Defining Brand Equity

Before defining brand equity, we must first understand what a brand actually is. A brand is a name or symbol that a company uses to identify a product or service. Branding is an integral part of company development; companies cannot afford to overlook it. A brand brings value to a company. This brings us to brand equity.

Brand equity is well known and highly recognized brand that leaves a good impression on consumers. Companies achieved brand equity by creating high quality and reliable products that surpasses competition. Sometimes spending enormous amounts of money will create brand equity as well. A great example, and now cliché form of brand equity is Apple, Inc. Apple has created a brand of creating high quality, reliable, and memorable computers. The amount of money consumers are willing to spend on an Apple computer versus a PC is an example of strong brand equity. NetMBA states brand equity can be measured by three methods: financial, brand extensions, and consumer based. The price a brand commands over a similar product is called a financial method; a brand equity method that can be measured. For example, some consumers are willing to pay premium prices over a branded Samsung phone versus its unbranded counterpart. Brand extensions are used

A poorly managed brand can send a company into a hole that is difficult to climb out of. It will be a bad idea for Louis Vuitton to sell its luxury handbags in Big Lots. Doing so would greatly diminish the value of the brand. A diminished value will give Luis Vuitton little justification to command higher prices for its handbags. I find myself more likely to purchase new products that are stamped with the approval of an established brand. I tell myself that I will not be shorted on quality. A strong brand reduces any risk that I may associate with the purchasing of a new