How Equity Marketing Can Boost Auto Sales

Posted by Deal Finder on July 10, 2013

[Posted July 10th by Keith Shetterly]

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Equity marketing is a term used to describe the value of a product’s brand name. Equity marketing helps a company generate sales using the power of association. There are many ways that companies use brand equity in marketing. Establishment of “customer relationships” is one, as is using specific marketing campaigns to increase brand awareness among different types of customers. The automotive industry relies heavily on brand equity built over the past century.

General Benefits of Product Branding

A well-known product brand produces an economic benefit for the company that owns and markets it. Established brands are able to charge higher prices for their products because of customer familiarity. Customers perceive less risk of a negative experience from a well-known company with high equity marketing and are, therefore, willing to pay more, whereas lesser known brands must lower prices to attract customers to their products.

Building a Brand

Developing a reputation in a particular industry can take years or even decades. In order to establish a corporate identity, a company benefits from utilizing a recognizable logo and a unique name. Switching logos or company names frequently results in confusion and loss of familiarity, so many companies stick with the same name even if the brand is sold or transferred. A company tinkering with a well-established, popular brand does so at its own peril. Even minor changes can destroy brand equity that took years to build.

Good and Bad Publicity

Many consumers base purchases, especially major purchases like automobiles, on past experiences with a company, word-of-mouth referrals and other secondhand knowledge. The old adage “There is no such thing as bad publicity” does not always hold true. Consumers remember unpleasant headlines and bad experiences, and these memories help develop an overall opinion of a company, even if the details of bad publicity or a bad experience are not specifically recalled.

Quantifying Brand Equity

The numerical effects of brand equity on marketing are tough to ascertain. It is difficult to quantify the influence of one customer’s feelings when making a purchase and even more difficult to extrapolate this effect for millions of individual customers. Numerous studies have attempted to estimate the financial value of good customer relations, and, although there is a definite benefit to retaining customers who make multiple purchases from a company and refer their friends, placing a dollar value on such a relationship remains elusive. However, corporate branding has been used for the past several centuries for one reason; it works.

Brand Equity in the Automotive Industry

After a home, a vehicle is usually the second largest purchase made by an individual or family. Consumers make choices based on their personal feelings about a particular brand or based on personal experience. People like buying the same brand car they grew up with. Parents purchase a particular brand of vehicle and then purchase the same automotive brand for their children or grandchildren.

Automotive branding is so effective that there are no “generic” options offered as an alternative to name-brand products as in many other industries. Aside from the expense and logistics involved in launching an automobile company, breaking in amongst so many established brands is a major hurdle, and therefore most automotive brands have been around for generations and are followed by entire families. Few industries engender such multi-generational product loyalty as the automotive industry.

Although the exact effect of product branding can be hard to determine, product loyalty and the customer relationship translate into a big payoff for well-established automotive brands.


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