Brand Equity: What it is and how to build it

A 3D rendering of four sets of stairs that all meet to form a platform. This image is being used on a blog that describes the steps involved in building brand equity.
A 3D rendering of four sets of stairs that all meet to form a platform. This image is being used on a blog that describes the steps involved in building brand equity.

Every brand is comprised of many moving parts: visual assets like logos and colors, audio assets, packaging and design, brand image, brand values, and the size and stature of the brand in the marketplace. All of these brand assets influence how customers think and feel about a brand. Ultimately, those thoughts and feelings will translate into sales, reputation, and the brand’s overall health and longevity.

All of the components of a brand are used for building brand value. Marketers and brand specialists should pay attention to the brand value created. What is brand value, exactly? It’s also referred to as brand equity, which is how you measure the qualitative (e.g., brand loyalty, brand recognition, etc.) and quantitative (e.g. market share, profit margin, etc.) values of a brand.

Here’s a closer look at brand equity, the role it plays in your marketing and brand management, and how to grow your brand’s equity.

Table of Contents:

What is Brand Equity?

What is equity? Equity in terms of a business is the value of a business if all the business’s assets were liquidated and all the debts were paid off. It’s the byproduct of assets minus liabilities.

So, what is brand equity in marketing? Just like business equity, your brand builds value, too. This value is determined by a brand’s customers and how they have experienced your brand. If they have positive perceptions of your brand, then your brand equity is positive, too, and vice-versa.

So, brand equity can simply be defined as a brand’s value.

We can narrow this definition further by including customer-based brand equity (CBBE). CBBE attributes a brand’s success based on its customers’ sentiments and perceptions of that brand.

When you have high brand equity, you can justify higher prices for your product, increase your stock price, and potentially spend less on marketing. Things like positive word-of-mouth, online reviews, and customer loyalty can help you continue growing your brand naturally.

Why Does Brand Equity Matter?

The benefits of customer-based brand equity are hard to ignore. High brand equity can lead to:

  • Greater market share
  • Lower customer churn
  • Less price sensitivity
  • Greater brand recognition
  • More sales
  • Higher profit margin
  • Business taken away from a competitor
  • Easier entry into new markets

What’s more, your brand’s attempts to expand its product line may prove to be more fruitful. For example, pen maker Bic became well-known for inexpensive, no-frills pens that work reliably. As a result, the company was able to expand its offering to include razors and lighters, both of which maintain the reliable, no-frills image. Other pen companies may have found such a move to be out of reach since the products are so diverse. Bic's success would have been much harder to come by without solid brand equity.

A screenshot of a BIC product page showcasing an enlarged pen to emphasis the fact that their is "more than 2km of writing"

At its heart, equity in a brand builds up a loyal customer base that will continue to bring in revenue. It’s about creating a brand that people prefer over another, even if means spending more or going out of their way for something.

When you have this level of commitment from your customers, you can take advantage of all the benefits that positive brand equity brings.

How Brand Credibility Affects Brand Equity

Brand credibility is a key part of building brand equity. People favor and value brands they can trust. They don’t want to be left on the hook for a faulty product or an overcharge. They don’t want to do business with a company that closes its doors without warning.

When a brand builds enough credibility, it can leverage this perception to grow the business. Credible brands have a greater chance of building more loyal customer relationships. They may become more resilient in a crisis as customers shift to businesses that offer reliability and predictability. You might even be able to charge more for your products or services.

How to Create Brand Credibility

Sometimes, brand credibility comes from tenure in the industry. But for brands that haven’t been around for years, there are other ways to build credibility.

Generate Positive Press

Positive media coverage in trusted publications makes your brand look good by extension. Think of it as the publication’s endorsement of your brand, even if it doesn’t explicitly recommend you. Your name is associated with other credible people, companies, and sources, and that’s not something that just any brand can achieve.

Positive press starts with connecting with the right people – journalists, bloggers, and influencers, for example. You want to partner with people who have real influence and can move your brand story further. The right people will not only get you in front of the right audience to increase brand awareness but also share your story in a way that’s impactful.

Create and Share Quality Content

The internet enables every brand to become a publisher. Nowadays, you no longer have to wait for a book deal or connect with high-profile publications to create and share valuable content.

Even though the bar is lower, it’s still worthwhile for brands to create their own content to share with an audience. Content helps to position your brand as a thought leader and an authority in your space. It can also help improve your SEO and help people find you via online search, which gives you more opportunities to grow your audience.

