The effect of perceived quality on brand equity: an empirical study on generic drugs

Purpose - The purpose of this paper is to find out the relationship between the qualities of generic drugs perceived by the physicians and brand equity of the branded generics and to examine the physicians' perceptions of prescribing generic drugs for selective medical conditions in India. Design/methodology/approach - The study was carried out across six major cities in Eastern India with 392 physicians. Here components of perceived quality, i.e. intrinsic cues and extrinsic cues are hypothesized to influence perceived quality of branded generics which in turn influence brand equity. It is also hypothesized that respondents' quality experience is assimilated towards their quality expectations, independent of small variations in objective quality of the drug. Findings - Results showed that perceived quality of branded generics significantly, but indirectly, affected brand equity through the mediating variables, intrinsic cues and extrinsic cues. The results also showed that physicians' quality experience leads to quality expectations, independent of small variations in drug quality on five common yet serious diseases in India. Practical implications - Current research finds that for prescription-based branded generic drugs, perceived quality mainly depends on intrinsic cues; therefore, managers should be interested in intrinsic cues that increase brand equity and necessary marketing actions should be implemented accordingly. Originality/value - No other scholarly article has been developed, so far, analyzing the effect of perceived quality on brand equity in the Indian branded generic drug segment. Besides providing evidence from the Indian pharmaceutical context about the impact of quality cues, the paper also presents evidence on physicians' quality observation of branded generics on five common yet serious diseases in India.