Measuring BRD EQTY

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

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

George Christodoulides1a,Leslie de Chernatonya,Olivier Furrerb,Eric Shiua andTemi Abimbolac

Conceptualising andMeasuring the Equityof Online Brands

aBirmingham Business School,

University of Birmingham

bRadboud University, Nijmegen

cUniversity of Central EnglandBusiness School

Although brand equity is an importantsource of competitive advantage online,

previous conceptualisations and measuresoverlook the unique characteristics of theinternet that render consumers co-creatorsof brand value. In view of this, a three-

phased research programme wasundertaken to identify the facets of onlineretail/service (ORS) brand equity and then

develop and validate a scale for itsmeasurement. ORS brand equity was found to be a second order construct with five correlated yet distinct dimensions:emotional connection, online experience,responsive service nature, trust, and

fulfilment. A series of tests showed that theensuing 12-item scale has strong

psychometric properties. The implicationsof this research for marketing researchersand practitioners are discussed.

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

Introduction

Significant advances have been made in the assessment of marketingperformance (e.g. Ambler, Kokkinaki and Puntoni 2004; Barwise and Farley2004; 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:[email protected]


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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-termorientation stems from a view of the internet as a direct response medium however, such a position overlooks the brand building potential ofcomputer-mediated environments (cf. de Chernatony and Christodoulides

2004; de Chernatony 2001). Critically located at the intersection of marketingstrategy and implementation, branding provides an excellent lens throughwhich to examine and evaluate e-marketing performance (Basu 2000).

The concept of brand equity emerged in the early 1990s to bridge the gapbetween short- and long-term marketing success by denoting a non-financial,market-based intangible asset which reflects a storehouse of future profitsresulting from past marketing activities (Ambler 2003). A decade later,brand equity became an integral component of marketing performancemeasurement (Ambler, Kokkinaki and Puntoni 2004; Ambler 2003; Clark1999). According to Bharadwaj, Varadarajan and Fahy (1993), brand equityis an important source of competitive advantage, particularly in servicesindustries where the main benefit is intangible and consumers perceive highrisk. Previous studies have drawn parallels between internet and servicesbranding, primarily due to the intangibility, experience of mediationtechnology and deferred benefit all of which contribute to a level of trustdependency (Jevons and Gabbott 2000; Davis 2000). The importance ofbrands on the Web as proxies for trust was further supported by data from alarge-scale survey involving 12000 internet consumers from eight Europeancountries (Steenkamp and Geyskens 2001). A study by Kotha, Rajgopal andRindova (2001) corroborated brand equity building as a key determinant ofcompetitive success for internet firms. According to latest figures, pureinternet firms such as Google, E-Bay, Yahoo and Amazon.com have evenmade it to the top 100 global brands as determined by Interbrand (Berner andKiley 2005).

Given the increasingly important role of branding in e-marketing, it issurprising that to date no attempt to measure brand equity has taken intoaccount the internet and its related technologies. Experience with thisinteractive medium has shown that simply replicating offline marketingeffort online is at least inadequate (Meyers and Gerstman 2001). As is welldocumented, the internets unique characteristics (cf. Paterson,Balasubramanian and Bronnenberg 1997; Hoffman and Novak 1996) haveimplications for developing and managing brands (de Chernatony 2001).

This does not imply that the principles which have informed brandmanagement for half a century are not relevant today (Porter 2001). Abrand is a universal concept regardless of setting. What changes online isthe enactment of the brand (de Chernatony and Christodoulides 2004). It istherefore postulated that the ways in which brand equity is created online


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psychological value of a brand; while at the other end is the financial value ofthe brand, i.e. the amount the brand is worth to the owner. Such a distinctionis implicit in one of the most commonly cited definitions of brand equity, thatis a set of assets and liabilities linked to a brand, its name and symbol, thatadds to or subtracts from the value provided by its product or service to a

