Journal of Marketing and Consumer Research www.iiste.

org
ISSN 2422-8451 An International Peer-reviewed Journal
Vol.22, 2016

The Impact of Sales Promotion on Brand Equity: The Case of

Brewery Industry
Salelaw, Gashaw Tibebe Amanpreet Singh
School of Management Studies Punjabi University, Patiala

Abstract
The effects of sales promotion on the creation of brand equity; effects of brand equity dimensions on overall
brand equity; and the nature of inter-relationship among brand equity dimensions is a new area of research in
Ethiopia. By adapting exploratory approach, the study assumed a positive sales promotion-brand equity
dimensions-overall brand equity linkage in the Ethiopian beer market. Structural equation modeling (SEM) was
used to verify the conceptual model, that is, the hypothesized linkage. The study is purely quantitative and a
cross-sectional descriptive research design was applied. The study confirmed brand equity is a multidimensional
concept that consists of brand loyalty, perceived quality and brand associations. Brand loyalty exerts a great
influence on the formulation of brand equity and it is a holistic concept. The nature of brand equity dimensions
relationship in the Ethiopian brewery industry is a causal order. The study also indicated that sales promotion
affecting the formulation of brand equity with different level of intensity. The study further concluded that
monetary promotion affecting positively the creation of brand equity by influencing brand awareness, brand
associations and perceived quality; and non-monetary sales promotion affecting positively the formulation of
brand equity by influencing brand awareness and negatively by affecting perceived quality.
Keywords: Brand Equity, Brand Loyalty, Perceived Quality, Brand Associations, Brand Awareness, Sales
Promotion, Ethiopia

1.1. INTRODUCTION
Keller (1993) and Lehmann, Keller, and Farley (2008) suggested that “building and properly managing brand
equity has become a priority for companies of all sizes, in all types of industries, in all types of market”;
indicating building, managing and measuring brand equity is the priority agenda for all firms across the world. In
the last 3 decades, a growing amount of attention has been dedicated to academics and practitioners to the
conceptualization, building, measurement and management of brand equity (Aaker & Keller, 1990; Aaker, 1991,
1996; Keller, 1993,2008; Ailawadi, Donald, & Scott, 2003; Netemeyer, et al., 2004); all came up with several
often divergent viewpoints on the content and meaning of brand equity (Vazquez, Del Rio, & Iglesias, 2002); the
dimensions and the factors that influence brand equity, the perspectives from which brand equity should be
measured, and the way to measure brand equity (Ailawadi, Donald, & Scott, 2003; Keller, 2003; Christodoulides
& de Chernatony, 2010; Veloutsou, Christodoulides, & de Chernato, 2013). The proposed reasons for lack of
uniform understanding could be the nature of the product and the market characteristics; firms have different
brand management objectives; no universally accepted single brand equity conceptualized and measurement
technique applied to all brands; and different brand equity perspectives adapted to measure brand equity
(Christodoulides & de Chernatony, 2010).
This article measured brand equity from consumer-based brand equity perspective that focusing on the
conceptualization and measurement of brand equity on individual consumer’s context by believing “the strength
of the brands lies on consumer’s mind” (Leone, Rao, Keller, Luo, McAlister, & Srivastava, 2006). The financial
value of the brand (financial-based brand equity, another common perspective of brand equity) is the result of
consumer-based brand equity because the additional cash flow generated from the brand is the result of
customers’ willingness to buy one brand more than its competitors (Kapferer, 2008).
The nature of interrelationship amongst brand equity dimensions is another researchable area which
needs further investigation. Despite some studies suggested associative relationships (Yoo, Donthu, & Lee, 2000;
Atilgan, Aksoy, & Akinci, 2005; Pappu, Quester, & Cooksey, 2005), the current study proposed causal order
relationships amongst the dimensions of brand equity (Ashill & Sinha, 2004; Bravo, Fraj, & Martínez, 2007;
Martínez, Polo, & de Chernatony, 2008) and contribute its part to increase the generalizability of the nature of
brand equity inter-correlation.
Additionally, to maintain the health of the brand in consumer’s mind and to measure marketing effort
productivity, the effects of marketing investments (like sales promotions) should be investigated (Aaker, 2010).
However, studies indicated that the individual influence of marketing activities like sales promotion on the
creation/building of brand equity is unclear (Chu & Keh, 2006), and researchers have pinpointed the need to
examine the effects on the creation and management of brand equity (Netemeyer, et al., 2004). Therefore, the
primary concern of this study is measuring the consumer-based brad equity and investigating the effects of sales
promotions on the formulation of brand equity in the Ethiopian brewery industry.

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Vol.22, 2016

1.2. CONCEPTUAL FRAMEWORK AND HYPOTHESIS OF THE STUDY

The Brand Equity Creation Process Model of Yoo, Donthu and Lee’s (2000) that was developed on the basis of
Aaker’s (1991) Brand Equity concept was expanded and adapted in the present study. Aaker (1991) noted brand
equity is a “multi-dimensional concept” and provided a wide-ranging definition by defining it as “a set of assets
(and liabilities) linked to a brand's name and symbol that add to (or subtract from) the value provided by a
product or service to a firm and/or that firm's customers.” The assets and/or liabilities are brand loyalty,
perceived quality, brand awareness, brand associations, and other proprietary assets; also known as brand equity
dimensions (Aaker, 1991). From these five brand equity dimensions, the first four represents “customers’
evaluations and reactions to the brand that can readily understand by consumers” (Barwise, 1993; Yoo, Donthu,
& Lee, 2000; Yoo & Donthu, 2001), and can be used to explore the findings of marketing and consumer
behavior research in relation to brand (Barwise, 1993). Hence, the current study conceptualizes brand equity as a
four-dimensional model consisting of brand awareness, brand associations, perceived quality and brand loyalty
that applied to measure beer brand equity by considering the Ethiopian brewery industry as a case.
Yoo, Donthu and Lee’s (2000) Brand Equity Creation Process Model indicated the effects of marketing
efforts on brand equity. From marketing efforts, this paper selects sales promotion and investigates its effect on
brand equity by influencing brand loyalty, brand awareness, brand associations and perceived quality, which is
not yet clear among scholars (Khan, Rahmani, Hoe, & Chen, 2015). Accordingly, this study focused on the
linkage of sales promotion-brand equity dimensions-overall brand equity in the Ethiopian brewery industry.

