Brand equity is a great weapon to have in the never-ending battle that is today’s competitive markets. The main benefit of having a strong brand equity is that consumers will buy your products no matter the cost to them, as they perceive them as having innate value or quality based simply on the fact that they came from you.
Being the top brand whenever consumers think of your market sector is the ideal position, but it’s not quite that straightforward. I’m sure you’ve heard of the Pepsi vs Coca-Cola, Apple vs Microsoft feuds etc. No one side can claim to truly be at the top of the market, despite all having strong brand equity.
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What Is Brand Equity?
Brand equity is quite simple to define but more complex to measure.
Put simply, brand equity is a brand’s perceived value according to consumers. It can also be defined as the level of positive feelings that consumers have about a brand, when compared to others in the same market space.
For example, if you order a rum and Coke at a bar, you might be asked if Pepsi is okay. Some would answer yes, some no — that’s brand equity. If you go to buy a new gaming console and are dead set on having a Playstation, that’s brand equity.
Some brands even dominate the market to the point where their name becomes the commonly used word for the item they produce. Blu-tac, Coca-Cola and Sellotape have become synonymous with their markets, despite being only one amongst dozens of brands. That’s strong brand equity at work.
If you have strong brand equity, you have a dedicated customer base and the option to charge premium prices. If you launch a new product, you’re guaranteed to get customers no matter what it is, just from the trust they have in your brand. You need to make sure that your products are still top-quality however, a lesson Microsoft learned the hard way with Windows Vista.
Keller’s Brand Equity Model
It’s worth mentioning the Keller Brand Equity model here. We won’t cover it in too much detail as that would be an article in and of itself, but let’s go over it and give you the general idea.
The Keller model states that in order to get a strong brand, you need to shape the way your customers think and feel about you. This starts at the base level with establishing your brand identity, then works its way up the pyramid by asking questions about what your brand might want to achieve.
It’s a step by step process that makes thinking about how you plan to position yourself, and what feelings you want to evoke in your customers, quite simple actually. Each stage contains crucial components that evoke brand loyalty, so be sure to give it a look if you want to build your brand up to the next level.
6 Ways Of Measuring Brand Equity
Measuring brand equity isn’t straightforward. There are a number of factors to consider, and which one you put weight on will depend on your business model, industry etc.
Brand equity isn’t something you can measure in numbers – it’s all relative! Still, there are a few tried and tested brand equity analytics you can use. We’ve laid out five of them below for your consideration.
Competitive metrics set you up against your competitors and see how you’re doing compared to them. It’s a more aggressive form of analysis which takes their marketing campaigns and yours, sees the results of them and tells you how well you’re doing in comparison. If your competitors are lagging, that means you’re leading, and vice-versa.
Other factors you can look at for a comparison between brands include the relative customer sentiment, acquisition rates, social media engagement etc.
Remember though, just because your competitors are below you now doesn’t mean you can relax. They’ll be looking for ways to improve just as you are, and if you stop to watch you’ll be left behind!
Another metric you can use to measure brand equity is financial data. Market share, profits, revenues, prices – these all tie in to how well your brand is doing, since more brand equity correlates with more customers. Compare these to those of previous years or quarters and you’ll be able to measure brand equity data over time.
Customer lifetime value is another strong indicator. Essentially it’s the value that a customer brings to you during the entirety of their total interactions with you. Strong brand equity correlates to higher CLV, since loyal customers will bring in more revenue for you overall. Conversely, if you need to keep re-attracting customers it might end up lowering their overall value to you, since acquiring a customer is more costly than keeping a current one.
Also worth mentioning is the cost to acquire new customers, which is a huge indicator of brand equity. If said cost is large, it means that it takes a lot of incentive for a consumer to switch from a competing brand to yours, meaning your brand equity is low and you need to work on your image.
Brand awareness is another abstract quality that’s hard to measure, but nevertheless it’s very valuable when you’re looking at your brand equity. To put it simply, if consumers don’t know about you then they won’t buy from you. If they know of you only vaguely, you won’t be their first thought when looking for a product.
Having high brand awareness means that you’re synonymous with the market you’re in – like the examples of Coca-Cola and Sellotape mentioned earlier. Being so well known comes with certain risks to your brand, as you lose copyright on any name that becomes the commonly used term for an item, but it’s a definite sign that you’re well up there in people’s minds.
Coca-Cola managed to retain their trademark, since the commonly used term is the nickname Coke, however Sellotap lost theirs when the term was deemed genericized enough.
Ways you can measure brand awareness include:
- Store traffic
- Search volume
- Google search rankings
These aren’t the end all be all, but they’re a good start. You can also look to social media for hints, but this information will be highly polarized due to the nature of such spaces.
Customer sentiment is about feelings, specifically customers’ feelings towards a particular product or brand, depending how you measure it. Customer sentiment is a measure of how strong the emotions associated with your brand are, and how positive or negative they are. It’s especially important in today’s markets, as customers are willing to spend up to 140% more after a positive experience with a brand.
Generally customer sentiment is generated by surveys or similar methods, asking customers to rank their experiences based on how they felt about their interactions with you. However, it can also be found by scraping review data with sentiment analysis or analyzing social media chatter.
It’s not straightforward at all to measure customer sentiment, but fortunately Revuze has built the first ever customer sentiment analysis engine, Sentimate, to analyze the data for you. If that sounds interesting, find out more here.
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Something to consider when you’re analyzing your brand is what’s termed the total value of the brand itself, what it contributes to the business simply by existing. There are a myriad of factors you can measure when doing this, but depending on who you are and what you do some will be more important than others.
In general, things to consider when auditing your brand are:
- The cost to build the brand. How much money did you pump into advertising, trademarks etc.?
- The market value of the brand, or how much value it brings to stamp it on a product. Can you charge more for a branded product compared to a generic equivalent?
The income value of the brand, or how much money it brings in by making customers aware of your products. Can you launch a new product and expect high sales, or would you need to put funds into advertisement?
Brand equity is a strong indicator of your position in the market, but it’s something that isn’t easily measured. Hopefully after reading this article you’ll have some clue of how to do so in your industry, and if not we here at Revuze specialize in helping out.
What are you waiting for? Start measuring your brand equity today!