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.”