What is Brand Equity? Measuring, Building and Case Study

What is Brand Equity?

Brand equity is a term used to describe a product or brand value through customer awareness and their experience in using the brand. The foundation of creating long-term success for the organisation involves building strong brand equity and the marketers can reinforce brand equity by investing consistently in the components of brand equity.

Brand equity has a multi-dimensional concept which is determined with the brand fulfilling competitive potential through:

• Brand awareness: Involves the extent to which a brand is recognised and known to a consumer.
  
  
• Brand association: Being associated with the brand that arouses positive or negative sentiments.
  
  
• Perceived quality: This concept revolves around the reputation of the brand by the customers of having high quality.
  
  
• Brand loyalty: This involves loyal customers who believe in the value of the brand’s offerings and they make frequent and repeat purchases and they do not want to switch brands.
  
  
• Other proprietary assets: These are the trademarks, patents, channels, and trading partner connections.

Building strong brand equity is the foundation for a company’s longterm success. Marketers can strengthen brand equity by actively investing in components of brand equity. The important elements involved with brand equity are:

• Brand awareness: This is the process involved with making the consumers aware of the brand so that can easily identify the brand.
  
  
  It can be done by creating positive, strong, and unique brand attributes by:
  • Advertising the brand on various media
  • Connecting with different communities on social media
  • Creating viral content through campaigns, videos, and more
    
    
    For example, Apple’s events are an excellent example of a company raising awareness. We’ve all heard of firms that introduce new devices and features to keep their product lines fresh. Apple conducts a whole event just to reveal its new products (smart watch) or models (i-phone).
    
    Even if the actual product changes are minor, Apple has “hyped up” the event to the point that you immediately know to keep an eye out for the brand’s new innovations. This keeps the brand in front of customers’ minds while they are looking for a new electronic product.
    
    
• Positioning the brand: The values, USPs, and beliefs need be consistent with the brand’s overall culture so that they are clear to the consumers.
  
  The brand should stand for:
  
  
  • Conveying a conscious and consistent meaning of the brand’s core values
    
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  • Communicating to consumers regarding the core benefits of the products and the advantage they provide
    
    
  • Being clear on defining the brand as it is and not compared to the competition
    
    
    One such example is Amazon’s brand positioning approach. Amazon is a one-stop Online shopping platform for customers who wish to buy a large variety of things Online and have them delivered quickly. Amazon distinguishes itself from other online retailers by its customer focus, enthusiasm for innovation, and dedication to operational excellence.
    
    
• Emphasising positive brand associations: Here are a few instances of popular brand associations:
  • Google is for searching, finding answers, and gathering information.
  • Wikipedia is a great source of information and biographies.
  • Canva for graphic design, easy-to-use templates
    
    As you can see, the majority of the associations are a combination of services or goods offered by the organisation as well as specific features and notions. The goal is for your brand’s connections to be both truthful and positive.
    
    It is necessary to have strong brand associations that are crucial to building loyalty towards the brand.
    
    
    The various methods that can be used for enhancing the way consumers view the brand include:
    
  • Making use of innovative and attractive means of advertising and highlighting the main functional, social, or emotional advantages of the product
    
  • Ensuring that the business behind the brand establishes ethical business methods ‰‰
    
  • Creating celebrity endorsement
    
    
• Focusing on building relationships: It is mainly consumers who determine the strength of the company’s brand’s equity hence it necessary to build and maintain positive relationships with the specific target audience. This can be done in the following manner:
  
  
  • Connecting and staying in touch with customers via social media
  • Providing excellent customer service at all times
  • Tracking, listening, and responding to any negative press or feedback
    
    
    Domino’s has also done something similar. In recent years, Domino’s has taken its fair share of chances with its relationship marketing approach in the name of innovation and progress. This includes a campaign dubbed “Pizza Turnaround,” in which they displayed a string of bad customer evaluations before promising a new and improved recipe.
    
    These self-deprecating advertisements actually appeal to viewers while deviating from any typical advertising playbook, which is why they work. By admitting an area of opportunity, Domino’s re-invented its image as straightforward and honest — and who would not want to buy from a company like that? Domino’s has also done an excellent job of reaching out to its internet consumers. In fact, digital platforms currently account for 70% of Domino’s sales.
    
