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 the 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