Song101
Respond to both 200 words or more APA AND REFS
Love105
A brand says a lot about a product's or company's reputation. Firms spend lots of time and resources developing their brand and over time the brand develops equity. Brand equity is composed of loyalty, awareness, quality, and brand associations (Winer and Dhar, 2015, p. 218).
With the exception of loyalty, which is a behavior metric, the other three variables can be measured which can provide information about the value of the brand (Winer and Dhar, 2015, p. 218). When determining the price of a product or service, a pricing strategy is vitally important for the brand equity of a business (Sandilands, 2017).
For example, a premium pricing strategy for luxury items maintains the image of exclusivity and quality. Lexus, Mercedes, Tiffany, and Rolex are prime examples of brands with premium pricing strategies. They have established their reputations with their customers and thus enhanced their brand's image over time.
One of the major factors affecting the price of a product or service is the customer perceived value. Since the perceived value is always relative, a brand's image can have an impact on pricing. Even though one could link the perceived value with a brand's image, the price of a product is directly proportional to the perceived value and the market share (Winer and Dhar, 2015, p. 285).
In many cases, the market can dictate the price of an item. As the market declines, so will prices. But, premium priced items seem to be unaffected by the market. I have yet to see the price of a Lexus decline whenever the economy slowed down. The brand image of Lexus helps to maintain their premium price.
Love106
An effective brand image is pertinent in a brand's success. The brand image is the way in which the consumer perceives the product. Value is of utmost importance to the consumer and the view of the product or brand. Customer In order for a brand to be successful, it must first have an established brand image.
The consumer needs to recognize the value in the product or service prior to purchasing. The customer value is what a product or service is worth to the customer and is one of the components used in establishing its price.
(Winer &Dhar, 2011, p. 180) When a product or service fails to deliver as promised or not as well as the competition, an adjustment would likely need to be made to the price or product and of itself to ensure profit growth and continuity. Conversely, if the product or service exceeds expectations and its competition, the price would be adjusted as an increase versus a decrease.
A relevant example of brand imaging and inflated prices would be the offering and purchase of brand name over the counter medications versus generic. Upon comparison of the components used and the symptoms treated, some consumers still choose to purchase the higher priced brand named drug.
This is likely due to the image of the manufacturing company and the perceived higher value in the product made by them versus the competition. The established image of the brand name products equates to better medication and justifies the higher prices for the same medication.
Studies have suggested that there are four key factors in purchasing brand name purchases versus its equal generic counterpart, which are: personal image, confidence in experience, loyalty and social acceptance.
(Kokemuller) The aforementioned offers further evidence into the importance of a brands image and reputation as it pertains to increased profit margins.