Villarejo-Ramos - 2005 - The Impact of Marketing Communication & Price Promotion on Brand Equity

wth the relationships that are estab-lished between them.4

The proposal begins with thepreparation of a conceptual modelbased on theory and existing brandequity research. From this base, atheoretical model has been built ofcausal relationships between spendingon marketing communications and thedimensions of brand equity. To verifythe model, the structural equationsmodel (SEM) has been applied.

According to Aaker, the latent

INTRODUCTIONThis paper analyses the importance ofperceived spending on marketing com-munication for the brand equity ofdurable goods. This is framed within aline of research to develop a model forthe measurement of brand equity thatcontrasts the influence that the market-ing effort of the companies (measuredby pricing behaviour, distribution andcommunication) has on the brandequity components (perceived quality,brand loyalty and brand awareness)1–3

� HENRY STEWART PUBLICATIONS 1350-231X BRAND MANAGEMENT VOL. 12, NO. 6, 431–444 AUGUST 2005 431

Angel Fco. Villarejo-RamosBusiness Administration Faculty,University of Seville,1 Avenida Ramon y Cajal,41018–Seville, Spain

Tel: �34 (0)954 554 463Fax: �34 (0)954 556 989E-mail: [email protected]

The impact of marketingcommunication and price promotionon brand equityReceived (in revised form): 5th April, 2005

ANGEL F. VILLAREJO-RAMOShas been Professor of Marketing at Seville University (Spain) since 1994. His research has focused on marketingstrategy, consumer behaviour, brand equity management and customer relationship management. His currentinterests include the evolution of brand equity management to customer equity management, specifically, thetransition from brand loyalty to customer equity. He has published widely in marketing and management journals,and presented papers at international meetings.

MANUEL J. SANCHEZ-FRANCOhas been Professor of Marketing and Communication at Seville University (Spain) since 1996. His research hasfocused on internet marketing strategy, psychological processes and advertising effects. Currently, he is studyingthe design and interpretation of models to explain behaviours in online environments. Specifically, this involvesevaluating the mediating role of the main intrinsic and extrinsic motives explaining users’ web acceptance anduse. He has published widely in marketing and management journals.

AbstractThis paper establishes a theoretical and empirical basis that shows the impact of marketingcommunications and price promotion on brand equity. The theoretical review supports applyinganalysis techniques based on structural equations models to confirm empirically the relationshipbetween marketing communication efforts and the dimensions of brand equity: perceived quality,brand loyalty, brand awareness and brand image. This measurement model is verified on a samplegroup of families which purchased durable goods — in this case a washing machine. The resultsindicate the positive effect of marketing communication on brand equity, and offer strong supportfor the measures of perceived quality, brand loyalty, brand awareness and brand image asantecedents of brand equity.

made by companies. These causalrelationships condition the formulationof hypotheses that explain the directeffect of previous marketing com-munications on brand equity, and theeffect of marketing communicationstools on the dimensions of brandequity.

In the current research, twomarketing communications variableswere collected from the marketingmix that measure the positive effectof perceived advertising spending onbrand equity, and the negative effecton this value of offering price deals.The perceived advertising spendingcontributes to the successful creationof brand equity, as stated in somestudies (Maxwell,11 Chay and Tellis,12

Simon and Sullivan,13 Boulding etal.14). For its part, the use of pricedeals has a negative effect on brandequity, since it is considered that theconsumer perceives a negativerelationship between brand equity andthe need to use incentives for salesthat affects the established level ofprices.15,16 Therefore, brand equity isinfluenced by two marketing com-munications tools used by thecompany: advertising and price deals(see Figure 1).

This paper focuses on determiningthe effects of advertising and price dealson brand equity, measured throughconsumer perceptions. The first twohypotheses are:

— H1 (� > 0): The perceived advertisingspending that the company undertakesfor the product brand positively affectsthe perception of brand equity.

— H2 (� < 0): Price deals used by thecompany negatively affect the perceptionof brand equity.

variables are the dimensions of brandequity.5 The work of Yoo et al.6

hypothesised the influence that thebrand’s perceived marketing effort hason the dimensions of brand equity.

The model in this paper has beenverified against an empirical investiga-tion of a sample group of washingmachine (durable goods) purchasers,who responded to a questionnaire onattitudes. Once the reliability andvalidity of the responses had beenconfirmed, the responses were used tobuild the structural model.

