MARKETING

Mature BusinessMARKETING

Brand Equity

QUICK SUMMARY

Believe it or not, one of your company’s most valuable assets is something you can’t see, touch or find on your balance sheet. It's your “brand” -- or what the outside world thinks and feels about your company -- which is critical to your success.

What Is Brand Equity?

The degree to which your company’s brand generates positive thoughts and feelings, especially among customers, is referred to as “brand equity.”  It’s important you don’t underestimate your brand equity because it can add considerable value to your business…and specifically, to your bottom line.

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Advantages of Strong Brand Equity

While brand equity is intangible, its advantages are not. The value that a strong brand brings to a company translates to very real business benefits. Among them:

  • Increased margins. Positive brand equity allows you to charge more for your product or service, because people will be willing to pay a premium for your name. When customers are willing to pay extra for a name they trust and/or value, that boosts your profit margins.
  • Customer loyalty. Customers are willing to stick with a company they value and trust. Over years and years, they'll come back again and again.
  • Expansion opportunities. You can leverage the value of your brand to grow your business, by adding new products to your line, and/or expanding into new markets and geographies.
  • Negotiating power. Positive brand equity can give you considerable bargaining power in negotiations with vendors, manufacturers and distributors—power that can lower your cost of goods sold.
  • Competitive advantage. When customers pay a premium price for your products…and try your new product, sight unseen…and flock to your new location…that can mean very good things for your business and not-so-good things for your competition.
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