 I know what brand X looks like 0.850 (16.83) 0.723
AWA5 I can recognize brand X amongst other competing brands of PC 0.854 (15.69) 0.730
Perceived Quality Pappu et al. (2005, 2006)
PQ1 Brand X offers very good quality products 0.886 - 0.785 0.929 0.766
PQ2 Brand X offers products of consistent quality 0.882 (21.98) 0.779
PQ3 Brand X offers very reliable products 0.928 (28.40) 0.861
PQ4 Brand X offers products with excellent features 0.799 (20.67) 0.638
Brand Loyalty Yoo et al. (2000)
LOY1 I consider myself to be loyal to brand X 0.898 - 0.807 0.906 0.763
LOY2 Brand X would be my first choice when considering PC 0.903 (30.61) 0.816
LOY3 I will not buy other brands of PC if brand X is available at the store 0.817 (23.54) 0.667
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 0.812 - 0.659 0.878 0.707
ASS2 Within PC I consider brand X a good buy 0.934 (22.88) 0.872
ASS3 Considering what I would pay for brand X, I would get much more than my 0.768 (15.39) 0.590
money’s worth
ASS4 Brand X has a personality 0.846 - 0.716 0.868 0.767
ASS5 Brand X is interesting 0.905 (19.48) 0.820
ASS6 I have a clear image of the type of person who would use the brand X *
ASS7 I trust the company which makes brand X 0.903 - 0.816 0.923 0.799
ASS8 I like the company which makes brand X 0.895 (25.69) 0.801
ASS9 The company which makes brand X has credibility 0.884 (23.93) 0.781
Fit indices
SB χ2 = 811.98 (419) p<0.001; RMSEA = 0.048; CFI = 0.954; IFI = 0.954; NFI = 0.909; NNFI = 0.945
Note: *: items eliminated during validation process; λ: standardised factor loading; t: t-values; CR: Composite Reliability; AVE: Average
Variance Extracted; S-B χ2: Satorra-Bentler Scaled Chi-square; RMSEA: Root Mean Square Error of Approximation; CFI: Comparative Fit
Index; IFI: Incremental Fit Index; NFI: Normed Fit Index; NNFI: Nonnormed Fit Index.

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