firm and/or to that firms customers (Aaker 1991, p.12). Brand equity cantherefore be analysed on two levels, depending on the beneficiary of value(consumer or firm). Marketing research has largely concentrated onconsumer-based brand equity as opposed to firm-based brand equity. This isbecause the consumer-based approach offers insights into consumerbehaviour which can be converted into actionable brand strategies (Keller1993). As a result, marketing researchers made contributions vis--visconsumer-based brand equitys conceptualisation (e.g. Erdem and Swait1998; Keller 1993), measurement (e.g. Netemeyer et al. 2004; Allawadi,Lehmann and Neslin 2003; Vzquez, del Rio and Iglesias 2002; Yoo andDonthu 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 fromtwo theoretical approaches: cognitive psychology and signalling theory ininformation economics. The dominant stream of research is grounded incognitive 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 brandknowledge on consumer response to the marketing of the brand. Accordingto this conceptualisation, a brand is positively valued when the consumerreacts more favourably to the marketing of a product with a known brandname compared to an identical yet unbranded product. Brand knowledge isthen conceptualised as an associative network memory model consisting oftwo dimensions: brand awareness and brand associations in consumermemory. Positive consumer-based brand equity arises when the consumer isaware of the brand and also has strong, unique and favourable brandassociations in his or her mind.

On the other hand, brand equity research rooted in information economicstakes into account the imperfect and asymmetrical nature of contemporarymarkets. According to this view, economic agents transmit information bymeans 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 brands past and present marketing activities. Imperfect andasymmetrical market information creates uncertainty in consumers mindsabout available products or services. A credible brand signal generatescustomer value by: (i) reducing perceived risk; (ii) reducing informationsearch costs, and (iii) creating favourable attribute perceptions (Erdem and


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Conceptualising and Measuring the Equity of Online Brands 803

Swait 1998). Under this view, consumer-based brand equity is thereforedefined as the value of a brand signal to consumers (Erdem and Swait1998, p.140).

Hitherto, little research has been directed towards understanding brandequity in an e-business context. In their study, Page and Lepkowska-White

(2002) drew on Kellers (1993) framework of consumer-based brand equityand identified four categories of factors, which drive web equity throughawareness and image, viz marketer and non-marketer communications, sitedesign, vendor characteristics, and product/service characteristics. In asimilar effort, Kim, Sharma and Setzekorn (2002) used Kellers (1993)framework to propose strategies for building brand equity online. Thesewould increase either awareness (i.e. search engines, Web advertising, onlineword-of-mouth, cross promotion) or brand knowledge (i.e. website, trust). Itis noted that both studies were literature-based and their conceptual modelswere not subjected to empirical examination, possibly due to the lack of avalid and reliable measure of online brand equity. No study to date hasaddressed 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, thecurrent research contributes to filling this gap by developing the ORS brandequity 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 (Holt2002), which has dominated equity thinking for decades, ORS brand equity ishere conceptualised as a relational type of intangible asset that is co-createdthrough the interaction between consumers and the e-tail brand. There arethree important aspects to this definition. First, ORS brand equity similar toother forms of consumer-based brand equity denotes an intangible asset thatreflects the connection between a brand and its consumers. Second, aligningwith 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 throughassociations. Third, this intangible asset arises from the interactions ofconsumers 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 tospecify the domain of the construct under investigation and he recommendsthat a comprehensive literature search be undertaken. The literature reviewrevealed that hitherto knowledge on brand equity derived from classical


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contexts and that brand equity had not been empirically examined in thecontext of e-business. To identify the content domain of ORS brand equity, athorough scan of the embryonic literature on e-marketing was firstconducted. Recognising that practice is much ahead of theory developmentin the area of e-commerce, partly because of the novelty of computer

mediated platforms, it was considered appropriate to complement secondarydata with two exploratory qualitative studies (i.e. studies 1&2) that wouldenhance understanding of ORS brand equity.

Study 1: Experience SurveysSixteen semi structured depth interviewswith brand experts were carried

out, corresponding to Churchills (1979) experience surveys. According toChurchill (1996), the experience survey is individual interviews with peoplewho 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 allhad extensive involvement with projects relating to the development andgrowth of online brands. The case for the appropriateness of consultants assubjects in brand research was initially developed by de Chernatony andDallOlmo Riley (1998) who elucidated that [t]hrough their daily activities,consultants are in touch with a wide variety of branding problems, thus theirknowledge of brands is broad and their thinking reflects best brandmanagement practice (p.429).

The recruitment of subjects was based on two independent criteria. Thefirst criterion was the agencys reputation in delivering best practicebranding. The second criterion was the individuals reputation with thesubject matter in terms of related experience, research and publications. Inthe former case, Campaigns list of top branding consultancies was a startingpoint (cf. Austin 2001). The interviews were undertaken in the UK,predominantly in London, between September and October 2002, and eachlasted for an average of one hour.

