Proceedings of ASBBS
Volume 16 Number 1
MANAGING AND MEASURING ONLINE BRAND
VALUE
Merz, Michael
San José State University
Merz_m@cob.sjsu.edu
Czerwinski, David
San José State University
david.czerwinski@sjsu.edu
Amblee, Naveen
Graduate School of Culture Technology, KAIST
amblee@kaist.ac.kr
ABSTRACT
This paper investigates the implications of the new evolving S-D logic in marketing on brand value
creation in general. In addition, it introduces the concept of online brand value, develops a typology of
online brands, and identifies criteria to be taken into consideration when developing a measurement of
online brand value against the background of the S-D logic.
INTRODUCTION
Firms are increasingly recognizing that brands are among their most valuable assets and are, therefore,
intensifying the level of resources directed toward building them (Madden, Fehle, and Fournier 2006;
Simon and Sullivan 1993). Prior research on brand value creation has primarily focused on investigating
antecedent variables and developing measurements of brand value against the background of a goodsdominant logic. However, Vargo and Lusch (2004) posit that marketing is evolving toward a new logic,
which they identify as service-dominant (S-D) logic. Consequently, the question arises what implications
the S-D logic has on brand value creation and its measurement. Moreover, prior research has primarily
examined brand value creation in an offline context, despite the widespread observation that branding in
an online context becomes even more important (e.g., Clauser 2001; Kotha, Rajgopal, and Rindova 2001)
and that firms do not have a good understanding of how to build brand value online (Christodoulides et al.
2006). Because the online environment is significantly different from the offline environment (Alwi and
Da Silva 2007; Hoffman and Novak 1996), a better understanding of how firms can build brand value in
the online environment is needed (de Chernatony and Christodoulides 2004; Merrilees and Fry 2002).
Consequently, the question arises how brand value is created in the online environment and against the
evolving S-D logic of marketing.
The purpose of this paper is threefold: First, we examine the implications of the evolving S-D logic on
brand value creation. Second, we introduce the concept of online brand value and distinguish it from
existing offline brand value concepts. Third, we develop a typology of online brands. Against the
evolving S-D logic, this typology provides insights into the different components that a measurement of
online brand value would need to take into consideration.
ASBBS Annual Conference: Las Vegas
February 2009
Proceedings of ASBBS
Volume 16 Number 1
THE EVOLVING SERVICE-DOMINANT LOGIC OF MARKETING
Formal academic marketing inherited its foundation from neo-classical economic theory at the beginning
of the twentieth century (Vargo and Morgan 2005). Not surprisingly, therefore, it was built on a goodsand manufacturing-based model of economic exchange, which Vargo and Lusch (2004) called a “goodsdominant” (G-D) logic. G-D logic views units of output, embedded with value in the production process,
as the central unit of exchange. Specifically, it suggests that firms create value, embed that value into
goods, and then sell their goods to customers through discrete transactions. A G-D logic, therefore, views
customers as exogenous to the value creation process and thus as operand resources. Operand resources
are resources on which an operation or act is performed to produce benefit (e.g., for the producing firm;
Constantin and Lusch 1994). As a result, G-D logic emphasizes discrete transactions and customer
acquisition.
In line with calls from other researchers, Vargo and Lusch (2004) argued that the G-D logic perspective is
limited, as it does not fully take into consideration the increasing importance of services. In recognition of
the limitations of G-D logic, Vargo and Lusch (2004) therefore proposed a new service-based model of
all exchange which they named service-dominant (S-D) logic. Specifically, the authors suggest that
marketing is evolving toward a new dominant logic, which is more service-centered and customeroriented. This S-D logic suggests that people exchange service for service. The authors define service “as
the application of specialized competences (knowledge and skills) through deeds, processes, and
performances for the benefit of another entity or the entity itself” (p. 2). Therefore, people exchange to
acquire the benefits of applied specialized operant resources (knowledge and skills). In contrast to
operand resources, operant resources are capable of causing benefit by directly acting on other resources,
either operand or operant, to create benefit (Constantin and Lusch 1994). As a result, S-D logic views
tangible goods as embodied knowledge or activities. Tangible goods, therefore, solely constitute the
distribution mechanism for service provision.
