infonet-economy

The topic of marketing accountability is of great interest to marketing researchers and professionals. In this paper, we model the impact of customer-based brand equity on customer acquisition and customer retention which can be used as the basis for calculating customer equity. Using actual purchase data of 39 automobile brands sold in the US between 1999 and 2008 we derive customer acquisition and customer retention from first-order Markov brand-switching matrices. Brand equity is defined by customer mind-set measures for all 39 brands using annual survey data provided by Young & Rubicam which contains responses
from over 6,000 panel members. We consider competition by applying a market share attraction model and differentiating different degrees of loyalty. Our results indicate that customer-based brand equity is a predictor of both customer acquisition and customer retention. Furthermore, we can show that brand specific effects on acquisitions and retention can be explained by customer mind set metrics.