CONCEPTUAL FRAMEWORK ANDRESEARCH HYPOTHESESThis paper starts with the proposalformulated by Aaker7 on the brandequity concept and the componentsthat integrate and explain it: perceivedquality, brand loyalty and brand aware-ness. In this context, brand equity isdefined as a set of assets and liabilitieslinked to the brand, which add value toor subtract value from a product in itsrelationship with customers. Variousauthors (Leuthesser,8 Farquhar9 andNomen10) indicate that brand equity isa strategic aspect of marketing manage-ment and can be created, maintainedand intensified by strengthening one ofits dimensions. Likewise, it is recog-nised that any marketing action has apotential effect on brand equity, sincebrand equity represents the accumu-lated impact of investment in thebrand.

Establishing the hypothesesfor verificationThe proposed structural model recog-nises that brand equity is influencedby the different marketing efforts

432 � HENRY STEWART PUBLICATIONS 1350-231X BRAND MANAGEMENT VOL. 12, NO. 6, 431–444 AUGUST 2005

VILLAREJO-RAMOS AND SANCHEZ-FRANCO

ports the purchase decision by increas-ing the product value, as shown byArchibald et al.23 — ie the recipient ofthe advertising considers the perceivedadvertising spending on the brand asreaffirming the purchase decision. Thisrelationship is summarised in the fol-lowing hypothesis:

— H3 (�11 > 0): The perceived advertis-ing spending that the company under-takes for the product brand positivelyaffects the perception of the brand.

The perception of high advertisingspending first increases the probabilityof the brand being included in thegroup of alternatives that the con-sumer has to choose from, so that,secondly, the decision-making processis simplified at the same time as aconsumer habit is created, and, finally,brand loyalty behaviour becomes apossibility.24

— H4 (�21 > 0): The perceived advertis-ing spending that the company under-takes for the product brand positivelyaffects brand loyalty.

The level of advertising spending hasbeen found to have a positive relation-

When consumers perceive high spend-ing on advertising, this contributes totheir perception of the level of con-fidence that marketing managers havein the product.17 Perceived advertisingspending has positive effects, not onlyon brand equity as a whole, but alsoon each of the elements it is madeup of: loyalty, awareness, perceivedquality and brand image.18 This meansthat causal relationships are establishedbetween the different advertising ac-tions and the dimensions of brandequity.

The relationship between perceivedquality and spending on marketingcommunications was justified by dif-ferent studies (Milgrom and Roberts;19

Kirmani and Wright;20 Aaker andJacobson;21 Archibald et al.22). The firstpaper came to the conclusion thatmarketing communications are oneof the main external indicators ofproduct quality. The next work showsthe favourable relationship betweenmarketing communications spendingand the firm’s investment in the brand,which involves a higher perception ofquality. The relationship between theinvestment in marketing communica-tions and quality affects not only theperceived brand quality, but also sup-


Figure 1 Effects of commercial promotion on brand equity

Perceivedadvertisingspending

Brandequity

Perceived quality

Brand loyalty

Brand awareness

Brand image

Price deals

H1 (+)

H2 (–)

THE IMPACT OF MARKETING COMMUNICATION AND PRICE PROMOTION ON BRAND EQUITY

this regard, using price deals meansdeterioration in brand equity in bothperception of the brand’s quality andits image. As such, the establishedhypotheses are:

— H7 (�12 < 0): The use of price dealsfor the brand has a negative effect on itsperceived quality.

— H8 (�42 < 0): The use of price deals forthe brand has a negative effect on itsimage.

No relationships were noted betweenprice deals and other brand equitydimensions: loyalty and brand aware-ness. Although price deals encourageconsumers to make repeat purchases,the pseudo-loyalty appears to be relatedto the attractiveness of the promotionprice; when the promotion finishes, theconsumer loses interest in the brand.

Finally, and as Aaker and Alvarez delBlanco31 have indicated, brand aware-ness indirectly affects behaviour, as ithas a positive influence on perceptionsand attitudes towards the brand. Fur-thermore, a link is assumed betweenthe different brand associations thatmake up the image. A hypothesis thatestablishes a relationship between brandawareness and brand image is sug-gested:

— H9 (�43 > 0): High levels of brandawareness positively affect the formationof the product’s brand image.

