Most large companies, beholden to shareholders, manage by quarter with the goal of increasing share prices. While for publicly traded companies, this is a business reality, it tends to grossly mask the importance of long-term brand equity in determining stock market success. According to a white paper written by the Phelps Group, entitled Linking Brand Equity to Stock Equity, “every 1 percent increase in brand equity is associated with a roughly 1 percent increase in stock return.” This is “consistent with the fact that investors realize that a brand is an asset that can lead to higher future-term earnings.” Also they found that stock market return was positively related to ROI and there was a strong positive relationship between brand equity and stock return.

Short-term stock spikes, achieved through such things as deep discounts and irrelevant brand extensions, are just that – short term. They ultimately cause companies to fall into a game of catch up that can turn into a losing situation. But, managing your brand on a daily basis, for the long-term, will have the effect of increased brand equity resulting in steady increases in share prices and increased shareholder confidence over the long-term. Who doesn’t want that? Now if we could just convince the shareholders not to judge a company by its quarterly results alone…

- Jen Travis