Journal of Marketing Management, 2006, 22, 799-825

George Christodoulides1a,
Leslie de Chernatonya, Conceptualising and
Olivier Furrerb, Measuring the Equity
Eric Shiua and of Online Brands
Temi Abimbolac
Although brand equity is an important
source of competitive advantage online,
previous conceptualisations and measures
overlook the unique characteristics of the
internet that render consumers co-creators
of brand value. In view of this, a three-
phased research programme was
a
Birmingham Business School, undertaken to identify the facets of online
University of Birmingham retail/service (ORS) brand equity and then
develop and validate a scale for its
bRadboud University, Nijmegen measurement. ORS brand equity was
found to be a second order construct with
cUniversityof Central England five correlated yet distinct dimensions:
Business School emotional connection, online experience,
responsive service nature, trust, and
fulfilment. A series of tests showed that the
ensuing 12-item scale has strong
psychometric properties. The implications
of this research for marketing researchers
and practitioners are discussed.

Keywords: Brand equity, internet brands, scale development, validity,

reliability

Introduction

Significant advances have been made in the assessment of marketing

performance (e.g. Ambler, Kokkinaki and Puntoni 2004; Barwise and Farley
2004; Ambler 2003; Clark 1999), yet prevalent e-metrics such as click through

1 Correspondence: Dr George Christodoulides, University of Birmingham,

Birmingham Business School, University House, Edgbaston, B15 2TT Birmingham,
UK. Phone: +44 121 414 8343, fax: +44 121 414 7791, email:
g.christodoulides@bham.ac.uk

ISSN1472-1376/2006/7-8/00799 +26 ©Westburn Publishers Ltd.

800 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

rates suffer from “short-termism” (Chandon, Chtourou and Fortin 2003)

rendering them poor indicators of e-marketing success. This short-term
orientation stems from a view of the internet as a direct response medium –
however, such a position overlooks the brand building potential of
computer-mediated environments (cf. de Chernatony and Christodoulides
2004; de Chernatony 2001). Critically located at the intersection of marketing
strategy and implementation, branding provides an excellent lens through
which to examine and evaluate e-marketing performance (Basu 2000).
The concept of brand equity emerged in the early 1990s to bridge the gap
between short- and long-term marketing success by denoting a non-financial,
market-based intangible asset which reflects a storehouse of future profits
resulting from past marketing activities (Ambler 2003). A decade later,
brand equity became an integral component of marketing performance
measurement (Ambler, Kokkinaki and Puntoni 2004; Ambler 2003; Clark
1999). According to Bharadwaj, Varadarajan and Fahy (1993), brand equity
is an important source of competitive advantage, particularly in services
industries where the main benefit is intangible and consumers perceive high
risk. Previous studies have drawn parallels between internet and services
branding, primarily due to the intangibility, experience of mediation
technology and deferred benefit – all of which contribute to a level of trust
dependency (Jevons and Gabbott 2000; Davis 2000). The importance of
brands on the Web as proxies for trust was further supported by data from a
large-scale survey involving 12000 internet consumers from eight European
countries (Steenkamp and Geyskens 2001). A study by Kotha, Rajgopal and
Rindova (2001) corroborated brand equity building as a key determinant of
competitive success for internet firms. According to latest figures, pure
internet firms such as Google, E-Bay, Yahoo and Amazon.com have even
made it to the top 100 global brands as determined by Interbrand (Berner and
Kiley 2005).
Given the increasingly important role of branding in e-marketing, it is
surprising that to date no attempt to measure brand equity has taken into
account the internet and its related technologies. Experience with this
interactive medium has shown that simply replicating offline marketing
effort online is at least inadequate (Meyers and Gerstman 2001). As is well
documented, the internet’s unique characteristics (cf. Paterson,
Balasubramanian and Bronnenberg 1997; Hoffman and Novak 1996) have
implications for developing and managing brands (de Chernatony 2001).
This does not imply that the principles which have informed brand
management for half a century are not relevant today (Porter 2001). A
“brand” is a universal concept regardless of setting. What changes online is
the enactment of the brand (de Chernatony and Christodoulides 2004). It is
therefore postulated that the ways in which brand equity is created online
 Conceptualising and Measuring the Equity of Online Brands 801

are different from traditional contexts.

Extant brand equity measures have been developed and validated in
classical contexts (e.g. Vázquez, del Rio and Iglesias 2002; Yoo and Donthu
2001a). As yet brand equity measurement has not been re-examined in light
of the internet. As Pavlou and Stewart (2000) contended, “…while
traditional measures of brand equity… will remain important, the interactive
context potentially offers an opportunity to develop and measure a far richer
conceptualization of brand equity.” The purpose of this study is to
systematically develop an instrument to measure the equity of online
retail/service (ORS) brands, and to provide an initial assessment of the
exploratory scale’s psychometric properties.
The paper opens with a review of the literature on brand equity. It then
describes how qualitative research was conducted in parallel with the
literature search to identify the factor structure of online brand equity. The
paper goes on to explain the procedures followed to refine the initial pool of
59 items into the proposed 12-item online brand equity scale and presents a
series of tests performed to assess its reliability and validity, as well as the
unidimensionality of its constituent dimensions. The last section highlights
the usefulness of the scale for researchers and managers, and concludes with
recommendations for future research.