Each interview was audio taped and supplemented with notes. The tapedinterviews were transcribed by a secretarial assistant and were reviewed bythe lead author for accuracy. Content analysis was then performed on theinterview transcripts, in line with the guidelines of Miles and Huberman

(1994). The inter-coder reliability was established through an independentcoder who checked the initial coding. The coefficient of agreement was82.2%, 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


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dimensions: emotional connection, online experience, responsive servicenature, trust, and fulfilment.

Emotional connection is a measure of the affinity between consumers andthe ORS brand. As Berry (2000) contends, great brands always make strongemotional connection with consumers. Being a cluster of emotional and

functional values (de Chernatony and DallOlmo Riley 1999), the brandneeds to go beyond pure economic value to also generate emotional valuesuch as closeness and affection (Berry 2000). As Berry (2000) contends,brands that connect emotionally are authentic summations of a companywith a soul (p.134). According to an interactive consultant, a strong brandis one that builds on an emotional connection, which is always going to behard to measure. What is important for marketers is how you leveragedifferent parts of what the internet can do to create an emotional connectionand he carried on if there is something meaningful at the end of it whetherit 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 consumerperceptions of a brand, and as a result, dramatically erodes its equity (Mullerand Chandon 2004; Chang et al. 2002). Relatedly, Dayal and his colleagues(2000) maintained that the boundaries between the brand and the experiencein an online context are so blurred that in the eyes of consumers the brand isthe experience and the experience is the brand. Relatedly, one brandconsultant argued that the online experience means that users experience thebrand in real time which in turn has an impact on their perceptions of thebrand: its very transparent on the internet. You know, you experiencethe brand in real time. So, if at any part of the process it doesnt work, it hasan impact on how you perceive that brand.

Responsive service nature refers to the response and service mechanismsin support of the ORS storefront and the level of customer service interactionfacilitated by the site. According to Chaffey (2000), customer service isprobably the most important characteristic of strong digital brands, and a keydifferentiator between online brands. In addition, customer service wasfound 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 (Wolfinbargerand Gilly 2003). In a digital brand consultants words, all internet companiesare service companies even if they are selling simple products. If I can buy a PotNoodle on a website, there is still a huge service element there because whether itstrue or not, my belief is that it is Pot Noodle who run the website; are looking afterthe credit card security; are posting it to me. And those service elements would bemuch more defining of the brand experience than the Pot Noodle actually will beitself.


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Trust refers to the confident expectations of the brands reliability andintentions in situations involving consumer risk (Delgado-Ballester,Munuera-Alemn & Yage-Guilln 2003). Given the intangible nature of theinternet, shoppers often look for external cues that will enable them to reduceperceived risk. In online environments, risk is to a large extent associated

with data privacy and transactional security: if its commerce, clearlytranaction security is important, information privacy, not abusing the wayinformation is shared on the server (design consultant). Particularly in theearly stages of adopting internet shopping, consumers are likely to relyheavily on familiar brand names as proxies of trustworthiness.

The last dimension, order fulfilment, spans both the online and the realworld, and provides connections between the online and offline experiences.Thus, if the goods delivered do not correspond to the goods ordered, ordelivery is not completed by the time promised, customer frustration is likelyto occur, thereby damaging the equity of the ORS brand. If the offlineconsumption of a physical product does not meet customer expectations,then no matter how enjoyable the online experience has been, it is unlikely tocounteract the unsatisfactory offline experience. As one of the experts soaptly stated: when I get the book, or get the stuff, I say oh no! Then, no matterwhat song and dance someone puts on the Web, I would advise against it to mycolleagues.

Study 2: Focus GroupsTwo focus group discussions were carried out to further explore the

themes and concepts that emerged from the expert interviews, only this timefrom the point of view of consumers. In addition, the focus groups wereused to generate sample items to tap the constructs for which no publishedvalidated measures existed at the time of the study. This corresponds to thesecond step of Churchills (1979) sequence.

University students were used as subjects based on their accessibility tothe researcher and their homogeneity as a group (Calder, Phillips and Tybout1981). Ferber (1977) contended that a student sample is valid for consumerresearch if the study is essentially exploratory in nature and the topic isrelevant to the convenience sample used. These two prerequisites weresatisfied in this study. First, the focus groups were part of the exploratorystage of this research aiming to explore the unknown territory of ORS brandequity. Second, university students are among the most active online buyers.As Yoo and Donthu (2001b) elaborated, their [students] internet and actualonline purchase experiences, technological advances, and innovativenessqualify them as a proper sample for online shopping research (p. 2).