    
• Brand experience: To understand the experiences that the consumers have had and to understand their level of satisfaction with the products and whether the loyalty programs have been effective through feedback.
  
  BYJU, an edtech start-up, used a brand experience marketing strategy and produced a television ad called Keep Learning, Keep Winning, which featured the Indian cricket team wearing new jerseys with the BYJU brand name. The company’s campaign spreads the “keep learning” message to its audience while engaging them through notable athletes.
  
  Because cricket is the most popular sport in India, the company associates with it in order to broaden its reach. Byju inspires millions of people in India through cricket and is attempting to penetrate the hearts of people, particularly the younger generation, in order to motivate them to study more and more.

Measuring Brand Equity

Brand equity takes advantage of the customer behavioural patterns for maximising profitable sales since the customers prefer buying items they recognise and trust. A company has a strong and positive customer perception and brand name due to its brand equity which adds value to the company and has an impact on the ROI (Return on Investment) of the company. The companies can earn more money and spend lesser on production and marketing activities than their competitors due to their established brand equity.

The customers are willing to pay higher prices when they have confidence in the brand and believe in the values presented by the brand and the quality of their products. This makes it easier for the organisation to add new products and market them under the same brand which helps the new product to market well due to the established brand. The most challenging aspect of brand equity is to measure it since no defined metric is consistent that the brands can use for measuring the responses and emotional behavioural patterns of the consumers.

Measuring brand equity helps with developing a strong brand with high value that is needed for the brand to perform better in the market. The measurement of brand equity provides a better understanding of customer perceptions in terms of brand performance such as quality, reliability, satisfaction, loyalty, and more.

These indicators help the company with information regarding the brand perception and what the customers think about the brand and whether they are happy with the brand. This information helps the business entity with personalising their branding efforts and be able to reach out to the right set of people.

Consider the case of Coca-Cola. Coca-Cola is more than simply a bubbly drink. It has become a part of our daily lives. With its bottle’s form, colour, slogan, or typeface, this $87 billion brand is well-known across the world.

The 2011 #ShareACoke campaign was centred on relationships and individuality. Customers were invited to post a snapshot of a Coke bottle with their name on social media. Customers embraced it, and the company earned 25 million Facebook friends, with over 500,000 photographs including the Share A Coke hashtag (#) being posted. The various methods for measuring brand equity are:

• Brand awareness: It is necessary to measure brand awareness since awareness is highly linked with brand preference and brand quality perceptions since brand awareness is also connected with brand loyalty.
  
  This can be done by:
  • Conducting surveys to know about the customer’s preferred channel of choice  
    
    
  • Using focus groups
    
    
  • Monitoring of web traffic
    
    
  • Determining and analysing frequently used Google Search in regards to the products
    
    
  • Keeping a track of social media
    
    
• Preference metrics: The method of measuring brand equity through preference metrics helps with identifying the brand’s competitive position in the market, and its comparison with the competitors. it helps with determining the preference patterns of the consumers and analysing why some of them prefer the products of the company and are loyal toward brands and the company. The metrics used can be the same ones as used for brand awareness in terms of brand value, brand relevance, and emotional connection of the consumers.
  
  
• Quantitative measurements: Quantitative measurement is used for measuring brand equity using financial metrics that provide information on the requisite strength of the brand. The metrics are in form of:
  • Profit margins Price sensitivity in regards to price elasticity, and the impact on consumer demand with changes in price
  • Profitability
  • Rate of growth
  • Market share percentage
  • Purchasing frequency
    
    
• Qualitative Measurements: These measurements are used for providing insight into various factors associated with brand equity. These factors include:
  • Keeping a track of reactions of customers through social media towards the brand to understand their feelings and opinions regarding the brand.
    
    
  • Using methods of surveys or focus groups for evaluating the consumers’ preferences, value, emotional connection, and feelings towards the brand that indicates the value of the brand for the consumers.
    
    
  • Determining focus groups for assessing the various brands in the market and understanding the consumers’ awareness to wards the different brands in a market. It helps with evaluating the company’s brand within this mix.