Literature Review

Brand equity has been the subject of increasing interest and scholarly
investigation for over a decade. Prior research established a positive effect of
brand equity, inter alia on consumer preference and purchase intention
(Cobb-Walgren, Ruble and Donthu 1995); market share (Agarwal and Rao
1996); consumer perceptions of quality (Dodds, Monroe and Grewal 1991);
consumer evaluations of brand extensions (Aaker and Keller 1990; Bottomley
and Doyle 1996); shareholder value (Kerin and Sethuraman 1998); price
inelasticity (Erdem, Swait and Louviere 2002) and resilience to product harm
crisis (Dewar and Pillutla 2000). Although researchers agree on the
advantages of strong equity brands, little agreement exists on brand equity’s
conceptualisation, giving rise to a plethora of diverse methodologies for its
measurement. As Berthon et al. (2001, p.1) so succinctly put it, “perhaps the
only thing that has not been reached with regard to brand equity is a
conclusion.”
Ambler (2003, p.41) noted that “brand equity is such a big concept that
people have difficulty describing it” and went on to suggest that the
multiplicity of voices in brand equity research results from researchers
looking at different aspects of the same concept. Likewise, Schultz (2003)
proposed looking at brand equity as a continuum. At the one end is the
802 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

psychological value of a brand; while at the other end is the financial value of
the brand, i.e. the amount the brand is worth to the owner. Such a distinction
is implicit in one of the most commonly cited definitions of brand equity, that
is “a set of assets and liabilities linked to a brand, its name and symbol, that
adds to or subtracts from the value provided by its product or service to a
firm and/or to that firm’s customers” (Aaker 1991, p.12). Brand equity can
therefore be analysed on two levels, depending on the beneficiary of value
(consumer or firm). Marketing research has largely concentrated on
consumer-based brand equity as opposed to firm-based brand equity. This is
because the consumer-based approach offers insights into consumer
behaviour which can be converted into actionable brand strategies (Keller
1993). As a result, marketing researchers made contributions vis-à-vis
consumer-based brand equity’s conceptualisation (e.g. Erdem and Swait
1998; Keller 1993), measurement (e.g. Netemeyer et al. 2004; Allawadi,
Lehmann and Neslin 2003; Vázquez, del Rio and Iglesias 2002; Yoo and
Donthu 2001a; Park and Srinivasan 1994), and validation of instruments (e.g.
Washburn and Plank 2002; Mackay 2001; Agarwal and Rao 1996).
Current knowledge of consumer-based brand equity has evolved from
two theoretical approaches: cognitive psychology and signalling theory in
information economics. The dominant stream of research is grounded in
cognitive psychology, focussing on memory structure (Aaker 1991, 1996;
Keller 1993). Aligning with the psycho-cognitive framework, Keller (1993,
p.2) defined consumer-based brand equity as the “differential effect of brand
knowledge on consumer response to the marketing of the brand.” According
to this conceptualisation, a brand is positively valued when the consumer
reacts more favourably to the marketing of a product with a known brand
name compared to an identical yet unbranded product. Brand knowledge is
then conceptualised as an “associative network memory model” consisting of
two dimensions: brand awareness and brand associations in consumer
memory. Positive consumer-based brand equity arises when the consumer is
aware of the brand and also has strong, unique and favourable brand
associations in his or her mind.
On the other hand, brand equity research rooted in information economics
takes into account the imperfect and asymmetrical nature of contemporary
markets. According to this view, economic agents transmit information by
means of signals and brand names may act as such signals to consumers
(Erdem and Swait 1998). From this perspective, a brand signal becomes the
sum of that brand’s past and present marketing activities. Imperfect and
asymmetrical market information creates uncertainty in consumers’ minds
about available products or services. A credible brand signal generates
customer value by: (i) reducing perceived risk; (ii) reducing information
search costs, and (iii) creating favourable attribute perceptions (Erdem and
 Conceptualising and Measuring the Equity of Online Brands 803

Swait 1998). Under this view, consumer-based brand equity is therefore

defined as the “value of a brand signal to consumers” (Erdem and Swait
1998, p.140).
Hitherto, little research has been directed towards understanding brand
equity in an e-business context. In their study, Page and Lepkowska-White
(2002) drew on Keller’s (1993) framework of consumer-based brand equity
and identified four categories of factors, which drive “web equity” through
awareness and image, viz marketer and non-marketer communications, site
design, vendor characteristics, and product/service characteristics. In a
similar effort, Kim, Sharma and Setzekorn (2002) used Keller’s (1993)
framework to propose strategies for building brand equity online. These
would increase either awareness (i.e. search engines, Web advertising, online
word-of-mouth, cross promotion) or brand knowledge (i.e. website, trust). It
is noted that both studies were literature-based and their conceptual models
were not subjected to empirical examination, possibly due to the lack of a
valid and reliable measure of online brand equity. No study to date has
addressed the issue of brand equity measurement in online environments.

Scale Development

As no research, to the best of our knowledge, has so far produced a valid,

reliable, and parsimonious scale to measure brand equity on the Web, the
current research contributes to filling this gap by developing the ORS brand
equity scale based on the iterative procedures suggested by Churchill (1979),
and augmented by Gerbing and Anderson (1988).
Shifting away from the logic of “cultural engineering” branding (Holt
2002), which has dominated equity thinking for decades, ORS brand equity is
here conceptualised as a relational type of intangible asset that is co-created
through the interaction between consumers and the e-tail brand. There are
three important aspects to this definition. First, ORS brand equity similar to
other forms of consumer-based brand equity denotes an intangible asset that
reflects the connection between a brand and its consumers. Second, aligning
with the new logic for marketing by which consumers and marketers co-
produce brand meaning (Vargo and Lusch 2004), ORS brand equity is co-
created rather than being unilaterally ‘forced upon’ consumers through
associations. Third, this intangible asset arises from the interactions of
consumers with the e-tail brand both on- (e.g., digital experience) and off-line
(e.g., fulfilment).
According to Churchill (1979), the first step in scale development is to
specify the domain of the construct under investigation and he recommends
that a comprehensive literature search be undertaken. The literature review
revealed that hitherto knowledge on brand equity derived from classical
804 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

contexts and that brand equity had not been empirically examined in the
context of e-business. To identify the content domain of ORS brand equity, a
thorough scan of the embryonic literature on e-marketing was first
conducted. Recognising that practice is much ahead of theory development
in the area of e-commerce, partly because of the novelty of computer
mediated platforms, it was considered appropriate to complement secondary
data with two exploratory qualitative studies (i.e. studies 1&2) that would
enhance understanding of ORS brand equity.

