Brand power index – using principal component analysis

Abstract

A relatively simple approach is proposed to evaluate the strength of brands from the viewpoint of consumers. It employs Principal Component Analysis (PCA), in which the coefficients of the first principal component are used as the weight for developing our study's final ‘product’, the Brand Power Index (BPI). Empirical consumer-survey data of two product categories: televisions and mobile phones illustrate that the patterns of PCA results for both televisions and mobile phones are extremely similar. The biplots reveal that the leading brands in both product categories had positive component scores; more than a dozen following brands had positive first component scores and negative second component scores in both categories. This led us to a visual examination of the data on certain leading brands with regard to their brand excellence.

Keywords:

• biplot
• brand power index
• consumer survey
• principal component analysis

JEL Classification::

• A11
• M31