Whereas a G-D logic perspective views the “producer” and “consumer” as separate parties in the
exchange process, a S-D logic perspective views the consumer as a co-creator (operant resource), rather
than a target (operand resource). Moreover, a service-centered view is process oriented, that is, value is
only created interactively. Consequently, it embraces a process-oriented logic (marketing with) that
emphasizes value-in-use in contrast to the traditional output-oriented models (marketing to) that argue
that value is determined through value-in-exchange. S-D logic, therefore, acknowledges that value is not
embedded in the physical goods but rather co-created through (perceived) consumption and usage and
always determined by the beneficiary. This implies that exchange is relational (Grönroos 1994;
Gummesson 1998) and that firms cannot deliver value but only make value propositions.
IMPLICATIONS OF THE S-D LOGIC OF MARKETING ON BRAND VALUE CREATION
Prior research on brand value creation has generally taken one of three perspectives (Hoeffler and Keller
2003; Keller and Lehmann 2006). First, a financial-based perspective to measuring brand value views
brands as assets that can be and frequently are bought and sold. Brand value from this perspective is the
price the brand brings or could bring in the financial marketplace. Research scholars assessing a brand’s
value from the financial-based perspective have used such variables as the stock price, economic value
added, value in a sale, or unexplained market value (e.g., Randall, Ulrich, and Reibstein 1998;
Rangaswamy, Burke, and Oliva 1993).
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Proceedings of ASBBS
Volume 16 Number 1
Second, a product-based perspective to measuring brand value views brands as the additional value (i.e.,
discounted cash flow) that accrues to a firm because of the presence of the brand name that would not
accrue to an equivalent unbranded product. Brand value from this perspective, therefore, can be seen as
the degree of “market inefficiency” (Keller and Lehmann 2006). Research scholars assessing a brand’s
value from the product-based perspective have used such variables as price premium, revenue premium,
market share, and brand extension success (e.g., Ailawadi, Lehmann, and Neslin 2003; Kamakura and
Ruseell 1993).
Third, a customer-based perspective to measuring brand value views brand value as part of the attraction
to a particular product generated by the “non-functional” part of the product offering (e.g., the symbolic
or experiential parts). Brand value from this perspective is derived from the words and actions of
consumers. Research scholars assessing a brand’s value from the customer-based perspective have used
such variables as awareness, image, attitudes, loyalty, and satisfaction (Aaker 1996; Keller 2003).
While these perspectives to measuring brand value provide valuable insights, they are built upon G-D
logic. To illustrate, the financial-based perspective suggests that brands can be bought and sold through
discrete transactions. Brands are sold to customers, who remain passive in the brand value creation
process. Therefore, customers constitute operand resources. Brand value from this perspective is created
through value-in-exchange. Similarly, the product-based perspective suggests that firms build brands,
embed them into goods, and then exchange them in the marketplace. The product-based perspective,
therefore, also views customers as exogenous to the brand value creation process and hence as operand
resources. Brand value from this perspective is similarly created through value-in-exchange. Finally, the
customer-based perspective acknowledges the active role of customers in the brand value creation
process. It acknowledges that customers are active co-creators of brand value and hence operant
resources. In addition, the fact that some customer-based mathematical studies have taken into
consideration “brand loyalty” as one component of an overall brand value measure signifies that
relationships, and hence process orientation, have been acknowledged to be important. However, the
existing customer-based brand value models are still widely output oriented in that they view brand value
as being created when the brand is exchanged in the marketplace (value-in-exchange). In addition, the
existing customer-based brand value models do not take into consideration the interactive nature between
firms and customers in the brand value creation process. As a result, the existing perspectives to
measuring brand value are built upon G-D logic.
