Brand equity is a phrase used to describe the value of a brand. It refers to the value premium derived by a business from selling its products or services compared to other generic alternatives. Brands that make their products memorable among the consumers end up creating better brand equities. Brand equity building can be done by making your products more recognizable, reliable, and of superior quality. Mass campaigns have also been known to augment brand equity.
As a company, superior brand equity is immensely beneficial since customers are always willing to pay higher prices for your products due to their trust in your business, even though your next-door neighbor could be selling the same for much less. Clients will indeed pay a price premium for products and services from companies they know and trust. Since businesses with attractive brand equities will likely partner with the best suppliers, they obtain their stock at discounted prices than most competitors, even when pricing at par with the others. The extra profit margin goes into building their brand even further and improving the quality of their products and services.
Speaking of more profits resulting from brand equity, let’s briefly expound on it.
Impact of Brand Equity on Profit Margins
Again, customers will attach some level of prestige or quality to the products of a brand they perceive as being premium, and they’ll be willing to pay more than what the competitors are preaching. In essence, businesses with higher brand equity cost the markets more. The cost of making and availing an iPhone to the market is probably much less than anything anyone could ever imagine. But the brand equity of Apple is what people tend to pay for as opposed to what iPhones could probably be offering in terms of features vs. price. If the same product is compared to other tech companies producing similar or arguably better phones, you instantly understand the real effect of brand equity – no one seems to care that some cellphone companies have outsmarted Apple’s technology. A majority simply wish to be associated with Apple products regardless of the price tag that comes with it.
This has translated into massive revenues for Apple over the years, with its profits steadily rising. Consumers tend to gravitate towards reputable brands and this has a direct impact on revenue and profits. This is why sneakers enthusiasts will line up in stores all day just to get a hold of Kanye West’s latest Yeezy release even though most of the time, they’re nothing out of the ordinary or the previous version. And the brand equity craze seemed to have gone overboard a few days ago when the “king of Yeezy” sold just a pair of his used shoes for a staggering $1 million.
The point is, companies are now realizing the true meaning of brand equity, and your wholesale eCommerce business shouldn’t be left behind either. It all starts with portraying the right image out there and staying true to your fundamental values. Always listen to the needs of your customers and stay consistent in listening and implementing their feedback for consonant improvement. And when it comes to your business image, make sure you have a terrific online presence – a neat website, a wholesale eCommerce store, and social media pages sound like a great place to start your journey to building a solid brand equity.