Study 1: Experience Surveys

Sixteen semi structured depth interviews with brand experts were carried
out, corresponding to Churchill’s (1979) experience surveys. According to
Churchill (1996), the experience survey is individual interviews with people
who are knowledgeable about the general subject being investigated.
Branding on the internet is synthesised by a diverse base of specialist groups,
and therefore the judgement sample for this phase of research was drawn to
reflect this diversity. The sample consisted of a broad range of consultants,
spanning brand, digital brand, design, and advertising consultants, who all
had extensive involvement with projects relating to the development and
growth of online brands. The case for the appropriateness of consultants as
subjects in brand research was initially developed by de Chernatony and
Dall’Olmo Riley (1998) who elucidated that “[t]hrough their daily activities,
consultants are in touch with a wide variety of branding problems, thus their
knowledge of brands is broad and their thinking reflects best brand
management practice” (p.429).
The recruitment of subjects was based on two independent criteria. The
first criterion was the agency’s reputation in delivering “best practice”
branding. The second criterion was the individual’s reputation with the
subject matter in terms of related experience, research and publications. In
the former case, Campaign’s list of top branding consultancies was a starting
point (cf. Austin 2001). The interviews were undertaken in the UK,
predominantly in London, between September and October 2002, and each
lasted for an average of one hour.
Each interview was audio taped and supplemented with notes. The taped
interviews were transcribed by a secretarial assistant and were reviewed by
the lead author for accuracy. Content analysis was then performed on the
interview transcripts, in line with the guidelines of Miles and Huberman
(1994). The inter-coder reliability was established through an independent
coder who checked the initial coding. The coefficient of agreement was
82.2%, which was considered acceptable (Miles and Huberman 1994).
Discrepancies were resolved through discussion.
The analysis of the transcripts suggested that ORS brand equity had five
 Conceptualising and Measuring the Equity of Online Brands 805

dimensions: emotional connection, online experience, responsive service

nature, trust, and fulfilment.
Emotional connection is a measure of the affinity between consumers and
the ORS brand. As Berry (2000) contends, great brands always make strong
emotional connection with consumers. Being a cluster of emotional and
functional values (de Chernatony and Dall’Olmo Riley 1999), the brand
needs to go beyond pure economic value to also generate emotional value
such as closeness and affection (Berry 2000). As Berry (2000) contends,
“brands that connect emotionally are authentic summations of a company
with a soul” (p.134). According to an interactive consultant, “a strong brand
is one that builds on an emotional connection, which is always going to be
hard to measure.” What is important for marketers is “how you leverage
different parts of what the internet can do to create an emotional connection”
and he carried on “if there is something meaningful at the end of it whether
it is simple or complicated then you can establish an emotional connection.”
Online experience is a very powerful concept in cyberspace (cf. Novak,
Hoffman and Yung 2000), and is able to drastically change consumer
perceptions of a brand, and as a result, dramatically erodes its equity (Muller
and Chandon 2004; Chang et al. 2002). Relatedly, Dayal and his colleagues
(2000) maintained that the boundaries between the brand and the experience
in an online context are so blurred that in the eyes of consumers the brand is
the experience and the experience is the brand. Relatedly, one brand
consultant argued that the online experience means that users experience the
brand in real time which in turn has an impact on their perceptions of the
brand: “…it’s very transparent on the internet. You know, you experience
the brand in real time. So, if at any part of the process it doesn’t work, it has
an impact on how you perceive that brand.”
Responsive service nature refers to the response and service mechanisms
in support of the ORS storefront and the level of customer service interaction
facilitated by the site. According to Chaffey (2000), customer service is
probably the most important characteristic of strong digital brands, and a key
differentiator between online brands. In addition, customer service was
found to be a key determinant of the success or failure of internet firms
(Lennon and Harris 2002), and also a significant component of e-loyalty
(Srinivasan, Anderson and Ponnavolu 2002) and e-tail quality (Wolfinbarger
and Gilly 2003). In a digital brand consultant’s words, “all internet companies
are service companies even if they are selling simple products. If I can buy a Pot
Noodle on a website, there is still a huge service element there because whether it’s
true or not, my belief is that it is Pot Noodle who run the website; are looking after
the credit card security; are posting it to me. And those service elements would be
much more defining of the brand experience than the Pot Noodle actually will be
itself.”
806 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

Trust refers to the confident expectations of the brand’s reliability and

intentions in situations involving consumer risk (Delgado-Ballester,
Munuera-Alemán & Yagüe-Guillén 2003). Given the intangible nature of the
internet, shoppers often look for external cues that will enable them to reduce
perceived risk. In online environments, risk is to a large extent associated
with data privacy and transactional security: “if it’s commerce, clearly
tranaction security is important, information privacy, not abusing the way
information is shared on the server” (design consultant). Particularly in the
early stages of adopting internet shopping, consumers are likely to rely
heavily on familiar brand names as proxies of trustworthiness.
The last dimension, order fulfilment, spans both the online and the real
world, and provides connections between the online and offline experiences.
Thus, if the goods delivered do not correspond to the goods ordered, or
delivery is not completed by the time promised, customer frustration is likely
to occur, thereby damaging the equity of the ORS brand. If the offline
consumption of a physical product does not meet customer expectations,
then no matter how enjoyable the online experience has been, it is unlikely to
counteract the unsatisfactory offline experience. As one of the experts so
aptly stated: “when I get the book, or get the stuff, I say oh no! Then, no matter
what song and dance someone puts on the Web, I would advise against it to my
colleagues.”