James and Sonner (2001) compared the results of an advertising studyusing three separate samples: a random sample of adults, a sample of


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traditional undergraduate students, and a sample of older non-traditionalstudents. Their findings indicated that traditional undergraduate studentsare not effective surrogates of real consumers, whereas older non-traditional students may produce results that are quite similar to thoseobtained from the general population. In view of this, a decision was made

that members of the MBA programme at the University of Birminghamwould comprise the sampling frame for the focus groups. MBA members areatypical students in that they are older than undergraduate students andhave a few years work experience (admission to the MBA programmerequires at least three years of experience). An incentive in the form of giftvouchers worth 25 was offered to each participant.

The two focus groups took place in March, 2003. Each focus groupconsisted of eight participants and lasted approximately 1 hours. The firstfocus group was equally composed of male and female participants whosemean age was 27 years, and who spent on average 9.7 hours online eachweek. The second group consisted of three male and five female participantswhose mean age was 33.25 years, and who spent on average ten hoursweekly online.

Based on the focus groups and the existing literature (Churchill 1979), aninitial pool of 59 items was then created, as shown in Appendix A.Emotional connection was tapped primarily through Fourniers (1998) brandrelationship quotient construct which was further supplemented by items ofrelevance. Similarly, online experience went beyond website design byincorporating items of interactivity and customisation. Responsive servicenature spanned items of service and and service interaction. Trust includeditems relating to data privacy and transactional security. Items of fulfilmenttapped aspects such as delivery time and accuracy of order/description. Allitems were evaluated with seven-point Likert scales anchored at 1= stronglydisagree and 7= strongly agree. Scale items were randomly ordered toavoid any systematic order or cluster answering effect.

Study 3: Web-based SurveyA web-based questionnaire was developed to collect data (Furrer and

Sudharshan 2001). A personalised email was sent to a sample of 5,000 UKinternet shoppers to participate in the survey. All target subjects wereregistered members of ipoints, a UK online reward scheme. As anincentive 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% responserate). Such a response rate is not atypical in web surveys; for which responserates as low as 4% have been reported in the marketing literature(Grandcolas, Rettie and Marusenko 2003). However, to test for the


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possibility of non-response bias, Armstrong and Overtons (1977)recommended procedure was adopted. This assumes that late respondentsin a sample are similar to theoretical non-respondents. Using a series of t-

and 2-tests to compare early and late respondents on their demographiccharacteristics 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 categoriesof the subjects last online purchases were CDs, books, DVDs and clothes.The sample characteristics closely mirrored those of the average UK onlineshopper (cf. WARC 2003).

Results

Prior to any analysis, the sample of 375 respondents was randomly split inhalf. 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 AnalysisFollowing Churchills (1979) model, the first step in purifying the

measurement instrument was to calculate item-to-total correlations andcoefficient alpha to eliminate garbage items. Items failing to correlatehigher than 0.30 on the preconceived factor were removed from subsequentanalyses (Nunnally 1978). Two items were deleted at this point. Cronbachscoefficient alphas were then computed for the five subscales. These were0.92 for emotional connection; 0.94 for online experience; 0.88 for responsiveservice nature, 0.86 for trust, 0.82 for fulfilment. All the coefficients are largerthan 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 brandequity is supported by the data. The KMO statistic and Barletts test ofsphericity were used to evaluate the suitability of the data for EFA. TheKMO statistic produced a value of 0.92 that was well above the minimum

recommended value of 0.60 (Kaiser 1974) and the Barletts test yielded an 2value of 9710.6 (p


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criterion as a cut-off value for extraction; (2) deleting items with insignificantfactor 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 ormore factors; and (4) excluding single item factors from the standpoint ofparsimony.

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, EFAwas repeated to reduce the items to a more tractable number. A morestringent criterion specifying that items with loadings less than 0.67 (thesquare root of 0.45) on a given factor be deleted was employed in lieu ofdecision rule two from above (Shimp and Sharma 1987). Out of 57 items, 18survived this process, loading on five distinct factors. Reliability coefficientswere 0.91 for emotional connection; 0.92 for online experience; 0.71 forresponsive service nature; 0.86 for trust; and 0.72 for fulfilment.

