You can measure the success of your company easily by financial statements, customer satisfaction, new and returning customers, employee performance reviews, and staying current on the market. Your brand’s value, however, depends on the public perception of your brand and its recognition compared to its generic equivalents. With this in mind, today we’re going to talk about brand equity. What is brand equity, how do you measure it, and how to build it for your brand? Let’s find out.
Article overview:
1. What is Brand Equity?
2. The Benefits of Brand Equity
3. Keller’s Brand Equity Model
4. The Four Components of Brand Equity
5. How to Build Brand Equity
6. How to Measure Brand Equity
1. What is Brand Equity?
For Google, it was the moment people started using the phrase “I’m gonna Google it” instead of “I’m gonna look it up on the internet” that cemented the company’s brand equity.
In marketing, brand equity is the term that describes the brand’s recognition and added value in its name. This is determined by how the customer perceives your brand and what opinion they have of it. It refers to the premium that you generate from a product compared to a generic equivalent. For example, you can generate more sales by making better, new, or improved products constantly. But if you manage to take care of your brand equity and make sure public opinion is on your side, you won’t have to. Your brand equity will do the work for you.
In fact, if your company has positive brand equity, your customers will be happy to pay a much higher price for your services in comparison to the same services by a generic brand for much less. The three basic components of brand equity:
- Perception: This is the knowledge customers have of your brand and the experience they’ve had with your services.
- Effects: They can be positive or negative for the brand, organization, services, and profit.
- Value: Tangible value that translates into revenue, and intangible value that translates into brand awareness. Depending on the effects, the value can also be positive or negative.
2. The Benefits of Brand Equity
The market is a giant ladder and you want to be as high on it as possible. Brand equity plays a big role in that since it attaches a level of prestige to your brand. There are three major benefits to why brand equity is that important.
- Profit Margin: The amount by which revenue from sales exceeds costs is your profit margin. Higher levels of brand equality allow you to charge more for a product or service in comparison to your competitors, despite the fact it was obtained or manufactured at the same price. Logically, the difference will be much more profitable to the company with high brand equity.
- Sales: Since customers tend to purchase products and services from brands with a good reputation, this will have a direct effect on sales.
- Customer Retention: Your customers will not only wish to pay more for your product. They will want and anticipate more products. In this phase, your brand equity does the job for you and your company doesn’t even need to spend that much on marketing.
3. Keller’s Brand Equity Model
Kevin Keller is a marketing professor at the Tuck School of Business at Dartmouth College. He is also the author of “Strategic Brand Management”, which is one of the most recognized textbooks about marketing in the world! In his work, he presents us with his Customers-Based Brand Equity Model. It illustrates how building a successful and stable business depends on how customers perceive and experience your brand. This will create positive feelings and will sway public opinions about you.
Keller’s Brand Equity Model
Brand Identity
Also known in the model as Brand Salience, this is your brand awareness. It determines who are you and what makes you stand out from other brands offering similar services. The key take here is that in addition to building your identity and awareness, you tick all the correct points to ensure the right type of perception.
In order to do so, it will take thorough market research to understand how the different market segments interact with your brand. These are the questions to start with:
- Are there different market segments and their specific needs?
- In what way do different market segments have a different relationship with your brand?
- When it falls to your brand and a competitor’s brand, what makes the customer choose your services?
- Do you have a unique selling proposition in comparison to your competitors?
- Is your unique selling proposition clear to your market?
Once you’re able to answer these questions, you’ll be able to understand exactly how your market perceives your brand. Does your market perceive your brand the way you intended, are there any specific issues you need to address, do you need to change the way you communicate your message, and more valuable insight.
Brand Meaning
The next step is identifying your brand meaning and communicating it properly. According to Keller’s model, there are two building blocks: performance and imagery.
- Performance: This block defines how your services meet the needs of your customers. There are five categories in which your services “perform”: features and main characteristics; reliability; service effectiveness; design; and pricing.
- Imagery: This block also refers to how your services meet the need of your customers, but on a social level. It’s when the services meet these needs on a psychological level, from the customer’s own experience with the services; or with marketing.
For example, on a performance level, your services meet your customer’s needs with valuable features, the durability of the product, an effective way to solve the problem, great design, and competitive price. On an imagery level, however, your brand takes part in environmental programs and part of your profit goes to causes that help to recycle. Your brand has a meaning: great service performance and contributing to important causes. To create your own brand personality, you need to identify what your brand meaning currently is and is it what you originally intended. In this step, you determine if you need to make changes in “personality”.
Brand Response
Once you’ve built your identity and meaning, what comes next is the responses by your market segment. These responses fall into two categories:
- Judgments: Your customers will make judgments about your services and brand based on its quality; your credibility; how relevant your services are to their specific needs; and are your services superior to similar services by competitor’s brands.
- Feelings: This refers to what feelings your brand evokes in your customers. In Keller’s model, these could be warmth; security; fun; excitement; self-respect; and approval.
For this step, you have a lot of work to do. Starting with the judgments, you need to consider what you can do to improve the quality of your services and your brand credibility. The second step is for your marketing strategy to determine an efficient way to communicate the relevance of your services is to your customer’s specific needs. Third, find out how your services compare to those of your competitors. And last, consider determining which feelings your brand evokes in your customers and how to enhance them.
