Companies that build strong brand equity benefit from numerous advantages.
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For example, strong brands increase consumer loyalty, have larger profit margins, and are less sensitive to market changes. Moreover, the brand's reputation is transferable to new products and services. However, creating favorable brand equity involves major commitments by the firm that can take decades to achieve. This article outlines some of the requirements for a firm to construct a successful brand.
The most important aspect to building brand equity involves the products' performance which is based on three aspects, quality, design, and price. Customers will not purchase a product for a premium if the brand symbolizes inferior quality. This can be considered negative brand equity. Therefore, the product must satisfy and exceed the requirements of the consumer. This includes the functions, durability, reliability, and/or serviceability of the product. Because every aspect of the product will be critiqued by the conscionable consumer, it must excel in accomplishing its purpose for an acceptable amount of time, and, if a problem arises, it must be conveniently rectifiable.
Moreover, the design and style of the product as well as the brand logo should be appealing to consumers. This seems trivial compared to the capabilities of the product, but some consumers can be somewhat superficial. They desire products that fulfill their needs and are also fashionable or trendy. Of course, this is not true for all products, so companies need to evaluate and adjust to their target market's desires.
Finally, the price can affect the overall perception of the product. Because customers can attribute a low priced product for inferior quality, undercutting competitors may not be the best option for the firm. Premium brands demand premium prices that consumers will accept as long as the product fulfills its obligations. Although charging less may be beneficial at the time of the product's release, companies should gradually increase prices as it becomes more widely accepted.
The perception of the brand may be as important to consumers as its capabilities. Along with an eye pleasing design, the brand must offer the customer social approval, self-respect, and security. Because customers care about their perceptions by others, they desire positive reactions regarding the products they choose.
For instance, a Starbucks latte communicates a sense of sophistication and prosperity, while a McDonald's coffee conveys an impression of quick, easy, and cheap. Moreover, people want to feel better about themselves for choosing a certain brand. Creating a brand that offers people self-respect can prove difficult, but, once consumers receive a sense of pride, fulfillment, or accomplishment from the brand, their loyalty to that product will be unwavering.
In addition, the brand needs to offer a feeling of security or confidence to the customer. For major brands, consumers find comfort in the knowledge that the product will be identical every time they use or consume it.
For example, Coca-Cola encountered severe criticisms from loyal customers when it changed the formula for its major product, Coca-Cola or Coke, in 1985. People had grown accustomed to the original formula over a series of decades, and the New Coke was a shocking deviation from what they grew to love. It did not offer the same comfort or experience that they desired. Sales plummeted to the point that Coca-Cola reverted back to the original formula.
Once a product has been embraced by a market, companies need to insure that it remains consistent.