Globally recognized in the field of brand marketing, David Aaker, Professor Emeritus at the Haas School of Business of the University of California at Berkeley said that higher brand equity can lead to higher profits.
Aaker told reporters that his statistical study on brand equity and corporate profits found out that there is a correlation between brand assets and profits in a press conference held at the 11th World Knowledge Forum on October 14th.
He explained that when profits increase stock prices rise, too, because 70% of rises in stock prices stem from higher brand equity.
However, he pointed out that marketing budget increases do not always lead to higher profits. He underlined that profits can increase when brand values come alive. Therefore, he asserted increasing marketing budgets is not a proper measure to make brand values more relevant.
Aaker emphasized the importance of business strategy to achieve success in the market. A powerful brand helps strategies work properly toward success, not reinforces itself, according to him.
The brand expert picked Hyundai Motor Company and Samsung Electronics as businesses with powerful brand values in Korea.
He praised Hyundai Motor for its great leap and successful business over the past five years and increasing market shares dominating a wide range of the auto market from compact vehicles to luxury sedans.
As for Samsung Electronics, he gave credit to the company’s efforts to be recognized worldwide, for example, sponsoring the Olympics Games.
[Written by Ik-ho Choi - Su-hyun Song / edited by Soyoung Chung]