Brand Equity
A company's brand equity can be calculated
by comparing the expected future revenue from the branded product with
the expected future revenue from an equivalent non-branded product.
Brand equity is the value that customers and prospects perceive in a
brand. It is measured based on how much trust a customer has in the
brand.
Brand equity cannot be negative. Positive brand equity is created by
effective marketing - advertising, PR and promotion in all forms, and
the ability of the brand's performance to consistently maintain customer
relationships -- trust.
The greater a company's
brand equity, the greater the probability that the company will use
a family branding strategy rather than an individual branding strategy.
This is because family branding allows them to leverage the equity accumulated
in the core brand.
The Toronto Star quoted
an analyst who warned that changing the name of the well known Windstar
to the Freestar would cause confusion and discard brand equity built
up, while a marketing manager believed that a name change would highlight
the new redesign.
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