Types of content to consider include:

  • Webinars and speaking events
  • Blog articles and guest blog posts on other sites
  • Whitepapers
  • Business-to-business industry reports
  • Client testimonials
  • Case studies

Content is a great way to establish your brand's core values, influence consumer perception, reinforce your brand promise, and support your brand purpose. Establish an emotional connection with your target market and show what makes you different from other brands.

Be Transparent – Consistently

Transparency gives your target audience a clear look at your brand values. What are brand values, exactly? Think of it as your set of brand beliefs, the ones your brand lives by. It’s a way for people to get to know the real you.

For example, Zappos.com has become the gold standard for customer service. Its customers favor the no-hassle return policy and the solution-oriented representatives. In fact, the longest customer service call took an impressive 10 hours and 51 minutes, proving that the company does anything and everything to make its customers happy.

A screenshot of the navigation bar from Zappos' customer service page

But what happens if Zappos’ customer service contact information suddenly disappeared from its website? Or the company charged for a return shipment, or tell you your time is up and you still haven’t reached a resolution? None of these things would be on brand, and credibility would suffer.

When brands make and break promises, their image is tarnished. It’s hard for the brand to re-establish its customers' sense of trust. That’s why consistency is just as important as transparency.

Everything from a brand’s policies to its blog articles to its merchandise should be in alignment. Together, these play an important part in how brands earn customer trust.

Listen to Your Customers

When building brand credibility, what you hear is just as important as what you say. While you’re excited to talk about your brand to earn consumer trust, it’s equally important to listen to what your customers are saying about your brand.

For example, branding juggernaut Coca-Cola caught a lot of flack when it introduced New Coke in 1985. The new recipe was the company’s response to a slowly dipping market share and the subsequent belief that consumers’ tastes were changing. But after customers expressed extreme dissatisfaction, the company increased its credibility by listening and bringing back the original formula, slightly rebranded as Coca-Cola Classic. Had the company ignored the warnings of its fans, the outcome might have looked much different.

A photograph of an old bottle of coke

Hear about your customers' experiences. Accept their compliments. Acknowledge their complaints and work with them on a resolution. This can be as simple as replying to comments and DMs on social media or as thorough as managing your online reputation.

Your customers are going to talk about your brand, regardless of whether you are part of the conversation. The best thing you can do to build credibility is to take their conversations seriously. Social media monitoring tools and services can help you stay in touch with what’s being said so you can decide what to do next.

3 Steps for Building Brand Equity

There’s an old saying in marketing that companies don’t build brands, customers do. While there’s a lot of truth to this, building brand equity still takes proactivity and thought. You can influence your customers’ perceptions of your brand based on your own priorities in managing your brand.

Keller’s customer-based brand equity model illustrates how a company builds a strong brand foundation and works upward to create brand “resonance,” where customers can actively identify with and advocate for a brand.

Keller's brand equity model called the brand equity pyramid

This brand equity pyramid provides a great starting point for companies to start building brand equity. Let’s start from the ground up:

Step 1: Establish a Brand Identity

Who are you as a company? What do you stand for? What do you do better than anyone else? Why should people choose you?

These are just a few of the questions that can help to shape your brand identity. Your brand identity is its personality, tone of voice, audience, and the way it looks and functions to customers.

Creating your brand’s identity is the first step in developing awareness, which will later grow sales, loyalty, and advocacy.

Step 2: Communicate Brand Meaning through Products

Next up: How do you want your customers to feel and think when using your products? What image should they associate with your brand?

In Keller’s customer-based brand equity model, brand meaning includes both performance and imagery. Nike is a great example of how a brand communicates meaning through its products. Their advertising and marketing focus largely on athletes in training or playing sports, not necessarily the products themselves. In the customer’s mind, though, we tend to think of high-quality products that perform well under pressure.

Olympic Gold Medal Winners

How you communicate your products can support your brand's meaning. Include influencers, social media, and SEO in the mix to get your products in front of the right people to start building awareness.  

Step 3: Grow Your Relationships through Brand Response

Once you’ve established your brand’s identity and are conveying its meaning through awareness campaigns, customers will have a chance to react and respond. In Keller’s model, this phase includes judgment and feelings–how people will perceive your brand.

Brands can influence this phase by connecting with customers on a personal level, taking stock of their feedback and becoming part of conversations. You can also initiate conversations and spur engagement by building communities, hosting live events, providing good customer service, and making people feel part of the brand you’re building.

As you build relationships, your brand equity will start to grow as you gain more loyal customers. The more advocates you create, the more people you can get in front of that will potentially do the same!

Let’s start building your brand equity strategy. Get in touch today to learn more!

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