The term Brand Equity is typically used to describe the value premium that a firm earns from a product with a distinctive name. This is one of the reasons why brands are so important because consumers are willing to pay more for branded goods and services, as they are perceived to be of higher quality. This means that if you are selling a branded product or service, people will pay more for your goods than an identical product that has no brand.Moreover, there is also a psychological aspect of brand equity and this is referred to as brand loyalty. Consumers who have a strong positive brand association with the product or service will be loyal and willing to pay premium prices. This is because they are likely to keep buying the brand even when it is more expensive than a similar product or service that is not branded.If your business has a strong brand and you can leverage this, you can increase sales and profits. In fact, Forbes estimates that the cost of replacing a customer who has left to purchase from one of your competitors is between five and 20 times the cost of retaining an existing customer. This means that it is more expensive to attract a new customer to your business than it is to retain one, so it makes sense to focus on retaining customers.Brand equity has a lot to do with the power of your business brand and how it is perceived by consumers. The more distinctive and meaningful the brand, the more powerful it will be. This means that you need to create a brand that has 'staying power' and will continue to be relevant over time. This is why it is important that your company has a strong brand that reflects the personality of your business and what you stand for as a company.
