Brand equity is the perception that people have of a company or a brand. It is about the relationship to the consumer, so the most important way a company can improve its brand equity is to advertise directly to the prospective customers for its product. Customers are much more comfortable when purchasing goods or services from a company that they associate with being friendly, reliable and trustworthy. A great brand is often perceived as having guaranteed quality. By increasing advertising, the company can inform consumers directly of the high quality of their products and the strict enforcement of that quality.

The second most important part of brand equity is living up to the fantastic reputation that advertising buys. When customers buy a product based on advertising, they want it to live up to the expectations the advertising created. If the company ensures that the quality control of the product or service is always held to high standards, consumers can trust that no matter how many times they buy a product, it will always be as good as the last one they purchased. Customers who have received the quality they expect from a product can provide free advertising for the company by telling their friends and families about their satisfaction with the brand.

Brand equity can be gained very quickly through a lesser-known company partnering with a larger and more visible entity. For example, if A is the third-largest tire company in the United States, and becomes business partners with the number one car company, A is still the third-largest tire company, but now the public sees it as something more: the tire provider to the number one car company. Therefore, the tire company gained from its partner's reputation.

Many things fall under the category of brand equity, but overall, having a great product, getting the word out, and ensuring happy customers and clients are the first steps to building great brand equity.

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