The Relationship of Brand Equity and Brand Extension

Topics: Brand, Brand equity, Branding Pages: 15 (3528 words) Published: November 20, 2011

The Relationship of Brand Equity and Brand Extension: Low Involvement products vs. High Involvement Products

Background and Significance
In the present, technology enhances modern goods production resulting producers can provide resemble products in physical aspects such as quality or packaging.  These create no differentiate of products.  Consequently, Product Brand as well as the customer’s perception is the significance that promotes product differentiates or product advantages.  Marketing professionals and organizations focus with Brand and try to position their Brands into customer’s mind.  That establishes the Brand Equity (Keller, 1998). “ Brand equity is a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm’s customers”(Aaker, 1996).  

            Marketing Science Institute conducted the survey in fifty famous companies in the United States.  As the survey, the main topic that was interesting to research is the Brand Equity.  That means all successful organizations pay attention with the Brand Equity and prefer to support the budget for the well management of the existing Brand Equity.  These organizations also realize that their brand equity eliminate the chance of using the price strategy.  The price strategy may decrease the existing value of the brand equity.  As the well management of brand equity, organizations attempt to gain the great marketing communication for creating their product differentiates.  Additionally, the other researched topic in their interest is the estimation of Brand Equity (Keller, 1998).            

Brand Equity is the significant issue in the consideration of all organizations because it creates the brand loyalty that motivates product perception, increases the repeated buying behavior and elevates sales of other products from the same brand including prohibits any mind changing to competitor’s brands.  In the crisis economy, consumers normally choose products from the strongest brand for avoiding wrong decision making.  The strong brand also generates the brand equity in consumer’s perception leading to the capability of higher price setting for instance, the preserved fruit can from “Malee” can set its price 20% higher than others but Male earns more market share than UFC preserved fruit cans.  Male is the top of the preserved fruit cans in the current market because the Male brand gains the great consumer’s perception resulting to the willingness of consumer to pay more for the well-known brand even if the product itself has slight differentiate from others.  The strong brand can provide large income to any organization.            

Besides the significance of brand equity, the strong brand can converse to be currency value.  The value of this strong brand is estimated more than the real asset value in the company’s balance sheet.  For instance, Interbrand and Citigroup in the USA arranged the companies value stated that Coca-Cola earned the highest market brand value as 80 billion dollars in 1999 (see in table 1.1 below).  

Table 1.1        Top Ten Brand Value in the World
|No. |Brand |Market Brand Value | | | |(Billion Dollars) | |1 |Coca-Cola |83.8 | |2. |Microsoft |56.7 | |3. |IBM |43.8 | |4. |GE |33.5 | |5. |Ford...
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