Brand Equity describes a brand’s value. It is determined by consumer perception for the brand generated by a consumers’ experience with the brand. A company’s brand value can be positive or negative based on whether consumers think highly of the brand or have been disappointed so much that they tell friends and family to avoid it.
Why creating positive brand equity is necessary?
- Businesses can charge a higher price for their product than their competitors in the same category. For example, Apple charges more than Samsung, and it is because it is seen as an innovative company and has higher social acceptability compared to other brands. But all this can be the perception of Apple in the minds of consumers, which increases its equity.
- A trusted and well-liked brand can successfully transfer its brand equity when launching a new product line extension. The consumers should well accept a brand that makes hand sanitizer can launch an anti-bacterial floor cleaner as they already trust the brand that performs on all the levels.
- It helps to increase and maintain customer loyalty. The loyalty of Apple’s customers is the epitome of brand resonance so much so that they keep on buying new products or upgrading their existing ones.
How to measure brand equity-
Financial Metrics– Sales volume and revenue are very relevant to understand the brand’s performance. But looking at the following metrics, we can also understand brand equity-
- Price premium as compared to competitors in the same category
- Customer Lifetime value
Perception metrics– Quantitative methods are very commonly used to understand the feelings and experiences of consumers. They can be surveys and feedback forms that are highly effective and can help improve the quality of service, website experience, etc.
Also, qualitative methods, like focus groups, can be used to monitor customer’s sentiment.
Market Metrics– When your competitor invests a considerable amount in advertising to change consumers’ perception about their product. It could result in more market share for them, which means less market share for you.
Some metrics can be useful here are-
- Customer acquisition rate
- Market share
Achieving brand equity is essential but maintaining is very crucial. Any scandal or performance crisis can eliminate years of positive brand equity.