Branding - the dark side

Once a brand becomes well known, manufacturers can and often do raise prices. The brand equity represents the additional margin that can be added to the competitive market or oligopolistic commodity price ("CMOCP"). The danger, however, is that when the brand loses its luster, the company must either reduce prices back to the CMOCP or lose sales. But in reducing prices, it reveals to its installed base and to potential future customers what the brand equity premium was. Those who paid it may feel cheated, and that might tarnish the brand for potential future buyers.