Customer loyalty is a major strategic objective and focus in marketing. It has been suggested that brand reputation is a major driver of customer loyalty, and hence companies seek to increase the equity of their brands. Quality affects not only customer satisfaction, but also the reputation of the brand. Thus, both brand reputation and customer satisfaction are important determinants of customer loyalty. In situations where the intrinsic cues of the product or service are ambiguous, brand reputation is the strongest driver of customer loyalty compared with customer satisfaction. In fact, when the intrinsic cues are ambiguous, it is found that customer satisfaction is not driving customer loyalty.

A model of the process of brand equity is proposed that depicts brand reputation as a mediator of the effect of brand advertising, brand familiarity, and brand uniqueness on brand equity outcomes. Brands are used as the unit of analysis in determining the relationships between consumer-level perceptions of brands and market-level data on brand advertising and brand equity outcomes such as market share and relative price. Path analysis of the brand-level data strongly validates the model. It is also shown that brand reputation is a separate construct from brand attitudes and that it performs better than brand attitudes in explaining the effect of brand advertising on brand equity outcomes.