Brand Equity. MarketCheese

Brand equity is an intangible value lying solely in a brand name itself. It is reflected in customers’ readiness to prefer products of a certain brand to other relatively similar products, even if the brand products go for a higher price, as the customers’ commitment is based on their trust to the brand.

Brand equity is a logical continuation of recognition of a certain brand, but these concepts are not fully equal, as brand equity implies an increase in value of a product, which isn’t necessarily true in case of brand recognition.

Brand equity might be deliberately created by a company, as owing high positive brand equity brings significant advantages. High brand equity means instant recognition of a product, predetermined expectations of its quality and usability, even if the product is new. Such expectations are dictated by customers’ awareness of the brand’s typical qualities, and if the brand owner managed to create a credible reputation for his recognizable brand, all products of said brand would be met more favorably by the public than their equivalents by less known competitors, at least at initial stages of launch.

As creating brand equity is important for any kind of business, it’s essential to understand how this process works, and how brand equity affects the overall business results.

Brand Equity main features and benefits

In general, brand equity refers to the worth and influence of a brand name, and it actually might come in two forms – positive and negative. Brand equity is based on customers’ views on a brand, which are formed by their previous experience with said brand, that can be pleasant or unpleasant.

In theory, a company might have high negative brand equity, if it is a well-known entity with a massive market share, but its reputation is damaged by some reason. In that case, customers recognize the brand and intentionally avoid choosing its products if there are any other options available. So, negative brand equity might cause serious losses to a business, which can lead to unpleasant outcomes up to a collapse.

Positive brand equity, in its turn, has a beneficial impact on a company’s performance. It directly affects sales volumes and the revenue, as customers tend to buy well-known products of recognizable brands with a significant prominence they can trust, even if it implies spending more on such products. When a company achieves high brand equity, it allows gaining more than its competitors, as it’s possible to set higher prices acceptable by the customers, while spending the same amount of time and resources on production and marketing.

An additional advantage is also connected with marketing and promotion, as a widely recognizable brand doesn’t require as much promotional support as products of less popular and well-known companies, so the expenditure on marketing is relatively less. High brand equity also aids in launching new products under the same brand name, as the public is already familiar with the brand. People have certain ideas of what to expect from said company’s products, and customers are usually easier attracted to a new product if it goes by a familiar and well-respected trade name. The abovementioned marketing privileges might be viewed as intangible benefits going along with high brand equity.

So, in general, all advantages of disposing high brand equity usually result in two groups of benefits:

Tangible benefits, such as additional revenue gained by higher product prices and savings on certain marketing areas;
Intangible benefits, realized through increased brand awareness and a general benevolence of the public towards the brand.

Ways of attaining Brand Equity

Positive brand equity is a goal of many companies, and it is usually achieved through a system of special measures taken to gain the public’s attention. There might be a plenty of possible campaign scenarios, with their key elements depending on a company’s type, business style and the sphere it operates in.

The most efficient ways, however, are based on an initial research and study of the brand’s target audience. Most of successful campaigns of attaining high positive brand equity were focused not on products’ features or qualities, but on a brand’s mission and philosophy in general, which helped to attract attention not to a single product only, but create an overall demand for the company’s goods and services.

To create brand equity, it’s necessary to remember that there are several important elements, which form a positive attitude of customers towards the brand.

The following elements are considered to be crucial:

Brand awareness, which is reflected by how fast and easy customers distinguish a certain brand among others, and what attributes they associate with said brand;
Brand experience, which is based on a history of each single customer’s interaction with the products of said brand, being that a satisfaction with a product’s quality, the results of communication with the company’s representatives and/or a customer support employee.
Brand quality, which is represented by customers’ trust in a brand and their belief that the brand guarantees high quality of each of its products.

Although each company chooses its own way of reaching high brand equity, there are several popular moves tried by large world-famous organizations, which succeeded in gaining significant brand equity.

Some of those steps which might be taken to achieve the desirable result are the following:

Determining a brand’s philosophy and message by studying customers’ needs and interests;
Checking the chosen strategy by applying it on focus groups, getting feedback and adapting the strategy according to the received data;
Increasing the presence of the brand in the media and real life by promotion and other marketing strategies, all while sticking to a long-term strategy;
Remaining truthful to the chosen philosophy by avoiding marketing steps which seem to be attractive, but contradicting the chosen philosophy;
Engaging customers into a dialogue, focusing on their preferences and needs, emphasizing the brand’s openness to communication with its customers.