Economist Aug 30th 2014

What are brands for?

  • Three main components of brand equity: 1) consumers’ awareness; 2) the qualities associated with it; and 3) loyalty; the question is how important how each element is;
  • one analysis shows that awareness matters more than loyalty – brands are “a shorthand for choice”; such “physical and mental availability” are achieved through traditional method of mass marketing, such as television advertising, packaging, and celebrity endorsements, rather through the fashionable targeted sort made possible by the internet;
  • brands have “a reduced role as a quality signal” – now it is easier to find reviews;

Choosing the right pin: Popping property bubbles

  • property valuations look high in many countries: Belgium, Finland, France, and Britain; based on the ratios of prices to rents, or prices to incomes;
  • household debt is also hitting new records, America is now 105% of income after tax, while that of euro-zone is almost 110%;
  • Monetary policies (e.g. in Sweden) turned out to be a bad solution; macroprudential tools, to discipline both banks and borrowers, help to curb the irrational exuberance;
  • A good case study: Netherlands, vs. Belgium;
  • Europe’s property booms tend to be concentrated in capital cities – that makes matters more difficult;

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