5 Factors Affecting Brand Equity

Brand equity indicates the strength of the brand In the market place. A strong brand has high brand equity. Consumers are ready to pay a premium price for a brand with high equity.

Edward Tauber defines brand equity as, “The incremental value of a business above the value of its physical assets due to the market position achieved by its brand and the extension potential of the brand.

1. Brand Image

Brand image is overall impression of the brand in the minds of consumers. Positive brand image enhances the goodwill and brand value.

2. After-sales Service

The after-sales service provided by the company can make a difference in brand equity.

3. Brand Patent

Patenting the product gives exclusive marketing rights for certain number of years. Other companies can not sell similar product in the market without the permission of patent holder.

4. Perceived Quality

A brand will have associated with it a perception of overall quality not necessarily based on the knowledge of detailed specifications. Perceived quality will directly influence purchase decisions and brand loyalty, especially when a buyer is not motivated or able to conduct a detailed analysis. It can also support a premium price which, in turn, can create gross margin that can be reinvested in brand equity.

5. Brand Association

The underlying value of a brand name is often based on specific associations linked to it. Associations such as Ronald McDonald can create a positive attitude or feeling that can become linked to a brand such as McDonald’s. If a brand is well positioned on a key attribute in the product class (such as service backup or technological superiority), competitors will find it hard to attack.

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