Seeing the forest despite the trees: Brand effects on choice uncertainty

Prior research on brand equity suggests that consumers use brands as signals to reduce uncertainty and perceived risk. Erdem and Swait (1998) developed a conceptual framework based on information economics and signaling theory to explain how equity is created, maintained and transferred over time that involves seven theoretical constructs. This paper reviews the impact of brand-equity-associated brand utility on the scale of the indirect utility function (i.e., the inverse of the error variance); we argue that higher brand-equity-associated brand utility reduces the need for consumers to review previously formed preferences. We combine a brand utility experiment with a brand feature experiment to estimate the effects of brand-equity-associated brand utility scores on choice. We find that higher brand-equity-associated brand utility leads to higher choice consistency, which can drive increases in market share.

► This paper studies the impact of brand equity on consumer choice variability. ► We combine a brand utility with a brand feature experiment across six categories. ► Across all categories higher brand equity leads to more consistent choices. ► Market shares depend on strength of brands signals.