1.2.1. HYPOTHESES FORMULATION AND VERIFICATION

The proposed path analysis indicated the causal effect of brand equity dimensions on brand equity, causal order
inter-relationship among brand equity dimensions, and causal effect of monetary and non-monetary sales
promotion on the building of brand equity by influencing brand equity dimensions.
1.2.1.1. Effects of Brand Equity Dimensions on Overall Brand Equity
Brand equity is a strategic aspect of marketing management and can be created, maintained, and intensified by
strengthening one of its dimensions (Leuthesser, 1988; Farquhar, 1989; Yoo, Donthu, & Lee, 2000; Villarejo-
Ramos & Sanchez-Franco, 2005). Buil, de Chernatony, and Leslie (2010) also claimed brand equity dimensions
are related among themselves and “companies can optimize the brand equity management process by
considering the relationships existing between the different dimensions” of brand equity.
Previous study findings claimed the positive and significant effects of brand equity dimensions (brand awareness,
brand associations, brand perceived quality and brand loyalty) on the overall brand equity (Aaker, 1991; Yoo,
Donthu, & Lee, 2000; Amini, 2012).
Brand Awareness
Brand awareness is defined as “the ability of potential buyers to recognize and recall brands as a member of a
certain product category” (Aaker, 1991). The definitions noted the accessibility of the brand and the presence of
strength of the brand in the consumer’s mind (Aaker, 1996; Aaker & Joachimsthaler, 2002) and specified brand
awareness comprises brand recall and brand recognition (Keller, 1993; Liu, Liston-Heyes, & Ko, 2010). Hence,
in this paper brand awareness measures the strength of the brand in a consumer’s memory as reflected by the
consumer’s ability to identify various elements of the focal brand.

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Brand Associations
Brand association is defined as “anything linked to the memory of the brand” (Aaker, 1991) and “the meaning of
the brand for consumers” (Keller, 1993). Brand associations are complicated and connected to one another and
consist of “multiple ideas, episodes, instances, and facts that establish a solid network of brand knowledge”
(Yoo, Donthu, & Lee, 2000). Besides, anything linked in memory to a brand includes the variables of perceived
value, brand personality, and organizational associations (Aaker, 1991; Sequeira & Mohan, 2012). Hence, in this
paper brand association is concerned with the ability to think of a brand characteristic, that are, perceived value,
brand personality (uniqueness and favorableness) and organizational associations (liking, pride and trust).
Perceived Quality
Perceived quality is defined as “the consumer’s subjective judgment about a product’s overall excellence or
superiority” (Zeithaml, 1988). Hence, in this study, perceived quality measures consumers subjective judgment
about a brand’s overall excellence or superiority and addressed overall quality rather than individual elements of
quality (Yoo, Donthu, & Lee, 2000).
Brand Loyalty
One of the modern definitions of brand loyalty came from (Chegini, 2010) who described brand loyalty as
“theory and guidance leadership and positive behavior including, repurchase, support, and offer to purchase
which may control a new potential customer”. It is the “attachment the customer has to a brand” (Aaker, 1991).
Besides, since the brand value of the firm is largely created by brand loyalty (Aaker, 2010) and brand loyalty
goes to personal scarification (Reichheld, 1993), indicating the overall brand commitment of consumers is
essential. Hence, this study tried to capture the consumer’s overall commitment to being loyal to a brand.
1.2.1.2. Inter-relationship of Brand Equity Dimensions
With regarding the inter-relationship of brand equity dimensions, there is a debate among scholars, that is, some
argued on associative relationships and other argued on causal relationships. Studies proposed associative
relationships were (Yoo, Donthu, & Lee, 2000; Atilgan, Aksoy, & Akinci, 2005; Pappu, Quester, & Cooksey,
2005) and studies proposed casual relations were (Ashill & Sinha, 2004; Bravo, Fraj, & Martínez, 2007;
Martínez, Polo, & de Chernatony, 2008). Accordingly, the current study proposed the causal order amongst
brand equity dimensions.
Consumers must first be aware of a brand to develop a set of brand associations, perceived quality and
brand loyalty later (Aaker, 1991). Studied also pinpointed that brand awareness affects the formation and the
strength of brand associations and perceived quality (Keller, 1993; Pitta & Katsanis, 1995; Aaker, 1996; Na,
Marshall, & Keller, 1999; Konecnik & Gartner, 2007; Buil, de Chernatony, & Leslie, 2010), and when
consumers acquire a more positive perception of the brand, loyalty results (Oliver, 1999). Thus, positive
associations and high levels of perceived quality can enhance brand loyalty (Keller, 1993; Chaudhuri, 2000;
Pappu, Quester, & Cooksey, 2005). These facts indicated a causal order relationship amongst brand equity
dimensions.
Lastly, this paper adapted exploratory approach and assumes brand equity dimensions affecting the
creation of overall brand equity and there is a causal relationship among brand equity dimensions in the
Ethiopian beer market. Accordingly, the study proposed the following relationships.
Hypothesis 1: Brand equity dimensions have a positive effect on the creation of consumer-based brand equity.
With respect to hypothesis 4, the study further hypothesizes:
Hypothesis 1-1: Brand awareness has a positive effect on the creation of brand equity.
Hypothesis 1-2: A brand association has a positive effect on the creation of brand equity.
Hypothesis 1-3: Brand perceived quality has a positive effect on the creation of brand equity.
Hypothesis 1-4: Brand loyalty has a positive effect on the creation of brand equity.
Hypothesis 2: There is a causal order inter-relationship among brand equity dimensions.
With respect to hypothesis 2, the study further hypothesizes:
Hypothesis 2-1: Brand awareness has a positive influence on brand associations
Hypothesis 2-2: Brand awareness has a positive influence on perceived quality
Hypothesis 2-3: Brand awareness has a positive influence on brand loyalty
Hypothesis 2-4: Brand association has a positive influence on perceived quality
Hypothesis 2-5: Brand association has a positive influence on brand loyalty
Hypothesis 2-6: perceived quality has a positive influence on brand loyalty
1.2.1.3. Effects of Sales Promotion on Brand Equity
Aaker (2010) argued brand equity is the result of past marketing investments like sales promotion. Similarly,
Keller (1993) pinpointed that consumer’s brand knowledge, perception, attitude, intentions and behaviors
towards a certain brand is the result of marketing investments by defining brand equity as “the differential effect
of brand knowledge on consumer response to the marketing of the brand” (Keller, 1993). Among the different
types of marketing investments, sales promotion is the most commonly used brand communication strategy used
to build brand equity. Providing temporary incentives (sales promotion) to encourage customers to try and use a