Confirmatory Factor Analysis

Following Gerbing and Andersons (1988) advice, the remaining 18 itemswere examined through CFA to establish the unidimensionality of eachemerging factor. A measurement model was thus specified to have theretained five factors with the 18 selected items constrained to load on the onefactor identified in EFA.

The measurement model turned out to be a poor representation of thedata, with fit indices failing to meet acceptable levels (Hu and Bentler 1999).

The 2-test was 1452.00 (p


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of multiple independent dimensions, and this required a clean factorstructure. Moreover, removing cross-loadings also helps factor interpretationand when not underpinned by theory, cross-loadings may be attributed to astatistical artifact (Yoo and Donthu 2001b).

Figure 1: ORS Brand Equity Measurement Model

Following a series of iterative procedures, a final 12-item ORS brandequity measurement model (see Figure 1) was supported by values of fit.

The Satorra-Bentler 2 statistic was 55.59 (p=0.11) with 44 degrees of freedom.

X1: Affiliation

X2:Care

X3: Empathy

X4: Ease of use

X5:Navigation

X6: Speed

X7: Responsiveness

X8: Interaction

EmotionalConnection

OnlineExperience

ResponsiveServiceNature

X9: Privacy

X10: SecurityTrust

X11: Accuracy

X12: Delivery

Fulfilment


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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 dimensionsranged from 0.59 to 0.96 as shown in Table 1. The smallest t-value of theloadings was 6.45, which indicates highly significant loadings.

Scale Validity and ReliabilityTo evaluate the validity and the reliability of the scale, a CFA was

performed on the second sample (n2=187) to test the underlying structure ofthe items from the previous analysis. The five-dimensional ORS brandequity measurement model was re-evaluated and showed satisfactory fit.

The models Satorra-Bentler 2 was 38.11 (p=0.72) with 44 degrees of

freedom, and its relative 2 was 0.87, which is less than two as recommendedby Carmines and McIver (1981). RMSEA and SRMR were 0.00 and 0.044respectively. CFI, IFI, and NFI were all 1.00 denoting excellent comparativefit. GFI and AGFI were 0.96 and 0.93 respectively. These fit indices exhibitan excellent level of fit with the model (Hu and Bentler 1999). The itemloadings 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 StandardisedSolution

Dimensions and ItemsFactor

loadings t-value Emotional Connection S1 S2 S1 S2X1: I feel related to the type of people who are [X]s customers 0.80 0.78 12.10 10.62X2: I feel like [X] actually cares about me 0.93 0.89 13.33 14.24X3: I feel as though [X] really understands me 0.87 0.85 14.23 12.62Online ExperienceX4: [X]s website provides easy-to-follow search paths 0.91 0.88 13.00 12.73X5: I never feel lost when navigating through [X]s website 0.79 0.62 10.52 9.96X6: I was able to obtain the information I wanted without any

delay0.88 0.86 10.24 12.55

Responsive Service NatureX7: [X] is willing and ready to respond to customer needs 0.89 0.81 11.72 9.82X8: [X]s website gives visitors the opportunity to talk back to

[X]0.65 0.59 8.20 6.80

TrustX9: I trust [X] to keep my personal information safe 0.78 0.90 10.61 13.00X10: I feel safe in my transactions with [X] 0.81 0.82 9.15 10.28Fulfilment

X11: I got what I ordered from [X]s web site 0.96 0.88 7.58 9.77X12: The product was delivered by the time promised by [X] 0.59 0.86 6.45 10.95

Note: S1= Sample1(n1=188); S2= Sample 2 (n2=187)


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To evaluate the internal consistency of the scale, composite reliabilityestimates were computed with LISREL results (Fornell and Larcker 1981).These were 0.88 for emotional connection, 0.83 for online experience, 0.66 forresponsive service nature, 0.85 for trust, and 0.86 for fulfilment. Reliabilityestimates 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 brandequity scale, the next step involved an assessment of its content, criterion,and construct validities (Ping 2004). As care was taken with the proceduresfollowed (cf. Churchill 1996) involving exploratory research with experts andconsumers, the ORS brand equity scale is considered content valid.

