Improve your Brand Equity: Issue

Why are some brands clearly worth more than others?
What underlies "brand equity" or brand value?
Why does it take a huge investment to build a dominant brand?
Can too many product extensions damage a brand?
How does brand strategy relate to the behavior of consumers and real markets?

Brands are important to companies because they are important to consumers.

The cult of the brand has conditioned us to think that a brand's power resides in the mysterious influence of its logo, or in the laboriously crafted positioning which brand gurus have created. While these may be influential components in the creation and establishment of a 'brand image', they are by no means the most important component of the power of the brand.

Research has demonstrated that brands have a functional value for consumers:

1. They reduce decision-making costs - brands are simple mechanisms for making decisions;
2. They make purchases less risky for consumers because they're like bonds that can be forfeited - if companies don't deliver on their promises, brands lose value and firms compromise all the hard brand-building work they did in the past.

Brands are important because they're a credible aid to consumers' decision-making, over and above any brand image or positioning which the brand owner may have been able to create.