Marketing Intelligence & Planning

Determining the causal relationships that affect consumer-based brand equity:

The mediating effect of brand loyalty
Pedro Marcelo Torres, Mário Gomes Augusto, João Veríssimo Lisboa,
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Pedro Marcelo Torres, Mário Gomes Augusto, João Veríssimo Lisboa, (2015) "Determining the
causal relationships that affect consumer-based brand equity: The mediating effect of brand
loyalty", Marketing Intelligence & Planning, Vol. 33 Issue: 6, pp.944-956, https://doi.org/10.1108/
MIP-11-2014-0211
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MIP
33,6
944
Received 12 November 2014
Revised 19 March 2015
13 April 2015
18 May 2015
Accepted 7 June 2015
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Marketing Intelligence & Planning
Vol. 33 No. 6, 2015
pp. 944-956
© Emerald Group Publishing Limited
0263-4503
DOI 10.1108/MIP-11-2014-0211
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-4503.htm
Determining the causal
relationships that affect
consumer-based brand equity
The mediating effect of brand loyalty
Pedro Marcelo Torres, Mário Gomes Augusto and
João Veríssimo Lisboa
School of Economics, University of Coimbra, Coimbra, Portugal
Abstract
Purpose – The purpose of this paper is to analyse the causal relationships among the dimensions that
explain consumer-based brand equity, and to determine the importance of each dimension in the
assessment of overall brand equity.
Design/methodology/approach – A research instrument proposed by Yoo and Donthu was applied
to undergraduate students of the University of Coimbra. Two leading brands in the Portuguese beer
market were used in the study. Respondents were randomly assigned to one brand and were asked to
rate all items on seven Likert-type scales. Based on Aaker’s conceptual framework, a structural
equation model (SEM) was designed to analyse the proposed relationships.
Findings – A causal order between brand equity dimensions was established. The results suggest
that the positive effects of perceived quality and brand awareness on overall brand equity are mediated
by brand loyalty.
Research limitations/implications – Although the exclusion of brand associations’ dimensions in
the SEM improves the validity of the constructs, it should be regarded as a limitation, given its
importance in brand equity building.
Practical implications – Marketing managers should focus on brand loyalty in order to increase
overall brand equity, and should give special attention to perceived quality, since it is the factor with
the strongest impact on brand loyalty.
Originality/value – The identification of the causal relations among brand equity dimensions and
the analysis of their influence in overall brand equity, not yet clearly validated in the literature.
Keywords Brand equity, SEM, Brand loyalty, Perceived quality, Brand awareness
Paper type Research paper
1. Introduction
According to Keller and Lehmann (2006), brand equity measurement is considered to
be a relevant research topic with a strategic role to play given its importance in gaining
competitive advantage (Atilgan et al., 2005). Therefore both academics and practitioners
have focused on identifying the factors that build brand equity. Several models of brand
equity measurement have emerged (Chenhall and Langfield-Smith, 2007; Valette-Florence
et al., 2011). However, the literature on brand equity is largely fragmented and inconclusive
(Christodoulides and Chernatony, 2010), and only a few studies have attempted to
establish causal relationships among the constructs (Buil et al., 2013; Huang and Cai, 2015).
The main purpose of this study is precisely to analyse the causal relationships among
those constructs that explain the brand equity.
Among other advantages, strong and positive brand equity creates competitive
barriers (Yoo et al., 2000), and influences consumer preference and purchase intentions
(Cobb-Walgren et al., 1995), creating competitive advantages for a firm. Therefore, it is
generally accepted that brand equity adds value to a business.
 While some authors have focused on the financial value, others take the perspective Mediating
of the customer and consider that the financial value of brand equity is merely the effect of brand
outcome of consumer response to the brand name, which is based on market
perceptions (Christodoulides and Chernatony, 2010). The latter is usually known as
loyalty
consumer-based brand equity, and the dominant stream of research in this perspective
is grounded in cognitive psychology (Aaker, 1991; Keller, 1993).
Most of the models of consumer-based brand equity are built on the conceptual 945
dimensions of brand equity proposed by Aaker (1991): brand awareness, brand
associations, perceived quality, brand loyalty and other proprietary brand assets (such as
patents, trademarks and channel relations). However, in the operationalization of the model,
the last dimension is usually excluded due to the consumer-based nature of the approach.
In almost all of past empirical studies, the separation between brand awareness and
brand associations did not occur, which is not consistent with the theory. Moreover, the
causal relations among the constructs were not clearly validated by previous research.
The objective of the present research is to analyse the causal relations among the
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different brand equity dimensions and to determine the importance of each dimension
on overall brand equity. In doing so, we aim to contribute towards narrow the apparent
gap in the literature by emphasizing the influence of brand awareness and perceived
quality on brand loyalty, and the importance of the latter as a predictor of brand equity.
The rest of the paper is organized as follows: the next section presents the literature
review, proposed model and research hypothesis. In Section 3, the research methodology
is described and justified. The following section includes the results, which are discussed
in the subsequent section. Finally, in Section 6, the main conclusions and their implications
for management are presented.