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promoted brand is a common practice in many of the companies to convince customers to try or use a promoted
brand (DelVecchio, Henard, & Freling, 2006; Tong & Hawley, 2009). Keller (2003) defined sales promotion as
“short-term incentives to encourage trial or use of a product or service”. The incentives can be monetary or
non-monetary (Tong & Hawley, 2009). Obtaining short-term financial incentives is known as monetary
promotion (Yoo, Donthu, & Lee, 2000); and add a value of “excitement” and bring “some computable economic
saving” is known as non-monetary promotion (Tong & Hawley, 2009).
Though sales promotion is a key brand communication tool used in marketing promotion programs that
influence brand equity (Valette-Florence, Guizani, & Merunka, 2011), scholars not yet agreed on the
effectiveness of sales promotion on the creation of brand equity (Garreston, Fisher, & Burton, 2002; Palazón-
Vidal & Delgado-Ballester, 2005). This motivated the researchers to investigate the effects of sale promotion on
the creation of brand equity by influencing brand equity dimensions in the Ethiopian brewery industry.
Frequent use of sales promotion especially price oriented are very effective to bring short-term benefits
such as increasing market share, encouraging brand switches, generating sales traffic, and inducing product trial
usage (Bawa, Bawa, & Shoemaker, 1989; Blattberg & Neslin, 1990; Leone & Srinivasan, 1996; Grewal,
Krishnan, Baker, & Borin, 1998) and obtain short-term financial profit (Yoo, Donthu, & Lee, 2000). However
the frequent use of price-oriented promotion is not recommended by scholars and it has a negative effect on the
creation of brand equity (Yoo, Donthu, & Lee, 2000). Some of the proposed reasons are, it may provoke
consumer confusion, instability and variability and this lead to an image of unstable quality in consumer’s
mindset (Winer, 1986); can deteriorate brand equity in both perceptions of the brand’s quality and its image
(Yoo, Donthu, & Lee, 2000; Villarejo-Ramos & Sanchez-Franco, 2005; DelVecchio, Henard, & Freling, 2006);
leads consumers to think primarily about price instead of brand (Yoo, Donthu, & Lee, 2000); consumer who
purchases a discounted product often attributes it is discounting because the product is a poorer quality product
(Dodson, Tybout, & Sternthal, 1978); lower the distinctiveness for the firm’s products (Boulding, Lee, & Staelin,
1994); may create price sensitive customers and consumers may infer “low product quality because they lead
consumers to think primarily about price deals” instead of the utility provided by the brand (Yoo, Donthu, & Lee,
2000); and influence on consumers reference price can lead to unfavorable quality evaluations (Mela, Gupta, &
Jedidi, 1998; Raghubir & Corfman, 1999; Jørgensen, Taboubi, & Zaccour, 2003; DelVecchio, Henard, & Freling,
2006; Buil, de Chernatony, & Martínez, 2013). All these have the potential to affect brand equity building
process negatively.
Unlike monetary promotion, the non-monetary promotion may not negatively affect brand equity
creation (Palazón-Vidal & Delgado-Ballester, 2005; Montaner & Pina, 2008) because scholars argued that the
incentives are “not directly seen in a lower purchase and it is more difficult to influence the internal reference
price” (Campbell & Diamond, 1990). Besides, studies indicated that non-monetary sales promotions have the
ability to strengthen brand equity (Palazón-Vidal & Delgado-Ballester, 2005; Montaner & Pina, 2008) by
creating differentiation through communicating unique brand attributes (Papatla & Krishnamurthi, 1996; Mela,
Gupta, & Jedidi, 1998; Chu & Keh, 2006) and by adding value to the brands and encouraging brand loyalty
(Conlon, 1980; Jagoda, 1984; Aaker, 1991). Mostly, companies are using non-monetary sales promotion to
achieve long-term marketing objectives by enhancing brand image and strengthening brand-customer
relationships (Tong & Hawley, 2009). Furthermore, non-monetary sales promotions can strengthen brand equity
by adding excitement and immeasurable value to the brands and providing economic savings to consumers
(Jagoda, 1984; Aaker, 1991; Tong & Hawley, 2009). Accordingly, it might contribute positively to “the
development and reinforcement of brand equity” (Papatla & Krishnamurthi, 1996; Mela, Gupta, & Jedidi, 1998;
Chu & Keh, 2006). Finally, by adapting exploratory approach the study proposed the following hypothetical
relationship
Hypothesis 3: Consumers’ perception of a brand’s monetary promotions has a positive influence on brand equity
dimensions.
With respect to hypothesis, the study further hypothesizes:
Hypothesis 3-1: Consumers’ perception of a brand’s monetary promotions has a positive influence on brand
awareness.
Hypothesis 3-2: Consumers’ perception of a brand’s monetary promotions has a positive influence on brand
associations.
Hypothesis 3-3: Consumers’ perception of a brand’s monetary promotions has a positive influence on perceived
quality.
Hypothesis 3-4: Consumers’ perception of a brand’s monetary promotions has a positive influence on brand
loyalty.
Hypothesis 4: Consumers’ perception of a brand’s non-monetary promotions has a positive influence on brand
equity dimensions.
With respect to hypothesis, the study further hypothesizes:
Hypothesis 4-1: Consumers’ perception of a brand’s non-monetary promotions has a positive influence on

