Brand equity

Brand equity, in marketing, is the worth of a brand in and of itself – i.e., the social value of a well-known brand name. The owner of a well-known brand name can generate more revenue simply from brand recognition, as consumers perceive the products of well-known brands as better than those of lesser-known brands.[1][2][3][4]

In the research literature, brand equity has been studied from two different perspectives: cognitive psychology and information economics. According to cognitive psychology, brand equity lies in consumer's awareness of brand features and associations, which drive attribute perceptions. According to information economics, a strong brand name works as a credible signal of product quality for imperfectly informed buyers and generates price premiums as a form of return to branding investments. It has been empirically demonstrated that brand equity plays an important role in the determination of price structure and, in particular, firms are able to charge price premiums that derive from brand equity after controlling for observed product differentiation.[5]

  1. ^ Aaker, David A. (1991). Managing Brand Equity. New York City: The Free Press. pp. 27–31. ISBN 978-0029001011.
  2. ^ Keller, Kevin Lane (March 2003). "Brand Synthesis: The Multidimensionality of Brand Knowledge". Journal of Consumer Research. 29 (4): 595–600. doi:10.1086/346254.
  3. ^ Leuthesser, Lance; Kohli, Chiranjeev S.; Harich, Katrin R. (1 March 1995). "Brand Equity: The Halo Effect Measure". European Journal of Marketing. 29 (4): 57–66. doi:10.1108/03090569510086657.
  4. ^ Ailawadi, Kusum L.; Lehmann, Donald R.; Neslin, Scott A. (October 2003). "Revenue Premium as an Outcome Measure of Brand Equity". Journal of Marketing. 67 (4): 1–17. doi:10.1509/jmkg.67.4.1.18688. S2CID 6996459.
  5. ^ Baltas, George R.; Saridakis, Charalampos (February 2010). "Measuring brand equity in the car market: a hedonic price analysis". Journal of the Operational Research Society. 61 (2): 284–293. doi:10.1057/jors.2008.159. S2CID 30538511.

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