2. Background
2.1 Consumer-based brand equity
The term “brand equity” can have different meanings, but from a consumer psychology
perspective it may be defined as “the differential effect of brand knowledge on consumer
response to the marketing of the brand” (Keller, 1993, p. 2).
Another generally accepted definition of brand equity is the one proposed by Aaker,
namely, “a set of brand assets and liabilities linked to the brand, its name and symbol,
that add to or subtract from the value provided by a product or service to a firm and/or
to that firm’s customers” (Aaker, 1991 p. 15). According to Aaker (1991) brand equity
should be regarded as a global preference for the brand over similar alternatives.
Brand equity could be analysed on two levels: firm-based brand equity and
consumer-based brand equity. However, marketing research has largely concentrated on
the latter (e.g. Christodoulides et al., 2006) because this approach provides more insights into
consumer behaviour which can be converted into actionable brand strategies (Keller, 1993).
Moreover, attempts to operationalize brand equity could be direct or indirect. The direct
approach focuses on the consumer’s preferences and/or utilities, while indirect approaches
are based on their demonstrable manifestations (Christodoulides and Chernatony, 2010).
Following an indirect approach and building on the theoretical dimensions of brand
equity suggested by Aaker (1991) and Keller (1993), Yoo and Donthu (2001) developed a
consumer-based brand equity scale, which is considered by Christodoulides and
Chernatony (2010) to have the most strengths and the fewest weaknesses and which has
subsequently been retested in different contexts and different categories (Atilgan et al.,
2005; Washburn and Plank, 2002). Yoo and Donthu (2001) measured brand equity at the
individual consumer level and four dimensions are considered: brand awareness, brand
 MIP associations, perceived quality and brand loyalty. The scale is considered reliable, valid,
33,6 parsimonious and easy to administer (Christodoulides and Chernatony, 2010).
Nevertheless, the dimensions of brand associations and brand awareness have been
collapsed into one, despite being conceptually distinct dimensions of brand equity.
The same happened in subsequent research (e.g. Gil et al., 2007; Washburn and Plank,
2002). An exception can be found in the study of Pappu et al. (2005) that distinguishes
946 those two conceptual dimensions. However, the scale used by Pappu et al. (2005) is
questionable (Buil et al., 2008; Christodoulides and Chernatony, 2010), and brand
associations could result from a range of sources (Pappu et al., 2005), which are difficult to
access. In fact, this dimension could be divided into at least three sub-dimensions:
perceived value, brand personality and organizational associations (Buil et al., 2008).
Moreover, although brand associations are a key element in brand equity, it is difficult
to determine which associations have the strongest effects on consumer behaviour.
Thereby, some authors suggested that brand associations should be studied separately to
better guide brand decisions (Del Rio et al., 2001).
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The question of whether or not brand awareness and brand associations are different
dimensions is critical (Christodoulides and Chernatony, 2010; Washburn and Plank, 2002);
both Aaker (1991) and Keller (1993) distinguished the two constructs and there is
empirical evidence that these are in effect two different dimensions of brand equity
(Pappu et al., 2005). This issue is an important drawback of previous studies.
On the other hand, in previous research, authors that attempted to identify causal
relationships between the brand equity dimensions did not reach conceptually robust
results. For example, Buil et al. (2013) suggested that perceived quality has a small but
negative effect on brand loyalty, and Gil et al. (2007) found no significant relation between
perceived quality and brand loyalty, results that are contrary to what they predicted and
not consistent with accepted theory (Keller, 1993; Pappu et al., 2005). In fact, few studies
posit the causal relationships among brand equity dimensions and the causal relationships
are not clear, for example, brand loyalty could influence brand equity and could be
influenced by brand equity (Wang and Finn, 2013). Moreover, some studies conceptually
considered the evolution of brand equity as a consumer learning process: brand awareness
leads to perceived quality and brand associations, which in turn will influence brand
loyalty (Buil et al., 2013; Konecnik and Gartner, 2007), but the results of previous studies
did not confirm the expected relations. Recently, Huang and Cai (2015) recognized that the
interrelationships between brand equity dimensions are an identified research gap.
Least but not last, determining the causal relationships of consumer brand equity
dimensions has important implications for managers, who should pay attention to the
causal relationships among brand equity dimensions in order to manage effectively
their marketing efforts (Buil et al., 2013).
Furthermore, authors that studied the relationships between the dimensions did
not considered the most recognized constructs of consumer-based brand equity, and
the results are not completely in accordance to the base conceptual background
(e.g. Netemeyer et al., 2004; Wang and Finn, 2013) and valid measurement of consumer-based
brand equity requires correct specification of its dimensions and their causal relationship.
However, most of the scales have important limitations, and no defensible comparisons
