“Perception is position.” I have become fond of this phrase because it helps me frame for my clients the importance of developing a brand that is not only well-known, but is also valued and trusted. This relates to the idea of brand equity. Brand equity is something most people understand from experience, even if they have never personally learned about it. Think about the last thing that you bought where you were willing to pay a higher price for the name brand-version as opposed to paying less for a (perceived) lesser brand. That’s the power of brand equity. 

As a brand moves along the brand value spectrum (see below), it grows in brand equity. The goal of almost all brands is to increase its brand equity over time. Every business owner wants a brand that can command higher price and marketshare simply on the strength of its perception and name. Even though brands are created and marketed with an eye toward how it is desired to be perceived by the marketplace, brand equity only truly exists in the hearts and minds of your consumers.

 

What is brand equity? 

Brand equity can be thought of as the worth of a brand in and of itself —in other words, the social value of a well-known brand name. Since consumers perceive the products of well-known brands as better than those of lesser-known brands, they are willing to pay a premium for it. XX product from XYZ brand is worth the greater price. People are comfortable with paying a premium for certain brands because of the perceived value (in the mind of the consumer).

David Aaker, author of Managing Brand Equity and Vice President at Prophet, a San Francisco consulting firm, describes brand equity as “the value of having a recognized brand, based on the idea that firmly established and reputable brands are more successful. More specifically, it’s a set of brand assets and liabilities linked to a brand name and symbol, which add to or subtract from the value provided by a product or service.” [Prophet]

Going further, consulting and data firm Qualtrics defines brand equity as “the additional value that a recognizable brand name adds to a product offering. Other words that are used to describe brand equity are ‘sway’, ‘good standing’, or ‘commercial value’. Brand equity is linked to brand recognition as a customer must be aware of the brand name initially, but it differs from it as brand equity emphasizes the added value that the brand-name provides to the product.” [Qualtrics]

Why is brand equity Important?

Why does any of this matter for you or your small business? One of the core functions of branding systems and platforms is decision making. All branding exists to help consumers know, understand and choose between options for products and services. As a result of strategic and tactical decisions on the part of the brand itself, brand equity can increase or decrease over time. 

All businesses, large and small alike, should care about brand equity because it impacts their bottom line. The more brand equity your brand possesses, the easier it is to retain and activate existing customers as advocates and ambassadors for your brand, and the easier it is to acquire new customers on the strength of that name. You don’t have to work as hard to get noticed and be valued by your customers.

What builds brand equity?

Here are three things that your business can do to build brand equity.

1. Alignment Consistently deliver on a great brand experience from awareness through follow-up, so much so that your customers become ambassadors
2. Association Strategically develop “up-level” relationships with more known and valued businesses; position your brand to be mentioned alongside industry leaders
3. Avoidance Prevent scandals and persistent issues in your business that can negatively impact your brand perception, especially those that relate to culture, quality and customer service/experience

What erodes brand equity? 

Here are three that your business can do to erode or destroy brand equity.

1. Inauthenticity When a brand does not live out its values, is not trustworthy or proves to have a culture that fails to deliver on its brand promises
2. Inferiority & Indifference Putting out poor quality product and refusing to change or not being responsive to changes requested by your customers or the marketplace
3. Inconsistency Changing your brand too often, hindering any goodwill and trust associated with your brand that people have built up over the years

As we have seen, brand equity is an important concept that all businesses should have an understanding of, not just those that are in branding or marketing. Your business is only as good as its good name, and a good name, so growing your brand equity can grow your brand value. Equity is, first and foremost, a value word. Most people come to understand equity as applied to homeownership. Just like equity in your home, brand equity, the value in and created by your brand name needs to be protected and grown over time. Small, strategic investments can make a big difference to overall value.

Growing your Brand Equity

Strategic Tip: When developing content, practice self-awareness in light of customer-awareness. This simply means, consider the value of what you produce in light of what it means or represents to your clients and customers. Your goal is not just to be known (popular), your goal is to be known, valued and trusted. All content should be created with this goal in mind.

Tactical Tip: Align your brand with major players in your industry. Are there forums you can participate in, webinars you can take part in, etc? Consider valuable partnerships that afford you introduction or association with the names and personalities in your industry that are already known, valued and trusted. 

Enthuse Creative is a strategic branding and design firm based in Tysons, VA providing valuable brand strategy, design, experience and leadership for growing businesses and organizations. Contact us for a free consultation or to work together on strategy and tactics that will help you build your firm’s brand equity. 

References

https://www.prophet.com/2013/09/156-what-is-brand-equity-and-why-is-it-valuable/

https://www.qualtrics.com/experience-management/brand/brand-equity/