EXPRESS: Brand Equity in Good and Bad Times: What Distinguishes Winners from Losers in CPG Industries?

We examine why some brands are able to ride the wave of macroeconomic expansions, while other brands are better able to successfully weather contractions. Using a utility-based framework, we develop hypotheses how the impact of these shocks on brand equity is moderated by six strategic brand factors—price positioning, advertising spending, product line length, distribution breadth, brand architecture, and market position. We utilize monthly data on 325 CPG national brands in 35 categories across 17 years from the United Kingdom to obtain quarterly sales-based brand equity estimates. The two pre-eminent brand factors are distribution and assortment. Distribution is by far the most important factor in contractions. It is also the most important factor in expansions. In short, in good times and bad times, extensively distributed brands win. In expansions, a wide assortment is also a very strong contributor to brand equity, while it does not destroy brand equity in contractions. We further find that advertising spending, premium price positioning, umbrella branding structure, and market leadership matter in either expansions and/or contractions, the magnitude of their effects on brand equity is relatively modest. We conclude with managerial implications.