What is Brand Equity?
Brand Equity is the added value a company generates through branding and marketing activity. Brand owners and marketers can create equity for their product or service by making them easily recognisable, distinctive, memorable and conveying a strong sense of purpose or meeting consumers’ rational and emotional needs.
Understanding where your brand sits in the mind of the customer is essential for brand owners looking to develop/improve their brands name. Vision One’s BrandVision provides powerful research tools to measure and track brand health.
Brand equity develops and grows as a result of a customer’s experiences with the brand. The process typically involves that customer or consumer’s natural relationship with the brand that unfolds following a predictable model:
- Awareness – The brand is introduced to its target audience, often with advertising, PR and word of mouth in a way that gets it noticed
- Recognition – Building awareness can take time and as customers begin to recognise it then this inevitably leads to trust
- Consideration – Consideration can develop very quickly once familiarity and recognition have been developed and can lead to trailing the product. However, competition and their marketing activities will attempt to prevent this from developing any further.
- Preference – When consumers have a positive experience it can then become their preferred choice.
- Loyalty – Loyalty often develops after multiple experiences. The most loyal customers are often vocal and willing to recommend it to others – this is a measure captured by NPS (Net Promoter Score). The holy grail for many brand owners is loyalty – ideally where customers will only buy their brand that category.
Why is brand equity important in marketing?
Brand Equity is a measure of brand strength or brand health, and ultimately reflects the success of all marketing activities. Basic brand health metrics include measures such as; market share, market penetration, customer loyalty, net promoter score etc. More sophisticated brand metrics encompass brand imagery, brand values and needs.
Strengthening brand equity has several benefits. Perhaps the most obvious is that brands with a strong brand equity typically are more profitable or achieve higher revenues because consumers are prepared to pay more for their product than others. Furthermore, it becomes generally easier for a company with strong brand equity to expand into different products or services – largely because they’ve built up a trust with consumers already, some may follow a brand with its new product.