The Value of Having Brand Equity Essay

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1.Johnson & Johnson has been able to establish strong brand equity for its line of baby products. What benefits does J&J have because of its brand equity for these products?

The advantages of having a strong brand equity are that it increases the visibility of the company’s product and makes them more attractive to consumers. The brand has the benefit of a good reputation in the minds of consumers: they see the brand of the product and immediately expect it to work and be a good product. This in turn helps the company to grow its sales and increase its margins. The more popular a brand becomes, the greater the premium the producer can charge. For example, if a Johnson & Johnson is selling baby powder that is similar to what a generic off-brand is selling, Johnson & Johnson can still charge more for their product because of the premium afforded them by their brand equity. Even though their product is more expensive than the off-brand, Johnson & Johnson can still move enough product to be profitable—all thanks to the demand and appeal their brand equity affords them.

Concomitant with the concept of increasing margins is the idea that brand equity equates to customer loyalty. Customers will be loyal to Johnson & Johnson products because they feel that they should buy the brand based on past experiences. Rather than try another brand, customers who have bought Johnson & Johnson in the past will continue to do so.

This also allows for the opportunity to expand its product line. Once the company has built up considerable brand equity it can offer other products that may in essence be little different from off-brands but will have the added charm of being offered under the Johnson & Johnson brand. This gives the company an advantage over competitors—all thanks to its brand equity (Hartford, 2018).

2.You have been asked by Coca-Cola’s product manager to present the arguments for and against extending the Coke brand to a new cola drink.
What would be the arguments for and against extending the Coke brand to a new cola drink?

The arguments for extending the Coke brand to a new cola drink would be that Coke has great brand equity so would automatically give consumers an incentive to purchase the new beverage if the Coke name were applied to it in some manner. People who love Coke tend to love other Coke products and become loyal consumers of Coke sodas. If given the option, they’ll choose Coke products over Pepsi products because they prefer the Coke brand recipes. Coke’s reputation precedes it, and that carries a lot of weight with consumers.

On the other hand, if Coke were to apply its brand to a soda that was less than worthy of the Coke seal of approval, so to speak, the brand could suffer in the long run. Consumers could begin to doubt the brand’s quality and suspect Coke of selling out or of trying to push inferior products onto the market simply by affixing the Coke name to the product and not actually attempting to infuse the drink with any sort of quality recipe or care.

Thus, the final decision would really have to come down to the question of whether the product was worthy of the brand name or not. It would also have to be compelling enough to warrant carrying the brand name. Coke does not have a reputation of affixing its brand lightly to products left and right. A product that carries the Coke brand name has to be a superior product—one that can stand above others on the market. So the real question is whether the quality is there to begin with: if so, the Coke name can be applied.

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Hartford. (2018). Brand equity. Retrieved from

Silver, S. (2011). 5 key elements to great package design. Retrieved from

Trout, J. & Rivkin, S. (2006). Differentiate or die. In The marketing Gurus (ed. Murray). NY: Penguin.

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