Study 2: Focus Groups

Two focus group discussions were carried out to further explore the
themes and concepts that emerged from the expert interviews, only this time
from the point of view of consumers. In addition, the focus groups were
used to generate sample items to tap the constructs for which no published
validated measures existed at the time of the study. This corresponds to the
second step of Churchill’s (1979) sequence.
University students were used as subjects based on their accessibility to
the researcher and their homogeneity as a group (Calder, Phillips and Tybout
1981). Ferber (1977) contended that a student sample is valid for consumer
research if the study is essentially exploratory in nature and the topic is
relevant to the convenience sample used. These two prerequisites were
satisfied in this study. First, the focus groups were part of the exploratory
stage of this research aiming to explore the unknown territory of ORS brand
equity. Second, university students are among the most active online buyers.
As Yoo and Donthu (2001b) elaborated, “their [students’] internet and actual
online purchase experiences, technological advances, and innovativeness
qualify them as a proper sample for online shopping research” (p. 2).
James and Sonner (2001) compared the results of an advertising study
using three separate samples: a random sample of adults, a sample of
 Conceptualising and Measuring the Equity of Online Brands 807

traditional undergraduate students, and a sample of older non-traditional

students. Their findings indicated that traditional undergraduate students
are not effective surrogates of “real consumers”, whereas older non-
traditional students may produce results that are quite similar to those
obtained from the general population. In view of this, a decision was made
that members of the MBA programme at the University of Birmingham
would comprise the sampling frame for the focus groups. MBA members are
atypical students in that they are older than undergraduate students and
have a few years work experience (admission to the MBA programme
requires at least three years of experience). An incentive in the form of gift
vouchers worth £25 was offered to each participant.
The two focus groups took place in March, 2003. Each focus group
consisted of eight participants and lasted approximately 1½ hours. The first
focus group was equally composed of male and female participants whose
mean age was 27 years, and who spent on average 9.7 hours online each
week. The second group consisted of three male and five female participants
whose mean age was 33.25 years, and who spent on average ten hours
weekly online.
Based on the focus groups and the existing literature (Churchill 1979), an
initial pool of 59 items was then created, as shown in Appendix A.
Emotional connection was tapped primarily through Fournier’s (1998) brand
relationship quotient construct which was further supplemented by items of
relevance. Similarly, online experience went beyond website design by
incorporating items of interactivity and customisation. Responsive service
nature spanned items of service and and service interaction. Trust included
items relating to data privacy and transactional security. Items of fulfilment
tapped aspects such as delivery time and accuracy of order/description. All
items were evaluated with seven-point Likert scales anchored at 1= “strongly
disagree” and 7= “strongly agree.” Scale items were randomly ordered to
avoid any systematic order or cluster answering effect.

Study 3: Web-based Survey

A web-based questionnaire was developed to collect data (Furrer and
Sudharshan 2001). A personalised email was sent to a sample of 5,000 UK
internet shoppers to participate in the survey. All target subjects were
registered members of ipoints™, a UK online reward scheme. As an
incentive for completing the survey, respondents were offered: a donation of
50p to their preferred charity, 25 ipoints™, and a summary of the results.
Elimination of incomplete data resulted in 375 usable surveys (7.5% response
rate). Such a response rate is not atypical in web surveys; for which response
rates as low as 4% have been reported in the marketing literature
(Grandcolas, Rettie and Marusenko 2003). However, to test for the
808 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

possibility of non-response bias, Armstrong and Overton’s (1977)

recommended procedure was adopted. This assumes that late respondents
in a sample are similar to theoretical non-respondents. Using a series of t-
and χ2-tests to compare early and late respondents on their demographic
characteristics and internet habits, no significant differences appeared
between the two groups.
Our sample comprised 57% male and 43% female respondents, the
majority of whom fell in the “25-34” age group. The most popular categories
of the subjects’ last online purchases were CDs, books, DVDs and clothes.
The sample characteristics closely mirrored those of the average UK online
shopper (cf. WARC 2003).

Results

Prior to any analysis, the sample of 375 respondents was randomly split in
half. The first half (n1=188) was used to develop the scale, while the second
half (n2=187) was used to validate the results (Churchill 1979).

Item Analysis
Following Churchill’s (1979) model, the first step in purifying the
measurement instrument was to calculate item-to-total correlations and
coefficient alpha to eliminate “garbage items.” Items failing to correlate
higher than 0.30 on the preconceived factor were removed from subsequent
analyses (Nunnally 1978). Two items were deleted at this point. Cronbach’s
coefficient alphas were then computed for the five subscales. These were
0.92 for emotional connection; 0.94 for online experience; 0.88 for responsive
service nature, 0.86 for trust, 0.82 for fulfilment. All the coefficients are larger
than the 0.70 recommended in the literature (Nunnally 1978).

Exploratory Factor Analysis (EFA)

A series of exploratory factor analyses was subsequently performed on the
remaining 57 items to check if the hypothesised structure of ORS brand
equity is supported by the data. The KMO statistic and Barlett’s test of
sphericity were used to evaluate the suitability of the data for EFA. The
KMO statistic produced a value of 0.92 that was well above the minimum
recommended value of 0.60 (Kaiser 1974) and the Barlett’s test yielded an χ2
value of 9710.6 (p<0.001) which suggests that the intercorrelation matrix
contains sufficient common variance to render factor analysis appropriate.
The data was then examined using principal components analysis and a
Promax rotation. To improve unidimensionality and discriminant validity
through EFA, three commonly employed decision rules were applied to
identify the factors underlying ORS brand equity: (1) using the latent root
 Conceptualising and Measuring the Equity of Online Brands 809

criterion as a cut-off value for extraction; (2) deleting items with insignificant
factor loadings at the 0.05 level (≤0.45 for our sample size) (Hair et al. 1998, p.
112); (3) deleting items with significant factor loadings (≥0.45) on two or
more factors; and (4) excluding single item factors from the standpoint of
parsimony.
The outcome of EFA suggested a ten-factor solution, accounting for 68.6%
of the variance. As emerging factors comprised as many as 12 items, EFA
was repeated to reduce the items to a more tractable number. A more
stringent criterion specifying that items with loadings less than 0.67 (the
square root of 0.45) on a given factor be deleted was employed in lieu of
decision rule two from above (Shimp and Sharma 1987). Out of 57 items, 18
survived this process, loading on five distinct factors. Reliability coefficients
were 0.91 for emotional connection; 0.92 for online experience; 0.71 for
responsive service nature; 0.86 for trust; and 0.72 for fulfilment.