can be made between consumer-based brand equity score obtained using different
scales (Wang and Finn, 2013).
Considering the above, in the context of the present study, we used a model based
on Aaker’s (1991) conceptualization, but without the brand associations’ dimension, in
order to extract conceptually robust insights.
 2.2 Causal relationships hypothesis and proposed model Mediating
The conceptual framework proposed by Aaker (1991) posits that brand equity is a effect of brand
multidimensional concept, which includes the following dimensions: brand awareness,
brand associations, perceived quality, brand loyalty and other proprietary brand assets.
loyalty
However, the fifth dimension is not considered pertinent to consumers (Buil et al., 2013),
therefore it is not included in consumer-based brand equity research. Moreover, brand
associations and brand awareness are often considered one dimension, as mentioned in 947
the previous section, which is not conceptually consistent. Thus, we have also chosen to
exclude this dimension from our model. Nevertheless, brand associations could be
“anything linked in memory to a brand” (Aaker, 1991, p. 109), and if they are unique,
strong and favourable they could positively relate to brand equity (Keller, 2003), as they
lead to favourable behaviour towards the brand and influence purchase intentions.
However, consumers must first be aware of the brand to later have a set of brand
associations (Aaker, 1991).
While direct relations between brand equity dimensions and overall brand equity
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are not supported in several studies (e.g. Atilgan et al., 2005; Gil et al., 2007), brand
loyalty appears to be closely related to overall brand equity (Atilgan et al., 2005;
Gil et al., 2007). Subsequently, brand loyalty has been considered as a construct
preceded by the other three dimensions (Gil et al., 2007). All in all, several studies have
corroborated the multidimensionality of brand equity, but few have attempted to
establish causal relations between the constructs (Buil et al., 2013). Hereafter, we
present the constructs and develop the hypothesis concerning the dimensions of brand
equity that are object of our research, considering the literature review.
Perceived quality could be defined as “the consumer’s (subjective) judgment about a
product’s overall excellence or superiority” (Zeithaml, 1988, p. 3). Previous research
suggested that perceived quality influences brand loyalty (Chiou et al., 2002; Konecnik
and Gartner, 2007), and, according to Oliver (1997), the perception of high-product
quality leads to brand loyalty because it is the basis of consumer satisfaction. Thus, our
first research hypothesis is as follows:
H1. The higher the perceived quality, the greater the brand loyalty.
Brand awareness corresponds to “the ability of the potential buyer to recognize and
recall that a brand is a member of a certain product category” (Aaker, 1991, p. 61),
and brand recognition and recall results from the individual’s prolonged exposure to
the brand (Keller, 2003). In fact, the level of brand awareness could be a consequence of
the scope and frequency of brand appearance, which is related to brand advertising
spend (Keller, 2003). Therefore, the higher the advertising spending, the higher
awareness levels are likely to be (e.g. Gil et al., 2007; Keller, 2003; Yoo et al., 2000).
Although awareness may not always lead to purchase (Fesenmaier et al., 1993),
greater brand awareness could lead consumers to increase their preference for a brand
(Gil et al., 2007). Furthermore, in order to be loyal to a given brand the consumer must
be aware of the brand. Consequently, the second hypothesis expresses a positive
relationship between brand awareness and brand loyalty:
H2. The greater the brand awareness, the greater the brand loyalty.
Brand loyalty is usually considered a core dimension of brand equity and for Aaker
(1991) it corresponds to a situation that reflects how likely a customer will be to switch
to another brand. Brand loyalty could also be related to the extent to which customers
feel that they are in “sync” with the brand, reflecting the nature of the customer-brand
 MIP relationship (Keller, 2003). Yoo and Donthu (2001, p. 3) defined brand loyalty as
33,6 “the tendency to be loyal to a focal brand, which is demonstrated by the intention to
buy the brand as a primary choice” and Oliver (1997, p. 392) considers brand loyalty as
“a deeply held commitment to rebuy or repatronize a preferred product or service
consistently in the future, despite situational influences and marketing efforts having
the potential to cause switching behavior”. On the other hand, overall brand equity is
948 regarded as a global preference for the brand over similar alternatives (Aaker, 1991)
and can be defined as the value added to the branded product relative to the unbranded
product (Kim and Hyun, 2011). Prior research has suggested that brand loyalty and
overall brand equity are closely related (Atilgan et al., 2005; Gil et al., 2007).
Consequently, we propose the following hypothesis:
H3. The greater the brand loyalty, the greater the overall brand equity.
Thus, motivated by the questions presented, this study intends to investigate the causal
relations between the different brand equity dimensions and, in doing so, determine the
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importance of each dimension in overall brand equity. The conceptual model in Figure 1
attempts to establish a broader perspective of the causal relationships to be tested.

