Effect of Brand Equity on Firms Financial Performance in Consumer Goods Industries

Abstract

This study aims to find empirical evidence linking consumer based brand equity (CBBE) with financial performance of firms. Aaker’s CBBE approach is adopted and this equity is measured using a questionnaire developed from scales in existing literature. Differing from the extant literature, this study relates CBBE and firms’ performance by taking a direct approach in measuring financial performance by utilizing independently audited financial statements. A face-to-face survey study encompassing 28 companies from a variety of consumer goods industries was carried out in Turkey arriving at 505 valid responses. Firms’ financial performance was assessed using ten different performance indicators derived from financial statements submitted to Istanbul Stock Exchange. Following an exploratory factor analysis to reveal CBBE dimensions, a multiple regression analysis was carried out to test potential effects of CBBE factors on financial performance indicators. As an outcome of the analysis it has been seen that the components of CBBE positively affect most of the financial performance indicators to varying extents. Perceived quality dimension appears to be the major driver of financial performance followed by the composite factor encompassing brand awareness and brand association components.