BRAND EQUITY AS A SIGNALING PHENOMENON: TESTING THE THEORY	

					       by

					Tulin Erdem
		       	    University of California at Berkeley
				 
				  	Joffre Swait
			      	     University of Florida

				          Jordan Louviere
		 	       	      University of Sydney

	Over the past few years, brand equity has received considerable attention in 
marketing. In a general sense, brand equity is defined as the added value a brand gives a 
product (Farquhar 1989). Much of the work on brand equity in marketing focuses on 
consumer brand associations and is based on a foundation of cognitive psychology, 
exemplified by Aaker's conceptualization (1991) and Keller's framework (1993).
	In this paper, we approach the issue of brand equity from a signaling view, as 
developed in economics of information and recently adopted/adapted by Erdem (1995) to 
derive a conceptual framework for brand equity generation, management and 
measurement. We test several hypotheses derived from a signaling perspective of brand 
equity employing both stated preference (experimental) and revealed preference data. 
These hypotheses concern the relationship between brand equity and consistency of 
marketing messages over time, consistency of marketing mix elements, consistency of 
brand attributes over time, reputation for delivering what is promised, brand investments, 
as well as the content, clarity and credibility of the information contained in a brand. 
Using two data sets, gathered through two separate instruments, we are able to show 
support for all the hypotheses.