Following the establishment of the ex-isting relationship between perceivedadvertising spending and price deals onthe dimensions of brand equity, theproposed structural model which col-lects the hypotheses is presented (seeFigure 2).

ship with advertising recall, which is ameasure of brand awareness.25,26 Brandsachieve awareness through marketingcommunications and, as a part of that,advertising is mentioned as the mainpromotional tool for products in theconsumer market.

— H5 (�31 > 0): The perceived advertis-ing spending that the company under-takes for the brand positively affectsbrand awareness.

The associations linked to the brandare mental pictures that the consumerperceives after recognising the brand inthe messages sent by the company. Thepositive associations that form a highbrand image are transmitted to con-sumers through advertising and adver-tising strength.27

— H6 (�41 > 0): The perceived advertis-ing spending that the company under-takes for the brand positively affectsbrand image.

Sales deals in general, and especiallyprice deals, have been considered toweaken brand equity in spite of theshort-term benefit that they provideto the consumer.28 They are, there-fore, an erroneous way of trying tobuild a strong brand, as they areeasily imitated and counteracted bycompetitors.29 In addition, their tem-porary nature creates a feeling ofshort-lived benefit for the consumer,that ends once the deal finishes. Infact, in the long term, brand imagecan appear to be of poor qualityand worn out. Activities based onlowering prices can place brands indanger by provoking consumer confu-sion; instability and variability leads toan image of unstable quality.30 In



communications on consumers, andthe perceptions that the messagesare provoking among different tar-get individuals. The scale developedto measure the advertising spendingperceived by the consumer consistsof seven indicators. Price deals aremeasured with a very similar scale tothat used to measure the effect ofadvertising.

Perceived quality is defined as asubjective judgment made by theconsumer regarding the excellence orsuperiority of a product.46 The con-sumer’s opinion about the product’squality and its attributes with regardto its expected performance formsthe measurement scale indicator ofthe brand quality perceived by in-dividuals.

Brand loyalty plays an outstandingrole in generating brand equity, notonly because of its capacity to keepcustomers loyal,47,48 but also becausethat customer loyalty extends to otherbrands in the company’s portfolio.49

METHODOLOGY

Proposed measurement scalesThe complete formulation of themeasurement scales used in the re-search can be seen in Table 1.

In order to develop the measure-ment process for the different elementsinvolved, Bollen’s recommendation45

has been followed: (1) identify thedimensions and latent variables thatrepresent the concept to be measured;(2) create indicators based on the pasttheoretical position; and (3) specify therelationship between the observableindicators or variables and the latentconcepts or variables that they ex-plain.

The consumer normally has a per-ception of the brand in terms of themarketing communications spendingmade on it by the company. Advertis-ing expenditure, as the main marketingcommunications tool in the consumermarket, should be considered whendetermining the effects of marketing


Figure 2 Effects of promotion on dimensions of brand equity

Perceivedadvertisingspending

Perceivedquality

Brand loyalty

Brand awareness

Brand image

H3 (+)

H4 (+)

H5 (+)

H6 (+)

H9 (+)

Price deals

H7(–)

H8 (–)



Table 1 Measurement scales

Item Enunciation Variable (sources)

PAS1 I think advertising is, in general, very good Perceived advertising PAS2 In general, I like the advertising campaigns for X brand spendingPAS3 My opinion about X’s advertising is very high (Yoo et al.;32 Martín33)PAS4 The ad campaigns for X seem very expensive, compared to campaigns for

competing brands PAS5 I think X brand is intensively advertised, compared to competing brands PAS6 The advertising campaigns for X are seen frequently PAS7 I remember the last advertising campaigns for XPD1 I think price deals are, in general, very good Price dealsPD2 In general, I like price deals for X brand (Yoo et al.;34 Martín35)PD3 My opinion about X’s price deals is very highPD4 Price deals for X are frequently offeredPD5 Price deals for X are emphasised more than seems reasonable PD6 I think price deals for X are more frequent than for competing brandsPD7 Price deals for X are presented too many timesPQ1 X is of high quality Perceived qualityPQ2 The likely quality of X is extremely high (Aaker and Álvarez delPQ3 The likelihood that X will be satisfactory is very high Blanco;36 Lassar et al.;37

