There are many non- financial benefits of building a strong brand to a company like premium pricing, perception of quality and increase in return on investment (Aaker, 1995). It is also beneficial for a customer of the availability of a well renowned brand (Sullivan, 1996). The details of such benefits are as follows.
It is the power and prestige of a good brand that encourage the customers to pay some extra prices for the similar product. Why somebody pay more money for the apparels of Marks and Spencer as compared to others? It is the power of brand and its equity. The price difference which a customer pays with brand and without brand of the same product is the per unit equity of the brand. The higher the recognition and awareness, the higher will be the premium. The brand which has more international repute wins the trust of customer easily and customer attaches more value to the brand. This is reason why such companies are able to change premium prices of their products (Aaker, 1995).
High Price is considered the indicator of high quality
The companies which have spent heavily in building brands and their brands are very popular among the masses, are able to charge premiums. Where this premium helps to bring more money, it also helps to increase the perception of quality of the products. It is considered that high price of a particular brand conveys the image of high quality. Because people think that if company is charging high price for the product, it must be of high quality. For example, the high price of BMW car as compared to its competitors immediately conveys the image of high quality to its customers. This also leads to repeat purchase and word of mouth spread about such brands (Aaker, 1995).
Increase in the return on investment (ROI)
It is perceived that brand of the company is the greatest contributor of revenue to the company as compared to market share and research and development. So it is very straight way to improve the perceived quality of the products and services which is in the favor of both the customer and company. It is like a win-win situation for both the parties. One thing is very important in this respect is that there should be a consistency in the quality of products. Once this image is built, then it is the perception which brings the customer to the company rather than products particularly in business to consumer market. It depends how much value customer associates to your brand. That’s why; PLFD was able to charge extra prices of almost the similar products to Manchester’s. They have built the brand through television coverage and by winning awards. The brand PLFD has become so much famous that one of the distributor claimed that this brand helps to generate rush in to their shop. Otherwise customer has many other shops to go. So he does not want to lose this brand. It is also in the favor of PLFD, to charge extra pieces for its products by almost 16%, which is a good amount of money per product and improved its return on investments.
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