3. Methodology
3.1 Research method
To estimate and evaluate the proposed model (see Figure 1), an application of structural
equation modelling (SEM) is used. SEM is a statistical method that allows a set
of relations among observed and latent variables to be examined (Hoyle, 1995).
In general, the SEM approach enables multiple regression analysis to be performed
on factors representing constructs of interest. As such, it facilitates the combination
of exploratory factor analysis with multiple regression analysis. It also enables the
introduction into the analysis of unobserved (latent) and observed variables, which, in
turn, increases the model’s ability to detect relations among variables (e.g. Hoyle, 1995;
Schumacker and Lomax, 1996).
The SEM approach is comprised of two models: a measurement model and a structural
model. According to Jöreskog and Sörbom (1984, 1993) and Anderson and Gerbing (1988),
these two models can be estimated simultaneously or using a two-step approach.

3.2 Research instrument, product category and sample

As stated in “Background”, the proposed model is based on Aaker’s (1991)
conceptualization, but without the brand association dimension. Nevertheless, we used
the full 19-item scale developed by Yoo and Donthu (2001) and tested the unidimensionality
of each construct, including brand associations. The consumer-based brand equity scale of

Perceived
quality H1

H3 Overall
Brand loyalty brand equity

Figure 1. H2
Conceptual Brand
framework awareness
 Yoo and Donthu (2001) is recognized as having the most strengths and fewest weaknesses, Mediating
and is reliable, valid, parsimonious and easy to administer (Christodoulides and effect of brand
Chernatony, 2010). Moreover, as it has been used in different contexts and with different
categories by several authors (Atilgan et al., 2005; Washburn and Plank, 2002), it facilitates
loyalty
comparisons with previous research. The names of the variables have been translated into
Portuguese with some adaptations, considering the characteristics of the product category.
The selection of the product category should consider the following: it should be 949
widely available and well known (Buil et al., 2013). Therefore to comply with these
criteria we targeted the beer market in Portugal.
The beer market in Portugal could be characterized as a duopoly, historically
dominated by two companies: Unicer – Bebidas de Portugal and SCC – Sociedade
Central de Cervejas e Bebidas. SCC’s Sagres brand and Unicer’s Super Bock brand rank
in the first two positions of the mid-price domestic lager, by far the biggest category in
Portugal (Beer in Portugal 2014 report, Euromonitor, 2014). The intensive marketing
activities of both brands assure that they are well known amongst consumers.
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Thus, the research focused on these two leading brands.

