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BRAND EQUITY

                     BRAND EQUITY

         Brand Equity is the financial value of a brand. Brand equity is the value a brand adds to a product. Brands vary in the amount of power and value they have in the marketplace. At once extreme are brands that are not known by most buyers. Then there are brands for which buyers have a fairly high degree of brand awareness. The word ‘Reebok’ on a shoe adds value to it. Beyond a product’s value is its potential to do what it’s supposed to do. A brand adds value to that product through its name awareness and its favourable perception. Brand equity has a positive aspects of a product. If the brand adds nothing or detracts from the value of a basic product than a brand will lack equity or even have negative equity. Brand evokes a strong set of belief and values like the ‘Mercedes’ stands for high technology, performance, and success.

        David Aaker distinguished five levels of a customer attitude toward a brand, from lowest to highest:

1. Customer will change brands for price reasons, so there is no brand loyalty.

2. Customer is satisfied so there is no reason to change the brand.

3. Customer is satisfied with the product and would incur costs by changing brand.

4. Customer values the brand and sees it as a friend.

5. Customer is devoted the brand.
   
        Brand equity is highly related to how many customers are in classes 3, 4 or 5. Customers pay more for a strong brand. The extent to which customers are willing to pay more for a particular brand is measure of brand equity. High brand equity provides more bargaining power to the company with distributors, suppliers and interested groups. The brand offers the company strong defense against price competition. A strong brand creates trust, confidence, comfort and reliability in customer’ mind. Lays in FMCG sector and the Rolex in the durable category are the world’s most admired brands.  

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