Given that the existing brand value models are built upon G-D logic, the question arises what
characteristics a brand value model would embody if built upon S-D logic. While the G-D logic suggests
that brand value is embedded in the physical good by the firm and determined through value-in-exchange
(output orientation), the new evolving S-D logic implies that brand value is co-created between a firm and
its customers through constant interaction and determined by customers through their perceived value-inuse (process orientation). Furthermore, the G-D logic suggests that customers are exogenous to brand
value creation, while the S-D logic acknowledges that they constitute important co-creators of brand
value and thus are endogenous to the brand value creation process. Consequently, the S-D logic has the
following implications for the brand value creation process: (1) brand value creation is relational (process
orientation), (2) customers are always co-creators of brand value, and (3) brand value is always
determined through customers’ perceived value-in-use. As a result, a new measurement of brand value
that takes the new evolving S-D logic of marketing into consideration would need to be able to capture
and model these characteristics. In support of this view, Pavlou and Stewart (2000) highlight that
“…while traditional measures of brand equity […] will remain important, the interactive context
potentially offers an opportunity to develop and measure a far richer conceptualization of brand equity.”
ASBBS Annual Conference: Las Vegas
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Proceedings of ASBBS
Volume 16 Number 1
In the following sections, we aim to investigate the implications of S-D logic on managing and measuring
online brand value. For this purpose, we first introduce the concept of online brand value.
ONLINE BRAND VALUE
In line with the new evolving S-D logic of marketing, we define brand value as a brand’s perceived use
value to all customer constituents. Similarly, we define online brand value as a brand’s perceived use
value to all online customer constituents, that is, to all Internet users. Our definition of online brand value
highlights that we distinguish between offline and online brands and between brand value creation
activities targeted toward building a firm’s offline and online brand. Given that brands exist that are
strong in the offline (e.g., Coca-Cola, McDonald’s), online (e.g., Google, eBay), or both (e.g., Cisco,
Dell) worlds, we believe that any marketing activity targeted toward building online brand value should
complement, rather than substitute, the activities targeted toward building offline brand value. Similarly,
we believe that any measurement of online brand value should complement, rather than substitute,
existing offline brand value measurements.
Prior research has highlighted the need for the online brand value concept as the online equivalent to
offline brand value. Kotha, Rajgopal and Rindova (2001) argued that building brand value is a key
determinant of competitive success for Internet firms. Similarly, de Chernatony (2001) argued that the
Internet’s unique characteristics have implications for developing and managing brands. Furthermore,
Christodoulides et al. (2006) emphasized that “brand” is a universal concept regardless of setting but that
the ways in which brand value is created are different in an online than offline context. Ind and Riondino
(2008) argue that the web has changed everything for brands. As a result, many researchers have
highlighted the importance of online brands and branding in the online context. Despite this
acknowledgement, however, surprisingly little research exists that helps managers understand how to
build a strong online brand, that is, how to build online brand value.
The few studies that investigate brand value creation in the online context are mainly of conceptual
nature. For example, Page and Lepkowska-White (2002) introduced the concept of web equity and
developed a framework for building consumer value in Internet companies. Specifically, they drew upon
Keller’s (1993) customer-based brand value concept and identified factors that drive web equity through
awareness and image. Kim, Sharma and Setzekorn (2002) also built upon Keller’s brand value
conceptualization and put forward a conceptual framework to help firms build brand equity online. These
authors argue that firms should increase awareness (i.e., search engines, web advertising, online word-ofmouth, cross promotion) or brand knowledge (i.e., website, trust) to build their web equity. Nandan
(2005) built upon these studies and proposed the concept of web brand franchise to help firms manage
successful online brands.
While the previously mentioned studies are all of conceptual nature, Christodoulides et al. (2006)
developed a conceptualization and measurement of the equity of online brands. However, the authors’
focused on the online retail/service (ORS) context and thus identified the components of ORS equity.
