How Does Brand Equity Help Businesses Grow and Succeed?
In the modern world of fierce competition and overcrowded markets, establishing a valuable brand is a matter of survival. Companies consider developing brand equity as one of their most coveted goals. But what is exactly brand equity? How does it assist companies to achieve their goals? By definition, brand equity is the worth a brand contributes to a service or product in addition to its functional benefits. It includes perception from customers, recognition of the brand, loyalty towards it, and reputation.
What Is Brand Equity?
Brand equity is one of the brand management concepts which involves value attached with a brand name which is not physical. Brand equity is created over years due to good experiences, strong relations with customers, and delivering consistent communication. High equity is enjoyed when a brand is trusted and perceived to be of reasonable standard, and has an emotional attachment. Apple, Nike, and Coca-Cola are iconic companies known to the world, and their strong brand equity enables them to set high prices while having loyal consumers.
How Brand Equity Helps Businesses
1. Increases Customer Loyalty
Customers who believe in a brand are more likely to make repetitions and become advocates which is a big advantage of brand equity. Strong brand advocates tremendously amplify the firm’s profits not only through repeat purchases but also prompt free, reliable marketing, referring the brand to their circle. This decreases costs which were spent on advertising, money spent on sales promotions, and increases revenues.
2. Allows for Premium Pricing
Firms which have developed brands tend to offer more of their services or goods at a higher price. As stated earlier, customers will always pay a premium to those services and products which they trust. People may opt for an expensive smartphone from a well-known company rather than purchasing a cheaper smartphone from a non-reputable company.
3. Enhances Market Positioning
A business can use a well-established brand to easily reposition itself in case of a strong competition. A popular and reputable brand pioneered on its marketing approach has done a tremendous job on the competition as it eases the introduction of new products, entering new regions and applying for alliances with other firms. People will tend to trust new releases from the already established reliable brands which they trust.
4. Enhances Marketing Campaigns Effectiveness
Having high brand equity strengthens the effectiveness of marketing campaigns. The name of a reputable brand invokes higher interest and stronger emotions which raises engagement rates. It also helps maintain uniformity across campaigns that helps customers identify and relate to the brand easily.
5. Strengthens Business Development and Expansion
Having high brand equity allows businesses to develop freely whether they plan to launch new products or enter a new geographic market. It lessens the risks related to the expansion because the existing trust on the brand usually applies to new undertakings. Early brand equity development is invaluable to the long-term success of small businesses and startups.
Information Technology is a field experiencing constant change supported by new innovations and technologies. Keeping pace with those improvements requires a powerful brand. In times of consumer overload, innovation is plenty, while attention spans tend to be shorter, a strong impactful identity means everything.
Having an excellent brand that resonates enables a business to maximize the benefits of having brand equity available. Brand equity is vital in almost every aspect of a business such as defining consumer loyalty, offering premium pricing, fortifying the company’s market position and fueling its growth. Companies heavily reliant on brand equity have a distinct advantage in the marketplace.