Finschool By 5paisa

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When compared to a generic alternative, a corporation can command a higher price for a product with a well-known brand. This is known as brand equity. Making items unique, instantly recognizable, superior in quality, and dependable helps businesses build brand equity for their goods. Campaigns for mass marketing can aid in building brand equity.

Customers would happily pay a premium price for a company’s products when it has strong brand equity, even though they could buy the same thing for less from a rival. Customers essentially pay a higher price to work with a company they trust and respect. The price differential flows to the margin of the company with brand equity because it does not cost it more than its rivals to produce and promote the product. Due to the company’s strong brand recognition, each sale results in a higher profit.

Consumer perception, adverse or beneficial consequences, and the consequent value make up the three main parts of brand equity. Brand equity is primarily created through consumer perception, which involves both knowledge of and experience with a brand and its products. Positive or negative effects are directly related to how a consumer segment perceives a brand. The company, its products, and its finances can all gain from strong brand equity. The opposite is true if brand equity is low.

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