I’ve a confession. I’m a sucker for buying certain brands over others simply because I’ve a hunch they must be better. Like the paint with the Old English sheep dog or the cornflakes with the cockerel. I’ve no proof or rational reason, it’s just the power of brand equity.
What is brand equity?
What is brand equity and how do you build it? In technical terms, brand equity development is the commercial value of your brand that derives directly from your customer’s perception of your product or service, rather than the actual value of the product or service itself.
Or, to put it another way, it’s the magic dust that differentiates the most valuable brands from the rest.
Why is brand equity important?
If your brand has positive brand equity it holds sway over your competitors and your customers will pay a higher price for your products.
Another brand equity equity advantage is that it makes it easier for you to attract the best talent and motivate your team, so they’ll be more likely to work harder and stay with you longer too.
Here’s an example you may have come across before:
Estée Lauder (high-end cosmetics’ company) and Rimmel (high street chemist cosmetics’ brand) share manufacturing facilities and receive ingredients for their products from the same manufacturer.
So although their operating costs and ingredients are roughly the same, Estée Lauder can charge up to four times more for their products. The reason? Estée Lauder has more brand equity than Rimmel.
How do you build brand equity?
You can build brand equity two ways:
1. Brand Awareness:
Firstly your target market needs to know you exist.
Whether you are measuring your brand awareness using unaided or aided recognition or the more recent approach of brand salience, you need to understand what percentage of your target audience think of you when they want to buy your product or service.
As you begin to build brand awareness amongst your target audience you are creating associations that they will link to your brand. These associations help your target audience to recognise and distinguish your brand from the competition. Your messaging and identity need to stand out and be conveyed cohesively and you need to consider what kind of associations you are placing in the minds of your customers. For example, is it innovation, sustainability, quality or value?
We can get you started with our brand discovery sessions. Here we explore your story and what makes you different. We’ll develop your brand positioning and help you communicate this to your audience in a compelling and engaging way.
2. Brand Experience:
These days consumers are tougher on brands than ever before. A recent survey suggests 80% of CEOs believe their organisation is delivering a superior service but, when asked, only 8% of customers agreed.
This is called the Experience Gap and one you need to bridge if you’re going to have high brand equity. It means being relentlessly true to your story in all brand communications, campaigns and brand touchpoints.
Using every brand experience, every interaction, as an opportunity to reinforce what you stand for and create deeper, more emotive connections will only help to strengthen brand equity.
Read more on how we approach brand communications with both your short term goals and your brand equity in mind.
How to measure brand equity
The added value of brand equity can be quantified in three ways:
Economic data or financial metrics – the ‘what’, like sales, market share, profitability, revenue, price, growth rate, cost to retain customers, cost to acquire new customers. These and other indicators of good brand equity should all be increasing if you’re on the right path including the value of a customer over their lifetime and your price premium in comparison with your competition.
But these figures can only tell you about past activities and what’s happened. It can’t tell you what will happen in the future. For this you need:
Emotional data or experience metrics – the ‘why’. Brands that invest in their brand equity get a ‘mental advantage’ over other brands. Here you can measure the differential value the brand has acquired in someone’s mind, as a result of multiple interactions over time. You can capture this brand equity data using preference metrics derived from consumer surveys and focus groups, with a series of evaluative questions that assess the relative preference, or ‘wantability’ consumers have for your brand. Common models for this include Millward Brown’s MDF framework and Ipsos’ Brand Value Creator (BVC).
Brand awareness data or knowledge metrics. Again, typically through surveys, focus groups or other forms of feedback you can measure the success of your brand identity and campaigns in building brand equity, and the positive brand association you’ve been able to develop. What kind of first-hand feedback are your customer service or sales teams getting. How are you holding up on Trustpilot – or Twitter?
How do you keep brand equity?
Once your brand equity is established your brand needs to act consistently to keep it. You need products and service that go beyond the expected and you can’t afford your standards to slip.
But it’s more than that; in practice it means seeking to express what you stand for in everything you create and do. From standalone, one-off, sales-focused communications, to fully integrated marketing campaigns that promote positive emotional responses.
Our top tips for retaining brand equity include:
- Stay authentic: Sense check your proposition and core values regularly to make sure they still reflect what your brand believes in
- Stay connected: Creating a community through your brand is a good way to improve brand equity over time and to stay in tune with what your customers think about you. There are numerous ways to create a community including newsletters and social media groups
- Retain your quality: As your brand equity grows, make sure your products and services are always the best they can be.
You may also want to read our article on customer loyalty.
- Brand equity is the magic dust that makes your product or service more desirable than a competitor with a similar offering
- It can’t be bought, it begins by defining your brand and building over time
- Brand equity can be measured using economic and emotional data
- Brands with the greatest brand equity remain meaningful, distinctive and consistent
- Brand equity also makes it easier for you to attract the best talent and motivate your team.
Like to know more?
Want to learn more about the advantages of building strong brand equity and the difference between brand equity and brand awareness? From breweries to banks we’ve helped hundreds of clients to build and retain brand equity through brand development, rebranding and brand identity design. Get in touch to find out more.