Question

In 350-600 words, explain brand equity, provide at least one example or application of brand equity and pose a question about brand equity.Use at least one scholarly journal article.

Answer 1

Brand equity is a marketing term that is commonly being used in order to define the brand value of a company’s product. The basis of brand equity is the perception of the customer about the company’s brand and the level of experience the customer has with that product. If the customer thinks positively about a certain brand, it will have high brand equity. On the other hand, if the brand or product is not able to satisfy the expectations of the customers on a consistent basis and under delivers, then in most of the cases customers will not use it or they will not recommend this product to others. Then the brand is said to have negative brand equity.

The main benefits of brand equity are stated below=

It facilitates the companies to charge high or premium prices for the product

Brand equity can be used in the line extension that is the same brand name can be used to launch more products or service

This will help the company to have better prices for its shares.

Example= We can take the example of Apple iPhone. The product is said to have very strong brand equity as it has provided a very consistent and good performance over the period of time. The company has introduced innovative features and the latest technology in its cell phone that has been successful in satisfying the demand of the customers and in many cases exceeding the demands of the customers. This has really developed a positive image of the product and thus the customers are not only ready to pay high prices for this product but are quite eager to use the new products launched by the company. Even though the prices of the iPhone are relatively higher than other smartphones yet customers are ready to pay because of brand equity.

Question= Is it really worth paying high prices for a product having high brand equity although the product has similar functions or features? Are customers just wasting their hard-earned money to buy famous brands as they can also have a similar product at a relatively lower price?

Reference-

Aaker, D. (2019, April 10). What Is Brand Equity? Retrieved from prophet/2013/09/156-what-is-brand-equity-and-why-is-it-valuable/

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