Brand equity is a concept that has been used since 1980s and describes the assets and liabilities that are associated with a particular brand name. Brand equity will either add to or subtract from the brand or the products and services that are associated with the brand.
It is an intangible brand value that may be positive or negative. If you have positive brand equity built from years of product quality and excellent customer service, customers will always choose your brand over others in the marketplace. This also highlights another important aspect of brand equity: it does not exist in isolation and so it is not so abstract. For a business to have positive brand equity, it must have a solid track record of delivering high quality products and services to its customers. Over time, the general target market develops an overall positive perception of the business and it products. It becomes a trusted brand.
Just like other items of value, brand equity can also be diluted if a business begins to deviate from its value proposition or unique selling point. Building brand equity takes time and that value must be protected at all costs. Once consumers have lost trust in a particular brand, it will take the brand years of hard work and excellence to rebuild its brand equity to its previous prominence. Sometimes, a loss in brand equity could be potentially fatal for the business.
Brand Equity Impacts Consumer Choices
Positive brand equity is the reason consumers choose your products in the shelves and leave others of similar price or quality. When you have positive brand equity, consumers will have a good perception of your business and they will choose it believing that your brand will offer them more reliable products or services with consistent quality.
Consumers develop a perception about the quality and value of a product and it is that perception that drives the brand value. When you go through a process of building this perception of quality and reliability, you are building your brand equity. But it isn’t just perception. Tangential to the perception is your ability to deliver the goods just as your brand messaging suggests. Otherwise you will just be selling hot air; and brand equity has never been built on hot air. You need a good combination of a good product and good branding to build positive brand equity.
What Constitutes Brand Equity?
Brand equity may seem like a very abstract idea to a business person but if you understand the many dimensions that constitute brand equity, you will discover that there is some empiricism to the process of developing your brand equity. That means that there is a quantifiable method that you can use to gradually develop your brand equity. The dimensions of brand equity include the following:-
- Brand Loyalty
- Brand Awareness
- Brand Associations
- The perceived brand equity
Brand loyalty makes an integral part of the brand equity. Every business values the loyal repeat customer who attaches some value to the brand. Not only does this help reduce the customer acquisition cost, a loyal customer is the mainstay of many businesses. The strongest brands put a premium on cultivating customer loyalty because it helps reduce marketing and acquisition costs and offers businesses trade leverage.
Brand equity is about how aware people are of your brand. If your brand is widely known, for good or for worse, you have some brand equity. Brand awareness gives your brand visibility and some consideration in the minds of customers. Familiarity with a brand also cultivates a sense of trust and confidence in what you have. Customers are not a very adventurous lot and they like buying what they are familiar with. Good brand awareness may also lead to another brand quantity-perceived value. If your brand is well known, customers will have the perception that it must provide some value.
This is also a brand equity currency. If customers perceive your brand to be one that is offering good quality, then this is going to contribute to the overall strength of your brand equity. It reinforces the value of your brand equity in the minds of customers. Perception of quality gives customers a reason to buy your products and helps differentiate or position your brand in the marketplace.
Developing Brand Equity
No brand will be launched with brand equity unless the brand is being launched by another brand that already has brand equity. In this case, the new brand will already have acquired some brand equity by association.
If you are launching your brand from scratch, there are stages that you will need to pass through in order to build strong brand equity. The first stage is creating awareness for your brand. This involves increasing the visibility of your brand in the minds of your target market through advertising and marketing. You use various platforms to increase the awareness of your brand including email marketing, social media marketing, billboards, print advertising, TV advertising, events and many other available marketing channels.
The next phase is brand recognition. Here, you will go beyond brand awareness to make sure your target market is well acquainted with your brand. The aim of brand recognition is to get your target customers to identify the value proposition that your brand is offering. To succeed in brand awareness and recognition, you must also offer your customers excellent quality products. First impressions matter a lot in business and if the first impressions of your products are good, this will contribute to overall positive brand equity. The same applies for poor quality products and services.
From the first contact with the brand, your clientele will begin forming a brand association or associating with your brand. To be successful in building your brand equity, you must offer your customers consistency not just in the product and service but also in the customer service offered, advertising and many other interfaces between your brand and customers.
When brand recognition has been achieved, the customers will begin showing a brand preference. If your customers have regular positive experiences with your brand, they will show a strong preference for it and from this, will emerge brand loyalty. Attaining brand loyalty is the ultimate achievement in brand building.
There are businesses that have been so successful in building their brand equity that they have managed to attain brand synonymity, where the brand equity is so deeply entrenched that consumers associate the brand identity with the product category itself. A good example of these include Xerox, GoPro, Google, Polaroid etc.