Given below are two statements:

Statement I: If there are differences in consumers' responses, brand-name product is essentially a commodity and competition will probably be based on price.
Statement II: Brand equity is reflected in perceptions, performance and behaviour related to all aspects of the marketing of a brand.

Choose the most appropriate answer from the options given below:

Correct option is D

Statement I is incorrect. It misinterprets the concept of commoditization. A product becomes a commodity when there are no differences in consumers' responses to different brands—meaning they see all offerings as the same and base their decisions purely on price. However, if there are differences in consumers' responses, then the product is not a commodity, and brand equity exists. Hence, competition is likely based on value, identity, and differentiation, not just price.

Statement II is correct. Brand equity refers to the value added to a product because of its brand name. This value is reflected in consumers’ perceptions, experiences, and behaviours related to the brand. Strong brand equity enhances brand loyalty, pricing power, and marketing effectiveness, and is built through consistent positive performance and strategic marketing efforts across all touchpoints.

Information Booster:

• Brand equity can be positive or negative, affecting consumer attitudes and behavior.

• It includes brand awareness, brand associations, perceived quality, and brand loyalty.

• Strong brand equity enables firms to command premium prices, extend into new categories, and withstand competitive pressures.

• It plays a key role in customer-based brand valuation models.

• All aspects of marketing—advertising, packaging, service experience, distribution—contribute to brand equity.

• It is a strategic asset and a source of sustainable competitive advantage.