Brand Equity – Why It’s Important To Your Business’ Identity (Part 2 of Brand Marketing)

• Caliber Media Group


• 13 Mar 2014

Brand Equity is an essential component of your business’ identity. Just like the equity accumulated in your home has monetary value, the equity of your brand is valuable too. It determines many aspects of your business, including profitability. So what is brand equity?

Brand Equity is the value of a brand, or can be summarized as the perceived value by consumers over other products.  The equity of your brand is important because, if your brand has positive brand equity, you can charge more for your products and services than the generic products or other competitors. Conversely, if your brand has negative brand equity, consumers will more inclined to pay more for generic products or products from your competition.

Brand Equity breaks down into several components:

• First is the tangible and intangible value of the brand. The tangible value of a brand includes revenue and higher pricing. Intangible value includes awareness of the brand and goodwill associated with the brand
• The second component of brand equity is the monetary effects. The business itself, products, and services will all benefit positively or negatively based on brand equity. This is one of the primary reasons business like Coke, Pepsi, IBM and Apple, do brand updates to avoid looking stale or out of date
• The third part is the perception your brand creates for quality. Again, higher quality translates to pricing and lasting value. Apple is a great example. If you have ever been to an crowded Apple store, it appears that they are giving away their products but in fact, Apple products are considerably more expensive that their competitors but their reputation for quality and ease of operation is well known.
• Finally, the consumer is the most important aspect of brand equity, because consumers determine the value of a brand. Consumer loyalty is how brands are built and need to be a focus of your overall marketing strategy

Several factors affect brand equity. The top four are:

• Brand Loyalty
• Brand Association
• Brand Awareness
• Perceived Quality

If you want to increase your brand equity, you have to increase consumer loyalty to your brand, associate your brand with better value or quality, or increase consumer awareness of your brand. Ideally, you would be able to do all four. Advertising is a good way to drive increased Brand Awareness and Brand Associations, which will lead to increased loyalty if done correctly. The key is to distinguish between this type of advertising and sales driven marketing.

The effect of brand equity can be seen every day. Consider why most people pay nearly double the price for name brands like Pepsi and Honey Nut Cheerios than for generic store brands. Also, think back to when BP had that disaster with the Deepwater Horizon oil spill in the Gulf of Mexico – the bad publicity associated with the brand responsible for an environmental disaster such as that is enough to kill any business or at least cause negative brand equity for along time. In general, the more positive your brand equity is and the more consistent your quality, the more you can charge for your products and services.

Building brand equity is no easy task and rarely happens overnight but, is essential for the lasting success of your business. It should involve a robust and diverse brand strategy that spans multiple marketing channels.

If you are interested in improving your brand image or building brand equity for your business, see what the business development experts at Caliber Media Group can do for you – visit www.calibermediagroup.com or call 714.867.1600 and ask for Mark.