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What Is Brand Equity and How to Measure It?

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Found in:    joyX | Consumer Products or Services | Financial Services | Healthcare | Restaurants | Retail/Ecommerce

The following article is a guest post submitted by Emma Miller from Bizzmark blog. Emma is a digital marketer and blogger from Sydney.  

Brands that want to stand out in today’s saturated and competitive marketplace need to have a carefully developed branding strategy. In order to attract their target audience, they need to deliver quality consistently, but that’s not all. Apart from maintaining the quality of its products, a brand has to come up with a unique, catchy name, create an aesthetically appealing visual identity, build a well-optimized website, produce high-quality, useful content, and generally speaking, always try to go the extra mile and push back the boundaries. Still, customers’ perceptions of a brand is an even more important part of the equation.

What is brand equity?

To put it in a nutshell, brand equity can be defined as a value of a brand in terms of how customers perceive that particular brand and feel about it based on their experiences with it. However, saying that brand equity and brand value are synonyms would be a simplification. Although brand equity can’t be easily expressed through monetary value, it’s true that consumers are willing to pay more for certain brands. Let’s take Apple as an example. People line up to purchase the latest model of iPhone even though it’s one of the most expensive smartphones. The reason for that is its combination of impeccable design, innovative features, and superb branding. In addition to having strong brand equity, Apple holds the second spot of the world’s most valuable brands list, with $146.3 billion. What’s even more interesting, there are some products which managed to override branding and become generic terms used for a whole class of products. Kleenex, ping pong, Band-Aids have become dictionary entries and genericized trademarks for facial tissues, table tennis products, and adhesive bandages respectively, and this perfectly illustrates the power of brand equity.

Types of brand equity

Brand equity can be positive or negative. It’s self-explanatory that brands which build strong customer loyalty, never fail to deliver on their promise and work hard to improve their products are rewarded with positive brand equity. If we bear in mind that loyal customers are 5 times more likely to forgive you if you make a mistake, there’s no doubt that every effort you invest in building positive brand equity is worthwhile. Coca-Cola, one of the most popular and beloved beverage brands, survived its “New Coke” formula fiasco in 1985 mainly because of its positive brand equity and customer loyalty. Only 5 years later, in 1990, the soft drink giant was involved in yet another incident – the infamous “MagiCan” promotion, and again saved its face (despite losing an estimated $100 million) thanks to its well-established popularity all around the world. Similarly, negative brand equity can take its toll on a brand’s hard-won reputation very easily. For example, Volkswagen, which was strategically and patiently nurturing its reputation as an environmentally conscious brand, suffered a heavy blow to its equity after the emissions scandal in 2015. Facebook has had its share of reputation problems, and the latest one, the Cambridge Analytica scandal, seriously threatened the social media behemoth, so it’s no wonder that according to paid surveys 3 out of 4 people in the U.K. distrust social media.

How to measure brand equity?

It’s clear that brand equity is an elusive concept which is hard to measure, but this doesn’t mean that it’s impossible. First of all, you need to establish what your goals are when it comes to brand equity research. In ot

her words, not every brand will have the same objectives, meaning that a startup which is trying to make a name for itself should be focused on metrics showing its customers’ engagement and factors which affect their association with the brand. On the other hand, business owners who want to sell their brand are, logically, more interested in financial metrics. These two examples serve as a good introduction to two types of data collecting approaches – qualitative and quantitative. As its name suggests, a qualitative approach measures intangible assets and uses highly subjective metrics like brand recognition, customer satisfaction, or relevance. Customer feedback is one of the best ways of obtaining data necessary for qualitative analytics, so you can use online surveys, questionnaires on your websites, and even comments on social media platforms in order to feel the pulse of your audience. A quantitative approach measures the revenue your brand generates as well as your sales numbers, and all this allows you to calculate the financial value of your brand. Neither of these approaches can’t work without the other one, and only their synergy will give you a complete insight into your brand equity.

Building brand equity is a complex process, and once you achieve your goal, it takes even more hard work to maintain it. Don’t fall into the trap of resting on your laurels, and remember that brand equity can be very fragile and hard to repair once it’s damaged.


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