As there are many similar products that is found in the market, branding can have a large effect on the price the customer pays for the product.
Brand value, then, comes into the pictures as it pertains to the extra money a company can possibly make from its products just because of its brand name.
It is a premium that accrues to brand of products from customers who are willing to pay extra money for it. The simplest example for this is paying for a coffee at Starbucks as opposed to paying more to a coffee at the fast-food restaurants.
To give a brighter view on the topic, brands add value to a basic service or product by allowing the service or product to command higher price in the market than those that are unbranded.
The brand equity, then, comes into the picture as it pertains to describe both of the brand’s component values and value of the brand.
Brand equity and brand value are said to be both measures which estimates the worth of a brand. However, the term brand equity pertains to the importance of the brand to customers of a certain company while the brand value pertains to the financial asset that a certain company records on its balance sheet.
When determining brand value, a certain company usually ask other companies the price that they would likely pay to purchase a brand.
The market value of their brand could also contain the costs of hiring consultants, advertising experts and marketers that are employed to develop the brand a company already owns or to estimate the cost a company usually incurs in producing a new brand for its products.
To state a fact, brand value represents the difference between the branded product and similar unbranded product’s net present future cash flow. In building brand value, a company already pays its employees and other staffs that work on the brand even though customer’s doesn’t know yet the brand.
These brand value development costs are recorded by companies before they gain brand equity. When building brand value, it is important to consider the quality of the brand, positioning in the market, its communications, repositioning, first-mover benefit, internal marketing and long-term perspective.
It is the quality which is the important component of an excellent brand. According to researches, quality brands achieve higher profitability and gains higher share in the market.
Brand value may likely increase as it have a unique position in the target market. They are often achieved through the combination of brand image, name, product guarantees, service standards, the way it is delivered and its form of packaging.
When building a brand value, all elements in the promotional mix must be used to sustain and develop the customer’s perceptions.
In this way, brand message would be likely communicated to its target customers, thus creating brand awareness. Hence, in order to create a brand value, company must invest in the brand over a long-term period.
This is because of the fact that communicating brand’s message, structuring brand awareness, and building customer loyalty usually takes time.
Hence, marketing it internally as well as externally means understanding how brand is valued and positioned in the market. The critical art of a brand value is usually the quality and type of service customers receive form it.
The value of a brand likely increase as the brand equity is already established by a company. There are still various approaches used to measure brand value different companies apply. Hence, brands have a real definite value to companies which own them.