They find that ORS brand equity is a construct with five correlated yet distinct dimensions: emotional
connection, online experience, responsive service nature, trust, and fulfillment. To develop a proper
measurement of online brand value for all types of online brands and against the S-D logic of marketing,
we will develop a typology of online brands in the following. The different types of online brands will
provide insights into the specific components that need to be taken into consideration for an online brand
value measurement.
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Proceedings of ASBBS
Volume 16 Number 1
TYPOLOGY OF ONLINE BRANDS
As mentioned, the S-D logic suggests that brand value is relational and that customers are always cocreators of brand value. Furthermore, it suggests that brand value is always determined through
customers’ perceived value-in-use. Consequently, any online brand typology that takes the new evolving
S-D logic of marketing into consideration should develop criteria that capture this essence of S-D logic
for each online brand type and that can be used as a basis for an overall online brand value measurement.
To develop our online brand typology, we aim to identify dimensions that enable a meaningful
classification of all websites publicly available. From this approach, it becomes clear that we view any
website (and domain name for that matter) as an online brand. As a result, just as Amazon.com,
eBay.com, and Google.com are brand names, so are RateMyProfessor.com, Coca-Cola.com, and
ParisHilton.com.
One dimension that can be used to differentiate between different websites is website types. Similar to
Puto and Wells’ (1984) classification of advertising, we acknowledge that websites can either serve the
purpose of being informational or experiential. Websites that include some element of information, be it
nothing more than the identity of the advertised brand or firm, are informational. In line with Puto and
Wells’ (1984) definition of informational advertising, we define an informational website as one which
provides the visitor with factual, relevant brand data in a clear and logical manner, such that the visitors of
the website have greater confidence in their ability to assess the merits of buying the brand after having
visited the website. We view informational websites as static. They, therefore, do not provide the visitor
of the website with the opportunity to directly interact with the provider of the website (e.g., online
brand). In contrast, websites that allow their visitors to provide information (e.g., login, newsletter signup), opinions (e.g., blogs, discussion boards, groups), ratings (e.g., product ratings, credibility ratings,
usefulness ratings) etc. in any way are transformational or experiential. Such websites are highly
interactive and “transform” the experience of using the brand by endowing this use with a particular
experience. For a website to be experiential, it must make the experience of using the website richer,
warmer, more exciting, and/or enjoyable than that obtained solely from an objective description of the
brand (Puto and Wells 1984). The advent of Web 2.0, which signifies the ability of people to participate
in the commons of cyberspace, has made experiential website very popular and common. Overall, the
main difference between informational and experiential websites is that the former are essentially
cognitive-based, while the latter are affect-based (Morgan, Zou, Vorhies, and Katsikeas 2003). It is worth
noting that information and experience are not mutually exclusive categories of websites. Therefore, a
website can be both informational and experiential (Bettman 1979; Holbrook and Hirschman 1982).
Another dimension that can be used to differentiate between different websites is website initiators.
Specifically, we differentiate between customer-initiated and firm-initiated websites. Armstrong and
Kotler (2008) argue that there exist four major online marketing domains, some of which are initiated by
the customer and targeted toward firms (C2B; e.g., PlantetFeedback.com) or other customers (C2C; e.g.,
eBay.com, Amazon.com, blogs) and some of which are initiated by firms and targeted toward customers
(B2C; e.g., quickenloans.com) or other firms (B2B; e.g., sun.com; cisco.com). As a result, we define any
website that is initiated by customers but publicly accessible as customer-initiated website. Similarly, we
define any website that is initiated by firms and publicly accessible as firm-initiated website. Both
customer-initiated and firm-initiated websites can have customers or firms as their major target. This
classification of websites captures the customer type classification of websites discussed by Craig-Lees,
Harris, and Maulana (2005). As a result, taking website type and website initiator as the two dimensions,
we propose the following online brand typology as depicted in Table 1.
