Brand Equity: The Four Stages Of Perceptions

2.1.2. Brand Equity

Aaker (1991) describes that brand equity is the concept that comprises of brand loyalty, brand awareness, perceived quality, brand association and other brand assets.

2.1.3. Perception

Lindsay and Norman (cited in Pickens, 2005) “Perception is the process by which organisms interpret and organize sensation to produce a meaningful experience of the world” The perception process follows multiple stages that lead to specific experiences of the world. According to Pickens (2005) there are four stages in the perception process: stimulation, registration, organization and interpretation. The first stage viz. stimulation is caused by external sensory factors such as smell, taste, hear, sight and touch. This simulation leads

In a study conducted by Allison and Uhl (1964) on 326 drinkers, it was found that the participants rated beers from certain brands higher than that of others not based on the taste but purely based on the labels of the brands. The study confirmed statistically that the perceptions created by the marketing efforts of the companies had a higher influence on consumers’ brand choices than the product attributes themselves. Creating a positive perception leads to trust and loyalty which is rated high by many companies. For example, car companies usually never conduct satisfaction surveys, rather they track repurchase data of the customer and use it as the measure of their long term success (Reichheld et. al,

He argues that social perception is also a result of how individuals see and are seen by others. He explains further that two effects predominantly govern social perceptions: a) Halo effect and b) Contrast effect.

The ‘Halo’ effect creates perceptions in others about an individual based on his/her individual characteristics or traits. On the other hand, the ‘contrast’ effect creates perceptions in others about an individual based on not his/her individual traits but their traits, in comparison to those of other individuals.

In line with the ‘Halo effect’, the effect social perceptions could even lead to people paying a premium for certain brands to show the products they use command social status. This observation was confirmed through an empirical study with 1000 surveys results conducted in the Spanish shoes market by Rio et. al (2001). Using confirmatory factor analysis, the results proved statistically that when consumers perceived that the product could offer high guarantee they were ready to pay a high premium for the brand and also were willing to recommend the brand to