Absolutely, it's a proven thing that the people are more willing to pay for a famous brand than for a product with the same specifications produced by a less famous brand. In the marketing industry, the concept is referred to as Brand Equity.
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'The Role of Brand Equity in Marketing Industry'
Basically, Brand Equity is the values associated to a brand name, based on how consumers understand the brand. Brand equity is a term used in the marketing industry which describes the significance of having a well-known brand name, depending on the concept that the owner of a famous brand name can generate more earnings simply from brand recognition; that is from products with that brand name than from products with a less famous brand, as consumers assume that a product with a well-known name is better than products with less well-known brands.
Brand equity talks about to the value of a brand name. Brand equity has been analyzed from two different points of views: cognitive psychology and information economics. According to cognitive psychology, consumers generally observe familiar brands as more reliable and deserve more attention. Additionally, they may relate the brand with quality attributes not necessarily centered on any detailed knowledge of the actual products. According to information economics, a strong brand name could be a trustworthy indicator of product quality for improperly aware buyers and produces price premiums as a form of return to branding investments. These benefits incorporate to help consumers rationalize higher spending on more famous brands than a less famous brand.
For example, most consumers will assume that the Apple Watch is more high-class, much easier to use and more reliable than its rivals even though they have never used these kinds of watches. It's actually because they already correlate Apple with such attributes.
It has been empirically proven that brand value plays a vital role in the determination of price structure. Positive brand equity can bring many benefits to the company, among which is charging higher prices from the consumers. In other words: if a consumer is brand conscious, he/she will be willing to pay more for the products or services.
Several marketing researchers have come to the conclusion that brands are one of the most valuable assets a company has, one of the most important factor to boost the financial values of brand to the owner is brand equity, although not the only one. Essentials that can be included in the valuation of brand equity include (but not limited to): changing market share, profit margins, consumer recognition of logos and other visual elements, brand language associations made by consumers, consumers' perceptions of quality and other relevant brand values.
Another research has proved that the people linked with a familiar brand refrain to move a new one. According to new research, sixty percent|60 %} of global consumers who have access to the internet prefer to buy new products from a known brand rather than switch to a new brand.
Listed below are the seven reasons why consumers prefer a known brand rather than a less-known brand.
- Brands provide peace of mind.
By getting branded products, consumers want comfort, happiness, and satisfaction in their lives. The consumers form a trustworthy opinion about brand by consistently using if the brand delivers a positive experience, which gives them a pease of mind when buying.
- Brands save decision-making time.
If someone wants to purchase a product of brand, it makes easy for a consumer to make decision. For an example, if someone wants to purchase an “HDTV” Samsung will be the right decision for the consumer.
- Brands create difference.
Any grocery store aisle has more product options than anyone can reasonably consider purchasing. What allows us to choose one peanut butter brand over another or over a generic product? Branding helps define-in an immediate}, with a minimum of thought-what makes your product different and even more desirable than equivalent products.
- Brands provide safety.
Generally, people avoid risk and seek safety. Imagine one is on a business trip in a new place, and need to pick a restaurant for dinner. He is most likely to choose a nationwide restaurant brand over a local one because he is aware of the national brand. It's the safe and sure option because this individual knows what to anticipate. Brands offer safety and minimize the risk of dissatisfaction.
- Brands add value.
Consumers pay higher prices for the brands compared to unbranded or generic products because of quality which leads the companies to charge premium prices by making more money for the branded products.
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- Brands give consumers a reason to share.
Generally, people share their experiences about things whether good or bad. We become brand advocates when we share positive experience of brands. Strong brands give consumers a reason to share their experiences.