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brand awareness.
Hypothesis 4-2: Consumers’ perception of a brand’s non-monetary promotions has a positive influence on
brand associations.
Hypothesis 4-3: Consumers’ perception of a brand’s non-monetary promotions has a positive influence on
perceived quality.
Hypothesis 4-4: Consumers’ perception of a brand’s non-monetary promotions has a positive influence on
brand loyalty.

1.3. RESEARCH METHODOLOGY

1.3.1. Research Design
In this paper, a quantitative research approach was undertaken and a cross-sectional descriptive survey research
design in nature was applied to test the formulated hypotheses. Besides, to gather information from the sample
respondents, the current study employed person-administered survey method and the data collection was
administered by the researcher and hired experienced data collectors.
In this study, Amharic version of the scale was prepared and the questionnaire was administered in Amharic (the
National language of Ethiopia) after the professional translators were translated the English version of the
questionnaire into Amharic version.
1.3.2. Instrument Development
To develop a valid scale capable of testing the formulated hypotheses, the study employed Bollen (1989)
recommendations. The recommendations are: first, “identify the dimensions and latent variables that represent
the concept to be measured”; the second is, “create indicators based on the past theoretical positions”; and, the
last is “specify the relationship between the observable indicators or variables and the latent concepts or
variables they explain” (Bollen, 1989). Accordingly, the study developed the following brand equity and sales
promotion measurements.
Measurement of Brand Equity
To measure overall consumer-based brand equity, a uni-dimensional measure called “Overall Brand Equity”
(OBE) composed of four items was developed from the studies of Yoo, Donthu, and Lee (2000) and Yoo and
Donthu (2001).
To measure brand equity dimensions, Yoo and Donthu’s (2001) “Multi–Dimensional Brand Equity”
(MBE) scale composed of twenty-four items grouped into four factors: brand awareness, brand associations,
brand perceived quality and brand loyalty were adapted and used. Unlike the previous researches (as an example,
Yoo, Donthu, & Lee, 2000), this paper treated brand awareness and brand associations as separate dimensions
of brand equity. The study adapted five items to measure brand awareness (brand recall and recognition) from
the works of Aaker (1991), Yoo, Donthu, and Lee (2000) and Yoo and Donthu (2001). Besides, to measure
brand associations (perceived value, brand personality and organizational associations), the study adapted nine
items were developed based on Keller (1993), Aaker (1996), Lasser, Mittal, and Sharma (1995), Yoo, Donthu,
and Lee (2000), Yoo and Donthu (2001) and Pappu, Quester, and Cooksey (2005) studies.
The study adapted six items to measure consumers’ perceptions of the focal brand quality in
comparison with other competing brands from Aaker (1991), Lasser, Mittal, and Sharma (1995), Yoo, Donthu,
and Lee (2000), Yoo and Donthu (2001) and Pappu, Quester, and Cooksey (2005) works. Additionally, based
on the works of Yoo, Donthu, and Lee (2000), Yoo and Donthu (2001) and Pappu, Quester, and Cooksey
(2005), five items were adapted the consumer’s overall commitment to being loyal to a focal brand.
Measurement of Sales Promotion
To measure consumer’s perception towards the brand’s monetary and non-monetary sales promotion, the study
adapted nine items for each from the works of Yoo, Donthu and Lee (2000). The study examined the perceived
rather than actual sales promotion efforts, because it plays a more direct role in the consumer buying behavior
than actual marketing efforts; not feasible to control actual marketing efforts, and it has a strong connotation and
clarify consumer behaviors more effectively than actual marketing efforts (Yoo, Donthu, & Lee, 2000).
1.3.3. Product Stimuli
Following previous brand equity works (Yoo, Donthu, & Lee, 2000; Netemeyer, et al., 2004; Buil, de
Chernatony, & Martínez, 2013) the present study adapted the principles guided to the selection of product
category and brands. The first principle is the product must be widely available and well-known by consumers to
provide more “valid and reliable responses and assures the reliability of the scales” (Parameswaran & Yaprak,
1987; Buil, de Chernatony, & Martínez, 2013). The second principle is the selected brands in the product
category were different in terms of consumer involvement. The selected product for this study meets both
principles. In general, Ethiopian manufactured beer brands were used as product stimuli and the chosen brands
were Bedelle, Dashen, Meta, St.George and Walia beers which are widely available in and well-recognized by
Ethiopian beer consumers.

