Impact of Customer-Based Brand Equity on Operational Performance of FMCG Companies in India

Measurement of brand equity is critical to meeting the big challenge of performance for companies in the Indian fast moving consumer goods (FMCG) industry. One of the main challenges lies in the quantification of brand equity and its components. This study investigates the impact of brand equity on the operational performance of businesses in the FMCG industry.

The study adopts a mixed research approach of both descriptive and exploratory types. The descriptive approach was used to measure the perceptions of FMCG consumers on the various dimensions of brand equity. A sound theoretical framework was developed prior to the collection of data.

The study adopted judgment sampling to obtain the responses from FMCG consumers. Through survey, 826 filled-in questionnaires were collected from FMCG consumers in five major cities in India. The samples focussed on two aspects:  a sample of brands (stimuli) to be selected from the entire set of FMCG brands, and a sample of FMCG consumers. Data was analysed using both descriptive and inferential statistics.

It was observed that correlation was moderate between brand equity and operational performance of business. The findings also indicated that consumer based brand equity for FMCG consists of four dimensions: brand association, brand loyalty, perceived quality, and brand awareness. Brand association was the most important source of brand equity and brand awareness had the least effect on brand equity. The practical implication of this research is that brand equity has to be effectively managed for improved operational performance.

While many studies have identified the importance of brand equity dimensions for individual products and services, few have tested the model with FMCG companies. The findings of this study provide practical pointers to brand managers to manage brand equity of Indian FMCG brands for improved performance. Further, the results also provide a model for brand equity and operational performance that can be effectively used by companies in the FMCG industry.