Regarding the sample, considering the product category and the purpose of the
study, the use of a university students’ sample seems appropriate.
In fact, young people are frequent consumers of beer and a major consumer
segment. Previous papers referred that the likelihood of beverage consumption is
strongly linked to the 20-30 age segment of the market (e.g. Atilgan et al., 2005, p. 241).
Moreover, young people are the primary target of this beverage category, which could
be inferred by the analysing advertising content (e.g. Zwarun et al., 2006).
In 2008, a market-research firm Growth from Knowledge (GfK) performed a
study about Europeans drinking habits for the Wall Street Journal, which was
published in December. The newspaper article highlights the shift from wine to
beer consumption in countries like France, Spain and Portugal, and the preference for
beer among young people. The results from GfK research suggested that beer
represents 36 per cent of the alcohol beverages consumption in Europe, which
compares to a percentage of 48 per cent when considering only people aged between
14 and 29 years. In Portugal, the percentage is even higher and beer represents
57 per cent of the alcohol drinking consumption among young people. This result is
corroborated by the last studies conducted by the Portuguese observatory of
addictive behaviours that concluded that beer is the most consumed alcohol drink by
university students (19-24 years) and stated that they are frequent consumers
(SICAD).
On the other hand, the homogeneous nature of a student sample, with regard to both
demographics and behavioural characteristics, supports its use for theory application
(Carpenter et al., 2005; Wyllie et al., 2014), given the potential to obtain a higher degree
of internal validity. A student sample is homogeneous on non-theoretical variables,
thereby reducing error in the measurement model and increasing the sensitivity for
identifying significant relationships (Calder et al., 1981; Stevens, 2011) because
the differences between individual subjects are minimized (Washburn and Plank, 2002).
Moreover, the use of student samples is common in consumer-based brand equity
research (e.g. Atilgan et al., 2005; Wang and Finn, 2013; Washburn and Plank, 2002;
Yoo et al., 2000; Yoo and Donthu, 2001), as in marketing research studies (e.g. Wyllie
et al., 2014). Furthermore, using the same type of sample and product category of
previous studies facilitates comparisons and limits the influence of other variables
besides the ones that are the subject of the present research.
 MIP All in all, nevertheless the drawbacks of a student sample, being the most important
33,6 the lack of generalization (i.e. external validity), it could be appropriate depending on the
purpose of the study: typically when the researchers aim precision regarding the nature of
cause-effect relationships, the trade-off between internal and external validity tends
towards the optimization of internal validity (Stevens, 2011). In fact, when the objective is
to detect the invariant relationships among constructs, sampling choices are assumed to
950 be irrelevant because the relationships among the variables should be observed regardless
of the sample subject (Stevens, 2011), which is the case of the present study.
Thus, the survey was applied to undergraduate students of the University of
Coimbra. The data were collected in the months of March and May 2014. Two different
versions of the questionnaire were used, one for each brand, and respondents were
randomly assigned to one brand and were asked to rate all items on seven Likert-type
scales ranging from 1 (strongly disagree) to 7 (strongly agree). We obtained a total of
168 usable responses: 115 from Super Bock and 53 from Sagres.
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4. Results
The results reported in this section are obtained using a two-step approach, as
recommended by Anderson and Gerbing (1988). The maximum likelihood estimation
method and the AMOS 22.0 software are used for this purpose.