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1.3.4. Sample and Procedure

The study used a sample of actual beer consumers (greater than 18 years old). The research employed Retail-
Outlets Consumer Intercept Survey Method to collect consumer information; as Rosen and Percy (1987)
expressed retail-outlets consumer intercept survey method as a valuable method in brand researches to collect
consumer information.
Multi-stage systematic sampling processes were employed. First, the researcher used stratified random
sampling techniques to select Sub-Cities (Strata). Second, to select the beer retail outlets, the researcher used a
simple random sampling technique. Third, to select respondents in each selected retail outlets, the current study
used a convenience-systematic sampling technique, that is, a systematic random sampling pattern was applied to
the convenience-sampling frame to select sample respondents. Further, to randomize the sample and increase the
generalizability of the findings in each beer retail-outlets, every fifth (5th) individual who have visited the retail
beer outlets from 5:00 post meridian (PM) to 11:00 post meridian (PM) on Friday, Saturday, and Sunday were
contacted.
In this paper, to determine the sample size, Israel (1992) sample sizes determination formula applied for
the infinite population was applied and 600 respondents were contacted. After invalid and incomplete
questionnaires were rejected, the survey yields a total of 571 valid and completely usable questionnaires used for
further analyze. Since the study used person-administered survey method, the response rate was high.
Moreover, the present empirical study was used five versions of questionnaires, such that each version
was customized for one to five brands, that is, except the brand name, all the question items were identical across
the five versions of questionnaires. Finally, to ensure the validity of the findings, the selected brands were
assigned to the respondents by observing the brand they have purchased or consumed at the selected retail beer
outlets during the time of the study.

1.4. VALIDATION OF THE MEASUREMENT MODEL: PSYCHOMETRIC CHECKS

The study used structural equation modeling (SEM) to validate the measurement model and to analyze the data.
It has composed of two models: “a measurement model (sometimes known as confirmatory factor analysis)”,
which specifies how latent variables or theoretical constructs are measured in terms of observed variables, and “a
structural model, which stipulates the direct and indirect associations among latent variables” (Hughes, Price,
& Marrs, 1986; Schumaker & Lomax, 1996; Hair, Anderson, Tatham, & Black, 1998). Additionally, the present
study followed two-step model building approach recommended by Anderson and Gerbing (1988), Jöreskog and
Sörbom (1996) and Hu and Bentler (1999); that focused on the analysis of two conceptually distinct model, that
are, a measurement model followed by the structural model (Lomax, 1982). Furthermore, the proposed model
analysis in the present study was conducted by using the most widely used estimation method, that is, “Maximum
Likelihood Estimation Method” (Anderson & Gerbing, 1988).
To validate the measurement model, this study used Cronbach’s alpha coefficients and confirmatory
factor analysis. Calculating the Cronbach’s alpha coefficients helping to know the internal consistency of items
and done through IBM SPSS version 20. Confirmatory factor model approaches helps the researcher to test
“whether a sample data confirms the model or to test the significance of a hypothesized factor model”
(Schumacker & Lomax, 2010) and done through IBM SPSS AMOS 21. The present study used confirmatory
factor analysis for the following purposes: to check the uni-dimensionality of the constructs (the manifest that a
single construct or characters are underlined a set of measures) (Anderson & Gerbing, 1988); to confirm the
reliability and validity of the sample data fitness to the hypothesized model (Schumacker & Lomax, 2010); for
scale development and to check construct validity (Brown, 2006); and to validate the measurement model
(MacCallum & Austin, 2000; Brown, 2006).

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Table 1: Measurement of Brand Equity Scale Estimates

Item Construct Statement Standardized Cronbach’s Composite Average
Code loading Alpha Reliability Variance
Extracted
Brand Awareness Fit Measures GFI=0.97,AGFI=0.90,NFI=0.94,CFI=0.95,RMR=0.04,RMSEA
=0.07
BAW1 I am aware of “X”. 0.69 0.80 0.98 0.90
BAW2 When I think of beer, “X” is one of the brands 0.65
that comes to my mind
BAW3 “X” is a brand of beer I am very familiar with 0.77
BAW4 I know what “X” looks like 0.62
BAW5 I can recognize “X” among other competing 0.66
brands of beer
Brand Associations Fit Measures GFI=0.96,AGFI=0.93,NFI=0.92,CFI=0.94,RMR=0.04,RMSEA
=0.07
BAS1 Some characteristics of “X” come to my mind 0.68 0.79 0.98 0.89
quickly.
BAS2 I can quickly recall the symbol or logo of “X”. 0.56
BAS3 Considering what I would pay for “X”, I 0.51
would get much more than my money’s worth
BAS4 “X” has a strong personality 0.63
BAS5 “X” is interesting 0.73
BAS6 I trust the company which makes “X” 0.71
BAS7 I like the company which makes “X” 0.65
BAS8 The company which makes “X” has credibility 0.66
Perceived Quality Fit Measures GFI=0.98,AGFI=0.95,NFI=0.98,CFI=0.98,RMR=0.02,RMSEA
=0.06
BPQ1 “X” is of high quality. 0.73 0.87 0.99 0.93
BPQ2 The likely quality of “X” is extremely high. 0.72
BPQ3 “X” is a quality leader in its category 0.77
BPQ4 The likelihood that “X” will be satisfactory is 0.73
very high
BPQ5 Compared to its competitors, I appreciate “X” 0.72
BPQ6 Compared to its competitors, I respect “X” 0.72
Brand Loyalty Fit Measures GFI=0.99,AGFI=0.96,NFI=0.98,CFI=0.99,RMR=0.02,RMSEA
=0.07
BLY1 I consider myself loyal to “X”. 0.76 0.86 0.98 0.92
BLY2 “X” would be my first choice. 0.82
BLY3 I will not buy other brands if “X” is available 0.73
at the store.
BLY4 I will buy “X” again 0.73
BLY5 I will suggest “X” to other consumers 0.69
Overall Brand Equity Fit Measures GFI=0.98,AGFI=0.91,NFI=0.98,CFI=0.98,RMR=0.03,RMSEA
=0.12
OBE1 It makes sense to buy “X” instead of any other 0.76 0.85 0.98 0.93
brand, even if they are the same.
OBE2 Even if another brand has same features as 0.77
“X”, I would prefer to buy “X”.
OBE3 If there is another brand as good as “X”, I 0.82
prefer to buy “X”.
OBE4 If another brand is not different from “X” in 0.71
any way, it seems smarter to purchase “X”.
Source: 2014/15 Survey
GFI: goodness-of-fit index; AGFI: adjusted goodness-of-fit index; NFI: normed fit index; CFI: comparative fit
index; RMR: root mean square residuals; RMSEA: root mean square error of approximation