To assess criterion and construct validities, an aggregate score of ORSbrand equity was then computed. For this purpose, a higher-order ORSbrand equity model was fitted, whose five dimensions are related to ahigher-order factor. This procedure was necessary because, simply summingthe raw scores of the 12 items would be inappropriate as the five dimensionsare not likely to contribute equally to ORS brand equity scale. Causal pathsof this higher-order model to the five dimensions were used as weights tocreate an index for ORS brand equity. The ORS brand equity model and thehigher-order model were statistically equivalent; and thus their fit indiceswere identical. Path coefficients were 0.27 for emotional connection, 0.24 foronline experience, 0.24 for responsive service nature, 0.26 for trust, and 0.30for fulfilment. The weight of a dimension was calculated as the fraction ofthe 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 from0.27/(0.27+0.24+0.24+0.26+ 0.30). As a result, the ORS brand equity indexequals 0.21(the mean of emotional connection) + 0.18(the mean of onlineexperience) + 0.18(the mean of responsive service nature) + 0.20(the mean oftrust) + 0.23(the mean of fulfilment).

The scales criterion validity was assessed by correlating the ORS brandequity index to an independent 3-item overall brand equity measure (OBE)adapted from Yoo and Donthu (2001a). The internal reliability of OBE was0.90. The two scales were correlated at 0.51 (p


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Larcker 1981). The squared pairwise correlation is 0.01 (emotionalconnection 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 thanthe AVE mentioned above. This provides good support of discriminantvalidity.

The second test consists in the examination of each correlation between allpairs of factors within the ORS brand equity measurement model (Andersonand Gerbing 1988). In order for two factors to be independent, their pairwisecorrelation should be statistically smaller than one. This was tested bybuilding a 95 percent confidence interval around each correlation.Confidence intervals were [-0.06, 0.30] for emotional connection andfulfilment; [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 servicenature and trust; [0.38, 0.70] for online experience and responsive servicenature; [0.56, 0.80] for emotional connection and responsive service nature;and [0.12, 0.48] for emotional connection and online experience. None of theconfidence intervals subsumed one, supporting the discriminant validity ofORS brand equity.

The third test compares the 2 statistic among the five-factor ORS brandequity model and alternative measurement models with fewer factors.

Evidence of discriminant validity exists if the 2 of each unconstrained

model (with more factors) is significantly lower than the

2 of eachconstrained model (model with fewer factors). The smallest 2 differencebetween the one-factor model and the models with more factors was 443.50

(p


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achieved reliabilities of 0.96 and 0.89 respectively. Purchase intention wasmeasured through a single item borrowed from Graeff (1997). Thecorrelation of the ORS brand equity index with the constructs was significantat the 0.01 level: 0.63 with attitudes towards the ORS brand, 0.35 withpurchase intention, and 0.45 with consistent image. In addition, the

correlation between individual ORS brand equity dimensions and therelevant constructs was consistent and significant. This is good support forthe scales construct validity.

Conclusions

The results of the various tests demonstrate that the ORS brand equity scalepossesses strong psychometric properties, and suggest that emotionalconnection, online experience, responsive service nature, trust, and fulfilmentconstitute 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 passiveor reactive result of marketing intervention (Brown, Kozinets and Sherry2003), the ORS brand equity scale aligns with the new dominant logic formarketing based on which consumers are co-creators of brand meaning andvalue (Vargo and Lusch 2004).

Consisting of merely 12 items, the scale is parsimonious and is of value toboth practitioners and researchers. According to research, at least, 70 percent of organisations employ metrics which lack statistical validity (Ittnerand Larcker 2003). The ORS brand equity scale can serve as a diagnostic formarketers to track the equity of their ORS brands at the individual level, asbrand value is idiosyncratically assigned by the consumer (Rust, Zeithamland Lemon 2004). By assessing individual dimensions of ORS brand equity,marketers are able to identify areas of strength and weakness. Pillars ofstrength can be reinforced via marketing actions and further capitalised onthrough related extensions. The ORS brand equity scale can, therefore, assistonline marketers in making decisions about brand extensions. By extendingthis consumer-based exercise to include competing brands, marketers canmake concomitant adjustments to their positioning strategies in order toenhance their ORS brands competitive stance. Marketers can also use theORS brand equity scale to monitor the long-term impact of variousmarketing 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 insightsinto the relationship between their brand performance and bottom linemeasures such as profit, market share and sales (Ambler 2003).