Confirmatory Factor Analysis

Following Gerbing and Anderson’s (1988) advice, the remaining 18 items
were examined through CFA to establish the unidimensionality of each
emerging factor. A measurement model was thus specified to have the
retained five factors with the 18 selected items constrained to load on the one
factor identified in EFA.
The measurement model turned out to be a poor representation of the
data, with fit indices failing to meet acceptable levels (Hu and Bentler 1999).
The χ2-test was 1452.00 (p<0.001) with 126 degrees of freedom. Goodness of
fit index (GFI) and adjusted goodness of fit index (AGFI) were 0.27 and 0.02
respectively. The comparative goodness of fit indexes measured by the
comparative fit index (CFI), incremental fit index (IFI), and non-normed fit
index (NNFI) were 0.63, 0.66 and 0.55 respectively. The root mean square
error of approximation (RMSEA) was 0.24 with a 90% confidence interval of
0.23-0.25. The standardised residuals also exceeded the 2.58 norm (largest
residual was ±4.56).

Model Re-specification
In order to detect misfitting parameters and achieve a clear factor
structure with unidimensional factors only, CFA was then used in an
exploratory mode. Scale items exhibiting high modification indices or
residuals were subsequently removed from the variable list. These may, inter
alia, stem from model misspecification, non-normally distributed data or
nonlinear relationships among some variables and adversely affect the
overall model fit (Jöreskog and Sörbom 1996). Significant cross-loading
items were also dropped for three reasons because the objective of this
research was to develop a valid, reliable and parsimonious ORS equity scale
810 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

of multiple independent dimensions, and this required a clean factor

structure. Moreover, removing cross-loadings also helps factor interpretation
and when not underpinned by theory, cross-loadings may be attributed to a
statistical artifact (Yoo and Donthu 2001b).

X1 : Affiliation
Emotional
X2: Care Connection

X3 : Empathy

X4: Ease of use Online

Experience
X5: Navigation

X6: Speed

X7 : Responsiveness Responsive
Service
X8 : Interaction Nature

X9 : Privacy
Trust
X10: Security

X11: Accuracy
Fulfilment
X12: Delivery

Figure 1: ORS Brand Equity Measurement Model

Following a series of iterative procedures, a final 12-item ORS brand

equity measurement model (see Figure 1) was supported by values of fit.
The Satorra-Bentler χ2 statistic was 55.59 (p=0.11) with 44 degrees of freedom.
 Conceptualising and Measuring the Equity of Online Brands 811

GFI and AGFI were 0.93 and 0.88 respectively. CFI, IFI and NNFI were 0.94,
0.95 and 0.92 respectively. Item loadings on their corresponding dimensions
ranged from 0.59 to 0.96 as shown in Table 1. The smallest t-value of the
loadings was 6.45, which indicates highly significant loadings.

Scale Validity and Reliability

To evaluate the validity and the reliability of the scale, a CFA was
performed on the second sample (n2=187) to test the underlying structure of
the items from the previous analysis. The five-dimensional ORS brand
equity measurement model was re-evaluated and showed satisfactory fit.
The model’s Satorra-Bentler χ2 was 38.11 (p=0.72) with 44 degrees of
freedom, and its relative χ2 was 0.87, which is less than two as recommended
by Carmines and McIver (1981). RMSEA and SRMR were 0.00 and 0.044
respectively. CFI, IFI, and NFI were all 1.00 denoting excellent comparative
fit. GFI and AGFI were 0.96 and 0.93 respectively. These fit indices exhibit
an excellent level of fit with the model (Hu and Bentler 1999). The item
loadings to their constructs ranged from 0.59 (t-value=6.80) to 0.90 (t-
value=13.00) as shown in Table 1.

Table 1: ORS Brand Equity Items: A LISREL Completely Standardised

Solution

Factor
Dimensions and Items loadings t-value
Emotional Connection S1 S2 S1 S2
X1: I feel related to the type of people who are [X]’s customers 0.80 0.78 12.10 10.62
X2: I feel like [X] actually cares about me 0.93 0.89 13.33 14.24
X3: I feel as though [X] really understands me 0.87 0.85 14.23 12.62
Online Experience
X4: [X]’s website provides easy-to-follow search paths 0.91 0.88 13.00 12.73
X5: I never feel lost when navigating through [X]’s website 0.79 0.62 10.52 9.96
X6: I was able to obtain the information I wanted without any 0.88 0.86 10.24 12.55
delay
Responsive Service Nature
X7: [X] is willing and ready to respond to customer needs 0.89 0.81 11.72 9.82
X8: [X]’s website gives visitors the opportunity to ‘talk back’ to 0.65 0.59 8.20 6.80
[X]
Trust
X9: I trust [X] to keep my personal information safe 0.78 0.90 10.61 13.00
X10: I feel safe in my transactions with [X] 0.81 0.82 9.15 10.28
Fulfilment
X11: I got what I ordered from [X]’s web site 0.96 0.88 7.58 9.77
X12: The product was delivered by the time promised by [X] 0.59 0.86 6.45 10.95

Note: S1= Sample 1(n1=188); S2= Sample 2 (n2=187)

