What is Brand Equity?
Brand equity is defined as the additional brand value extracted from a product as a result of the brand name, rather than the product itself. This adds brand value through reputation, exposure and the positioning of your brand in the mind of the consumer. This development is gradual and could stem from simple image recognition, trust and other positive things a customer associates with a particular brand. Strong brand equity translates to having a product that is more valuable with your branding than without and which in turn delivers more profit, better customer loyalty rates, and justifies higher or premium prices.
Let us take brand equity a little further and examine a few examples that are common or well known to most of us. Brands such as Apple, Coca Cola, and Nike constitute an image and lifestyle. They create trust, customer loyalty and even emotion making the names of the brands priceless.
The Impact and Importance of Brand Equity
Brand equity plays a major and pronounced role in determining consumer behaviour as well as the commercial success of any organisation. Here are some reasons as to why brand equity is fundamentally important:
- Consumer Decision-Making: A strong brand equity may tilt the scale towards your brand even in the presence of cheaper alternatives at the point of purchase.
- Financial Wins: Strong brand equity enables managers to set higher prices, reduces pressure to focus excessively on advertising, and as a result, derives a decent profit margin.
Key Components of Brand Equity
- Brand Awareness: It is the extent to which consumers, or the market can actually accurately recognise or recall a brand.
- Brand Associations: These are how the given brand is perceived by the customers in regard to certain characteristics. Positive associations like the ones of being dependable, inventive or trustworthy will increase the brand equity.
- Perceived Quality: This is a customer’s understanding of overall quality on the products from the brand. High perceived quality is a brand value added quality because it improves the level of confidence of the consumer, thus encouraging him or her to come back to buy more with ease.
- Brand and Customer Loyalty: Brand and customer loyalty is another essential aspect of brand equity and relates to the degree of attachment a customer has to a particular brand. Brand and customer loyalty not only assures the business of return purchases, but also encourages those customers to endorse the brand to their circles.
Introducing the IMM Institute’s Strategic Brand Management Course
Should you wish to learn more about brand equity and how to effectively utilise it, you may consider taking the Strategic Brand Management course offered by the IMM Institute. This is a six-week course meant to develop your capability to construct, control, and evaluate brand equity concentrating on practical approaches and real examples. You will learn about how consumers feel toward a brand, how a brand is positioned, and how customer loyalty is built which are all important aspects of developing a meaningful brand.
Learn the principles underlying the dynamics of brand equity in a systematic manner, with professional assistance from an experienced tutor.
Conclusion
Creating and sustaining equity for an organisation’s product or service is a strategy that takes time to implement, though it offers great benefits. To understand; strong brand equity has the potential of drawing in customers and keeping them for the brand in the long term. Businesses should seek to enhance brand equity because builds lasting brand value, inspires devotion among customers, and provides a strategic edge over competitors.
For those who are ready to explore these concepts further and wish to put them into practice, the IMM Institute’s course – Strategic Brand Management – is for you. Begin your quest to become a branding guru now – sign up and discover how building brand equity can help create a brand that endures for centuries.
