Last Updated on: 26th April 2020, 05:07 pm
Brand: A brand is the image and personality of a product or service that a business provides. It is what makes a company or business unique and different from others.
Equity: The term equity refers to the value of a group of assets after deducting the value of liabilities, or the value of an ownership interest in a business, such as shares of stock held.
Brand Equity: The additional value a product receives from having a well-known brand or a high level of brand awareness.
Have you at any point wondered why consumers would flock towards brands that have popular names over brands that are not as famous?
Have you ever wondered why businesses and companies give a ton of consideration into ensuring that consumers know their brand and remember it easily, not just the nature of their item?
The explanation is just a result of brand equity.
Before we dive deeper, how about we make one thing straight:
If your business or organization offers a product or service that doesn’t satisfy your customers’ and clients’ desires, your business won’t get much of anywhere.
Definition of Brand Equity
Brand equity is the business esteem that is derived from consumers’ perception of the brand name of a particular product or service rather than from the product or service itself.
Brand equity is the reason individuals would flock towards a brand because of its name, because the name is well-known, and not necessarily because their product or their service is the best in the market.
If people think highly of a brand, it has positive brand equity. …
If people think lowly of a brand, it has negative brand equity. …
Brand Equity is an amazing phenomenon and if marketers and entrepreneurs pay a lot more attention to it, they can supercharge their customer acquisition channels. They can even gain customers at a cheaper rate. The reason is obvious. The people will naturally get attracted to the brand and naturally want to buy their products because they possess a solid brand equity.
Importance of Brand Equity for a Business
There are some great advantages to maintaining positive brand equity in a business.
Let’s look at what good solid brand equity gets you?
- Premium Pricing
Businesses can charge more for a product or service with a great deal of brand equity. When you have positive brand equity, you can charge premium prices. People will pay more for your product because they suppose that they will get what they require from your offers.
Even if your competitors’ prices are lower than yours, having positive brand equity will make people choose your product or service over theirs.
Consider why most people pay double the price for name brands like Coke and Nike than for generic store brands.
- Reduced Marketing Cost
When people hold positive feelings about your brand, especially after having a great customer experience, they naturally spread the word about your brand to their loved ones (friends and families).
They will gravitate towards you and develop a willingness to promote your brand. This will save you lots of money during marketing campaigns, since these people will have already done a great deal of free advertising work for you.
- Business Expansion
Positive brand equity makes it easy for you to expand your business operations into other geographical regions. It also facilitates the addition of other products or services to your business offerings.
As long as people know of how great your brand is, they’ll be willing to try out your new products or services. They’ll also be happy if you expanded into their geographical region.
- Easy Scalability
If your business has awesome brand equity, it can get widespread recognition and eventually become scalable.
The reason is this – Since your business already has a positive brand image, manufacturers, marketers, and distributors associated with your business will trust you more. They will be more willing to negotiate and work with you without the fear of business failure.
Simple Ways to Improve the Brand Equity of Your Small Business
There are many areas to look at when you want to improve your brand equity. Below, we will look at three principal things can you do as a marketer or as an entrepreneur to enhance or increase your brand equity in the marketplace. These tips will help you gain more customers, or so that more people can be naturally attracted to your brand. They’ll also help you retain customers.
Now, value is in two phases. We have perceived value and the actual value.
Perceived value is more about branding. It is all about perception. The bread and butter of every business is its brand image. Your brand image is the accumulation of the tangible and intangible characteristics of your brand, as perceived by your target market.
Your brand image determines how your target market thinks and feels about your brand. People say that perception is a reality. Before people come to you, before people use your product or your service, the first thing is how they regard your business right?
Before the experience, perception comes into play. So, you want to make sure you are telling a story that people can buy into. You want to make sure you’re telling a story that people love; attractive stories. You want to make sure that your packaging on the outside is something impressive, wonderful, genuine, and exceptional, which would naturally get people to crave to associate with your business brand.
How do people perceive your business? When people think about your brand, when they think about your business, your product or service, what comes to their mind? How do they feel about your brand? That is your brand perception. You must pay attention to that.
A simple way to enhance your brand perception is by making sure that you are telling the right story, that you are driving the right narrative, and that your packaging on the outside is as excellent as your product or service quality itself.
Yes, perception is what would bring people to come to your business. But when they eventually come and start using your product or service, what keeps them is the actual value.
It is one thing to focus on packaging and telling people a good story (perception), but it is another thing to provide the right quality of product and service. This is very important because it is not all about attracting new customers; It’s also about keeping the existing ones.
