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Posted on July 12th, 2012, by

Brands play an increasingly more important role in the contemporary economy. The successful market performance of a company is, to a significant extent, determined by the popularity and recognition of its brand by customers. In such a situation, it is extremely important to maintain the positive brand image and develop branding of a company, which, though, implies the necessity to assess the effectiveness of branding and the popularity of the brand. In this regard, a company normally deals with two processes: branding and measurement of brand equity, which are often closely interrelated.

First of all, it should be said that branding is very important process because it includes the formation of a positive brand image and development of the positive customer experience. It is not a secret that nowadays brand may be one of the most valuable assets of a company and constitute a considerable part of its market value (Gitlow, 122). In such a situation, branding is very important because it contributes to the increasing popularity of products and services of a company and its growing value because a popular and recognizable brand formed in the process of branding defines the high demand on a company’s products and services and facilitates consistently entering new markets. In such a way, branding basically implies the attribution of brand image to products and services of the company and formation of its positive brand image.

In this respect, brand equity is quite different because it does not actually deals with the formation of a brand but, instead, it rather focuses on the measurement of the popularity of brand and its perception by customers. It is necessary to underline that brand equity targets at the revealing the effectiveness of branding in a way, because, normally, brand equity implies the comparison of the effects and outcomes that accrue to a product that has a brand name compared to the effects and outcomes that would accrue to the same product if it did not have a brand name (Viardot, 251). In such a way, it is possible to compare the impact of the brand on the popularity of the product among customers and their preferences. In other words, it is possible to assess the extent to which the value of the product increases due to its branding.

In fact, brand is very important because its measurement provides ample opportunities to assess the effectiveness of branding. At the same time, it may indicate to the necessity to increase the introduction of new strategies to increase the popularity of the brand in order to increase sales, for instance. On the other hand, brand equity provides an opportunity to reveal the extent to which the brand is popular that may influence the decision of a company to enter new markets, for instance, if the brand is recognizable and, therefore, it could be used to facilitate gaining a larger share of the new market.

In the contemporary economy, it is quite natural that brand equity becomes more and more popular because it helps better understand and measure the popularity of the brand and its recognition by customers, while branding contributes to the increasing popularity of the brand and forms the positive brand image of a company and its product. Consequently, branding and brand equity are different but still very important and often closely interlinked processes.

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