Brand Resonance
The last segment of the pyramid, which is the very top, places the brand resonance. This is the degree every brand strives to reach as it reflects resonating with your customers on a deep psychological level. According to Keller, brand resonance means your brand has achieved: customer’s behavioral loyalty; attitudinal attachment; a sense of community; and active engagement.
Often brands encourage behavioral loyalty through rewards, gifts, social presence to inspire engagement.
4. The Four Components of Brand Equity
We can also call them the 4 dimensions of brand equity. Once your brand identifies its value, you’re ready to follow the roadmap for building and managing that value.
Brand Loyalty
Your customers already have a good experience with your services. You have built their trust and earned their loyalty. This means they will choose your services instead of similar ones by competitor brands and will even recommend them to other people. At this stage, you can safely introduce them to new products and services that they would gladly try.
Another part of your business that greatly benefits from good brand equity is your stock price. If a lot of people believe in your brand, the company’s stock will most likely continue rising in the long run.
Your brand can capitalize on this by reducing marketing costs, trade leveraging, attracting new customers, enhancing awareness, and responding to threats by the competitors.
Brand Awareness
Brand awareness refers to how much people recognize you. It might take years of brand campaigns running in the background, but when it pays off, your brand is on its way to achieving high equity. This dimension includes attaching associations to your brand; building familiarity and liking; gaining visibility, and signaling commitment.
Perceived Quality
Customers are often willing to pay more for a product or service from a brand with a good reputation. There are many ways to sway public opinion in your favor. However, no matter what strategies you implement, the most proven way to ensure that people perceive your products as quality ones, is to offer high-quality services and improve them further based on customers’ feedback.
Brand Association
The last brand equity dimension refers to a set of qualities that communicate specific information to your customers. Brand associations exist thanks to your brand marketing activity. Their purpose is to differentiate your brand from the competition and give your desired market segment a reason to choose your services. More specifically, the brand association helps customers remember your brand and its unique solutions to a specific problem.
5. How to Build Brand Equity
After learning how brand equity works, let’s have a look at the 5 best strategies for building high equity for your brand.
Make your brand recognizable
Building brand awareness is a hard task, but a path worth taking. In order to introduce customers to your brand and become recognized, there are a couple of strategies you can try.
- Consistency: Build a distinctive identity for your brand by creating the name, logo, design, symbolic elements, and color scheme related to the brand. It will give you consistency.
- Story: Who are you? What is the story behind your brand? Why are you so passionate about what you do? Make people care.
- Value: Provide ongoing value to your services.
- Presence: tap into social media platforms to share quality content people would love. Also, keep in touch via email and newsletters.
- Customer Service: Offer quick and effective customer service.
Creating a bond with your customers
Making a deep psychological bond with your customers means gaining their loyalty. To accomplish that, first let your customers know you see them as people, not money dispensers. Focus on paying attention to their needs by conducting surveys, asking for feedback, answering their comments, and being accessible. Make communication as simple as possible.
In order to build such a strong bond, honesty is key. You can maintain that integrity by delivering services or responses exactly when you promise and leaving a good impression. If that means giving something for free to boost your reputation, don’t hesitate.
Make people know what you stand for
Your services meet your customer’s needs in terms of performance. This is great. However, consider the social and psychological needs as well. This includes a genuine commitment to a cause, sharing your values and brand mission. What do you contribute to the world? What will your customers contribute to the world by supporting and associating with your brand?
Find the target audience
People are very different and the more successful your company becomes, the more diverse your customers will be. It is important to divide your target customers based on specific criteria and run different campaigns simultaneously. This will give you valuable insight into what your target market actually looks like and to whom you’ll be communicating your message.
Know your data
Knowing who, when, where, and why is using your services could be critical to achieving success. Consider linking your website to Google Analytics and using the insight to target with more precise parameters for Google and Facebook ads. You can improve your marketing campaign and social media posts, custom-tailor for your specific audience and their purchase patterns.
6. How to Measure Brand Equity
As subjective as it seems, there are six metrics to help us measure brand equity.
- Sentiment Analysis: This technique determines whether data is positive, neutral, or negative. Also known as opinion mining, sentiment analysis uses textual data in the form of customer feedback.
- Brand Awareness: You can measure it by launching awareness surveys to your target group; checking your social media following and engagement; using Google trends data; using brand tracking software; checking mentions and extra publicity on third-party websites.
- Preference Metrics: This method measures your brand’s competitive position and determines customers’ preference patterns.
- Financial Metrics: This refers to your brand’s monetary value, market share, company value, and revenue potential.
- Competitive Metrics: It refers to the areas where your competitors fail to meet the customer’s needs. You will learn exactly the areas you need to capitalize on. This refers to measuring customer acquisition rate, ROI of distribution channels, and sales lift.
- Brand Audit: And last, in order to understand how successful is your brand, is to find the inconsistencies in your market strategies and locate potential opportunities and threats.
In conclusion
Brand equity is the key factor that determines your business performance over time. It’s strategic support to build a long-term brand value, recognition, and loyalty.
