The Critical Role of Brand Equity in Providing Value to the Customers

    The Critical Role of Brand Equity in Providing Value to the Customers-01

    Consumers are attracted towards products that have a good reputation. Brands that possess positive brand equity can generate a higher premium when compared with a generic equivalent. Customers are ready to pay a larger amount, even if there is a similar service or a product from a competitor for less.

    It is crucial for businesses to maintain their brand equity as it holds a lot of weight in the minds of consumers. Positive brand equity can provide brand authenticity, and build customer awareness, loyalty and trust.

    Businesses can build It by making services and products superior in quality and reliability, easily recognizable, and more memorable. Marketing acts as a significant driver of brand equity by differentiating products from other competing brands. Marketing helps create a great brand equity by influencing the brand associations held in the minds of the consumers.

    Businesses can strengthen their brand position by investing in advertising. They should avoid discounting products often. Industry experts believe that discounting products often can create negative brand equity, as customers may be less willing to pay a premium price for a product when they know they can get it a lower price.

    To build brand equity, businesses first need to build consumer awareness and trust. A significant way of raising awareness and trust is by ensuring that brand messaging and visual content are consistent across all channels.

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    The Role of Positive Brand Equity

    Other than the benefit of being able to charge a premium price, there are multiple benefits of having strong and positive brand equity. Let’s take a look at role of brand equity:

    • Businesses with higher brand equity can charge more, resulting in bigger profit margins. And they do not have to bear higher expenses involved in producing the product or service.
    • Since the brand is more visible and trusted, there is an increased demand by consumers leading to higher sales volumes. Also, since brands can be easily extendable, the parent brand can create favorable impressions towards their new services and products with their customers. Also because of a brand’s existing positive reputation, the target market will readily accept the marketing communications.
    • Furthermore, launching costs of new products and failure rates are lower because of increased brand awareness and trust within the target market.
    • Since the brand has a reputation for delivering a certain level of quality, customer loyalty and retention is high since customers prefer to simplify their choice and reduce their risk.
    • A positive brand equity can help in reduction of marketing costs as it is more expensive to acquire new customers compared to retaining existing customers.
    • There will be a higher resilience to the actions of competitors since customers are loyal and unlikely to switch. This in turn creates an entry barrier to the marketplace and competitors may not consider it as a profitable market segment for them to target.
    • A strong brand value also lends strategic support to a business strategy and will add long-term value to the company.
    • Brands with a positive equity can achieve larger marketing budgets to invest back into marketing via their higher profit margins. This ensures that the brand equity remains strong.

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