What is Brand Equity?
Brand equity is a marketing term that describes a brand’s value. The value is determined by consumer perception of the brand. Positive brand equity can be achieved by making brands memorable, easily identifiable and superior in quality and reliability. Integrated PR and marketing strategies drive brand equity.
Why is Brand Equity Important?
Positive brand equity is important to a brand because a business with a brand with positive equity can charge more for their product than a comparable product i.e. branded laundry powder versus supermarket own brand laundry powder. Additionally positive brand equity can be transferred to new products within a brand under the same brand name i.e. Apple initially earned their reputation selling Macintosh computers before extending the brand to iPhones. Customers anticipated that the iPhone would be of the same quality as Macintosh computers. If you think about when you go to the supermarket, you are probably more inclined to try a new product from a brand you know i.e. Heinz or Arnott’s that a brand you do not know or do not have the same positive associations with.
Positive brand equity is important to a business as it delivers the tangible benefit allowing
a business to make more money from the brand, it adds to the share price and ultimately the value or perceived value of the business. It also delivers an intangible brand value from brand awareness and the goodwill towards a brand. Businesses or brands are often sold for more than they are worth on paper due to their perceived value from having positive brand equity.
Negative brand equity has the opposite effect to both the brand and the business.
Stages of Brand Equity Development:
- Awareness – The brand is introduced to its potential customers through an integrated communications strategy.
- Recognition – Customers can recognise the brand in its marketplace
- Trial – Customers know what the brand is and its claims and will try it
- Preference – When the customer has a good experience with the brand it becomes their preferred choice.
- Loyalty – After several good experiences with a brand the customer will be loyal to that brand and be evangelical about the brand and recommend it to others. This has a halo effect for any products perceived to be part of the brand or associated with it.
How can I look at improving my brand equity?
Start by looking at the visual elements of your brand and asking yourself some questions:
- Is my brand easily identifiable?
- Does my brand look consistent across each consumer touch point (each place where my brand is seen by my customers)?
With an independent market research organisation, conduct some consumer research, ask consumers and potential consumers:
- What they think of my brand?
- How do they identify it?
- Do they think my brand looks consistent across each touchpoint?
- How would they position my brand in the marketplace I operate in?
- What brand language do they associate with my brand?
- What are their thoughts on my brands product performance?
- Can they name the features of my brand and identify the differentiation?
- What perception do they have about the quality of my brand?
- How does this compare to my competitors?
- What associations (brand, environment, celebrity) do consumers associate with my brand?
Look at your marketing and PR strategy, and ask yourself:
- Does the strategy highlight the product differentiation?
- Do have I have comprehensive brand equity guidelines?
- What associations does my brand have? Do they all have a positive halo effect on my brand?
- Do my PR & Marketing activities provide consumers with proof of performance? Does it give them enough knowledge of why it is superior?
Brands are arguably one of the most valuable assets that a company has and it is important that they are taken care of strategically.