Brand Equity: What is it and why should we care?
What is brand equity?
A brand is arguably one of the most valuable assets a company owns and when we speak of the term brand equity, we’re referring exactly to that- the value of our brand.
Our brand is anything that creates associations that allow our audience to identify us as a company. A brand takes shape as (and is not limited to) a logo, a colour, packaging, values and a promise. Our brand has a major influence over our audience when it comes to the decision making process, thus emphasising the need for us to craft a brand well and the importance of brand equity.Now, brand equity can turn up dressed in its quantitative form (e.g profit margin and market share) or it’s qualitative counterpart (e.g brand awareness, brand loyalty). The kind of brand equity we choose to measure depends entirely on the individual; having said that, most marketing and comms professionals opt for the later. As such, we’ll be focusing on qualitative brand equity in a 4 part blog series.
There are a number of elements that sit under the brand equity umbrella. For example, some believe that brand resonance, availability, and positioning should be evaluated. For the purpose of our brand equity blog series, we’ll be discussing brand credibility, brand loyalty, brand image and brand awareness in depth and shedding light on how we can improve those elements of brand equity as to positively impact our bottom line.
Why should we care about brand equity?
High brand equity can bring about a number of benefits for a company, for example:
- Increased levels of market share
- Higher profit margins
- Brand recognition
- Reduced customer churn
- Less price sensitive customers
Companies with high brand equity also have the advantage of expanding into different markets and geographic locations with ease. Brand equity presents products with the opportunity of increasing the likelihood of purchase by associating a new product with an existing and successful brand. For example, when it comes to the pen brand Bic, the audience expects a reliable, low cost and no thrills product. As such, Bic were able to leverage these strong associations and borrow from high brand equity to diversify their product offering by introducing lighters and disposable razors. This would be difficult to achieve without strong brand equity and associations.
For those interested in how they can improve brand equity, subscribe to our blog and keep an eye out for part two of the blog series where we will be discussing brand image as a means of building brand equity.