PQ4 The likelihood that X is reliable is very high Yoo et al.38)PQ5 X must be of very good qualityPQ6 X is a brand characterised by its continuous innovationPQ7 X is a quality leader within its categoryPQ8 Compared to its competitors, I appreciate X brandPQ9 Compared to its competitors, I respect X brandBL1 I consider myself to be loyal to X brand Brand loyaltyBL2 X would be my first choice (Aaker and Álvarez del BL3 I will not buy other brands if X is available at the store Blanco;39 Yoo et al.40)BL4 X brand fulfilled my expectations the last time I bought itBL5 I will buy X againBL6 I will suggest X to other consumersBL7 The price of another brand would have to be considerably inferior to not choose XBL8 Even in the case of not using it, I would like to buy X brandBL9 Even if another brand has the same features as X, I would prefer to buy XBL10 If there is another brand as good as X, I would prefer to buy XBL11 If another brand is not different from X in any way, it seems smarter to

purchase X BA1 I know what X looks like Brand awarenessBA2 I can recognise X among other competing brands (Yoo et al.41)BA3 I am aware of X brand BA4 I know X brandBI1 Some characteristics of X come to my mind quickly Brand imageBI2 I can quickly recall the symbol or logo of X (Aaker and Álvarez del BI3 X has a strong personality Blanco;42 Lassar et al.;43

BI4 I have a clear impression of the type of people who use X brand Yoo et al.44)BI5 X has a strong imageBI6 The intangible attributes of X brand are reason enough to buy itBI7 X provides a high value in relation to the price we must pay for itAB1 X is a very good brandAB2 X is a very nice brandAB3 X is a very attractive brandAB4 X is an extremely likeable brandAB5 X is a different brand


The technical data sheet for theresearch, included in Table 2, sum-marises the design of the empiricalwork performed. The proportional af-fixation was performed based on thedifferent urban areas of the city.

Analysis and evaluation of themeasurement toolsThis section evaluates the measurementscales used in the research (Likert,1–7). The validity and internal consis-tency of the measurement scale wereestimated. To evaluate the measure-ment scales: (1) Cronbach’s alpha wasapplied — this statistic is considered anadequate index of the inter-item con-sistency of independent and dependentvariables50 as supplied by the SPSSprogram; and (2) confirmatory factoranalysis was performed to, first, test theone-dimensional qualities of the scales,secondly, test the construct validity ofeach of them, and, thirdly, provide amore robust reliability measurementthrough internal consistency.

Evaluation of the marketingcommunications tools scalesThe initial scales of seven indicatorswere refined through the reliabilityanalysis provided by the Cronbach’salpha statistic. Once the scales had beenestimated through the asymptotic dis-

High levels of brand-name recogni-tion are those that present the brandwith a high degree of brand awareness.For this reason, knowledge and recog-nition of the brand compared to itscompetitors are indicators that serve toform the measurement scale for thisdimension.

The brand associations that form itsimage are related to a series of tangibleand intangible attributes associated withthe brand, which conditions a favourableattitude to choosing the brand. Theseaspects linked to the brand are collectedas an item in the scale.

EMPIRICAL RESEARCH AND FINDINGSThis paper attempts to test a measure-ment model for brand equity. There-fore, in order to test the effectiveness ofthe proposed method, research shouldfocus on one product category and thebrands that operate in this market.The choice of washing machines asthe product category is justified basedon three criteria: (1) the influence ofbrands in the consumer market forwashing machines and the buyers’ sen-sitivity to brands are higher; (2) thereis tough competition between washingmachine brands in Spain, with noneof them having significant differencesfrom the others; (3) the high rate of use(between 98 and 99 per cent) of wash-ing machines in Spanish homes.


Table 2 Research details

Product area Domestic equipment — washing machinesGeographic location Seville (Spain) Survey methodology Personal questionnaire (buying decider > 18 years old) Type of sampling Proportional simpleSample size N = 268Sampling error ± 5.98%Level of significance 95%; Z� = 1.96; p = q = 50%Date October 2003


nine initial indicators. After the modelestimation, the indicators with lowindividual reliability were iterativelyremoved through the squared correla-tion coefficient. The scale was re-estimated with six indicators, and anacceptable global adjustment obtained(Table 4).

In order to measure brand loyalty, areliability analysis was applied to theinitial scale of 11 indicators, whichyielded an acceptable correlation of allthe items with the initial scale (exceptthe LM7 indicator). The removal of theLM7 indicator improved the Cron-bach’s alpha of the scale. After the

tribution-free (ADF) method (AMOS3.61) and the indicators that did notpass the required individual reliabilitylevel removed, results were obtained forthe convergent validity and individualreliability. The results indicate a positiveevaluation of the scales; the measure-ment model adjustment and the internalconsistency — measured by the com-pound reliability and the extractedvariance — were acceptable (Table 3).