Previous research revealed that the priority for most online marketers is to


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maintain high customer acquisition costs, often at the expense of customerretention and profitability (Reichheld and Schefter 2000). The concept ofequity encourages marketers to focus on their existing customer base. Byfirst 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 theirbrand that drive value. In addition, responding to the increased role ofword-of-mouth recommendation online (Henning-Thurau and Welsh 2003),marketers may target their marketing investment toward high equitycustomers to convert them into advocates.

A problem with pure e-tailers is that they have to build their brand equityfrom scratch as opposed to their bricks and clicks counterparts who canleverage their offline awareness. To this end, a commonly employed strategyinvolves establishing alliances with trusted bricks and mortar brands (Levin,Levin and Heath 2003). The ORS brand equity scale enables onlinemarketers to evaluate the impact of spill-over effects on their equity.

In addition to its managerial usefulness, the ORS brand equity scaleenables researchers to advance marketing theory in the area of e-marketingand branding. For instance, through using the ORS brand equity scale,researchers can evaluate how different marketing strategies affect the valueof ORS brands. A key consideration in competitive strategy is a firmsrelative position within its industry. To achieve and sustain competitiveadvantage, Porter (1985) suggested that organisations should follow eitherone of three generic strategies: cost leadership, differentiation or focus.Branding has traditionally been associated with differentiation or focusstrategies given the huge investment required to develop a brand. Theinternet, however, represents a low cost medium, providing more costefficient ways to build a brand through interaction than classicalenvironments. Marketing strategists can, therefore, use the ORS brandequity scale to assess generic strategies against the objective of creatingequity, and identify those which are more likely to lead to higher levels ofconsumer brand value in computer-mediated environments.

With the aid of the ORS brand equity scale, researchers can alsodemonstrate how marketing expenditure for ORS brands is an investmentthat results in quantifiable long term outcomes. This is particularlyimportant in view of imminent pressures requiring marketing to becomefinancially 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 (longterm) benefits it proclaims to produce. The inability of marketing to justifyitself 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,


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causing firms to lose their customer focus (Grnroos 2003). The ORS brandequity scale can help defuse the tension between marketing and finance,initiating a virtuous cycle with benefits for both consumers andorganisations.

Furthermore, the ORS brand equity scale provides a first step in the

direction of understanding brand valuation in online environments. It isnoted, at this point, that the ORS brand equity scale quantifies the intangiblemarketing asset per se; it is not intended to place a financial value on theasset (Ambler 2003). Through the qualitative interviews with brand experts,it was realised that the valuation of online brands was largely based ondiscounted cash flows. This rather basic method of brand valuation isreflective of the limited knowledge of brands and brand equity in computer-mediated environments. The ORS brand equity scale can become a point ofdeparture for brand valuators quest for more sophisticated methods forvaluing ORS brands. For instance, weights can be developed and applied totranslate the ORS brand equity score to dollar value.

There are some limitations to this study that need to be addressed byfuture research. First, the present research was entirely conducted in a singlecountry, i.e. the UK. Other researchers are, therefore, encouraged toundertake replication studies in other parts of the world to assess the scalesequivalence across nations. Second, the participants of the quantitative studywere members of an online reward scheme, making them more likely toexhibit higher involvement with online shopping than the average onlineshopper (Conneran and Lawlor 1997). Future studies should explore themediating role of involvement in the creation of ORS brand equity. Third,this study focused on business-to-consumer shoppers. Researchers may wishto explore whether the identified dimensions of ORS brand equity hold forbusiness-to-business customers. Fourth, the proposed ORS brand equitymeasure is entirely consumer-based and does not incorporate the views ofother stakeholders such as the firm, employees, or channel members. Futureresearch can draw on this study to develop a total equity measure thatintegrates the equity created for different stakeholders of the ORS brand.Further use of the ORS brand equity scale involving application to diversesamples will allow developing stable norms (Churchill 1979).

Acknowledgements

The authors would like to acknowledge funding for this research from TheChartered Institute of Marketing.


