Final answer:
High brand equity facilitates firm expansion into new markets, provides a competitive advantage and fosters customer loyalty which is likely to result in repeat purchases. It is a positive asset that lets companies charge higher prices due to their established reputation and can deter competition due to high advertising and branding costs.
Step-by-step explanation:
High brand equity signifies a positive perception of a company and its products, contributing to various favorable outcomes for the firm. Contrary to the options that suggest a negative impact, high brand equity positively affects a firm in several ways. One significant benefit is enabling a firm to expand into new markets more easily due to the established trust and recognition among consumers. It serves as a testament to the company's reputation, reassuring customers about the quality, which in turn, increases the likelihood of repeat purchases.
Additionally, high brand equity provides a competitive advantage in a saturated market. Well-established firms can often maintain higher pricing strategies because customers perceive greater value in their products. In contrast to the other options, brand equity also assists in protecting the firm against competition, as competitors may find it financially challenging to compete with a well-established brand with high consumer loyalty and recognition.
As mentioned, established brand names can be challenging to dislodge, as seen with giants like Coca-Cola and Pepsi. Both creating a new competitive brand and marketing to equal these household names require substantial investments, often beyond the capabilities of new entrants. Therefore, high brand equity can indeed increase a firm's ability to succeed in a competitive environment and does not discourage consumers from making repeat purchases.