You see, brands are more than mere symbols, logos and names.
They are the foundation of your company as they play an essential role in the relationship between the company and consumers.
Think of the last time you went grocery shopping.
More than likely, you had many options in choosing a specific product, for example, Nutella.
The famous hazelnut spread has plenty of off-brand versions that might taste similar with lower prices. Yet, most people still prefer Nutella.
As such, Nutella is a prime example of how brand equity matters.
Since Nutella has better brand equity than the off-brand versions, customers gravitate toward Nutella despite the existence of cheaper alternatives.
If you are not familiar with brand equity and its significance in the business world, we’re here to help!
This article will go over how to define brand equity, its importance, and how to brand equity.
What is Brand Equity?
While one might think that brand equity is just one of the many taxing marketing buzzwords, understanding brand equity is exceptionally vital.
Brand equity is significant if you’re building a brand or promoting a new product.
Without further ado, let’s dive right in!
Brand equity is the advantage of having a reputable and well-liked brand name.
Essentially, it’s a metric for determining a brand’s ability to elicit consumer preference and loyalty.
The more powerful a brand is, the higher its brand equity.
There are two types of brand equity; positive and negative.
When people react more warmly to a brand than to a generic or unbranded version of the same product, the brand has positive brand equity.
Meanwhile, if consumers respond less favourably than they would to an unbranded version, it has negative brand equity.
The Importance of Brand Equity
What is the worth of my company’s brand?
How can my brand accomplish this goal of mine?
Generating brand equity is critical since it allows businesses to more effectively communicate with their customers to foster brand loyalty and enable the company to expand.
Although brand equity is most commonly associated with multinational companies, the truth is that brand equity is the crux of every business.
SMEs, start-ups, too, those dipping their toes into the treacherous waters of business must also contemplate the value of their brand since this will assist them in establishing themselves in the future years and subsequently direct the company toward a remunerative objective.
If you do not have brand equity, you will eventually lose to your competitors.
First and foremost, buyers frequently rely on their shopping selections for brand equity.
They purchase goods from companies in which they believe and have faith, which they recognise, and continuously deliver value.
In addition, you’ll need an outstanding amount of brand equity if you ever want to raise your rates. You may recall a point in your life when you switched brands owing to a price increase.
Conversely, you may also remember a time when you stayed with a brand despite price increases.
To elucidate, one can take Astro, one of Malaysia’s prominent pay-tv providers, into consideration.
Previously, the crowds chastised the company for hiking its service costs and charging users penalty fees.
Despite its overcharging controversies, Astro managed to retain most of its subscribers due to its brand equity.
To sum it up, the three significant benefits of growing brand equity is increased sales, immense profitability, and a lot more influence.
How to Create Brand Equity
To know how to generate brand equity, you must first know and understand the components.
Here are some features of brand equity that you must know:
#Brand Recognition and Awareness
Brands like Nutella and Milo are household names and bear outstanding brand equity.
However, it is not needed for your brand to be a household name as it is more important for your brand to be recognised among your target audience instead.
Meanwhile, brand awareness is a step further than brand recognition. While you might recognise certain brands, you might not be aware of their benefits and services.
For instance, you are aware of Apple products, and due to your intense brand awareness, you might even immerse and devote yourself to Apple.
#Customer Preference and Experience
Customer preference is tremendously vital as it shows how your brand is perceived.
While you can’t dictate your customers’ choices, you can influence and persuade your customers to choose your products rather than your competitors’.
Next, customer experience can make or break brand equity.
One of the ways to ease customer experience is by perpetually testing your products with your customer in mind.
Would they like it? What could be better?
Perceived quality is the amount of money a consumer believes a product is valued vs the actual price tag on the goods.
When perceived quality improves, other aspects of the customer’s perception of the brand also tend to improve.
Good brand perception will then boost brand equity.
If you want to increase your brand equity, you need to consider all the components stated above.
There is no single methodology that will assist you in establishing and maintaining brand equity.
Instead, it’s a continuous process that necessitates your active participation to ensure a good end goal.
As the adage goes, Rome is not built in one day.
Creating brand equity is a complex undertaking that seldom occurs overnight, but it is critical for your company’s long-term success.
A solid and robust brand strategy that encompasses various marketing channels is a must.
If you want to improve your brand image or establish brand equity for your company, contact our branding consultant today!