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Brand equity is the value that customers and prospects PERCEIVE in a Brand . It is measured based on how how much trust a customer has in the brand. The value of a company's brand equity can be calculated by comparing the expected future revenue from the branded product with the expected future revenue from an equivalent non-branded Product . The difference, usually profit, is how much customers TRUST the brand, and are willing to pay above and beyond the price for other competitive brands with lower value perceptions. This calculation is at best an approximation. This value can comprise both tangible, functional attributes (e.g. TWICE the cleaning power or HALF the fat) and intangible, emotional attributes (e.g. The brand for people with style and good taste). POSITIVITY Brand equity cannot be negative. Positive brand equity is created by effective marketing - advertising, PR and promotion in all forms, and the ability of the brand's performance to consistently maintain customer relationships -- trust. The greater a company's brand equity, the greater the probability that the company will use a Family Branding strategy rather than an Individual Branding strategy. This is because family branding allows them to leverage the equity accumulated in the core brand. This ma EXAMPLES In the early 2000s, the Ford Motor Company made a strategic decision to brand all new or redesigned cars with names starting with "F". This aligned with the previous tradition of naming all sport utility vehicles since the Ford Explorer with the letter "E". The Toronto Star quoted an analyst who warned that changing the name of the well known Windstar to the Freestar would cause confusion and discard brand equity built up, while a marketing manager believed that a name change would highlight the new redesign. The aging Taurus , which became one of the most significant cars in American auto history would be abandoned in favor of three entirely new names, all starting with "F", the Five Hundred , Freestar and Fusion . By 2007, the Freestar was discontinued without a replacement, and Ford announced record losses. In a surprise announcement, the discarded Taurus nameplate would be re-used on an improved Five Hundred which had dissapointing sales and whose nameplate was recognized by less than half of most people, but an overwhelming majority was familiar with the Taurus. SEE ALSO
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