What is Brand Equity? Can It Give My Brand More Value?
Brand equity is the value that clients associate with a company’s name, which is why they are willing to pay more for brand names than non-branded items.
This article will look at what components of branding will give you brand equity and actionable ways you can do it.
What is brand equity?
Brand equity is the perceived value of a brand by consumers. This value is often built based on the reputation and name of the brand.
Every brand has worth that built by the community surrounding and supporting it. In a small community, for example, John, who has grown up in the town and down everyone’s plumbing for thirty years, will have higher brand equity with the locals than, say, Steven, who has just arrived from another town and has no connections, reputation, or credibility yet with the locals.
John will be able to charge more than Steve because he is better known and has a higher equity. Steven will probably charge less to compete with John so that he can get a foot in the door with a few jobs and start his journey towards getting the same equity as John.
The higher a brand’s equity, the more positive its effect on the company’s sales volume and profitability will be.
Why is brand equity important?
The overall brand equity encompasses several components that collectively contribute to the overall perception and worth of the brand in the minds of consumers. Strong brand equity will add the following benefits:
- Competitive advantage: A loyal customer base will give you a significant edge over any competitor. You’ll influence industry standards with premium pricing or launch new products with consumers already waiting in line.
- Customer trust and loyalty: High equity usually results in a higher trust with consumers. They know your brand and what kind of quality and customer service they will get
- Resilience to market fluctuation: Better business equity will create a buffer against market changes or economic downturns. Loyal customers are less likely to switch to competitors, even when things get tight.
What are the components of brand equity?
Here are a few components that you need to start your journey to brand equity.
1. Brand awareness
Brand awareness is how familiar consumers are with your brand name, offerings, and goals. We are all familiar with the term “household items,” which is a goal for many businesses. You want to be the name that people associate with that product.
If you do it really well, you could even take over the product name completely. For example, “Lego” is a household name, but the real name of the childhood toy is actually “interlocking toy building blocks,” which is long and complicated.
High brand awareness will lead to an increase in consumer trust and preference, making it easier to introduce new products under the same brand name.
2. Brand loyalty
Brand loyalty, or customer loyalty, is the degree of consumer attachment to the brand. Once you have it, consumers will repurchase and recommend your brand to others, resulting in a steady revenue stream.
Ironically, the two top examples of brand loyalty companies are competitors. Apple and Android have been at each other for years, and both have incredibly loyal customers.
Technically, they are just operating systems at the end of the day, but they have expanded their product range, so once you start with one of them, you’ll need the whole set. For example, if you have an Apple computer, then you need an Apple Watch, which goes with your Apple HomePod.
3. Brand associations
You can build brand loyalty with consistent quality. However, another way to do it is to not sell the product so much as the idea behind it.
Let’s continue with our Apple and Android analysis. Both provide a great product and services, but Apple gets its loyalty because consumers have bought into the idea of “Apple.” It has branded itself as innovative, advanced, contemporary, and aesthetically pleasing. They are not just making an operating system — they are making the future.
Android, on the other hand, is definitely more user-friendly. They define themselves as having an ‘open’ operating system that technically-inclined consumers can open up and poke around in. They want people to play with their system and be innovative with it rather than the system itself being innovative.
Attributes, benefits, and appeal are all associations that influence the consumer’s behavior and the brands with which they associate themselves. This is also connected to their loyalty because if they believe that the brand represents them like they are an “Apple” person or an “Android” fan, then they will stick with it.
Another association is the premium of the brand. Android has always been a “people” brand and marketing itself to be open for all, while Apple has gone for a more luxury brand association with influencers and celebrities wearing their products.
Actionable ways to increase your brand equity and customer loyalty
Brand equity doesn’t happen overnight — it happens over time. Like brand awareness, you must build it up with every interaction you have with your consumers and every marketing campaign you employ.
Brand equity is a goal that all businesses should strive for. But how exactly do you build your brand equity and your customer loyalty?
Here are a few ways:
Be consistent
All of your communications should consistently reflect your values, missions, and identity. We are not only talking about what your brand represents — the communication tone should also be the same. Images need to be similar, and your brand guidelines should be impeccable.
A great example of this is Coca-Cola. They go above and beyond with pushing their fonts and logo, not even to mention what they have achieved with their signature red.
Did you know that Santa Claus’s coat was originally forest green? Coca-Cola did a Christmas campaign, changed the color to match their brand guidelines, and changed Santa worldwide in one advertising season.
They have brand-managed themselves since the very beginning of the company, and you should too. Even if you are just starting out, in a few years or a decade, your business might be huge to the point that you can alter the holidays!
Be engaged
All consumers want to feel like they are being heard, and in a world where everything is instant, that includes customer service. Actively engaging with customers through various touchpoints, such as social media, personalized marketing, and email, has now become almost a worldwide standard. Consumers expect it.
Be your best
Having a quality product might sound like a basic point, but it is an important one. There are a lot of businesses out there that make items for cheap and sell them for cheap. While it might be enticing to consumers, it becomes quickly obvious that corners have been cut.
Having a quality item builds trust with your consumers. They will be willing to spend a little extra if they know your product will last and make up for it in terms of sustainability and performance.
Couple a high-quality product with high-quality service, and you have a golden ticket to earning your branding equity.
Build your brand with WebFX
Now that you know what brand equity is and how to build it, the next step is getting a partner that will help you reach those objectives. That’s where WebFX can help!
We have 28 years of experience helping our clients build their brands and grow their customer loyalty. We offer our clients a range of services that will enhance their customer’s experience and implement creative marketing campaigns and content that resonates with their target audience.
Look at our case studies to see what we have done for others and how we have helped them build their brand. Contact us online or call us today at 888-601-5359 to speak with a strategist!