Given the potential impact of negative brand equity, the advantages of achieving a positive equity seems obvious. But there are many other reasons to invest in positive brand equity — most of which directly impact a company’s bottom line and help to spur growth
Theoretically, a positive brand equity should correlate to stronger performance
in sales and marketing. Customers buy more from brands they know and trust, which raises a company’s profitability. They will also typically pay a higher price point for that familiarity, which improves profit margin. And that, in turn, can boost a company’s stock price and market standing.
Companies with positive equity can more readily offer premium pricing
or customer rewards programs — a loyalty loop that’s also financially advantageous given the high costs of acquiring new customers. Positive brand equity doesn’t just inspire existing customers to buy again (or more), but also reassures new customers to take a chance. For instance, someone who has never purchased an Apple product may feel confident in doing so from the sheer familiarity, ubiquity and power of its brand.
A positive brand equity also helps differentiate a company from the competition
, which can be valuable in a crowded market. It can also help draw awareness to new markets. Businesses with positive brand equity can more easily get buy-in for new promotions, more readily introduce new products, and more successfully move into new spaces — as well as raise the price on the goods or services they already sell.
“Brand equity can help marketers focus, giving them a way to interpret their past marketing performance and design their future marketing programs,” writes Kevin Lane Keller in a seminal Harvard Business Review
article. “Marketers who build strong brands have embraced the concept and use it to its fullest to clarify, implement, and communicate their marketing strategy.”