What Is Brand Equity?
Brand Equity is the special or premium value attached to a brand and its products. It is based on the consumer’s perception and trust that they have in the brand. It is associated with a brand’s name and logo, and connecting “brand” to “equity” is an important business marketing strategy as it impacts brands’ prices, sales, and partnerships.
According to American marketing veteran, David Aaker, brand equity is made of four elements that contribute to a brand’s strength.
Brand Awareness: Consumers should be able to recognise a brand. This can be achieved by associating a message and imagery with the brand to help make it identifiable, even for new products.
Brand Attributes: This covers the product’s performance in the market, interactions with the brand representatives and customer service, and the worth of loyalty programmes. Positive experiences enhance the brand’s attributes.
Perceived Quality: It is important for brands to enhance the perceived value, as it improves customer experience and boosts sales. The perceived value is the customers’ judgment of the product quality based on their overall brand experiences. If past interactions with the brand are not good, customers may not react positively and may create a negative perception towards the brand.
Brand Loyalty: The process of loyalty is built over time, based on customers’ past and current experiences, brand recognition and brand attributes. While these components rely mostly on customer preference, enhancing these brand qualities can increase profits and customer influence.
By combining these factors, the brand can focus on consumers and foster lasting loyalty as consumer perception strongly impacts positive brand equity.
How To Measure Brand Equity?
To effectively measure it, a brand can consider the six metrics mentioned below:
Brand Awareness: This metric measures how much a brand is talked about in everyday conversations. Other elements like assessability through surveys, store traffic, search volume, media mentions and social reviews also enhance the brand awareness of a business.
Preference Metrics: This metric observes customer preference by evaluating a brand’s relevance, accessibility, emotional connection with customers and brand value through methods such as focus groups, sales data and surveys.
Channel Partner Engagement: This is an important metric to assess a brand’s relationship with its channel partners. It measures aspects like how well partners comply with guidelines and contribute to local marketing efforts and bigger marketing campaigns. Their attitudes can reflect a brand’s strength.
Financial Metrics: This area takes into account financial indicators like price premium, local store sales, transaction value, customer lifetime value and growth rate of brand equity.
Output Metrics: This metric is deployed to measure the marketing output by evaluating the frequency and quality of released marketing materials. It leverages local marketing metrics like price premium over competition, local store sales, average transaction value, customer lifetime value and the rate of sustained growth to measure local marketing activity’s impact on brand equity.
Competitive Metrics: This key indicator takes into account the impact of competitors’ brand equity on the brand. Brands must monitor customer acquisition rate, market share, sales lift and distribution channels to understand their performance in comparison to their competitors.
How To Improve Brand Equity?
Communicate with existing and prospective customers to understand brand equity and then work to improve it. Use customer feedback forms or dedicated email addresses to spot and fix customer issues swiftly. This will help build trust and improve customer retention.
- Foster relationships with customers by encouraging free trials of products and services. This will change them from customers into brand loyalists or brand advocates.
- Develop a brand story that communicates brand values. Create a compelling brand story on websites and share it on social media platforms and via emails to establish authentic connections with consumers.
- Invest in CX, identify customer pain points and create a brand experience that leaves customers more than satisfied at every touchpoint. Differentiating CX through a unique customer experience can enhance brand equity.
- Brands must regularly audit their marketing efforts to align their perception of the brand with consumers’ views. This can be achieved by gathering regular feedback from surveys, focus groups, and consumer research to ensure consistency.
- Build an in-house team to develop brand equity that outlines the brand’s philosophy, acceptable uses for brand assets and results from brand audits to improve brand equity. Distribute this to company executives regularly to stay focussed on equity-building goals.
- Design future marketing programmes to track marketing expenses. Build on past investments and guide future marketing strategies.
Brand Awareness Vs Brand Equity
In essence, brand awareness is how well people know that a brand exists, while brand equity is how much value people place on that brand.
Some of the common differences are:
What Are The Different Models Of Brand Equity?
- Keller’s Brand Equity Model
Developed by marketing professor Kevin Lane Keller at Dartmouth College, the model revolves around the concept that a brand’s strength comes from knowledge, emotions, and perceptions that consumers have about the brand throughout its existence.
This framework is often referred to as the Customer-Based Brand Equity (CBBE) model. Essentially, the model emphasises that a brand’s value is built over time through the interactions, associations, and sentiments formed in the minds of consumers, shaping their loyalty towards the brand.
- Aaker’s Brand Equity Model
Developed by David Aaker, who is also known as the father of modern branding, the model defines brand equity as a collection of assets and liabilities associated with a brand that either enhances or diminishes the value of products or services linked to that brand. This model, also known as the Five Assets Model, identifies five key components of brand equity.
What Are The Examples Of Brand Equity?
- Nike: The company’s strong brand equity is built on positive associations with motivation and victory through impactful marketing campaigns and sponsorships of renowned athletes. Their brand also incorporates customer loyalty, perceived quality, and proprietary assets like the iconic swoosh logo and its “Just Do It” tagline. This has enabled Nike to dominate the global athletic footwear industry.
- Apple: Apple’s brand loyalty lies in its unique customer experience through minimalist design and innovative products that integrate seamlessly within its ecosystem. This experience enhances the perceived value and quality of Apple products, fostering strong customer loyalty even at premium price points.
- Coca-Cola: Coca-Cola’s successful branding campaigns and slogans have synonymously positioned the brand with happiness and refreshment, elevating its perceived quality. This showcases the impact of strategic branding on enhancing product perception.