4.1 Measurement model

Before the analysis of the causal relations outlined in the proposed model (see Figure 1),
the data was subjected to a preliminary analysis to detect ill-fitting items, based on
item-to-total correlations and exploratory factor analysis. This focused on searching for
items that were poorly correlated with the other items in each scale and which had
cross-loadings. Following this analysis some items were deleted. Then, the remaining
items were submitted to a confirmatory analysis to assess the psychometric properties of
the scales of the four latent variables (constructs) included in the proposed model.
The factor analysis results for each construct show that all the scales used to measure a
particular construct were in one factor, thus supporting the unidimensionality of the
construct. As expected, the items related to brand associations were dropped because the
Cronbach’s α coefficient was not acceptable and they lacked unidimensionality, which
justifies statistically the exclusion of this construct in the proposed model and suggests
that this dimension should be studied separately as proposed by Del Rio et al. (2001).
Table I provides an overview of the theoretical constructs, the associated item
measures, and the estimated results of the measurement model. Although the χ2 of the
model is statistically significant ( χ2 ¼ 160.23, df ¼ 71), the remaining global-fit indices
also indicated an adequate fit (Tucker-Lewis index (TLI) ¼ 0.94, incremental fit index
(IFI) ¼ 0.95, goodness of fit index (GFI) ¼ 0.88, comparative fit index (CFI) ¼ 0.95 and
root mean square error approximation (RMSEA) ¼ 0.08) based on acceptable levels
cited in the literature (e.g. Browne and Cudeck, 1993; Hulland et al. 1996; Schumacker
and Lomax, 1996; Jaccard and Wan, 1996; Miles and Shevlin, 1998; Hu and Bentler,
1999; Steiger, 2007; Hooper et al., 2008). The standardized factor loadings are larger
(all loadings exceed the 0.5 threshold), and are highly significant ( p o 0.01), with all t
statistics above 4. The results provided in Table I also indicate that the individual-item
reliabilities are acceptable. The R2 were all above the 0.20 threshold (Hooper et al., 2008),
thus supporting the convergent validity of the measures.
The scales were then examined for internal consistency. Table II presents univariate
statistics, correlation coefficients, Cronbach’s α coefficients, composite reliabilities (CRs)
 Construct Items Stand. loads. CR R2
Mediating
effect of brand
Perceived quality X is of high quality 0.944 – 0.892 loyalty
X is likely to be extremely high quality 0.866 18.216 0.750
It is highly likely that X will be functional 0.822 15.943 0.675
It is highly likely that X is reliable 0.864 18.063 0.746
X must be of very good quality 0.855 17.582 0.731
Brand awareness I know what X looks like 0.849 – 0.437
951
I can recognize X among other competing brands 0.661 4.137 0.721
Brand loyalty I know I am loyal to X 0.845 – 0.714
X would be my first choice 0.854 12.967 0.730
I will not buy other brands if X is available at the store 0.733 10.543 0.538
Overall brand equity It makes sense to buy X instead of any other brand, even if
they are the same 0.771 – 0.594
Even if another brand has the same features as X, I would
prefer to buy X 0.920 13.166 0.846
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If there is another brand as good as X, I prefer to buy X 0.899 12.821 0.808 Table I.
If another brand is not different from X in any way, it seems Standardized
smarter to purchase X 0.816 11.368 0.665 parameter estimates,
Notes: Stand. loads, standardized loads; CR, critical ratio. Model fit: χ2 ¼ 160.23; df ¼ 71; goodness of fit index critical ratio
(GFI) ¼ 0.88; incremental fit index (IFI) ¼ 0.95; Tucker-Lewis index (TLI) ¼ 0.94; comparative fit index (CFI) ¼ 0.95; and R2 for the
root mean square error approximation (RMSEA) ¼ 0.08 measurement model

Construct Mean X1 X2 X3 X4 CR AVE

Perceived quality (X1) 4.86 0.94 0.94 0.76 Table II.

Brand awareness (X2) 5.12 0.37 0.72 0.73 0.58 Descriptive statistics,
Brand loyalty (X3) 3.17 0.65 0.41 0.85 0.85 0.66 correlation matrix,
Overall brand equity (X4) 3.27 0.55 0.31 0.81 0.91 0.91 0.73 reliability,
Notes: CR, composite reliability; AVE, average variance extracted. Diagonal entries (highlighted in and variance
italics) are Cronbach’s α coefficients, all others are correlation coefficients extracted estimates

