What is brand equity

In this situation, brand equity is one of the only things setting the products apart. Hence all the nifty art, music, and celebrity endorsements.

Put another way, brand equity is the value premium a company generates from a product with a recognizable name when compared to a generic equivalent. Source: Taste of Home.

Cereal is another great example here. Brand equity accumulates and varies over time. It is a cultural value based on public information, and the collected perceptions resulting from brands communicating with consumers through advertising and other exchanges. Brand equity is negatively affected by information that runs against the public perception of a product.

In the past, businesses invested in traditional forms of market research to try and pin down brand equity, as well as tracking changes in equity over time.

By traditional forms, we mean surveys, questionnaires, and focus groups. Answers to these questions help businesses to better understand their brand equity. If market research is conducted repeatedly, it allows brands to track perceptions of their equity over time. Unfortunately, for most of history, these methods have been the only game in town. But how exactly has social media changed brand equity?

How have platforms like Facebook, Twitter, and Instagram changed the way brands build and measure their equity? Before the rise of social media, consumers had a much smaller platform to voice opinions concerning brands and products. Besides recommending a product to friends and family, there was little a single consumer could do. Source: Live Chat. More than just funny takedown tweets, social media facilitates the spread of information, including negative reviews of a brand or product.

This is because communication with brands becomes immediate, personal, and transferable, able to be spread quickly around the world. Brand presence on social media has turned brand equity into a constant exchange. This model provided one perspective on brand equity that is worth another look now more than twenty years later. Another aspect of the definition of brand equity that I presented in my book was the argument that brand equity is that is also provides value to customers.

The fact that it provides value to customers makes it easier to justify in a brand-building budget. This model provides one perspective of brand equity as one of the major components of modern marketing alongside the marketing concept, segmentation, and several others.

Brand equity has four dimensions—brand loyalty, brand awareness, brand associations, and perceived quality, each providing value to a firm in numerous ways. Once a brand identifies the value of brand equity, they can follow this roadmap to build and manage that potential value.

The introduction of brand loyalty to the model was and is still controversial, as other conceptualizations position brand loyalty as a result of brand equity, which consists of awareness and associations. But when you buy a brand or place a value on it, the loyalty of the customer base is often the asset most prized, so it makes financial sense to include it.

The strongest brands have that priority. Amazon and Apple are classic examples of brands with positive brand equities. They also deliver on their promises to customers— Amazon provides convenience and industry-leading shipping options, while Apple prioritizes innovation and sleek design. All factors combined, these brands boast positive reputations, or brand equities.

There are a few brands that stand out as those who have arguably mastered positive brand equity. These brands have achieved consistent, identifiable design, unaided awareness, and, in many cases, unwavering consumer preference over competitors.

In , John Sculley, a former executive at Pepsi who went to Apple, said to the Guardian, "People talk about technology, but Apple was a marketing company.

It was the marketing company of the decade. This business should have been dead 10 years ago, but people said we've got to support it. They buy why you do it. They had spent the majority of their time highlighting features for example: Gateway was certainly qualified to make flat screen TVs, but their new products never caught on with the public.

Apple on the other hand focused on the brand and its relationship with the consumer. They dared consumers to challenge the status quo right alongside them, so when they introduced revolutionary products such as the iPod or iPhone, consumers were eager instead of confused.

Focusing on brand creates customer relationships and unties a company in a single direction. Nowhere is the emphasis on brand more prevalent than in the constant debate of Pepsi versus Coca-Cola.

The Pepsi Challenge campaign in the s forced the Coca-Cola company to take a look at their product line in one of their marketing campaigns The Pepsi Challenge. Coke even sweetened their drink to try to meet consumer demand, but was faced with backlash. Coca-Cola began focusing on its brand more so than the product. They emphasize how Coca-Cola brings families together using relationships and nostalgia i.

Share a Coke campaign. The brand uses a logo, font, and consistent color scheme that are immediately identifiable. We continue to see instances of brand over product today. In fact, Adidas recently announced plans to move away from short-term metrics to focus on overall brand health. As demonstrated by these and other brands, establishing positive brand equity can have a marked effect on the bottom line. With this in mind, organizations should devote resources to building out these campaigns with customer values and experience in mind.

The shifting focus to the consumer means that organizations must actively think about the brand image they are creating for themselves, as well as how each action and initiative contributes to overall brand awareness and perception. Equipped with this information, marketing teams can make strategic, data-driven decisions about how to optimize future strategies designed to build brand equity and drive ROI. How to Build and Measure It. Awareness and experience are the two key tenets of brand equity: Brand Awareness: Can consumers easily identify your brand?

Messaging and imagery surrounding your brand should be cohesive so consumer can always identify it, even for a new product. What kinds of values do consumers associate with the brand? Perhaps they think of sustainability, quality, or family-friendly qualities. Brand Experience : How have first hand experiences with your brand gone?

This could mean that the product performed the way it was supposed to, that encounters with brand representatives and customer service teams have been accommodating and helpful, and that loyalty programs have been worthwhile.

Why is Brand Equity Important? How Brand Equity Impacts Return on Investment ROI Brand equity can positively affect the bottom line in the following ways: Order Value per Customer If your brand has positive brand equity, people are more likely to spend more money to purchase those products.

Customer Lifetime Value: If your customers are loyal to your brand, they will purchase more from you. Apple is regularly regarded as one of the organizations with the highest brand equity. Apple users tend to own other Apple products, while Android users do not generally have a loyalty to a specific PC technology provider.

Customer Loyalty: Customers are 7 times more likely to forgive brands they are loyal to for mistakes. Additionally, consumers are 9 times more likely to try new products from brands they are loyal to. Stock Price: Strong brand equity can increase stock market process for organizations, out of the expectation that it will continue to perform.

How to Build Brand Equity There are obvious payoffs to establishing brand equity, but it takes a lot of work and research upfront to build and maintain this status. Test your Messaging When creating messaging, it is still important to test your positioning with consumers.

Drive Awareness Once you have a compelling message, you must drive awareness for both your brand and your company focus.