Evaluation of the dimensions of brandequity scalesThe ‘perceived quality’ scale presents


Table 4 Scales of dimensions of brand equity estimates

Cronbach's Standardised Individual Composite Variance Item alpha loading reliability: R2 reliability extracted

Perceived quality PQ1, PQ2, PQ3, PQ4, PQ8, PQ9 0.8847 > 0.7 > 0.5 0.9335 0.7024

Fit measures GFI = 0.834; RGFI = 0.838; RMSEA = 0.135; CFI = 0.728;NFI = 0.700; IFI = 0.738; AGFI = 0.610

Brand loyaltyBL1, BL2, BL4, BL5, BL6, BL9, 0.9055 > 0.7 > 0.5 0.9641 0.7710BL10, BL11 Fit measures GFI = 0.880; RGFI = 0.887; RMSEA = 0.119; CFI = 0.777;

NFI = 0.740; IFI = 0.782; AGFI = 0.785Brand awarenessBA1, BA2, BA3, BA4 0.8010 > 0.6 > 0.4 0.7314 0.5345

Fit measures GFI = 0.989; RGFI = 0.991; RMSEA = 0.000; CFI = 1,000;NFI = 0.968; IFI = 1,000; AGFI = 0.947

Brand image BI1, BI3, BI5, BI6, 0.8609 > 0.7 > 0.5 0.9391 0.6889AM1, AM2, AM3 Fit measures GFI = 0.901; RGFI = 0.907; RMSEA = 0.105; CFI = 0.758;

NFI = 0.711; IFI = 0.767; AGFI = 0.802

Table 3 Commercial promotion scales estimates

Cronbach's Standardised Individual Composite Variance Item alpha loading reliability: R2 reliability extracted

Perceived advertising spending PAS1, PAS2, PAS3, PAS5, PAS6 0.8605 > 0.7 > 0.5 0.9144 0.6827

Fit measures GFI = 0.915; RGFI = 0.918; RMSEA = 0.182; CFI = 0.812;NFI = 0.799; IFI = 0.816; AGFI = 0.744

Price deals PD2, PD3, PD4, PD6 0.7881 > 0.7 > 0.5 0.8209 0.5515Fit measures GFI = 0.975; RGFI = 0.976; RMSEA = 0.129; CFI = 0.945;

NFI = 0.935; IFI = 0.946; AGFI = 0.874

GFI: goodness-of-fit index; RGFI: relative goodness-of-fit index; RMSEA: root mean square error of approximation;CFI: comparative fit index; NFI: normed fit index; IFI: incremental fit index;AGFI: adjusted goodness-of-fit index


lished between perceived advertisingspending on durable goods and each ofthe dimensions of brand equity. Finally,an unfavourable influence was iden-tified between price deals, perceivedquality and brand image.

Once the measurement model hadbeen tested for suitability, the estima-tion of structural models followed. Thevalidated indicators of the exogenousmeasurement model and the averagevalues of the validated scale indicatorsfor the dimensions of brand equity (theaverage values used were a result of thevalidation of the scales used formeasuring the dimensions of brandequity, these being perceived quality,brand loyalty, brand awareness andbrand image) were included. Thismeasurement was adopted to make theestimation procedure for completemodels possible;51 its complexity madeit difficult to use all of the validatedindicators. Therefore, average valueswere used, according to the workingcriteria of Podsakoff and McKenzie.52

The global goodness-of-fit measuresfor the first of the models reachedacceptable values in the main indicators.The parameters related to the adjust-ment of the first of the structural modelsare shown in Table 5. This table showsthat the relationship between perceivedadvertising spending and brand equitywas the opposite of the one that hadbeen formulated (� � –0.108). Theresult does not allow the authors toverify H1. This hypothesis stated thefavourable influence that perceivedadvertising spending has on durablegoods in determining their brandequity. The second hypothesis, how-ever, was confirmed in the structuralmodel, with a high and significantstandardised parameter. Therefore, H2

was confirmed — the use of price

re-estimation, suitable values were ob-tained for the convergent validity andindividual reliability of the indicators.There was, however, a poor adjustmentwith regard to the goodness measures.The indicators were removed itera-tively. Finally, the results suggested avalid and reliable scale of eight in-dicators.

