Brand Equity Guide

Brand Equity Guide
Article by Jelena Relić
Last Updated: November 12, 2023

Brand equity is vital to winning in your industry. In today's dynamic business world, the immense impact of social media has revolutionized how you can build, maintain, and track brand equity

This article will define brand equity, discussing its moving elements and value and looking into ways of measuring it. Also, you'll learn how to create brand equity that will boost your business efforts.

What Is Brand Equity? 

Brand equity is the total perceived value of a brand name as a distinct asset. This is based on consumer perception and reception of the brand. 

It pertains to assets and liabilities associated with the brand name and what it symbolizes. These assets and liabilities either increase or decrease the perceived value of a brand based on its product or service offers. 

The concept of positive brand equity enables you to position your offers and formulate your marketing strategies in a way that makes your enterprise stand out in a crowd of competitors. 

This is the premium value your business generates from your products or services through a recognizable name, relative to the generic marketplace. 

81% of consumers believe that they should be able to trust a business to do what is right. Hence, a brand’s cultural value varies over time according to public information and people’s collective opinion. It may build up or lower depending on how you communicate with your target audiences via advertising and other correspondences. 

Just as it can be positive, there is also negative brand equity. We talk about negative equity when a brand constantly betrays the trust of its customers, which is why they stop buying and recommending it. 

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Why is Brand Equity Important?

Brand equity is a valuable step to your business growth and scaling. Here are the benefits of increasing your brand equity: 

  • It helps increase your market share. 
  • It helps improve your brand valuation in your industry. 
  • You gain loyal customers who stay longer. 
  • It lowers price sensitivity, letting you charge more for your offers than the average market price. 
  • Strong brand equity is an asset that can be leased, sold, or licensed. 
  • You can launch and market a new product line easier. 
  • You can have longer tenure for your company. 
  • It attracts and acquires new clients. 
  • It can convince people to switch to your brand from another. 
  • It is a solid indicator of your enterprise’s strength and performance, especially compared with competitors. 
  • It inspires positive feedback and opinion from consumers. 
  • It sets you up for long-term success. 
  • You can experience lower customer churn. 
  • You can enjoy greater brand recognition. 
  • It helps advance your bottom line and profit margin. 

Elements of Brand Equity

Firstly, brand awareness reflects the extent to which consumers recognize and remember a brand.

Brand association involves connecting the brand with positive attributes, emotions, or experiences.

Perceived quality relates to consumers' judgment of a brand's superiority. Brand loyalty signifies customer commitment and repeat purchases.

Lastly, brand personality and differentiation set a brand apart, fostering a unique identity.

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How To Build Brand Equity?

As you can see, brand equity is the value a brand brings to your company. A reputable and recognizable brand has more potential for success than a generic one since people tend to purchase from brands they trust and have an emotional connection with. 

This is why it’s essential to know how to build brand equity that is positive and persuasive. 

Here are four proven strategies to help you develop a long-term brand equity model: 

  1. Build Brand Awareness
  2. Communicate Brand Meaning To Your Customers
  3. Create a Positive Brand Response
  4. Foster Meaningful Relationships With Your Customers

1. Build Brand Awareness

The first step in developing brand equity is building brand awareness or a strong brand identity.   

Brand awareness brings the following advantages to your business: 

  • Makes your brand more visible to customers and search engines. 
  • Helps improve your brand perception. 
  • Builds trust and credibility. 
  • Facilitates lead generation. 
  • Drives traffic to your website. 
  • Increases sales. 
  • Boosts word-of-mouth marketing. 

To improve brand awareness, develop and consistently use a brand name, logo, slogan and other visual and textual elements that distinguish it from the competition. Your brand identity should be unique and memorable and reflect your company's values, personality and mission. 

2. Communicate Brand Meaning To Your Customers

The second step of building brand equity is to develop a strong brand meaning — the set of associations, feelings and perceptions consumers pair with your brand.  

One way to develop brand meaning is to consider how well your product meets customers' needs — not just physical but also social and psychological needs.  

Producing helpful products that add value to everyday life and committing to social or environmental responsibility will attract customers who share those values because customers care for brands that align with their personal beliefs.  

This, in turn, can help build brand equity by creating a positive brand response from customers and employees. When a brand's values and purpose align with those of its customers, it can create a deep emotional connection and a sense of loyalty and advocacy.  

Communicating brand purpose and messages correctly will create a strong brand meaning that resonates with the target audience and helps build brand equity over time. 

3. Create a Positive Brand Response

You can shape and reshape customers' perceptions of your brand.  