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Appendix A: Initial Item Pool

1. [X] has always been good to me2. [X] has personal relevance to me3. It would be shame if I had to start from scratch with another retailer4. [X] helps me make a statement about what is important to me in life5. [X] is dependable and reliable6. While I was on [X]s website, I could choose freely what I wanted to see7. 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 needs9. [X] makes a claim or promise about its products, its probably true10. The product that came was described accurately by [X]s website11. [X] plays an important role in my life12. Inquiries made on [X]s website are answered promptly13. [X] really listens to what I have to say14. [X] says a lot about the kind of person I am15. My experience on [X]s website is exciting16. [X] treats me like an important and valuable customer17. I feel like [X] actually cares about me18. [X]s image is consistent with how Id like to see myself19. I trust [X] will not misuse my personal information20. [X]s website enables me to order products that are tailor-made for me21. When you have a problem, [X]s website shows a sincere interest in solving it22. [X]s website has a good balance between text and graphics23. [X]s website is effective in gathering visitors feedback24. [X]s website is pleasing to the eye25. [X]s website makes me feel I am a unique customer26. [X]s website processed my input very quickly27. [X]s website provides easy-to-follow search paths28. I feel as though I really understand [X]29. [X]s website provides uncluttered screens30. [X]s website was very slow in responding to my requests (R)31. Every time I use [X], Im reminded of how much I like it32. Getting information from [X]s website is very fast33. I always find what I am looking for on [X]s website34. I believe that [X]s website is customized to my needs35. I feel as though [X] really understands me36. I feel like something is missing when I havent used [X] for a while37. [X]s website is creative38. [X]s website is easy to use39. I feel related to the type of people who are [X]s customers40. I feel safe in my transactions with [X]41. [X] is meaningful to me42. I felt that I had a lot of control over my visiting experiences at [X]s website43. I find [X] personally appropriate to me


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44. I got what I ordered from [X]s website45. I never feel lost when navigating through [X]s website46. I trust [X] to keep my personal information safe47. I was able to obtain the information I wanted without any delay48. It is difficult to give feedback to [X]s website (R)49.

My experience on [X]s website is engaging50. [X]s website facilitates two-way communication between the visitors andthe 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 boring54. [X]s website makes me feel it wants to take notice of its visitors55. The product was delivered by the time promised by [X]56. [X]s website makes purchase recommendations that match my needs57. The advertisements and promotions that [X]s website sends to me are

tailored to my needs58. When I clicked on the links from [X]s website, I felt I was getting

instantaneous information59. 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 BusinessSchool. He has recently completed his PhD in Brand Marketing under thesupervision of Professor Leslie de Chernatony. George's PhD involved thedevelopment and validation of an equity scale for brands operating inelectronic markets. His research has been published in the Journal of Productand Brand Management, the Service Industries Journal, and InteractiveMarketing. 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 theCentre for Research in Brand Marketing at Birmingham University BusinessSchool. With a doctorate in brand marketing, he has a substantial number ofpublications in American and European journals and is a regular presenter atinternational conferences. He has several books on brand marketing, the twomost recent being Creating Powerful Brands and From Brand Vision to Brand

Evaluation, both published by Elsevier. A winner of several major researchgrants, his two most recent grants have supported research into factorsassociated with high performance brands and research into servicesbranding. He is Visiting Professor at Thammasat University, Bangkok andUniversity of Lugano, Switzerland. He acts as an international consultant to


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

Olivier Furrer is Associate Professor at the Radboud University Nijmegen inthe Netherlands. He holds a PhD from the University of Neuchtel(Switzerland). His major research interests are in the areas of servicemarketing, customer services, the resource-based theory, and the strategicrole of intangible assets. He is the author of a book recently published inFrench about the strategic role of customer services: Services autour desProduits: Enjeux et Stratgies, and has published various articles includingsuch journals as Journal of Service Research, European Management Journal,Revue Franaise de Gestion, and Revue Franaise du Marketing. He is alsocurrently on the editorial board of theJournal of Service Research.

Eric Shiu is Lecturer in Marketing at the University of Birmingham. Heachieved a MA degree with distinction at Lancaster University, andaccomplished a doctorate at the University of Edinburgh. Online retailingand branding, to which this paper is related, is one of his research interests.

Temi Abimbola is Senior Lecturer at the University of Central England. Sheholds a PhD in brand marketing from Aston University Business School. Herresearch and academic interests are in competitive strategy, marketingintangible assets, knowledge and demand management, intellectualproperty, brand equity and brand valuation. Prior to embarking on her PhDresearch, Temi worked with the American Chamber of Commerce inLondon, Shell UK, and Unilever Plc.


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