Increasing importance of brand equity

Description:

Brand equity is the customer’s subjective and intangible assesment of the brand, above and beyond its purely perceived value. In a market where many products are rather similar, the brand can have a large effect on whether the customer wants to buy the product and the price they will pay. Brands therefore add more and more value to a basic product or service.

Enablers:

• Economic growth: Since the common civilian (i.e. customer) is becoming wealthier over the years, they’re now able to afford an demands driven (e.g. image) attitude.
• Globalization: “The world is becoming a common market place in which people – no matter where they live, desire the same products and lifestyles.” (Prof. Levitt, Harvard University)
• Heightened competition: Companies face intensive competition from domestic and foreign brands, resulting in lower profit margins. Branding is the way to differentiate and to create sustainable competitive advantage.

Inhibitors:

To be filled in.

Paradigms:

• Almost all products are good, it is brand equity (image!) that makes the difference in deciding whether and in what degree the product is able to satisfy customer demands.
• Purchase decisions are based on customers' perceptions. Perceptions can be influenced (“managed” in a certain sense) by marketers, for instance by advertisements.

Experts:

P. Kotler and K. Lane (authors “Marketing Management”)

Timing:

Emerging since the last decades. Society is transforming from need/product-driven to demand/customer-driven. The trend will go on for the coming years.

Web Resources:

http://www.coursework.info/i/60683.html http://www.brandingasia.com/columns/011.htm http://www.findarticles.com/p/articles/mi_m0DTI/is_3_32/ai_n6005261