812 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

To evaluate the internal consistency of the scale, composite reliability

estimates were computed with LISREL results (Fornell and Larcker 1981).
These were 0.88 for emotional connection, 0.83 for online experience, 0.66 for
responsive service nature, 0.85 for trust, and 0.86 for fulfilment. Reliability
estimates for the first sample were 0.90, 0.90, 0.75, 0.78, and 0.77 respectively.
Having established the internal psychometric properties of the ORS brand
equity scale, the next step involved an assessment of its content, criterion,
and construct validities (Ping 2004). As care was taken with the procedures
followed (cf. Churchill 1996) involving exploratory research with experts and
consumers, the ORS brand equity scale is considered content valid.
To assess criterion and construct validities, an aggregate score of ORS
brand equity was then computed. For this purpose, a higher-order ORS
brand equity model was fitted, whose five dimensions are related to a
higher-order factor. This procedure was necessary because, simply summing
the raw scores of the 12 items would be inappropriate as the five dimensions
are not likely to contribute equally to ORS brand equity scale. Causal paths
of this higher-order model to the five dimensions were used as weights to
create an index for ORS brand equity. The ORS brand equity model and the
higher-order model were statistically equivalent; and thus their fit indices
were identical. Path coefficients were 0.27 for emotional connection, 0.24 for
online experience, 0.24 for responsive service nature, 0.26 for trust, and 0.30
for fulfilment. The weight of a dimension was calculated as the fraction of
the path estimate of that dimension over the sum of the five path estimates.
For example, the weight of emotional connection is 0.21, which derives from
0.27/(0.27+0.24+0.24+0.26+ 0.30). As a result, the ORS brand equity index
equals 0.21(the mean of emotional connection) + 0.18(the mean of online
experience) + 0.18(the mean of responsive service nature) + 0.20(the mean of
trust) + 0.23(the mean of fulfilment).
The scale’s criterion validity was assessed by correlating the ORS brand
equity index to an independent 3-item overall brand equity measure (OBE)
adapted from Yoo and Donthu (2001a). The internal reliability of OBE was
0.90. The two scales were correlated at 0.51 (p<0.01), indicating criterion
validity. Convergent validity was gauged through the average variance
extracted (AVE). AVE for the five factors was 0.71 for emotional connection,
0.63 for online experience, and 0.50 for responsive service nature, 0.74 for
trust, 0.76 for fulfilment. All of them exceeded the 0.50 threshold
recommended by Fornell and Larcker (1981).
Evidence of discriminant validity among the five dimensions of ORS
brand equity was provided by three separate tests. The first test compares
the AVE for each factor with the squared pairwise correlation between
factors. In order to establish discriminant validity, the AVE for a given factor
should be higher than all φ2 estimates involving that factor (Fornell and
 Conceptualising and Measuring the Equity of Online Brands 813

Larcker 1981). The squared pairwise correlation is 0.01 (emotional

connection and fulfilment); 0.52 (online experience and fulfilment); 0.20
(responsive service nature and fulfilment); 0.41 (trust and fulfilement); 0.06
(emotional connection and trust); 0.38 (online experience and trust); 0.36
(responsive service nature and trust); 0.29 (online experience and responsive
service nature); 0.46 (emotional connection and responsive service nature);
0.09 (emotional connection and online experience), which are all smaller than
the AVE mentioned above. This provides good support of discriminant
validity.
The second test consists in the examination of each correlation between all
pairs of factors within the ORS brand equity measurement model (Anderson
and Gerbing 1988). In order for two factors to be independent, their pairwise
correlation should be statistically smaller than one. This was tested by
building a 95 percent confidence interval around each correlation.
Confidence intervals were [-0.06, 0.30] for emotional connection and
fulfilment; [0.28, 0.61] for responsive service nature and fulfilment; [0.51,
0.76] for trust and fulfilment; [0.07, 0.43] for emotional connection and trust;
[0.49, 0.76] for online experience and trust; [0.43, 0.76] for responsive service
nature and trust; [0.38, 0.70] for online experience and responsive service
nature; [0.56, 0.80] for emotional connection and responsive service nature;
and [0.12, 0.48] for emotional connection and online experience. None of the
confidence intervals subsumed one, supporting the discriminant validity of
ORS brand equity.
The third test compares the χ2 statistic among the five-factor ORS brand
equity model and alternative measurement models with fewer factors.
Evidence of discriminant validity exists if the χ2 of each unconstrained
model (with more factors) is significantly lower than the χ2 of each
constrained model (model with fewer factors). The smallest χ2 difference
between the one-factor model and the models with more factors was 443.50
(p<0.001). The improvement in χ2 from each model with fewer factors to the
five-factor ORS brand equity model was 678.97, 235.47, 193.60, and 107.41
respectively. This suggests that treating the individual dimensions as
distinct factors is superior to collapsing the dimensions.
The construct validity of the ORS brand equity scale was further assessed
vis-à-vis three independent constructs, namely attitude towards the ORS
brand, consistent image, and purchase intention. While attitudes and
purchase intention are related to the psycho-cognitive approach, the
consistency of image (brand signal) is a significant component of the
information economics approach. The attitude towards the ORS brand was
measured by means of three bipolar items adopted from Bruner, James and
Hensel (2001). A three-item modified measure from Loiacono, Watson and
Goodhue (2002) was used to quantify consistent image. The two scales
814 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

achieved reliabilities of 0.96 and 0.89 respectively. Purchase intention was

measured through a single item borrowed from Graeff (1997). The
correlation of the ORS brand equity index with the constructs was significant
at the 0.01 level: 0.63 with attitudes towards the ORS brand, 0.35 with
purchase intention, and 0.45 with consistent image. In addition, the
correlation between individual ORS brand equity dimensions and the
relevant constructs was consistent and significant. This is good support for
the scale’s construct validity.

