Modelling the Brand Equity Using Structural Equation Modelling

Modelling the Brand Equity is a must for any corporate. How much a brand is worth? Brands dijfer in their power and value in the market place. Brand Equity is the estimated value of premium customers are willing to pay for using a branded product compared to an unbranded product. Brand is an intangible assets and it is difficult to measure it directly. Brands, however, do not necessarily last forever Hence it is important that they are monitored over a period of time. Structural Equation Modelling methodology (SEM) provides a method to model brand equity that cannot be directly measured. In SEM terminology these are called latent variables. They are estimated using measured variables, or indicator variable(s).The measured variables need not be reliable and there will be a measurement error associated with each indicator variable. One latent variable can drive other latent variables and there can be two types of effects: Direct and indirect. By using SEM with multiple indicator variables we can model important latent variables while also taking into account unreliability of measured variables. This paper describes applying SEM to model the brand equity of Airlines. It also studies the comparison of SEM models across segments and identifies the most important variable(s) affecting the Brand equity. Primary data is used for analysis, collected among different dimensions covering demographic, satisfaction, commitment. Trust, Relation etc.