Brand equity is a term used to describe the value of having a recognized brand, based on the idea that firmly established and reputable brands are more successful. More specifically, it’s a set of brand assets and liabilities linked to a brand name and symbol, which add to or subtract from the value provided by a product or service.
Connecting “brand” to the concepts of “equity” and “assets” radically changed the marketing function, enabling it to expand beyond strategic tactics and get a seat at the executive table.
To help break down brand equity and provide details about how the term is used in the marketing industry, we’ve outlined how it all came into place, why it’s so valuable and a roadmap for success.
How Brand Equity Came Into Place
In the late 1980s, brand equity was just emerging as an important idea. An avalanche of researchers, authors and executives who provided substance and momentum to this idea reframed marketing.
In 1991, I published a book,Managing Brand Equity, which defines brand equity and describes how it generates value. This model provided one perspective on brand equity that is worth another look now more than twenty years later.
Why Is Brand Equity So Valuable?
Another aspect of the definition of brand equity that I presented in my book was the argument that brand equity is that it also provides value to customers. It enhances the customer’s ability to interpret and process information, improves confidence in the purchase decision and affects the quality of the user experience.
The fact that it provides value to customers makes it easier to justify in a brand-building budget. This model provides one perspective of brand equity as one of the major components of modern marketing alongside the marketing concept, segmentation, and several others.
Brand equity has four dimensions—brand loyalty, brand awareness, brand associations, and perceived quality, each providing value to a firm in numerous ways. Once a brand identifies the value of brand equity, it can follow this roadmap to build and manage that potential value.
Brand Loyalty
Reduced marketing costs
Trade leverage
Attracting new customers via awareness and reassurance
Time to respond to competitive threats
Brand Awareness
Anchor to which other associations can be attached
Familiarity which leads to liking
Visibility that helps gain consideration
Signal of substance/commitment
Brand Associations (Including Perceived Quality)
Help communicate information
Differentiate/Position
Reason-to-buy
Create positive attitude/feelings
Basis for extensions
The introduction ofbrand loyaltyto the model was and is still controversial, as other conceptualizations position brand loyalty as a result of brand equity, which consists of awareness and associations. But when you buy a brand or place a value on it, the loyalty of the customer base is often the asset most prized, so it makes financial sense to include it.
And, when managing a brand, the inclusion of brand loyalty as a part of the brand’s equity allows marketers to justify giving it priority in the brand-building budget. The strongest brands have that priority.
Examples of Brand Equity
Positive Brand Equity
Amazon and Apple are classic examples of brands with positive brand equities. Both Amazon and Apple provide consistentcustomer experiences, are dependable, innovative, and purposeful, and are integral in people’s day-to-day lives, making them indispensable.
They also deliver on their promises to customers— Amazon provides convenience and industry-leading shipping options, while Apple prioritizes innovation and sleek design. All factors combined, these brands boast positive reputations or brand equities.
Negative Brand Equity
When it comes to negative brand equity, Volkswagen is an example that can be learned from. In September 2015, the EPA issued a notice of violation stating that the brand had been falsifying emissions numbers. As the news spread, Volkswagen lost brand equity, since the public no longer viewed the brand as trustworthy, nor as adhering to its promises to be environmentally friendly.
Brand equity is the value of a brand, determined by the consumer's perception of its quality and desirability. It is based on factors such as the brand's recognition, customer loyalty, and customer satisfaction.
Brand equity is the value of a brand, determined by the consumer's perception of its quality and desirability. It is based on factors such as the brand's recognition, customer loyalty, and customer satisfaction.
What Is Brand Equity? Brand equity refers to a value premium that a company generates from a product with a recognizable name when compared to a generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognizable, and superior in quality and reliability.
Brand equity has four dimensions—brand loyalty, brand awareness, brand associations, and perceived quality, each providing value to a firm in numerous ways. Once a brand identifies the value of brand equity, it can follow this roadmap to build and manage that potential value.
The "one-word equity" is the highest level of condensation of a brand: It summarizes its positioning in a single word and defines what the brand stands for and/or the direction it wants to develop.
Starbucks is one of the largest coffee shop chains in the world. In 2021, the Starbucks brand was valued at approximately 13.01 billion U.S. dollars, up from 11.25 billion U.S. dollars the previous year.
Big brands tend to put more of an effort into valuing their brand. For example, Coca-Cola's brand equity was calculated to be US$87.6 billion in 2021 (source: Statista).
Traditionally, businesses measure brand equity through customer knowledge, preference, and financial metrics. Distributed brands can also determine brand equity through measuring output, local marketing metrics, and competitors.
Equity refers to the specific things each person needs to succeed. As an example, a person might ask to work from home a few days a week because of a medical condition. Providing the option to work remotely allows them to fulfill their full potential at their job.
Brand Equity is made up of seven key elements: awareness, reputation, differentiation, energy, relevance, loyalty and flexibility. Some of these are easier to build (or damage) than others.
If your brand has positive brand equity, people are more likely to spend more money to purchase those products. This results in higher profit margins. It may cost companies the same amount as competitors to make a product.
