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The importance of every transaction and how each one impacts Brand Equity. | Counter Diversion

Are you looking to increase your brand equity? If so, you'll need to focus on every transaction that takes place with your customers. Every purchase, interaction, and exchange impacts how customers feel about your brand. By paying attention to the details and making each transaction a positive experience, you can create lasting relationships with customers and boost your brand equity.

We'll discuss the following four points as well as an example of how this applies to a specific industry.


1. What is Brand Equity and what are its components

2. How does every product a Brand sells or offers contribute to total Brand Equity

3. Why should companies focus on building strong Brand Equity

4. How can companies go about increasing their Brand Equity


Profitability is the number one goal for any business, so it is no surprise that brand equity is a key concern for marketing managers. Brand equity is the unique value of a brand that allows it to command a premium price and earn higher profits than its competitors. There are three primary components of brand equity: consumer loyalty, name recognition, and perceived quality. Consumer loyalty is the degree to which customers are willing to stick with a brand, even in the face of alternatives. Name recognition is simply how well consumers know and remember a brand. Perceived quality is the degree to which consumers believe a brand offers high-quality products or services. All three of these components contribute to a brand's profitability and overall success. Companies must continually work to strengthen brands by building consumer loyalty, expanding name recognition, and enhancing perceived quality. When done effectively, this will result in increased profits and a sustained competitive advantage.





Every time a Brand sells a product, it is contributing to its total Brand Equity. Companies sell products to generate revenue which, in turn, can be used to grow the business, pay expenses and return value to shareholders. But how does the sale of each individual product contribute to the overall health of the Brand?


The answer lies in sell-through rates, the measure of how much product a company can sell against the inventory received. A high sell-through rate indicates that customers are willing to pay the set price for the product and that the company is able to command a premium for its goods. This, in turn, leads to higher margins and more profitability. On the other hand, a low sell-through rate indicates that customers are not willing to pay the set price for the product, or the customer can find it cheaper elsewhere. This leads to discounting to move inventory, which erodes margins and ultimately harms the bottom line.


So, while each individual sale may seem like a small piece of the puzzle, together they add up to contribute (or detract from) the health of the overall Brand. In order to build strong Brand Equity, companies must focus on selling products or services that customers perceive as valuable.


It's what customers think and feel about a company, its products, and its services. Brand equity is built over time through customer loyalty, positive word-of-mouth, and consistent marketing messages. A strong brand equity can result in customers paying a premium for a product or service because they perceive it to be a better quality than the competition. Brand equity can also give a company the ability to charge more for its products or services and still maintain market share. For these reasons, it's essential for companies to focus on building strong brand equity, which can help companies weather tough economic times, maintain market share during industry disruptions, and attract new customers. So, while it may take time and effort to build brand equity, it's worth the investment for any company that wants to be successful in the long term.


Distribution strategies are one of the most important factors in increasing brand equity. By controlling the channels through which products are sold, companies can ensure that their products are being sold at the right price and to the right customers. Additionally, by enforcing sales policies, companies can ensure that their products are being sold in a way that reflects their brand values. Finally, good product lifecycle management ensures that products are continuously upgraded and improved, maintaining customer loyalty and preventing customer attrition. All of these factors together can have a significant impact on brand equity.


For example, a luxury car company would have high Brand Equity because consumers perceive their products to be of high value. In contrast, a budget car company would have low Brand Equity because consumers perceive their products to be of lower value. This is not to say that budget cars are inferior to luxury cars, but rather that consumers have different perceptions of these two types of brands. Consumers' perceptions are based on a variety of factors, including the brand's history, reputation, and marketing. As such, Brand Equity is something that is built over time and can be difficult to change once it has been established. For this reason, it is important for companies to carefully consider how they want to position their brand in the market.





Think about the most prestigious Brands in the market and what they have done to get there and stay there. To put us in the right mind space to think about the value of every transaction that every brand makes, let’s momentarily look at the auto industry. In 2020,


• Ferrari delivered 9,119 cars worldwide,

• Porche delivered 272K

• Mercedes 2.1 million

• General Motors delivered 2.5 million

• Hyundai delivered 3.74 million

• Ford delivered 3.9 million

• Honda delivered 4.5 million

• Toyota delivered 9.5 million

The auto industry is a great example of brand equity and perceived product values. Ferrari invests heavily into their customer experience, from quality product construction and limited distribution outlets (which translates into luxury) right down through friendly but professional service representatives who know how much each individual person values his or her vehicle--and treat him/her accordingly!


Many of us don’t operate in the auto industry, but the point is obvious. The scarcer a product is the more prestigious it is to own. Obviously, the economics of this situation require brands that produce fewer products to charge more to survive and succeed, and certainly Ferrari invests a lot of money in the customer experience that their consumers enjoy.


The premium product market has changed considerably in recent years and e-commerce has made more products easier to find, but has that come at a cost to product values? As stated above, it is now more important than ever to protect and manage the distribution channels through which these products are sold, as well as analyzing, adjusting and enforcing sales policies to ensure their products are being presented with long term Brand health in mind. By doing so, companies can ensure that their products retain their value and that every sale has the desired effect on the overall brand equity. In an increasingly competitive marketplace, those companies that are able to effectively protect and manage their distribution channels will be the ones that succeed in driving higher sell-through rates and generating greater brand equity.


Brand equity is one of the most important, yet often overlooked, aspects of a company. It can be the difference between a successful and unsuccessful business. By focusing on building strong brand equity through every transaction, you create a foundation for success that will pay off in the long run. We hope this article has given you some ideas about how to increase your brand equity and achieve even more success in your business.


Counter Diversion is a boutique SaaS company that focuses on returning distribution control to brands selling premium products. We don't have marketing and we don't use high pressure sales tactics. Our goal is to have solid, honest conversations about the issues at hand and then either recommend our service or another one that is a better fit for your needs.


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