Disentangling the dynamics of brand awareness: sources and effects on brand equity and market performance

Abstract

This study explores the various sources of brand awareness and their differential impacts on brand equity and market performance. The primary objective of this research is to disentangle those sources of brand awareness (advertising, and non-advertising awareness) and examine how each type influences brand equity building, and sales outcomes. Despite the recognized importance of brand awareness in marketing literature, there is a lack of comprehensive studies that differentiate between its various types and their specific effects. This research addresses this gap by providing a nuanced understanding of how different sources of brand awareness contribute to brand equity and market performance. The study employs a three step modeling approach, combining an adstock function, a state-space specification, and a mediation model to estimate the relationships between brand awareness, brand equity, and sales. The results indicate that advertising-generated brand awareness has a direct impact on brand equity, while other sources of brand awareness have no effect. Additionally, brand equity mediates the relationship between brand awareness and sales. This research fills a critical gap in the literature by providing a detailed analysis of the distinct roles played by different sources of brand awareness. It clarifies the debate between "strong theory" and "weak theory" of advertising by demonstrating that both theories can coexist, with advertising not only reinforcing consumer behavior but also building brand equity. The findings have important implications for marketing managers. By understanding the differential impacts of various types of brand awareness, managers can more effectively allocate resources to different marketing activities. For instance, investing in advertising can enhance both brand equity and sales, while leveraging distribution and word-of-mouth strategies can support these efforts by reinforcing brand recognition and loyalty.