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Proceedings of ASBBS
Volume 16 Number 1
Table 1: Online Brand Typology
Website Type
Website
Initiator
Informational
Experiential
Firm
Firm-Initiated Informational
Online Brands
(e.g., static firm websites)
Firm-Initiated Experiential Online
Brands
(e.g., social networking websites,
exchange marketplaces, ecommerce websites)
Customer
Customer-Initiated Informational
Online Brands
(e.g., personal websites, blogs)
Customer-Initiated Experiential
Online Brands
(e.g., discussion boards, opinion
sites, auction sites)
Based on this online brand typology, we distinguish between four general online brand types. First, an
informational website that is initiated by a firm is the basis for a firm-initiated informational online brand.
Second, an informational website that is initiated by a customer is the basis for a customer-initiated
informational online brand. Similarly, an experiential website can result in either firm-initiated
experiential online brands, if the website initiator is a firm, or a customer-initiated experiential online
brand, if the initiator of the website is a customer (see Table 1). In line with the new evolving S-D logic
of marketing, we argue for each of the developed online brand types that (1) brand value creation is
relational (process orientation), (2) customers are always co-creators of brand value, and (3) brand value
is always determined through customers’ perceived value-in-use. Consequently, to develop a proper
measurement for online brand value in general, we need to identify criteria (i.e., determinants) for each of
the identified online brand types that capture this essence of S-D logic. The combination of these
determinants will then constitute the basis for a general online brand value measurement.
For informational online brands, whether firm initiated or customer initiated, variables such as frequency
of a website visit, total number of website visits, length of a website visit, depth of a website visit, number
of links to other external websites, and total number of bookmarks capture the components of S-D logic.
To illustrate, an informational online brand can be viewed as more relational and co-creating, if it is
connected to other external brands (i.e., websites), if people bookmarked the online brand and if it enjoys
many frequent, deep, and long visits. Given that people visit an online brand (i.e., a website) only if they
perceive the online brand to have any use value, these variables also capture the value-in-use component
of S-D logic.
For experiential online brands, whether firm initiated or customer initiated, additional variables such as
total number of website members and users, number of user ratings and rankings, number of
recommendations made, and number of user contributions will have to be taken into consideration to fully
capture process orientation and co-creation. Again, the underlying assumption is that people perceive an
online brand more valuable, the more frequently and intense they patronize a particular website and the
more actively they participate in the co-creation process of the website. We summarize some of the
variables that need to be captured in an attempt to measure online brand value against the evolving S-D
logic in Table 2.
Table 2: Some Variables that Capture a Brand’s Online Value in line with S-D Logic
ASBBS Annual Conference: Las Vegas
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Proceedings of ASBBS
Volume 16 Number 1
Brand Type
Online Brand Value Determinants
Informational Online
Brands
Frequency of a website visit, total number of website visits, length of a
website visit, depth of a website visit, number of links to other external
websites, total number of bookmarks.
Experiential Online
Brands
Additionally:
Total number of website members and users, number of user ratings and
rankings, number of recommendations made, number of user
contributions.
CONCLUSION
The purpose of this research was to investigate the implications of the new evolving S-D logic in
marketing on brand value creation in general. In addition, we aimed to introduce the concept of online
brand value, develop a typology of online brands, and identify criteria that need to be taken into
consideration when developing a measurement of online brand value against the background of the S-D
logic. Prior research has repeatedly called for a better understanding of how to build brand value online
(Christodoulides et al. 2006) and what the implications of the S-D logic are on brand value creation
(Vargo and Lusch 2004). Our research helps managers understand how brand value is created against the
background of the S-D logic. It also helps managers understand how online brand value is built by
identifying some of its determinants. However, future research is necessary to develop and validate a
specific measurement of online brand value against the background of the S-D logic. In addition, future
research needs to examine how websites (i.e., online brands according to our definition) that build their
value around other brands (e.g., personal websites or blogs that promote Apple) contribute to that brand’s
online brand value (e.g., MacRumors.com).
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Volume 16 Number 1
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