200086 Lecture Notes - Lecture 16: Brand Equity, Marketing Communications, Customer Retention

• School: UWS
• Department: University of Western Sydney
• Course: 200086
• Professor: anon

Document Summary

Brand equity has a direct effect on sales volume because consumers gravitate toward products with great reputations. For example, when apple releases a new product, customers line up around the block to buy it even though it is usually priced higher than similar products from competitors. One of the primary reasons why apple"s products sell in such large numbers is that the company has amassed a staggering amount of positive brand equity. Because a certain percentage of a company"s costs to sell products are fixed higher sales volumes translate to greater profit margins. Customer retention is the third area in which brand equity affects profit margins. Returning to the apple example, most of the company"s customers do not own only one apple product; they own several, and they eagerly anticipate the next one"s release. Apple"s customer base is fiercely loyal, sometimes bordering on evangelical. Apple enjoys high customer retention, another result of its brand equity.