Similar products, similar characteristics, one costs 10 times more than the other. Long live brand equity!
I am pretty sure you wondered at least once why some brands are so expensive. It’s simple: they are so expensive because there are people willing to pay for them!
Let’s take myself as an example. I always wanted to have a designer jacket. I dreamed at night how I will mix and match it with my wardrobe, how cool it would look when I will take it with me on holidays and my imagination relating this exact jacket was limitless. And then, in a magical Sunday when I was passing through Italy, I bought it! Guess what… the excitement lasted for only one or two days.
Afterwards, I started looking closely at my new Italian designer jacket (it doesn’t really matter who the designer is, you can think of any and you are almost right) and I haven’t notice anything different than the other leather jackets bought from fast fashion brands. The leather was similar to my Zara jacket, its stitches were the same as on all my coats and jackets, zippers and other smaller components remain out of our discussion.
I was not excited anymore about the jacket itself, but the good feeling that came with wearing my one and only designer jacket worth every penny.
You pay more for an aspirational social status and the security feeling
There is no other justification for the higher price compared to other similar products than the feeling you are willing to pay for. I consider two of them as the most important. Here are the two:
- Social Status. It can either be an aspirational social status or the idea of buying products that suit your lifestyle. Making the customer feel rich, healthy, beautiful or smart will make him cash out some more money.
- Security. You know the brand, you consider it has higher quality (real higher quality or only perceived higher quality), or you just experienced a good relationship with the customer care department. As long as it’s a powerful feeling relating trust or security, a customer can be willing to pay more.
Always keep in mind long-term brand positioning
Brand equity refers to the additional value added to a certain brand only because is highly popular.
If you just started down the road of entrepreneurship, one of your main concerns is bringing enough revenue in the company for both sustaining the business and developing it.
Skipping the brand equity aspect from your branding strategy, then your long-term brand positioning will collapse worse than the Soviet Union. If you don’t know how the Soviet Union collapsed: quickly and painfully.
So be smart and start thinking about how could you make more money out of the same product by only creating a proper brand equity strategy.