Why is Brand Equity Important in Marketing?
A marketing strategy refers to all actions that result in increasing sales and to improve the competitive advantage of a brand. In marketing, brand equity means the worth of a popular brand that evokes a positive emotion in the customers when they see or hear about a brand. Brand equity influences the choice of marketing strategies that are adopted by a company.
In recent days, people are buying products that are associated with a brand rather than by actually checking the quality of the products. Hence most of the marketing strategies involve using the brand name in all its marketing and advertising campaigns.
It’s a two-way relationship – marketing improves brand equity, and brand equity helps marketing activities.
The outcome of marketing activities will differ when the same activities are carried out for an unbranded product. Strong brand equity has the capability of changing the effectiveness of communication in marketing activities.
Consumers are more willing to listen to the communication coming from brands. They also process the communication favorably and also depict higher recall capability of any communication from a brand. This shows that brand equity is central to all marketing efforts.
One of the most valuable assets for a company is something that you can’t see or touch, and won’t appear in the balance sheet – It’s the brand equity! Brand equity is very critical for the success of a company.
When a company enjoys brand equity, it means that it has successfully differentiated itself from its competition by offering excellent product quality, customer service and also rolled out an attractive marketing campaign.
The brand equity of a company has the power to gain recognition from its consumers by way of effective marketing, to the extent that it encourages its consumers to spend more on the brand rather than going to its competitors.
Brand equity brings the competitive advantage thereby making it easier for marketing activities involved in launching a new product line, expanding in new geographies and releasing new versions of the existing products as there is already an established trust for the brand.
Lower Marketing Costs
Strong brand equity enjoys lower marketing costs as it is already a popular brand and does not need heavy investment in marketing its products. As the brand is well known among the consumers, the need to educate and raise awareness is not necessary, thereby reducing the cost and effort involved in marketing.