![]() Marketing professor David Aaker defined brand value as “a set of assets or liabilities in the form of brand visibility, brand associations and customer loyalty that add or subtract from the value of a current or potential product or service driven by the brand.” He recommends brands focusing on these assets or liabilities individually to assess their strength and increase brand value. Models Of Brand Equity #1 – David Aaker Model As distributors and retailers prefer brands with value, brands can charge price premiums, boost profit margins, broaden distribution networks, and promote sales. #4 – Resulting Valueīrands build long-term relationships with customers by offering superior value. For example, Tata Nano automobile users reported fire incidents with their cars, which led to negative equity Negative Equity A negative equity balance is one in which the liabilities in shareholder's equity exceed the assets for reasons such as accumulated losses over years, high dividend payments, borrowing money instead of issuing new shares to cover accumulated losses, and amortization of intangibles. It happens when a brand offers something no better than a lesser-known company or fails on its promises. It occurs if consumers shift towards generic products than branded ones, which impacts the brand value. For example, the Honey Nut Cheerios breakfast cereal tastes better than other versions, and hence, it charges more than generic brands. It is determined as the ratio of Generated Profit Amount to the Generated Revenue Amount. People pay a premium price to make a purchase based on the brand value, which, in turn, boosts its profit margins Profit Margins Profit Margin is a metric that the management, financial analysts, & investors use to measure the profitability of a business relative to its sales. Providing quality products and services enable a reputed brand to charge more for them. Analyzing negative emotions associated with the brand that will cause the consumer to switch to its competitors.Recalling the brand with unaided or aided awareness to address any market gaps.Assessing consumer knowledge and experience with a brand.It ultimately leads to positive or negative consumer sentiments, affecting the brand performance and its value. Mapping the consumer perception to a specific brand is an essential aspect of understanding brand value. Source: Brand Equity () #1 – Consumer Perception You are free to use this image on your website, templates, etc, Please provide us with an attribution link How to Provide Attribution? Article Link to be Hyperlinked Furthermore, it gives businesses leverage to introduce new lines of products or enter new segments and markets. Hence, a brand must fulfill promises made to consumers, as it will help them outperform their competitors and gain more market share. Consumers prefer products and services with superior quality, performance, and reliability, even if they have to pay more for them. It also enables companies to differentiate products and determine price premiums accordingly. As a result of brand recognition, businesses make profits through a boost in sales. Multiple efforts, including marketing, advertising, and packaging, can help a brand establish a long-term relationship with customers and earn loyalty. It could be its name, logo, slogan, and consumer perceptions about its products and services. It negatively impacts the brand.īrand equity represents the worth of a brand compared to its generic alternatives. A negative effect occurs if consumers are attracted to generic products than branded ones. The positive equity depends on widespread consumer recognition of the brand and results in increased revenues.Its main components include consumer perception, negative and positive effects, and resulting value.It helps achieve customer loyalty, retention, and acquisition, thereby increasing the market share. Brands can charge premium prices for their quality products and services. ![]() Based on the effects it brings to a brand, it could be its tangible and intangible value. Brand equity meaning defines qualitative levels of brand recognition among consumers.
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