Branding capability: a firm's perspective on building brands

© 2003 Dr. Jelena DodicMost of the research on brand equity has taken a consumer behavioural perspective, focusing on the notion of perceived image of a brand. While a detailed understanding of how consumers form perceptions of brands is critical for improved brand management, relatively less attention has been devoted to the equally important question of how organisations build brand equity. Although a number of scholars have indeed emphasised the need to look beyond brand image and further inside the organisation for the sources of brand equity, the link between organisational capabilities and brand performance remains largely unexplored. The purpose of this study is to explore an organisation's branding capability—the ability to deploy organisational resources and capabilities toward achieving a strong brand position. In doing so, the study addresses three main questions: (l) Which organisational capabilities contribute to a firm's ability to build and manage strong brands, (2) Which organisational factors facilitate or impede the deployment of branding capabilities? and (3) What effect does branding capability have on brand equity and other indicators of the brand's financial and market performance and further, what role does the marketing mix play in facilitating these relationships? Branding capability is modelled to represent a second-order latent variable to a number of constituent organisational capabilities. Theoretical support for branding capability was based on the resource-based view of the firm and dynamic capabilities theory. Furthermore, drawing from social capital theory and institutional theory, the study develops a comprehensive typology of organisational factors proposed to influence branding capability. These include top management characteristics, organisational dynamics, organisational structure and control. Data were collected via a survey questionnaire distributed at the SBU level to firms operating in a variety of consumer goods industries. Results demonstrate support for hypothesised branding capability dimensions which include commonality of vision, identification with the brand, market scanning and brand dynamism. Of the organisational factors, top management commitment and communication, interdepartmental connectedness, esprit de corps, organisational learning, market-based reward system and organisational socialisation positively influence the implementation of branding capability, whereas centralisation has a negative effect on branding capability. Moreover, branding capability has a strong direct effect on brand equity and a number of indicators of market and financial performance of the brand. The congruence of the marketing mix with brand identity objectives strengthens the relationship between branding capability and brand performance only at low levels of marketing mix congruence. Implications for both theory and practice are provided