and average variances extracted. The Cronbach α’s were all above the 0.70 threshold.
The CR of each scale exceeds the 0.70 threshold (Fornell and Larcker, 1981; Hatcher,
1994). This suggests that the scales are internally consistent. The variance extracted
estimates (AVE) ranged from 0.58 for “brand awareness” to 0.76 for “perceived quality”.
In all cases they exceed the 0.50 threshold as suggested by Fornell and Larcker (1981). On
the basis of these results, it can be concluded that the constructs are unidimensional and
meet acceptable levels of reliability and convergent validity.
4.2 Structural model
After the established validity of the scales had been examined, we proceeded with the
estimation of a structural model to test the causal relationships proposed in
the conceptual model (see Figure 1). Table III reports the results of the estimation of the
structural model, which include the overall-fit of the model and structural standardized
structural paths. Based on these results, it can be concluded that the overall model
shows an adequate fit. Although the χ2 is statistically significant ( χ2 ¼ 160.55, df ¼ 73,
p o 0.01), the remaining global-fit indexes indicate an adequate fit (TLI ¼ 0.94,
IFI ¼ 0.95, GFI ¼ 0.88, CFI ¼ 0.95, RMSEA ¼ 0.08). Overall, the results support the
 MIP proposed research model. In addition, the modification indices reveal that no other path
33,6 is significant, and this also shows the robustness of the hypothesized model.
Given that the sample used in this study refers two brands (Sagres and Super Bock),
the next step tests whether the results of the proposed model are different across the
groups. We now test the hypothesis that the two groups have the same relationships
between latent variables (structural weights). In this process there are two models: an
952 unrestricted model and a restricted model. In the latter, we impose the same structural
relations among latent variables. Specifically, we test whether the structural weights
are held constant across groups. When computing the degrees of freedom for the
unrestricted model, all the numbers from the initial structural model are exactly
doubled (73 × 2 ¼ 146). However, because of the additional constraints in the restricted
model, three fewer parameters have to be estimated from the data, thus increasing the
number of degrees of freedom by 3. The χ2 difference between the restricted model and
unrestricted model, χ2(149)−χ2(146) ¼ 275.365−271.217 ¼ 4.148  χ2(3), is not significant at
any conventional level (α ¼ 5 per cent). Also, the Akaike information criterion and
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Browen-Cudeck criterion values indicate that the best trade-off of model fit
and parsimony is obtained by constraining the structural weights to be equal across
groups (see Table IV). Based on these results, we can conclude that no are significant
differences between structural relations among latent variables in the two groups.

5. Discussion of the results

The hypotheses drawn in “Background” were corroborated, and the results obtained
are consistent with the conceptualization of the constructs. Therefore, it is possible to
extract implications for brand management practice and for future research.
First, although we did not include the brand associations dimension in our model, most
of the variability in overall brand equity and brand loyalty is explained (see Table III).
In our view, this option improved the model by separating brand awareness and brand
associations because it facilitates the interpretation of the results and enhances construct
validity. In fact, our research suggests that brand awareness and brand associations are
different constructs and should not collapse into the same dimension: brand associations’

Path from Path to Stand. coeff. CR p-value R2

Perceived quality Brand loyalty 0.591 7.441 0.000 0.465

Brand awareness Brand loyalty 0.187 2.103 0.035
Brand loyalty Overall brand equity 0.813 9.338 0.000 0.661
Table III. Notes: Stand. coeff., standardized coefficient; CR, critical ratio. Model fit: χ2 ¼ 160.55, df ¼ 73; good-
Results of the ness of fit index (GFI) ¼ 0.88, incremental fit index (IFI) ¼ 0.95, Tucker-Lewis index (TLI) ¼ 0.94,
structural model comparative fit index (CFI) ¼ 0.95 and root mean square error approximation (RMSEA) ¼ 0.08

Model Akaike information criterion (AIC) Browen-Cudeck criterion (BCC)

