Brand Equity

Brand Equity

Investopedia defines brand equity as ” a value premium that a company generates from a product with a recognizable name when compared to a generic equivalent.”

Remarkably, brands are more than mere names and symbols. They represent consumers’ perceptions and feelings about a product and its performance; that is, everything the product or service means to consumers. In view of this, the real value of a strong brand is its power to capture consumer preference and loyalty.

Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service. A powerful brand has high brand equity. You measure a brand equity by the extent to which costumers are willing to pay more for the brand.

A brand with strong brand equity is a very valuable asset. This brings us to the issue of brand valuation. This is the process of estimating the total financial value of a brand. Brand valuation, according to experts, is an inexact science. The brand value of Coca-Cola, for instance, has once been estimated at roughly $80 billion, while Microsoft was once valued at $70 billion.

In conclusion, it is important for companies to aim at high brand equity, as it provides the company with a plethora of competitive advantages.

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