It is the foundation of acquiring new customers and helping them become familiar with the products and services, leading to increased brand equity. There are five stages of brand recognition — awareness, preference, reputation, trust, and loyalty.
In 2022, brand value of Netflix stood at 29.41 billion U.S. dollars. A year earlier, the value was estimated at 24.94 billion U.S. dollars. Netflix is the eighth most valuable media brand worldwide.
In 2022, Tesla's brand value was estimated at nearly 76 billion U.S. dollars. This evaluation marked a leap of around 78 percent compared to the previous year.
In 2022, brand value of Disney stood at around 57.06 billion U.S. dollars. A year earlier, it was estimated at 51.24 billion U.S. dollars. Disney is the fifth most valuable media brand worldwide.
If customers generally think positively of a brand, the company has good brand equity. If customers have a negative perception of a brand, the company would have poor brand equity. It's all based on the judgement of consumers.
The main sources of brand equity and value are brand awareness, brand loyalty, perceived quality, brand associations, and other proprietary brand assets.
Positive perceptions, such as trust, reliability, and quality, can lead to impactful brand equity, while negative perceptions, such as poor customer service or inferior quality, can damage brand equity.
While it may not be one of today's biggest spenders, much of Apple's brand equity can be attributed to its iconic ads. From its “1984” ad to its dancing silhouettes for iPod, Apple has been an advertising powerhouse since the '80s. Apple uses its ads to promote its products and differentiate its brand.
With a brand value of over 35 billion U.S. dollars, Coca-Cola was by far the most valuable non-alcoholic beverage brand in the world in 2022. Pepsi ranked second that year, with a value of around 21 billion U.S. dollars.
Brand equity refers to the importance of a brand in the customer's eyes, while brand value is the financial significance the brand carries. Both brand equity and brand value are educated estimates of how much a brand is worth.
Brand equity refers to a company's visibility and reputation in the marketplace and consumers' view of the brand. Building positive brand equity can make it possible for businesses to: Gain market share.
Intangible factors are qualitative values, such as consumer awareness of your brand, and goodwill. Because brand equity involves tangible and intangible factors, determining brand equity from an objective standpoint can prove to be difficult.
It is not always that brands have positive brand equity. Brands can also have negative brand equity; in such a case, the brand loses customers' trust, which decreases brand value.
A typical example of negative shareholder equity is when significant dividend payments are made to investors, which erode the retained earnings and make the equity of the company go into the negative zone. It is usually a sign of financial distress for the company.
A property is in negative equity if it's worth less than the mortgage you have on it, and it's normally caused by falling property prices. For example, if you bought a property for £150,000, with a mortgage for £120,000 and the property is now worth £100,000, you would be in negative equity.
There are three things your company needs to build brand equity. These are a quality product or service in a niche market, a recognizable name and logo, and most of all brand-loyal customers.
The most basic from of brand equity is simply being aware of the brand. Awareness is the foundation of all other brand relationships. The strongest form of brand equity, reflecting a commitment to repeat purchases.
Brand equity can also be negative. If a brand has a huge product recall, for example, or is involved in a highly publicized environmental disaster such as the 2010 BP oil spill, some customers actively avoid that brand, and the brand name becomes a liability rather than an asset.
Philip Kotler, the five stages (Awareness, Appeal, Ask, Act and Advocacy) allow marketing and sales professionals to create a map of the customer's needs and priorities during the different parts of their purchase process.
Big brands tend to put more of an effort into valuing their brand. For example, Coca-Cola's brand equity was calculated to be US$87.6 billion in 2021 (source: Statista).
Brand equity is defined as the value that your brand delivers to your organization. That value may be derived from higher revenues, lower marketing costs, premium pricing—even favorable negotiating power with vendors.
In 2022, the Gucci brand was valued at approximately 18.1 billion U.S. dollars. This was approximately 2.5 billion dollars more than in the previous year.
Starbuck's brand equity is built on selling the finest quality coffee and related products, and by providing each customer a unique “Starbucks Experience”, which is derived from supreme customer service, clean and well-maintained stores that reflect the culture of the communities in which they operate, thereby building ...
The knowledge of the four dimensions of brand equity namely brand loyalty, brand awareness, brand associations and perceived quality is important as it can help brands in building a roadmap to establish and manage that potential value.
Brand equity focuses on the strategic issues that may occur while managing a brand. Meanwhile, customer equity's main concern is the financial value that the brand gets from the customers. Customer equity is a much broader alternative, as it can often ignore a brand's optional value.
Brand equity is typically attained by generating awareness through campaigns that speak to target-consumer values, delivering on promises and qualifications when consumers use the product, and loyalty and retention efforts.
Brand equity is an intangible asset that can give your company a lot of value. It can allow you to increase profits, give your brand more influence, and help your brand enter new markets. It can also give you a larger market share.
Address: 2033 Gerhold Pine, Port Jocelyn, VA 12101-5654
Phone: +8524399971620
Job: Central Manufacturing Supervisor
Hobby: Jogging, Metalworking, Tai chi, Shopping, Puzzles, Rock climbing, Crocheting
Introduction: My name is Edmund Hettinger DC, I am a adventurous, colorful, gifted, determined, precious, open, colorful person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
