I was speaking recently with a marketing professor from a top business school. He is a person I respect very much.
During the course of our conversation he said, "Wal-Mart has no brand equity." I almost choked on my wine. I asked him what he meant. He said that brand equity should create a price premium, and Wal-Mart's strategy has been to focus on low prices. In his mind brand equity always creates a price premium.
Yes, strong brands can get people to pay more. But, isn't paying a premium just one example of the kinds of behavior a strong brand can encourage? What if a brand gets no price premium, but encourages more frequent purchases, a greater share of spending dollars, or referrals? Isn't that a strong brand? Wal-Mart gets a disproportionate share of both wallets and shopping visits, and has millions of loyal customers. It has changed consumer shopping behavior, in a significant way.
So, can you have brand equity with no price premium? Or do you agree with the professor? (Any conversation about Wal-Mart can be incendiary, so please try to separate your answer to the brand equity question from any Wal-Mart rants, which you are also welcome to include in your comments.)
Before blogging became all the rage, Tom was posting book reviews and Observations (essentially early blog posts) to this site. You can find the archives below.
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