Building Brand Equity

Brand equity plays a critical role in enhancing value and a well-known brand adds name to the business enterprise that results in an increase in customer loyalty and opportunities for growth. Brands help with increasing financial value over some time and are a major asset or the company. The brand includes the product name, logo, attributes, and image of the product or service being offered by the company.

Brand equity helps with building trust and confidence when people become loyal customers when they have trust in the promises made by the company regarding the product quality. Higher brand equity enables the company to generate more income from the different products and services with the same name.

Through encouraging a healthy lifestyle, tailored messages, and high-quality products, Nike has cultivated a devoted following. “Just Do It” resonated with customers of all ages, genders, and cultures as we connected with it to uncover our inner champion. Nike’s message emphasises inspiration and heroism, and we want to be connected to it. Its brand recognition is so strong that when we see the swoosh, we immediately know it as Nike.

Positive brand equity is when the customers think positively about a brand based on their experiences and interaction with the brand. Firms need to manage their equity over time for achieving several competitive benefits that lead to the profitable growth of the company. The factors essential for building brand equity are:

• Developing a strong brand story and brand personality: For building strong brand equity, customers must perceive the brand the way the company wants to be seen, hence it is essential to first develop a strong brand story and personality that would help the company while making future marketing and strategy decisions.
  
  
• Build brand awareness: It is necessary to make the customers aware of the brand and what it offers to make them familiar with the brand and to understand their comfort level with the brand. There are various elements of business that the customers interact with the company logo, packaging, website, blogs and images, and more.
  
  
• Creating quality products: Organisations need to emphasise developing quality products for the niche market and becoming a leader in the market due to their superior qualities. Quality includes unique attributes, benefits, and services provided for fulfilling the needs and requirements of the target market. Brand equity adds value to the brand by creating their special market niche and being able to charge premium prices from the customers. It helps the firm with earning higher profits which gives them a distinct competitive advantage.
  
  
• Recognisable brand name and logo: Business enterprises need to have a recognisable name and logo for building their brand equity which is recognised by people all over the world even if they have not bought their products or services. The name and logo provide the brand with intrinsic value with a title and give the brand a title and a unique logo design that is registered in the name of the company to protect the brand and stand out from the competitors.
  
  
• Create brand-loyal customers: Building brand equity helps with building the trust and confidence of the customers which leads to having loyal customers. Customers are very important for the brand and their experiences with the product have an impact on the equity of the brand. Good customer experience results in the customers buying more from the brand and other people or companies to your brand.
  
  Retaining customers helps to prevent the competitors from gaining new business and it also helps a company with better profits. The business entity needs to do thorough market research for determining brand loyalty and provides information to the firm on how the customers perceive the brand. It helps with giving information on the strengths and weaknesses of the brand that helps the company to improve on their products, service, and customer experience.

Case Study: Apple’s Brand Equity

Apple is (currently) valued at $703.5 billion and the brand is valued at $234 billion (according to Interbrand), meaning 30% of the company’s total value comes from the Apple brand and all its sub-brands (iPhone, Mac, iCloud, etc.).

The $234 billion brand value means Apple will lose almost half of its value overnight if some bizarre trademark dispute means Apple can no longer “sell under the Apple name”, use the logo, similar graphics, or the apple.com website. Do not use other brands. Theoretically, Apple could sell its brand for $234 billion to Microsoft, Facebook, or any business with that much cash or stock.

It would be difficult to separate the Apple brand from the rest of the company. Brand equity is intertwined with all the other components of a company’s value. Companies are gestalts; they are their own whole, indivisible by nature. The intertwined nature of brands does not prevent companies from licencing their brands, which can have both good and bad consequences (brand dilution).

It is also interesting to note that Apple spends $1.8 billion a year on advertising. This may seem like a huge number, but considering the brand is worth $234 billion, it is not that much, just 0.8%. Because Apple’s brand is so valuable and loved, they get a lot of attention from a small investment in advertising. One of the benefits of having a valuable brand is that your ad spend will increase even more as ads from a well-known/loved brand get more attention from viewers. This relatively small advertising investment also shows that a brand is not earned through advertising alone. For decades, Apple has developed its brand through advertising as well as by providing consumer-focused solutions. Most of their goodwill comes from customers’ positive experiences with their products. Many people do not think about buying products from Apple’s competitors.