The third step is to create a positive brand response from your target audience. Provide a satisfying user experience across all digital and physical touchpoints, such as your website, social media channels, customer service, product packaging and other brand interactions.  

You want to create a consistent and positive brand experience that builds customer trust and loyalty. Satisfied customers will spread word –of mouth and be the best advocates of your brand. 

4. Foster Meaningful Relationships With Your Customers

The final step is establishing brand resonance, the ultimate goal of building brand equity. Brand resonance is the relationship consumers have with your brand. It is characterized by a strong attachment, loyalty and advocacy.  

To achieve brand resonance, you must create a deep emotional connection with your customers and consistently deliver on your brand promise. This can lead to a virtuous cycle of brand loyalty, positive word-of-mouth and increased sales and profitability. 

How To Measure Brand Equity?

Measuring brand equity is essential to gain insight into your brand's reputation, the strength of its market presence, and its progress over time. 

There are two types of approaches to brand equity data measurement: 

  1. Operational Data (Economical Measurements) 
  2. Experience Data (Emotional Measurements) 

Operational Data (Economical Measurements) 

The economic approach to brand equity measurement is based on numerical values - finances and human resources data. Since these values fluctuate over time, they are measured repeatedly. This approach provides reliable information about brand performance as well as predictions based on past recurring patterns. 

However, although the economical method offers relevant and accurate insights into the brand’s past results and is easier to measure than sentiment toward the brand, it cannot predict future events. That’s where emotional measurements take over the spotlight. 

The following qualitative means provide operational data to measure brand equity: 

  • Website and social media traction: This is derived from and monitored via built-in or third-party analytics and insights on how many people visit your business page and social sites. It also covers how many online users talk about your brand and their sentiments based on social reactions and shares. 
  • Surveys and focus evaluation groups refer to regularly tracking any changes to your overall brand health by openly asking people’s opinions. 
  • Product value: This defines the strength of your brand equity if buyers prefer your brand despite a high price point and potentially low availability, among other considerations. 
  • Brand audit: It is a comprehensive assessment of your positioning on the market. Plus, an audit allows you to look into your business strengths to cultivate and the weaknesses to improve or eliminate. 

Experience Data (Emotional Measurements) 

The emotional approach explains decisions based on people's sentiments toward the brand.  

Brands that invest in customers' emotional attachment gain an advantage over their competition - customers are willing to buy their products even if they are significantly more expensive.  

The reason lies in the customer's identification with the brand - the customer ties his self-image to the values the brand promotes. For example, people who purchase high-end brands tend to consider themselves elite and that helps their self-esteem. 

These are quantitative metrics that provide experience data for measuring brand equity: 

  • Brand visibility and recognition: How your brand comes to a customer’s mind easily when a need for your available offers arises 
  • Brand value associations: The positive or negative feelings evoked when a customer is reminded of your brand name 
  • Brand differentiation: How people distinguish your brand from the rest and how they describe your offers relative to similar products of another company 
  • Customer loyalty: Consumers’ commitment to your brand depends on availability and pricing 
  • Purchasing frequency: The number of times a singular customer buys from you within a specified period, for example, in one month. 

To correctly measure brand equity, consider the metrics showing you operational and experience data. This will give you a complete picture of your brand's equity and performance. 

Benefits of Developing Brand Equity

Enhanced consumer recognition and loyalty, which are some of the benefits of brand equity, result in repeat business and sustained revenue. A strong brand commands premium pricing, fostering profitability. Positive brand associations contribute to a favorable consumer perception, increasing trust and credibility.

Robust brand equity facilitates new product launches, as consumers are more willing to try offerings from a trusted brand. Moreover, it provides a competitive edge by creating barriers to entry. In the long term, a well-established brand equates to resilience against market fluctuations and fosters customer advocacy.

5 Brand Equity Examples 

Brand equity dictates your superiority over another. Listed below are examples of companies whose positive brand equity keeps them ahead of the competition and winning in their respective markets: 

  1. Apple
  2. Facebook
  3. Starbucks
  4. Tylenol
  5. Porsche

1. Apple 

Consumer loyalty toward Apple, its demand, and its premium price point are higher than brands offering similar products. 

Its use of technological innovation maintains Apple’s superior brand equity as a global household name. 

The brand also owes its popularity to the unique way it positions itself on the market—a premium, luxury, and avant-garde label equipped with unparalleled technological modernity that never fails to deliver and amaze. 

2. Facebook 

The social channel is consistent in attracting and maintaining brand loyalty from online users. Many of them do not even turn to other platforms for online networking. 

3. Starbucks 

A large volume of positive brand perception has catapulted the coffee chain into an international success. 