Conclusions

The results of the various tests demonstrate that the ORS brand equity scale
possesses strong psychometric properties, and suggest that emotional
connection, online experience, responsive service nature, trust, and fulfilment
constitute five independent, yet correlated dimensions of the construct.
Contrary to previous conceptualisations and measures of consumer-based
brand equity that encouraged managers to view this intangible “as a passive
or reactive result of marketing intervention” (Brown, Kozinets and Sherry
2003), the ORS brand equity scale aligns with the new dominant logic for
marketing based on which consumers are co-creators of brand meaning and
value (Vargo and Lusch 2004).
Consisting of merely 12 items, the scale is parsimonious and is of value to
both practitioners and researchers. According to research, at least, 70 per
cent of organisations employ metrics which lack statistical validity (Ittner
and Larcker 2003). The ORS brand equity scale can serve as a diagnostic for
marketers to track the equity of their ORS brands at the individual level, as
brand value is idiosyncratically assigned by the consumer (Rust, Zeithaml
and Lemon 2004). By assessing individual dimensions of ORS brand equity,
marketers are able to identify areas of strength and weakness. Pillars of
strength can be reinforced via marketing actions and further capitalised on
through related extensions. The ORS brand equity scale can, therefore, assist
online marketers in making decisions about brand extensions. By extending
this consumer-based exercise to include competing brands, marketers can
make concomitant adjustments to their positioning strategies in order to
enhance their ORS brand’s competitive stance. Marketers can also use the
ORS brand equity scale to monitor the long-term impact of various
marketing mix activities on their brand equity so as to optimise the
effectiveness of their budget allocation (Dekimpe and Hanssens 1999).
Furthermore, the ORS brand equity scale can help marketers gain insights
into the relationship between their brand performance and bottom line
measures such as profit, market share and sales (Ambler 2003).
Previous research revealed that the priority for most online marketers is to
 Conceptualising and Measuring the Equity of Online Brands 815

maintain high customer acquisition costs, often at the expense of customer

retention and profitability (Reichheld and Schefter 2000). The concept of
equity encourages marketers to focus on their existing customer base. By
first segmenting customers on the basis of their lifetime value (Rust et al.
2004), online marketers are able to identify the most lucrative segments to
which they can then administer the ORS scale to comprehend aspects of their
brand that drive value. In addition, responding to the increased role of
word-of-mouth recommendation online (Henning-Thurau and Welsh 2003),
marketers may target their marketing investment toward high equity
customers to convert them into advocates.
A problem with pure e-tailers is that they have to build their brand equity
from scratch as opposed to their bricks and clicks counterparts who can
leverage their offline awareness. To this end, a commonly employed strategy
involves establishing alliances with trusted bricks and mortar brands (Levin,
Levin and Heath 2003). The ORS brand equity scale enables online
marketers to evaluate the impact of spill-over effects on their equity.
In addition to its managerial usefulness, the ORS brand equity scale
enables researchers to advance marketing theory in the area of e-marketing
and branding. For instance, through using the ORS brand equity scale,
researchers can evaluate how different marketing strategies affect the value
of ORS brands. A key consideration in competitive strategy is a firm’s
relative position within its industry. To achieve and sustain competitive
advantage, Porter (1985) suggested that organisations should follow either
one of three generic strategies: cost leadership, differentiation or focus.
Branding has traditionally been associated with differentiation or focus
strategies given the huge investment required to develop a brand. The
internet, however, represents a low cost medium, providing more cost
efficient ways to build a brand through interaction than classical
environments. Marketing strategists can, therefore, use the ORS brand
equity scale to assess generic strategies against the objective of creating
equity, and identify those which are more likely to lead to higher levels of
consumer brand value in computer-mediated environments.
With the aid of the ORS brand equity scale, researchers can also
demonstrate how marketing expenditure for ORS brands is an investment
that results in quantifiable long term outcomes. This is particularly
important in view of imminent pressures requiring marketing to become
financially accountable (Rust et al. 2004; Gupta, Lehmann and Stuart 2004).
Marketing has traditionally been in tension with the finance department,
which always required marketing to develop tools to quantify the (long
term) benefits it proclaims to produce. The inability of marketing to justify
itself led to subsequent under-representation at the organisation board level.
This meant that the voice of the consumer was not heard in the board room,
816 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

causing firms to lose their customer focus (Grönroos 2003). The ORS brand
equity scale can help defuse the tension between marketing and finance,
initiating a virtuous cycle with benefits for both consumers and
organisations.
Furthermore, the ORS brand equity scale provides a first step in the
direction of understanding brand valuation in online environments. It is
noted, at this point, that the ORS brand equity scale quantifies the intangible
marketing asset per se; it is not intended to place a financial value on the
asset (Ambler 2003). Through the qualitative interviews with brand experts,
it was realised that the valuation of online brands was largely based on
discounted cash flows. This rather basic method of brand valuation is
reflective of the limited knowledge of brands and brand equity in computer-
mediated environments. The ORS brand equity scale can become a point of
departure for brand valuators’ quest for more sophisticated methods for
valuing ORS brands. For instance, weights can be developed and applied to
translate the ORS brand equity score to dollar value.
There are some limitations to this study that need to be addressed by
future research. First, the present research was entirely conducted in a single
country, i.e. the UK. Other researchers are, therefore, encouraged to
undertake replication studies in other parts of the world to assess the scale’s
equivalence across nations. Second, the participants of the quantitative study
were members of an online reward scheme, making them more likely to
exhibit higher involvement with online shopping than the average online
shopper (Conneran and Lawlor 1997). Future studies should explore the
mediating role of involvement in the creation of ORS brand equity. Third,
this study focused on business-to-consumer shoppers. Researchers may wish
to explore whether the identified dimensions of ORS brand equity hold for
business-to-business customers. Fourth, the proposed ORS brand equity
measure is entirely consumer-based and does not incorporate the views of
other stakeholders such as the firm, employees, or channel members. Future
research can draw on this study to develop a total equity measure that
integrates the equity created for different stakeholders of the ORS brand.
Further use of the ORS brand equity scale involving application to diverse
samples will allow developing stable norms (Churchill 1979).