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Table 2: Sales Promotion Scale Estimates

Item Construct Statement Standardized Cronbach’s Composite Average
Code loading Alpha Reliability Variance
Extracted
Monetary Sales Promotion Fit Measures GFI=0.97,AGFI=0.93,NFI=0.95,CFI=0.96,RMR=0.03,RMSEA
=0.08
PMP2 In general, I like the price deals like discounts 0.71 0.82 0.98 0.91
for “X”
PMP3 My opinion about “X’s” price deals like 0.62
discounts is very high
PMP4 I remember the last price deals for “X” 0.46
PMP5 Price deals like price discounts for “X” are 0.64
frequently offered.
PMP6 Price deals like price discounts for “X” are 0.69
emphasized more than seems reasonable
PMP7 I think price deals like price discounts for “X” 0.63
are more frequent than for competing brands
PMP8 Price Deals like price discounts for “X” are 0.63
presented too many times.
Non-monetary Sales Promotion Fit Measures GFI=0.98,AGFI=0.96,NFI=0.97,CFI=0.98,RMR=0.02,RMSEA
=0.05
PNM2 In general, I like the non- price deals like gifts 0.66 0.83 0.99 0.91
for “X”
PNM3 My opinion about “X’s” non-price deals like 0.61
gifts is very high
PNM4 I remember the last non-price deals for “X” 0.62
PNM5 Non-price deals like gifts for “X” are 0.59
frequently offered.
PNM6 Non-price deals like gifts for “X” are 0.68
emphasized more than seems reasonable
PNM7 I think non-price deals like gifts for “X” are 0.67
more frequent than for competing brands
PNM8 Non-price deals like gifts for “X” are 0.63
presented too many times
Source: 2014/15 Survey
GFI: goodness-of-fit index; AGFI: adjusted goodness-of-fit index; NFI: normed fit index; CFI: comparative fit
index; RMR: root mean square residuals; RMSEA: root mean square error of approximation

1.5. DISCUSSIONS ABOUT THE STRUCTURAL MODEL AND RESULTS

After the analysis of the measurement model and evaluating model fitness, the hypothesis testing was carried out
on the structural model, that is, all the hypotheses of the study were tested by structural equation model by using
SPSS AMOS 21 version. The total number of hypotheses is eighteen: four hypotheses referred to the effects of
brand equity dimensions on the creation of brand equity, six hypotheses referred to the inter-relation among
brand equity dimensions, and eight hypotheses belonged to consumer’s perception towards a brand’s monetary
and non-monetary sales promotions effect on brand equity dimensions. Since all hypotheses in this study were
directional, the rule of 1.65 t-values was applied as the critical value at 0.05 significant levels (Yoo, Donthu, &
Lee, 2000).
1.5.1. Effects of Brand Equity Dimensions on Overall Brand Equity
Table 3: Effect of Brand Equity Dimensions on Brand Equity
Hypothesis From To Standardized T-Value Supported/not
Coefficient (β Supported
Value)
Hypothesis 1-1 Brand Overall Brand Equity -0.02 -0.62 Not Supported
Awareness
Hypothesis 1-2 Brand Overall Brand Equity 0.01 1.78 Supported
Associations
Hypothesis Perceived Overall Brand Equity 0.37 7.96*** Supported
1-3 Quality
Hypothesis 1-4 Brand Loyalty Overall Brand Equity 0.58 15.44*** Supported
Fit Measures GFI=1.00,AGFI=0.99,NFI=1.00,CFI=1.00,RMR=0.00,RMSEA=0.00
Note: *** means P-value ≤0.001
Source: 2014/15 Survey

