How To Create Brand Equity

What is Brand Equity?

In marketing, brand equity refers to the value of a brand and is determined by consumers' perception AIDA Model The AIDA model, which stands for Attention, Interest, Desire, and Action model, is an advertising effect model that identifies the stages that an individual of the brand. Brand equity can be positive or negative. If consumers think highly of a brand, it has positive brand equity.

On the other hand, if the brand consistently under-delivers, fails to live up to consumer expectations, and generates negative word of mouth, it has negative brand equity. Simply put, brand equity is the reputation of a brand.

The Importance of Brand Equity

Marketing researchers have concluded that brands are the crown jewels Crown Jewel Defense The Crown Jewel Defense strategy in mergers and acquisitions (M&A) is when the target of a hostile takeover sells some of its valuable assets to reduce its attractiveness to the hostile bidder. The crown jewel defense is a last-resort defense since the target company will be intentionally destroying part of its value, with the hope that the acquirer drops its hostile bid. of a company. Brand equity provides significant value to companies:

Companies can charge a premium for products with lots of positive brand equity (think of designer brands).
Positive brand equity can be transferred to a different product line, which in turn increases sales Sales Revenue Sales revenue is the income received by a company from its sales of goods or the provision of services. In accounting, the terms "sales" and and revenues for the company.
Positive brand equity increases market share, Total Addressable Market (TAM) Total Addressable Market (TAM), also referred to as total available market, is the overall revenue opportunity that is available to a product or service if as the brand is widely known, recognized, and preferred by consumers.

Example of Brand Equity

An example of a brand with high brand equity is Apple. Although Apple's products are very similar in terms of features to other brands, the demand, customer loyalty, and company's price premium are among the highest in the consumer tech industry. Apple ranks consistently as one of the most valuable brands in the world. Apple's brand equity is valued at upwards of $250 billion.

Keller's Brand Equity Model

Kevin Lane Keller, a marketing professor at the Tuck School of Business at Dartmouth College, developed the Keller's Brand Equity Model in his widely used textbook, "Strategic Brand Management."

The concept behind Keller's Brand Equity Model is simple – to build strong brand equity, you must shape consumer perception of the brand. The right type of experiences must be built around the brand to generate positive feelings, beliefs, opinions, and perceptions about it.

There are four steps in Keller's Brand Equity Model to create a successful brand:

Step 1: Brand Identity

Step 1 is to create a brand that stands out – a brand that customers recognize and are aware of. It is important to ensure that the brand's perception by consumers aligns with how you want your brand to be perceived.

Step 2: Brand Meaning

Step 2 involves creating brand meaning. The two building blocks in this step to create brand meaning are "performance" (what your brand means) and "imagery" (what your brand stands for).

Performance refers to how well the products or services meet customers' needs. There are five categories: (1) primary characteristics and features; (2) product reliability, durability, and serviceability; (3) service effectiveness, efficiency, and empathy; (4) style and design; (5) and price.

Imagery refers to the ability of your brand to meet customer's needs on a psychological and social level.

For example, companies that are committed to "going green" build loyalty from customers who identify with and support the company's values. US clothing retailer Patagonia's brand performance involves reliability and durability – customers acknowledge that the products are well designed, stylish, and meets their expectations. The company's brand imagery is its commitment to environmental programs and social causes. Patagonia's customers feel good knowing that they are purchasing products from a company that takes into consideration its environment.

Step 3: Brand Response

Step 3 involves customers' responses to your brand – "judgments" and "feelings."

Customers make a judgment about a brand, which falls into four key categories:

Quality: The perceived and actual quality of a product/service.
Credibility: The trustworthiness, likability, and expertise (innovation) of the brand.
Consideration: The relevance of a product/service to a customer's needs.
Superiority: The superiority of a brand compared to other brands.

Customers also respond to a brand in accordance with how it makes them feel. Brands can evoke feelings such as warmth, fun, excitement, security, self-respect, etc.

Step 4: Brand Resonance

Step 4 involves building a deep customer relationship. This step is the most difficult to attain, and it means that the customers have formed a deep connection with your brand. This can be through repeat purchases, attachment to your brand or product, actively engaging as brand ambassadors, attending events, or following your brand on social media. In essence, brand resonance is the connection that customers have with a brand.

Example of Creating Brand Equity

Colin is the marketing manager for a company that sells coconut water. Although the product is of high quality, fair trade, and healthy for consumers, the company has never been able to generate significant sales or acquire loyal customers. Colin decides to consult Keller's Brand Equity Model to try and build brand equity for the company's product.

Step 1: Brand Identity

Colin first identifies the company's target customers – individuals who want a thirst-quenching drink that not only tastes good but is healthy. Colin develops a brand identity by positioning the brand as a healthy and delicious drink. Colin creates a slogan for the company – "a delicious drink that is healthy for your mind and soul."

Step 2: Brand Meaning

Colin identifies what the brand means to its consumers.

Colin concludes that the performance of the coconut water is high. It is a fair trade coconut water that is of higher quality than that of products from competitors. Also, the product is significantly healthier than its competitors and is priced competitively.

However, the product's brand imagery is low. The brand does not meet customers' social needs and the awareness of fair trade is not apparent. Colin decides to utilize social media and post fair trade stories about the workers who help harvest and make the coconut water. By doing so, Colin hopes that customers will realize the impact they are making on workers in developing countries when they purchase the company's coconut water.

Step 3: Brand Response

Colin examines the brand response judgments and concludes that the perceived quality of the brand is not up to par. Although coconut water itself is of high quality, the product is poorly packaged and lacks innovation. Therefore, Colin decides to consult with the R&D department to develop an innovative package to improve the product's perceived quality.

Step 4: Brand Resonance

To build brand resonance, Colin pushes the brand's imagery of fair trade. Colin decides to create several initiatives with the help of social networks to involve customers in the company's fair trade efforts. Among other things, Colin decides to host several fair trade events around its community and create a social media page dedicated to discussing issues regarding fair trade.