Unrestricted model 399.217 435.260

Restricted model 397.365 431.719
Table IV. Saturated model 420.000 538.265
Model comparisons Independence model 2,079.972 2,095.741
 dimension is not correctly assess by the items constant of Yoo and Donthu (2001) scale Mediating
and the complexity of this construct recommends that it should be studied separately as effect of brand
proposed by Del Rio et al. (2001).
Second, our findings suggest that perceived quality and brand awareness are
loyalty
antecedents of brand loyalty, and perceived quality is the main driver of brand loyalty
in the product category studied; this is an important difference in comparison with
previous research in which perceived quality did not appear to be a critical variable 953
(e.g. Buil et al., 2013; Gil et al., 2007). Moreover, the results suggest that brand
awareness do not have a significant influence on perceived quality for the chosen
product category, as suggested by some authors (e.g. Konecnik and Gartner, 2007).
These results are relevant for both researchers and marketing managers because they
may guide future research and fundament marketing investments.
Third, the effect on overall brand equity of perceived quality and brand awareness
is mediated by brand loyalty, and brand loyalty strongly influences overall brand
equity, given the standardized coefficient of 0.813 obtained in the structural model
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(see Table III). This result suggests that brand awareness and perceived quality may
not lead directly to a consumer purchase, but have an important indirect effect on
overall brand equity by influencing brand loyalty.
Thus, marketing managers should focus on brand loyalty in order to increase
overall brand equity, and should pay special attention to perceived quality, as it is the
factor with the strongest impact on brand loyalty, at least in this product category.
Consequently, the main effort should be place on improving perceived quality, which is
an important guidance regarding the allocation of marketing resources and the content
to insert in future advertisements.
On the other hand, the final scale constitutes an instrument with which managers
could regularly assess their brand performance in each brand equity dimension and
relate it to their firms’ marketing effort. Furthermore, they could use it to determine
their competitive position, if they perform the same analysis for competing brands.
Finally, our findings indicate that the scale proposed by Yoo and Donthu (2001)
could be improved and measures of brand associations should be refined in order to be
integrated in the model, and it contributes to a better understanding of the drivers of
brand equity by establishing causal relationships between the constructs which were
previously unclear. This is a significant step towards filing an identified research gap
in consumer-based brand equity, the interrelations between brand equity dimensions
(Huang and Cai, 2015), being a basis for future research on this important issue.
Knowing the causal relationships of brand equity is relevant, not only for practice, but
also for future research, since it constitutes a general framework that could be used in
more focused and specific studies, improving the theoretical understanding of the
drivers of brand equity.

6. Conclusion
The study of brand equity is regarded as one of the most critical issues in marketing
research and the interrelations between brand equity dimensions was identified as a
research gap. This paper contributes to both the theoretical conceptualization and
fine-tuning of the measurement instrument: first, causal relationships between
brand equity dimensions were established (see Figure 1); second, the concepts of brand
awareness, perceived quality and brand loyalty defined in the literature as predictors of
overall brand equity are validated; third, and the importance of each brand equity
dimension in a specific product category (beer) is determined. The theoretical and
 MIP statistical consistency of the proposed model enhances its applicability by brand
33,6 managers, who can developed marketing plans and assess their performance taking in
consideration the measurement scale and the causal relations suggested in this paper.
In short, from a management point of view, marketing managers should focus on
brand loyalty in order to increase overall brand equity, and should pay special attention to
perceived quality, as it is the factor with the strongest impact on brand loyalty.
954 Nevertheless, although the exclusion of the brand association dimension improved
construct validity, it could be regarded as a limitation, given its importance in brand
equity building and should not be forgotten. Therefore, future research focused on
brand associations’ dimension and its integration in a consumer-based brand equity
measurement instrument is encouraged.
Another limitation is the use of a single product category, which limits the
generalization of the results. Thus, testing the model in other geographic regions and
with different product categories is strongly recommended.
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About the authors

Pedro Marcelo Torres is a Professor at the University of Coimbra. He holds a PhD in Business
Administration from the School of Economics of the same university and an MBA from the
Católica University (Lisbon). His research has been presented at international conferences and
has been published in refereed journals. His research areas of interest are strategy and marketing.
Professor Pedro Torres is the corresponding author and can be contacted at: pedro.torres@uc.pt
Mário Gomes Augusto is a Professor at the University of Coimbra and a Research Member at the
Institute of Systems and Robotics, Coimbra. He received a PhD in Business Administration from the
School of Economics of the same university. His research has been presented at national as well as
international conferences and has been published in refereed journals. He received in 2006 the
Outstanding Achievement Award by the Decisions Science Institute for the Best Application Paper.
João Veríssimo Lisboa is a Professor at the University of Coimbra and a Research Member in
the Institute of Systems and Robotics, Coimbra. He has a PhD in Industrial Management from the
Clemson University. His research areas of interest are strategy and operations management.
His research has appeared in journals, such as Journal of Operations Management, OMEGA, Int.
J. Production and Operations Management and European Business Review.

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