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Vol.22, 2016

The finding of the study indicated the significant dimensions of beer brand equity are brand loyalty
(β=0.58, t-value=15.44), perceived quality (β=0.37, t-value=7.96), and brand associations (β=0.37, t-value=7.96).
The positive and significant effects of brand associations perceive quality and brand loyalty with overall brand
equity were consistent with previous studies (Yoo, Donthu, & Lee, 2000). The findings stated that high
consumer-based brand equity implies that consumers’ have a lot of positive and strong associations related to the
brand, perceived the brand is of high quality and superiority and are loyal to a brand (Yoo, Donthu, & Lee, 2000).
Among brand equity dimensions, brand loyalty highly affecting the building of brand equity in the Ethiopian
brewery industry indicated brand loyalty is a holistic concept and brand equity is a relationship concept. The
study also indicated perceived quality affected the creation/building of brand equity lower than brand loyalty but
higher than brand associations. Furthermore, the finding supported the idea of brand equity is a multi-
dimensional concept. Collectively, the study indicated brand loyalty, perceived quality, and brand associations
are the influential dimensions of brand equity creation in the Ethiopian beer market.
1.5.2. Interrelation among Brand Equity Dimensions
Table 4: Relationships among Brand Equity Dimensions
Hypothesis From To Standardized T-Value Supported/not
Coefficient (Ψ Supported
Value)
Hypothesis Brand Awareness Brand 0.66 29.22*** Supported
2-1 Associations
Hypothesis Brand Awareness Perceived 0.22 5.72*** Supported
2-2 Quality
Hypothesis Brand Awareness Brand Loyalty 0.32 6.92*** Supported
2-3
Hypothesis Brand Associations Perceived 0.74 16.18*** Supported
2-4 Quality
Hypothesis Brand Associations Brand Loyalty 0.26 4.11*** Supported
2-5
Hypothesis Perceived Quality Brand Loyalty 0.50 10.47*** Supported
2-6
Fit Measures GFI=1.00,AGFI=0.99,NFI=1.00,CFI=1.00,RMR=0.00,RMSEA=0.00
Note: *** means P-value ≤0.001
Source: 2014/15 Survey
With regarding inter-relation among brand equity dimensions, the study findings provided further
support for the arguments of causal order relationship among brand equity dimensions. Specifically, brand
awareness has a causal effect on the building of brand associations (Ψ=0.66, t-value=29.22), perceived quality
(Ψ=0.22, t-value=5.72), and brand loyalty (Ψ=0.32, t-value=6.92); brand associations affect the building/creation
of perceived quality (Ψ=0.66, t-value=29.22), and brand loyalty (Ψ=0.74, t-value=16.18), and brand loyalty
(Ψ=0.26, t-value=4.11); and perceived quality has a casual effect on the creation/building of brand loyalty
(Ψ=0.50, t-value=10.47). The finding is consistent with other studies conducted in Western markets (Farquhar,
1989; Leuthesser, 1988; Aaker, 1991; Yoo, Donthu, & Lee, 2000; Villarejo-Ramos & Sanchez-Franco, 2005;
Buil, de Chernatony, & Martínez, 2013). Furthermore, there is a very strong association between brand
awareness and brand associations, which is the causal effect of brand awareness is highest on the building of
brand associations (Ψ=0.66, T-value=29.22) compared with brand awareness effect on perceived quality
(Ψ=0.22, t-value=5.72) and brand loyalty (Ψ=0.32, t-value=6.92).
The main reason for the causality of brand equity dimensions is the result of consumer learning.
Scholars argued that the process of creating/building consumer-based brand equity is a consumer learning
process. First, consumers must aware of the brand to create brand awareness and develop brand associations
(Aaker, 1991). Second, brand awareness information affects and strengthens brand associations and perceived
quality (Keller, 1993; Pitta & Katsanis, 1995; Aaker, 1996; Na, Marshall, & Keller, 1999; Keller & Lehmann,
2006; Konecnik & Gartner, 2007). Third, brand loyalty will be created and enhanced when there is a high level
of perceived quality, positive associations and brand awareness (Keller, 1993; Chaudhuri, 2000; Pappu, Quester,
& Cooksey, 2005; Keller & Lehmann, 2006).

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1.5.3. Effects of Sales Promotion (Monetary and Non-monetary) on Brand Equity Dimensions
Table 5: Effects of Sales Promotion (monetary and non-monetary) on Brand Equity
Hypothesis From To Standardized T-Value Supported/not
Coefficient (γ Supported
Value)
Hypothesis Monetary Brand Awareness 0.20 3.34*** Supported
3-1 Promotion
Hypothesis Monetary Brand 0.17 5.12*** Supported
3-2 Promotion Associations
Hypothesis Monetary Perceived Quality 0.16 4.25*** Supported
3-3 Promotion
Hypothesis Monetary Brand Loyalty 0.05 1.07 Not Supported
3-4 Promotion
Hypothesis Non-monetary Brand Awareness 0.24 3.80*** Supported
4-1 Promotion
Hypothesis Non-monetary Brand 0.01 0.17 Not Supported
4-2 Promotion Associations
Hypothesis Non-monetary Perceived Quality -0.11 -2.90 Supported
4-3 Promotion Inversely
Hypothesis Non-monetary Brand Loyalty -0.04 -1.00 Not-Supported
4-4 Promotion
Fit Measures GFI=1.00,AGFI=0.99,NFI=1.00,CFI=1.00,RMR=0.00,RMSEA=0.00
Note: *** means P-value ≤0.001
Source: 2014/15 Survey
The study showed that monetary promotion has affected the building of brand equity by influencing
brand awareness (γ=0.20, t-value=3.34), brand associations (γ=0.17, t-value=5.12), and brand perceived quality
(γ=0.16, t-value=4.25). The study findings indicated that consumer’s perceptions of a beer brand’s monetary
promotion are effective in creating a good brand name (brand awareness); positive, favorable and unique brand
associations; and influencing consumer’s brand quality perceptions in the Ethiopian beer market. Furthermore,
the study findings confirmed a causal effect of monetary sales promotions on the creation of brand equity by
influencing brand awareness, brand associations, and perceived quality. The findings are not consistent with
most of the western studies that indicated monetary promotion has a negative effect on the building of brand
equity by affecting brand equity dimensions negatively. The probable cause might be related to the economic
condition of Ethiopia (Ethiopians disposable income is one of the lowest in the world); and Ethiopian beer
consumers might not be beer price sensitive, not infer quality with price promotions due to the nature of the
product and they are not loyal to beer brands.
With regarding non-monetary sales promotion, the study findings showed that monetary promotion has
a causal effect on the creation of brand awareness (γ=0.24, t-value=3.80) and a negative significant influence on
the formulation of brand perceived quality (γ=-0.11, t-value=-2.90). The result indicated non-monetary
promotion is effective in creating a good brand name but ineffective in influencing consumer’s quality
perceptions in the Ethiopian beer market, that is, the finding confirmed non-monetary sales promotion has a
causal effect on the creation of brand equity by influencing brand awareness positively and perceived quality
negatively. On the other hand, monetary sales promotion has no any significant influence on the building of
brand loyalty (γ=0.05, t-value=1.07) and, non-monetary sales promotion has no any effect on the creation of
brand associations (γ=0.01, t-value=0.17), and brand loyalty (γ=-0.04, t-value=-1.00), in the Ethiopian brewery
market.

