Brand equity simply refers to goodwill and benefits that a product or service enjoys which is borne out of consumers' perception and experiences with such brands. It is the value and worth ascribed to a brand in the minds and eyes of the consumers.
In other words, a brand has positive brand equity when people think highly of it and are willing to pay premium for it. This also suggests that there could be negative brand equity.
Brand equity isn't something you come about suddenly or overnight; it takes effort, consistency; focus and a lot more. Brand owners and custodians can shore up their brands' equities by making them reliable, memorable, easily recognizable and of superior quality.
A classic example that comes to mind when talking about brand equity is Apple. Despite the somewhat similarity of the company's products in features to other brands, the combination of its demand level, premium pricing and customer loyalty is most definitely the highest in the consumer tech industry. The obsession for i-Phone and other Apple products can't simply be rationally explained.
The benefits of building positive brand equity and consistently shoring it up are innumerable. Positive brand equity engenders increased margin; because the consumers are willing to pay premium for the product/service; you can charge more. Brand equity also gives a brand more power for negotiation at different tables - mergers, acquisitions, divestment, business buy-overs and other similar business processes come to mind here. Similarly, expansion opportunities get better when the brand has equity as it is a lot easier to attract business partners, distributors, affiliates, franchisees based on the perceived brand value and worth. We should also mention that positive brand equity engenders repeat purchases which is synonymous with brand loyalty.
Building brand equity shouldn't be the exclusive preserve of the big brands and big corporates, MSMEs can also enjoy commendable brand equity within their spaces if they put their heart to it. And if they are consistent at it; they might just be on their way to joining the big brands at the top.
Here are some quick tips on how to build brand equity:
Create Awareness for your brand: Top of mind awareness (TOMA) is a vital ingredient for brand equity building. When your brand comes top of mind when its category is mentioned; you have done a great job. The first level of awareness in the brand equity building process is the awareness of the brand name among consumers especially the target audience. Brand awareness comes about when we make the brand visible through promotional tools like advertising, brand activation, word of mouth promotion, events, sponsorships and the likes.
Work on the perceived quality of the brand: Quality perception definitely will influence pricing decisions. Perceived quality is the perception of the customer about the overall quality of a brand. The consumer judgments about quality may vary because these judgments are based on the parameters that are important to the individual consumer when taking into consideration the performance of the brand.
Be consistent with the brand building efforts: Consistency is key if you want to garner brand equity. Brand equity thrives on sustained efforts, history and pedigree .Consistency helps build trust and a sense of reliability.
Pay attention to brand association: Brand association is anything that is connected to the consumers' memory about your product or service. This is greatly shaped by experiences when they have interactions with the brand at various touch points. These could be interactions with an employee or any other representative of the organization, celebrity associations, how the product is displayed in stores, adverts and other promotional materials for the brand or even what others say about the brand. The question to ask here is: What is my brand associated with?
Put a lot of focus on brand loyalty: Brand loyalty happens when there is an established pattern of repeat purchases. When a brand enjoys massive brand loyalty; it's brand equity soars. This is because the brand loyalists help to spread the good news about the brand and influence others to also adopt the brand.
Invest in Brand assets: Proprietary assets like patents, intellectual property rights, franchise rights, trademarks and channel relationships help to ward off attacks from competitors or reduce the impact of such attacks. They also help to ensure that the competitive advantage of the brand is not eroded and its loyal customer base kept intact.