A reliability analysis was first per-formed on the initial scale of fourindicators that measure brand aware-ness. Two indicators did not exceed therequired value; however, given that thelevels were not too far from thoserequired, and to avoid losing infor-mation, it was decided to maintainthe scale with four indicators. (Thereliability analysis through the Cron-bach’s alpha statistic shows that thetotal scale correlation does not improveafter removing any one indicator.)

The brand image scale initiallypresented 12 indicators and the Cron-bach’s alpha statistic showed an accept-able level. Once the model had beenestimated through the ADF procedureand the less reliable indicators sequen-tially removed, the scale was finallyformed by seven indicators.

DISCUSSION ABOUT THE STRUCTURALMODEL AND RESULTSFollowing the evaluation and analysisof the measurement tools, an analysiswas carried out of the structural model.The two structural models that testedthe hypotheses set forward in this paperwere correctly specified and identified;it was confirmed that perceived spend-ing on advertising had a favourableinfluence on brand equity. A negativerelationship between using deals andbrand equity was established. Likewise,positive causal relationships were estab-



The evaluation of the model (per-formed through global adjustment andadjusting the final measurement model)showed high values for internal consis-tency of the exogenous variable andthe suitability of the final measurementmodel was confirmed. Therefore, thestudy states the suitability of the struc-tural model that measures the effectsof advertising spending on the dimen-sions of brand equity, and it confirmshypotheses H3, H5 and H6. The indirecteffect that perceived advertising spend-ing has on brand associations was alsoconfirmed: this is carried out throughthe effect caused by the level of brandawareness (H9).

The causal relationship between per-ceived advertising spending and thelevel of brand loyalty showed a lowstandardised coefficient, with the signopposite to that expected; the t-valuedid not reach 1.96, established as theminimum for the significance level of0.05. Therefore, this relationship wasremoved and H4 not verified (�21 > 0).Nor was it confirmed that the higherthe perceived advertising spending bywashing machine manufacturers, thehigher the consumer’s loyalty.

H7 suggested that deals have a nega-tive effect on perceived quality, the

deals in marketing communications fordurable goods has a negative effect onbrand equity.

The second structural model studiedthe causal relationships betweenmarketing efforts and the dimensions ofbrand equity. The effects formulated inthe hypotheses that relate theperceived advertising spending with thefour brand equity dimensions werefavourable — the marketing efforts forthe brand positively affected theperception of quality, the degree ofbrand awareness, the loyalty towards itand its image.

The relative effects on the relation-ship between price deals, perceivedbrand quality and brand image wereformulated to be negative: as a com-pany uses price deals in marketing itsbrand, a more negative perception ofproduct quality is attributed to it, thuspromoting the deterioration of theimage.

The measurement second-model ad-justment and the internal consis-tency — measured by the compoundreliability and the extracted variance —were acceptable. The second modelfollowed a development strategy, whichled to the removal of insignificantrelationships (Table 6).


Table 5 First structural model estimates

Composite Variance Variable reliability extracted

Perceived advertising spending 0.9679 0.8587Price deals 0.8628 0.6611

Standardised Causal relationship Hypothesis parameter t-value

Perceived ad spend →brand equity H1 confirmed (inverse) � = –0.108 –2.235Price deals →brand equity H2 confirmed � = –0.239 –4.083Fit measures GFI = 0.808; RGFI = 0.840; RMSEA = 0.138; CFI = 0.568; NFI = 0.527;

IFI = 0.572; AGFI = 0.763


ing spending as an exogenous variablein the structural model. A positiverelationship was established betweenthis spending and perceived quality,so that the more resources a com-pany dedicated to enhance a particularbrand, the higher perceived quality thebrand was seen to have. Also, spendingon advertising affected the perceivedquality, because it increased the as-sociated value of the brand, whichhelped in the purchase decision.53

It has not been demonstrated thatthe intensity of the marketing com-munications and a company’s high per-ceived advertising spending on a brandhave a positive effect on consumers’professed loyal behaviour towards thebrand. This situation can be explaineddue to, first, the product in questionbeing durable goods with a low buyingfrequency, and, secondly, the validatedindicators for measuring brand loyaltymainly refer to the purchase intention.

opposite has been confirmed, how-ever. In fact, instead of lowering theperceived quality of the brand, itheightened the perception of quality. Itis possible that price deals were under-stood as being promotional activitiesmore in line with after-sale customerservices than deals on prices. In thisrespect, an error should be assumed.The established causal relationship be-tween price deals and brand image (H8),formulated in terms of an unfavourableinfluence, cannot be confirmed due toa lack of meaning in its structuralcoefficient.

