The Role of Branding in Shaping Business Valuation and Profitability
A Study of Brand Equity’s Influence on Financial Performance
DOI:
https://doi.org/10.58445/rars.2624Keywords:
Brand equity, Financial performanceAbstract
Branding has evolved into a powerful strategic asset that not only shapes customer perceptions but also significantly influences business valuation and profitability. As global markets become saturated and product differentiation blurs, brand equity—defined as the value derived from consumer recognition, trust, and loyalty—emerges as a key determinant of long-term financial performance. This paper explores the multifaceted relationship between brand equity and financial outcomes, including stock performance, profitability, cost structures, and risk mitigation.
A comprehensive literature review synthesizes theoretical frameworks such as Aaker’s brand equity model and Keller’s Customer-Based Brand Equity (CBBE) pyramid while focusing primarily on empirical studies demonstrating quantifiable impacts of brand equity on metrics like Return on Assets (ROA), price-to-earnings (P/E) ratios, and market capitalization. The findings reveal consistent correlations between high brand equity and superior financial metrics across industries.
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