The Importance of Establishing Brand Equity
Brand equity refers to how consumers respond to a particular brand, and in fact can be said to be the value of the brand itself, reflecting how that brand is being experienced by consumers. Customer-based brand equity demonstrates to what extent consumers’ perceptions of and attitudes toward a product will result in that product’s ultimate success or failure. As Elon Musk has said, “Brand is just a perception, and perception will match reality over time. Sometimes it will be ahead, other times it will be behind. But brand is simply a collective impression some have about a product.” (TheAgeofIdeas.com). There was a time when this type of equity was established directly, through person-to-person interaction; these days, audiences can be reached through all manner of advertising media, including online exposure and various social media platforms.
Positive brand equity can translate directly into increased sales. It is a quality that can be built, beginning with the establishment of a strong foundation, designed to generate positive feelings in consumers about a brand. Although the concept of brand equity might at first appear to be abstract, the benefits of constructing a strong one can be experienced by companies in distinctly concrete ways. These can include higher pricing, customer loyalty and an increased capacity for long-term growth. Positive brand equity also provides real advantages in terms of negotiating with vendors, and maintaining a competitive edge in any marketplace.
Ways of Assessing Brand Equity
According to Intuit co-founder, Scott Cook, “A brand is no longer what we tell the consumer it is—it is what consumers tell each other it is.” (BenFrancia.com). He goes on to observe, “Psychologically speaking, branding is an incredibly powerful marketing strategy, and it can make all the difference.” The question then arises: How can companies assess how much a difference is being made? Brand equity is a largely intangible quality; it can, however, be evaluated by measuring more tangible aspects of a company, such as the loyalty of its customers, its overall reputation, and to what degree its brand establishes and maintains levels of consumer recognition and familiarity.
Companies need to determine the relative health of their brand, recognizing its strengths and determining any weaknesses that might need to be addressed. This type of investigation can be done in many ways, from simple consumer surveys to more complex systems of metrics. Data can be gathered and compiled to determine a brand’s performance in key areas of consideration. These are often grouped into metrics that measure such areas as consumer awareness and recognition, preference and product positioning, and financial and revenue calculations.
Two Brand Equity Measurement Models
Since the concept of brand equity can appear intangible, and therefore not readily quantifiable, models are often employed, depicting various areas of consideration. The most well-known one is the Keller Model, utilizing a pyramid structure to demonstrate the different aspects of brand equity, with each step building on the one before it. The four levels of the pyramid are delineated as follows: Brand Identity, where brand awareness is introduced; Brand Meaning, where a brand’s identity is established; Brand Response, describing how consumers’ expectations are being met; and Brand Resonance, which is all about the strength of consumers’ relationships to the brand in question.
Another brand equity model that can be used is the Aaker model. While the Keller Model is based on more complex emotional reactions, the Aaker Model is a somewhat simpler tool, relying primarily on factors associated with brand recognition. By identifying different aspects, and scoring the data gathered within them, a measurement of brand equity can then be determined. These components include: Brand Awareness, Perceived Quality, Brand Associations and Brand Loyalty.
Brand equity cannot be overestimated as an effective and readily available marketing strategy. In the words of Amazon founder, Jeff Bezos, “Your brand is what other people say about you when you are not in the room.” (StalwartCompany.com). By measuring brand equity, a company has the opportunity of becoming a fly on the wall of that room.
About the Author:
Otis Kopp
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