RESEARCH CONCLUSIONS ANDLIMITATIONS

Managerial and theoreticalimplicationsA company’s advertising spending wasrepresented by the perceived advertis-


Table 6 Second structural model estimates

Composite Variance Variable reliability extracted

Perceived advertising spending 0.9619 0.8360Price deals 0.9124 0.7294

Standardised Causal relationship Hypothesis parameter t-value

Perceived ad spend →perceived quality H3 confirmed �11 = 0.272 6.506Perceived ad spend →brand loyalty H4 not confirmed �21 = –0.058 –1.220Perceived ad spend →brand awareness H5 confirmed �31 = 0.338 6.924Perceived ad spend →brand image H6 confirmed �41 = 0.175 3.230Price deals →perceived quality H7 confirmed (inverse) �12 = 0.348 6.844Price deals → brand image H8 not confirmed �42 = –0.030 –0.555Brand awareness →brand image H9 confirmed �43 = 0.377 5.765Fit measures GFI = 0.839; RGFI = 0.858; RMSEA = 0.122; CFI = 0.656; NFI = 0.609;

IFI = 0.661; AGFI = 0.791


group of associations linked to thebrand increased the favourable attitudetowards the product as its recognitionand the level of awareness increased.This causal relationship is significantand quantitatively important for theresearched goods, leading to the con-clusion that brand awareness and namerecognition for washing machines en-hance consumers’ attitudes towards abrand and improve its image.

Price deals as incentives to increasesales have been shown to have anegative effect on brand equity. Al-though they can cause a short-termbenefit to the consumer,54 from astrategic perspective (when the brandwas evaluated) they showed negativeeffects. These effects can affect theperceived quality of the product ad-versely, since benefits gained throughprice promotion are not enduring, anddo not transmit the security or theconfidence that a brand should inspirewith regard to its expected utility.

Limitations of the study and futureresearch directionsIn this research, it has only been pos-sible to determine clearly one of thecausal relationships proposed: the nega-tive effect of deals on brand equity. It istherefore difficult to establish a generalconclusion about the relationship of thismarketing effort to some of its com-ponents. For the other relationships (theeffects of brand image and perceivedquality), no proposals could be con-firmed. As already mentioned, this maybe explained by the lack of understand-ing on the part of the sample groupregarding the aspects formulated in theprice-deals-related section in the ques-tionnaire. The authors propose to testthis measurement model on a sample

Likewise, in the case of durable goods,it was seen that the level of brandsatisfaction can affect perceived adver-tising spending. When brand satisfac-tion was low, the perceived spendingacted in the opposite way to thatnoticed in the structural model.

Brand awareness is reached througha company’s marketing communica-tions efforts towards brand equity. Per-ceived advertising spending favourablyconditions and affects brand awareness.In fact, brand recognition and aware-ness can imply a rise in the levelof confidence regarding the product’sexpected performance. When buyingdurable goods, it is normal to look fora recognised brand with a high level ofbrand awareness to reinforce the pur-chase.

The associations that consumersmake regarding a brand and its imageare configured by their own ex-perience, the non-formalised informa-tion they receive about the product,and also by the information transmittedby the companies with regard to theirproduct’s quality and excellence. Espe-cially in the consumer market, thisinformation is transmitted through acompany’s advertising.

To summarise, perceived advertisingspending showed a favourable causalrelationship for three of the fourdimensions of brand equity. Thehigher the spending on advertising forthe brand, the better the quality of theproduct as perceived by the consumer,the higher the level of brand aware-ness and the more associations linkedto the product, forming its brandimage.

Regarding theoretical implications,the positive effect of brand aware-ness on the perceived brand imagefor consumers was presented. The



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(28) Yoo et al., ref. 4 above.

of consumers of another category ofproducts, ie perishable products, wherepurchases are more frequent and there ismore ongoing consumer attention tomarketing communications and pricepromotions.

Some of the indicators in thecomparison of both structural modelsdid not exceed the minimum requiredlimits. This can be explained by thefact that the models were causalmodels, which were preliminary andpartial; the interaction of other market-ing efforts needs to be studied, such aspricing, distribution strength and theimage of the store.

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Villarejo-Ramos - 2005 - The Impact of Marketing Communication & Price Promotion on Brand Equity