An Analysis Of Brand Equity Determinants: Gross Profit, Advertising, Research, And Development

Abstract

The topic of brand equity continues to be of great importance to private sector firms in the creation and development of both product and company brand strategy. This study analyzes the relationship of different variables and brand equity with the purpose of providing useful insight into brand management and advancement. This research approach is unique in its use of private sector generated measures of brand equity as the main data source. The methodology entails collecting financial information from a list of publicly traded companies evident on the annual Interbrand ranking of top brand values, then executing statistical analysis using correlation and regression. Results make evident a significant positive correlation between brand equity and gross profit, advertising expense, and research and development expense. However, findings reveal that advertising is not as important a driver of brand equity in the short-term as put forward in previous research and evidence suggesting the presence of dynamics and non-linear effects exists.