Acknowledgements

The authors would like to acknowledge funding for this research from The
Chartered Institute of Marketing.
 Conceptualising and Measuring the Equity of Online Brands 817

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 Conceptualising and Measuring the Equity of Online Brands 823

Appendix A: Initial Item Pool

1. [X] has always been good to me

2. [X] has personal relevance to me
3. It would be shame if I had to start from scratch with another retailer
4. [X] helps me make a statement about what is important to me in life
5. [X] is dependable and reliable
6. While I was on [X]’s website, I could choose freely what I wanted to see
7. While surfing [X]’s website, I had absolutely NO control over what I can do
on the site (R)
8. [X] is willing and ready to respond to customer needs
9. [X] makes a claim or promise about its products, it’s probably true
10. The product that came was described accurately by [X]’s website
11. [X] plays an important role in my life
12. Inquiries made on [X]’s website are answered promptly
13. [X] really listens to what I have to say
14. [X] says a lot about the kind of person I am
15. My experience on [X]’s website is exciting
16. [X] treats me like an important and valuable customer
17. I feel like [X] actually cares about me
18. [X]’s image is consistent with how I’d like to see myself
19. I trust [X] will not misuse my personal information
20. [X]’s website enables me to order products that are tailor-made for me
21. When you have a problem, [X]’s website shows a sincere interest in solving it
22. [X]’s website has a good balance between text and graphics
23. [X]’s website is effective in gathering visitors’ feedback
24. [X]’s website is pleasing to the eye
25. [X]’s website makes me feel I am a unique customer
26. [X]’s website processed my input very quickly
27. [X]’s website provides easy-to-follow search paths
28. I feel as though I really understand [X]
29. [X]’s website provides uncluttered screens
30. [X]’s website was very slow in responding to my requests (R)
31. Every time I use [X], I’m reminded of how much I like it
32. Getting information from [X]’s website is very fast
33. I always find what I am looking for on [X]’s website
34. I believe that [X]’s website is customized to my needs
35. I feel as though [X] really understands me
36. I feel like something is missing when I haven’t used [X] for a while
37. [X]’s website is creative
38. [X]’s website is easy to use
39. I feel related to the type of people who are [X]’s customers
40. I feel safe in my transactions with [X]
41. [X] is meaningful to me
42. I felt that I had a lot of control over my visiting experiences at [X]’s website
43. I find [X] personally appropriate to me
824 Christodoulides, de Chernatony, Furrer, Shiu and Abimbola

44. I got what I ordered from [X]’s website

45. I never feel lost when navigating through [X]’s website
46. I trust [X] to keep my personal information safe
47. I was able to obtain the information I wanted without any delay
48. It is difficult to give feedback to [X]’s website (R)
49. My experience on [X]’s website is engaging
50. [X]’s website facilitates two-way communication between the visitors and
the site
51. [X]’s website gives visitors the opportunity to ‘talk back’ to [X]
52. My experience on [X]’s website is frustrating (R)
53. My experience on [X]’s website is NOT boring
54. [X]’s website makes me feel it wants to take notice of its visitors
55. The product was delivered by the time promised by [X]
56. [X]’s website makes purchase recommendations that match my needs
57. The advertisements and promotions that [X]’s website sends to me are
tailored to my needs
58. When I clicked on the links from [X]’s website, I felt I was getting
instantaneous information
59. While surfing [X]’s website, my actions decided the kind of experiences I got

(R): reverse coded item

About the Authors

George Christodoulides is Lecturer in Marketing at Birmingham Business

School. He has recently completed his PhD in Brand Marketing under the
supervision of Professor Leslie de Chernatony. George's PhD involved the
development and validation of an equity scale for brands operating in
electronic markets. His research has been published in the Journal of Product
and Brand Management, the Service Industries Journal, and Interactive
Marketing. George's research interests lie in the areas of brand management,
and internet marketing.

Leslie de Chernatony is Professor of Brand Marketing and Director of the

Centre for Research in Brand Marketing at Birmingham University Business
School. With a doctorate in brand marketing, he has a substantial number of
publications in American and European journals and is a regular presenter at
international conferences. He has several books on brand marketing, the two
most recent being Creating Powerful Brands and From Brand Vision to Brand
Evaluation, both published by Elsevier. A winner of several major research
grants, his two most recent grants have supported research into factors
associated with high performance brands and research into services
branding. He is Visiting Professor at Thammasat University, Bangkok and
University of Lugano, Switzerland. He acts as an international consultant to
 Conceptualising and Measuring the Equity of Online Brands 825

organisations seeking more effective brand strategies and has run acclaimed
branding seminars throughout Europe, Asia the Far East and America. He is
an experienced expert witness in legal cases involving branding issues in
commercial and competition cases.

Olivier Furrer is Associate Professor at the Radboud University Nijmegen in

the Netherlands. He holds a PhD from the University of Neuchâtel
(Switzerland). His major research interests are in the areas of service
marketing, customer services, the resource-based theory, and the strategic
role of intangible assets. He is the author of a book recently published in
French about the strategic role of customer services: Services autour des
Produits: Enjeux et Stratégies, and has published various articles including
such journals as Journal of Service Research, European Management Journal,
Revue Française de Gestion, and Revue Française du Marketing. He is also
currently on the editorial board of the Journal of Service Research.

Eric Shiu is Lecturer in Marketing at the University of Birmingham. He

achieved a MA degree with distinction at Lancaster University, and
accomplished a doctorate at the University of Edinburgh. Online retailing
and branding, to which this paper is related, is one of his research interests.

Temi Abimbola is Senior Lecturer at the University of Central England. She

holds a PhD in brand marketing from Aston University Business School. Her
research and academic interests are in competitive strategy, marketing
intangible assets, knowledge and demand management, intellectual
property, brand equity and brand valuation. Prior to embarking on her PhD
research, Temi worked with the American Chamber of Commerce in
London, Shell UK, and Unilever Plc.