Its name is attributed to consumer trust and outstanding client service has empowered Starbucks to sell coffee at a premium price. This has also enabled the brand to expand into retail spaces and collaborate with other companies across the globe. 

4. Tylenol 

A list of great examples of brand equity wouldn’t be complete without mentioning Tylenol, well-known pain relief medicine. Although many similar products are on the market, Tylenol is the leading one consumers trust the most. In addition to the basic version, Tylenol offers many other related products for different health issues and age groups, such as Children’s and Infant Tylenol, Headache and Muscle Pain, Arthritis Pain, Sleep and other medicines. 

5. Porsche 

Porsche is another excellent example of brand equity. The luxury car brand is one of the top 3 in America. It is known for its superior quality of artistry, use of unique materials and superb interior and exterior the vehicle. Porsche doesn't just sell cars; it sells an unparalleled driving experience. 

What Is Brand Equity Takeaway

Brand equity represents the overall value of your enterprise. It consists of these elements: 

  • Consumer awareness of your products and services (brand awareness) 
  • How people associate their needs with your offers (brand association) 
  • Their interaction or touchpoints with your brand—website, physical store, and client support (brand experience) 
  • The way they see your brand as a thought and industry leader (brand perception) 
  • Customers’ conscious decision to buy from you or employ your services (brand loyalty) 

It helps shape your marketing projects and impacts your ability to maintain a competitive edge in the long term. 

You can track your brand equity and its possible fluctuations through quantitative and qualitative metrics tailored to fortify your business amid dynamic economic trends. 

Brand Equity FAQ 

What Drives Brand Equity?

Brand equity is driven by factors such as strong brand awareness, positive associations, perceived quality, consumer loyalty, and unique brand differentiation

What Factors Affect Brand Equity?

Brand equity is influenced by factors like brand awareness, perceived quality, consumer perceptions, loyalty, marketing efforts, and competitive positioning.

Can Brand Equity Increase Profits?

Yes, brand equity can increase profits by fostering customer loyalty, allowing premium pricing, and attracting new customers

What Is Brand Equity in Marketing?

Brand equity refers to the premium value a specific brand gives its products or services. It signifies consumers' positive associations and perception or emotional attachment toward the brand. 

What are the components of brand equity?

Brand Awareness 

You should create awareness to build a reputable brand name. Prospective customers should be able to recognize your brand and its category to associate it with a specific niche. 

Brand awareness helps your marketing specialists strategize to increase visibility and find the right audiences through various advertising campaigns. 

It contributes to positive brand equity as awareness reflects people’s familiarity of your business, not confusing you with another brand name. The brand awareness scale ranges from discovery to choosing to buy a product from you or avail of your service. 

A common example of effective brand awareness is a logo, icon, or tagline being associated easily with a brand. 

Brand Association 

Brand association refers to interactions and attributes that clients relate to a certain brand. 

A good brand association results in repeat purchases and assists your company with word-of-mouth marketing. A critical contributor to high brand equity, this association allows consumers to identify your brand and set it apart from the competition. 

People find it easier to recall your defining characteristics by relating them to other positive differentiators impacting your brand. 

Brand Experience 

Client experiences with your overall branding aggregate with time. If they have an excellent brand experience, they will continue transacting with you, considering your company superior to others. 

Brand experience is a combination of the following: 

  • The environment if you have a brick-and-mortar shop 
  • The look and feel of your eCommerce website 
  • Customer interaction with your business web pages 
  • How your customer support representatives behave 
  • The product or service quality 
  • Uniformity of your product standards 

Brand Perception 

Brand perception pertains to how consumers think of and feel toward your brand. 

Since the average individual needs to invest in your brand before forming an opinion, keeping your brand’s promise to your target market is another factor affecting brand equity. People evaluate and compare competitor brands based on quality and price point. 

For businesses and marketers, quality perception will impact the company’s pricing decision. If you manufacture and provide exceptional quality products, you have the luxury to put a premium price tag on your offers. 

After all, 90% of consumers are willing to spend more on a trusted brand, and 40% say that high-quality craftsmanship is a foremost factor affecting their brand of choice. 

This is the resulting value of the positive characteristics of your products or services. 

Brand Loyalty 

There is brand loyalty when people choose to patronize your business over another. It leads to repeat sales and, in turn, helps you trim advertising costs because your customers become your brand ambassadors. 

Customer loyalty also makes it easier for your business to introduce new product offers targeting the same consumer base. 

Another crucial element of strong brand equity is, loyalty decreases the likelihood of customers switching to a competitor brand. It displays preference and adds more value to your brand name. It suggests that consumers believe in your business enough to discuss and recommend you to their family and friends. 

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