Importance of Brand Equity

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Brand equity is the value a brand adds to a product. Brands vary in the amount of power and value they have in the market place. They would differ on brand awareness, brand preference, and brand acceptability with respect to consumers.
It is the commercial value that is derived as a result of the positive perception of the consumer about the brand and its offerings.

Brand equity is highly related to how many customers are in the following class:

1. Customer is satisfied and would incur the cost by changing the brand.
2. Customer value the brand and sees it as a friend.
3. Customer is devoted to the brand. There are brands which are virtually unknown to customers. On the other hand, the brand for which buyers have a fairly high degree of awareness. This can be measured by either brand recall or brand recognition.

A powerful brand is said to have high brand equity. some brands with high brand equity in India are Reliance, Tata, Dabur, Coke, Pepsi, Birla, Maruti, Surf, Nirma, Colgate, Raymond, Maggi, Rasna and so on. Higher brand equity, higher is the brand loyalty, brand awareness, and perceived quality. The brand is an asset and it can be sold or brought for a price. Measuring brand equity of a brand is somewhat arbitrary. The various parameters can be price premium, stock value, brand replacement value and so on.

Advantages of Brand Equity 

1. Reduced marketing cost because of the high level of consumer, brand awareness and loyalty.
2. More leverage in bargaining with distributors and retailers.
3. Charge a higher price than competitors because a brand has high perceived quality.
4. A company can more easily launch a brand extension since the brand name carries high credibility.
5. The brand offers the company some defense against the fierce price competition.