You want to make sure that the experience you give people when they interact with your product or service, meets or even exceeds the belief that they had before they came to you.
One of the biggest impacts on brand equity is the value (actual and perceived).
Mercedes-Benz is a great example. Mercedes-Benz products are considerably more expensive than their competitors, but we well know their reputation for quality and class.
2. Top of Mind Awareness.
The second dimension to brand equity improvement is top of mind awareness.
I’m sure you’ve heard about brand awareness before right. Brand awareness is a marketing term that describes the degree of consumer recognition of a product or service by its name.
Well, top of mind awareness is another layer. It’s a bigger and deeper layer of brand awareness. It’s that when people think about your market, when they think about your industry, when they think about the product or service that you offer, it is you that comes up first. It is your business that they contact first. Hit it?
For instance, when you think about noodles, which brand comes to your mind? I bet it’s Indomie right? Indomie has a top of mind awareness. When you think about pens, which brand comes to your mind? Biro? If it’s biro, then biro has a top of mind awareness for you. When you think about soft drinks, which brand comes to your mind? Coke? If it’s coke, then coke has a top of mind awareness for you. The list goes on.
For all these things I have asked you, the brand or the business that comes to your mind first has a top of mind awareness with you.
So, it is a different thing from knowing that a brand exists to them having a top of mind awareness.
Back to the soft drinks illustration. There’s Pepsi, there’s Crush, there’s 7up, there’s Mirinda and lots more, but Coca-Cola stands out. It’s one thing to have brand awareness, but it is a more vital point to achieve a top of mind awareness.
For you to increase your business’s brand equity, you need to achieve a top of mind awareness. You need to make sure it is you that people think about the first when they look for a product or service you offer.
You can achieve this through consistency and visibility. Haven’t you been wondering why, although everybody in the world probably knows Coca-Cola, they still advertise? Every month and every quarter, they release an awesome advertorial that just sells all the emotions in this world.
It’s because they aim at being consistent and always visible. They want to keep the top of mind awareness for their current customers and even people who are yet to become coke fans.
It’s the same thing for all the brands you want to think about.
It’s a super bowl period and all the brands we know are advertising. Pampers did an ad recently. Nike is doing ads; Bumbu is doing ads. Already established brands are still running ads. They are still putting a lot of money into paid advertising. Why? They want to achieve a top of mind awareness consistently.
You want to make sure you’re putting yourself or your brand out there consistently. You want to become and remain visible. You want to make sure that people are seeing you. This is the only way to achieve a top of mind awareness.
The more people think about your business first when they have a purchase intention, the higher your brand equity and the higher the perception in the market.
So how consistent are you? How visible are you? How much do people know about your business? Are people seeing you regularly, or are you building a forgettable brand?
The third thing that impacts the equity of your business or your brand is brand loyalty. People do not care about what you do until they feel that you care. Sounds weird, right? But it is true.
Your target market wants to know that your brand cares about them, and the only way you can do that is to show them you care. You want to be loyal to earn their loyalty. You don’t expect to have customers loyal to you nor customers who become brand advocates, selling your products for you, without first showing them you care about them.
You need to prove to your customers that you care beyond them just using your product, that you care about their progress and success in life too.
We can communicate brand loyalty in different ways. It’s just really about how you connect with your customers. We aren’t saying you should give discounts, incentives, or VIP access all the time.
Yes, these are great ideas, but it is more than just the tangible and physical things that you can do for your fans. It’s about how you connect and communicate with them. It’s about you building a sense of trust. It’s about making them feel loved and cared for.
Most of all, it’s about them having a feeling of warmth and hospitality whenever they remember or think about your brand or business.
When you send them emails or messages, what words do you use? What kind of social media content are you putting out there? Every single thing that you do should make your current and incipient customers know that they are precious to your business.
If you want to increase the equity of your brand, three things you should pay attention to are :
1. Value -That is the perceived and actual value of your business.
2. Top of mind awareness – Being consistent and visible always.
3. Brand Loyalty – Showing your target market and customers that you care about them.
Building brand equity is no easy task and rarely happens overnight, but it is essential for the lasting success of your business.
We hope that you’ve learned something unique about Brand Equity. This is something to be very passionate about. We hope you can use these tips to improve the equity of the businesses you are working with or your own.
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Do you have questions regarding brand equity in your business?
Do you have other tips on how to boost the brand equity of a business?
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