Brand Equity: What's Price Got to Do with it?

Gordon Pincott

Perceptions about a brand's values, personality, and heritage all factor into consumer sentiment toward a brand. Typically, price is seen as something separate and distinct from other elements of brand equity, a factor that consumers weigh against their feelings about a brand.

But really, a brand's price is just as important and integral to a brand's equity as any other association. Price is a source of meaning and identity for a brand, not a separate countervailing factor.

However, considering many traditional marketing practices, it is not difficult to see how this fundamental truth has been obscured. Too often pricing is used as a tactical lever that is pushed or pulled as needed to respond to competitors' actions. Price promotions are often used to gain short-term volume that has little positive impact over the long term. Ruthless price competition can destroy prodigious amounts of brand value. While consumers may enjoy the reduced prices that result from these actions, they may not be getting a bargain in the long term if brands are unable to invest in innovation or, worse, if they go out of business, leaving consumers bereft of choice.

Price as Equity