1.6. CONCLUSION
The current study confirmed that brand loyalty, brand perceived quality, and brand associations are the major
significant dimensions of consumer-based brand equity in the Ethiopia beer market; supported brand equity is a
multi-dimensional concept. Interestingly, the study confirmed that brand loyalty is a holistic construct closer to
brand equity and a key construct that has a strong effect on the creation of consumer-based brand equity,
followed by perceived quality and brand associations in the Ethiopian beer market.
The study concluded that brand awareness is not the significant brand equity dimension, however, it
indirectly affecting the creation of brand equity because it significantly affecting the formulation of brand loyalty,
perceived quality, and brand associations. Besides, the study pinpointed, brand awareness is the foundation of
other brand equity dimensions, therefore, it is the foundation of brand equity.
With regarding the nature of inter-relationship among brand equity dimensions, the study concluded a
causal order relationship due to the result of consumer learning, this is, first, consumers must aware of the brand

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name to create brand awareness, second, brand awareness information affects and strengthens brand associations
and perceived quality; and third, brand loyalty will be created and enhanced when there is high level of brand
awareness; when consumers’ associate unique, strong and favorable brand associations; and consumers’ perceive
a brand has good quality. Furthermore, the study indicated brand awareness affecting the creation of brand
equity by touching brand associations, brand perceived quality and brand loyalty; brand associations affecting
the formulation of consumer-based brand equity by influencing brand perceived quality and brand loyalty; and
brand perceived quality influencing the construction of brand equity by manipulating brand loyalty in the
Ethiopian beer market. Moreover, the finding highlighted the evolutionary stages of brand development.
The study indicated monetary and non-monetary sales promotion has a synergetic effect and sales
promotion is the driver/antecedent on the creation of brand equity in the Ethiopian brewery industry with a
different level of intensity. Specifically, consumers’ perceptions of a beer brand’s monetary sales promotion
have a positive effect on brand awareness, brand associations, and brand perceived quality; and consumer’s
perception of non-monetary sales promotion has a positive effect on the creation of good brand name (brand
awareness) and a negative effect on the formulation of brand perceived quality.

1.7. MANAGERIAL IMPLICATIONS

The finding indicated that brand loyalty, perceived quality, and brand associations are the significant consumer-
based brand equity dimensions measures consumer-based brand equity so that brand management should
capitalize on the strength of these dimensions to create value for the firms and the customers. Besides, beer
manufacturing companies should give great emphasis and invest a lot for the creation and development of brand
loyalty since a brand value is to the beer manufacturing companies is largely formulated by brand loyalty.
The study noted that there is a causal order inter-correlation among brand equity dimensions and brand
managers should give a great attention to this relationship. This suggested that brand managers must first work a
lot to create/build brand awareness as a means of securing the associations that consumers have on the brand,
such as brand perceived value, brand personality, and organizational associations; to consider consumers a brand
as a superior quality brand; and to create life-long customer or to have a loyal consumers. Next to creating a
good name, companies should have a strategy to create unique, strong and favorable brand associations; this
leads to the consumers to have a good brand quality perception and help to create loyal consumers. Next to
formulating good brand associations, brand managers should have an appropriate strategy to create good brand
quality perceptions in order to influence consumers’ brand preferences and to affect the loyalty status of the
target customers. Furthermore, brand managers should deign suitable brand strategy to create and develop loyal
consumers, and to develop them as life-time business partners/customers.
Ethiopian beer manufacturing companies invest a lot in sales promotion efforts in order to influence
consumers’ brand perception and behavior, and subsequently to create strong brand equity by influencing brand
loyalty, brand perceived quality, brand associations, and brand awareness. Besides, beer brand managers should
diversify monetary and non-monetary sales promotion to strengthen beer brand equity and to get the maximum
benefit from the concept of brand equity.

1.8. RESEARCH LIMITATIONS AND DIRECTION FOR FUTURE RESEARCHES

Though the current study provides theoretical and practical explanation and the first research that examine the
sales promotion-brand equity dimensions-overall brand equity linkages in Ethiopia brewery industry, it has
limitations. First, future empirical studies should examine the effects of other marketing efforts (other brand
communications, product, price, and placement strategy) on the creation of brand equity to enhance the
explanatory power of consumer-based brand equity at least in Ethiopia. Second, since, the current study is
limited to beer product; future researches should undertaking in different product categories and in urban and
rural areas of Ethiopia in order to enhance the generalizability of the findings. Third, further research is needed
to explore the causal relationship among consumer-based brand equity dimensions to establish a stable brand
equity model that can be applicable in brewery industry. Fourth, the future research should focus on actual
measures of marketing communication activities and combine actual measures with the perceptual measure to
have a full picture of brand equity in Ethiopia.

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