{"id":24553,"date":"2022-12-23T17:00:16","date_gmt":"2022-12-23T17:00:16","guid":{"rendered":"https:\/\/www.revuze.it\/blog\/?p=24553"},"modified":"2022-12-23T15:35:00","modified_gmt":"2022-12-23T15:35:00","slug":"brand-equity","status":"publish","type":"post","link":"https:\/\/www.revuze.it\/blog\/brand-equity\/","title":{"rendered":"How Brand Equity Can Positively Impact Your Business and Drive Growth"},"content":{"rendered":"
Brand equity is the ability to be recognized and acknowledged as more than simply another face in the crowd. Some brands have it, and even fewer know how to build it. With time and effort, you can learn how to become a master of brand equity, similar to giants like Apple & Microsoft. Your Journey Starts Here.<\/strong><\/p>\n Brand equity is a great tool to have in today\u2019s ever-changing competitive markets.\u00a0<\/span><\/p>\n The main benefit of having strong brand equity is that consumers will continue considering your products even when the cost is high.\u00a0<\/span><\/p>\n Consumers perceive them as having innate value or quality solely because they associate it with your brand.<\/span><\/p>\n Being the top brand whenever consumers think of your market sector is the ideal position, but it\u2019s not quite that straightforward.\u00a0<\/span><\/p>\n I\u2019m sure you\u2019ve 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.<\/span><\/p>\n Still, it\u2019s a great position to be in.\u00a0<\/span><\/p>\n In this guide, we\u2019ll take you through the steps of creating strong brand equity, allowing you to dominate the conversation.\u00a0<\/span><\/p>\n Let\u2019s begin with the basics.<\/span><\/p>\n The definition of brand equity is a brand\u2019s 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.<\/span><\/p>\n 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 \u2014 that\u2019s brand equity. If you buy a new gaming console and are dead set on having a PlayStation? You guessed it, that\u2019s brand equity once again.<\/span><\/p>\n Some brands even dominate the market to the point where their name becomes the commonly used word for the item they produce.\u00a0<\/span><\/p>\n Coca-Cola and Sellotape, for example, have become synonymous with their markets, despite being only one among dozens of brands. That\u2019s strong brand equity at work.<\/span><\/p>\n If you have strong brand equity, you have a dedicated customer base and the option to charge premium prices.\u00a0<\/span><\/p>\n When launching a new product, you\u2019re guaranteed to get customers\u2019 interest no matter what it is.\u00a0<\/span><\/p>\n That said, you can\u2019t coast by on brand equity alone. You must ensure your products are still top-quality and are within the market\u2019s expectations. Microsoft learned that the hard way with Windows Vista and even Sony with the $600 PlayStation 3.<\/span><\/p>\n It\u2019s worth mentioning the <\/span>Keller Brand Equity model<\/span><\/a> here. We won\u2019t cover it in too much detail as that would be an article in and of itself, but let\u2019s go over it to give you a general idea.<\/span><\/p>\n <\/p>\n Keller\u2019s brand equity pyramid model states that to gain strong brand equity, you need to shape the way your customers think and feel about you.\u00a0<\/span><\/p>\n 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.<\/span><\/p>\n It\u2019s 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.\u00a0<\/span><\/p>\n 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.<\/span><\/p>\n Now that you know what brand equity is, you might be asking yourself – \u201cis it worth it?\u201d<\/span><\/p>\n It\u2019s true that building brand equity is a long and difficult process, but the results are well worth it.\u00a0<\/span><\/p>\n Let\u2019s take a look at some of the most tangible benefits, ones that you can point to when an investor asks why you\u2019re putting so much effort into building your brand\u2019s equity.<\/span><\/p>\n Brand equity impacts customer spending in two main ways.\u00a0<\/span><\/p>\n First of all, if you have a high brand equity you can charge more for a product than you otherwise might. In fact, it\u2019s often expected of you to do that. So much so consumers will become suspicious of a product line if you don\u2019t.\u00a0<\/span><\/p>\n When was the last time you saw a new iPhone going for less than $1,000? It would seem suspicious if it did, right? That\u2019s Apple\u2019s brand equity at work.<\/span><\/p>\n <\/p>\n The second way in which customer spending is impacted is in making decisions about <\/span>what<\/span><\/i> to buy, especially in cases where a customer has little knowledge of the products in that market sector.<\/span><\/p>\n When a not technologically aligned parent decides to buy their child a simple phone for calls and texts, they\u2019re left to rely on what little they know about a brand\u2019s reputation.<\/span><\/p>\n What do they pick? An obscure and niche phone with specific uses? Or a well-known brand such as Apple or Samsung that they\u2019ve probably heard of in passing? Probably the latter, right?<\/span><\/p>\n That\u2019s brand equity in action.\u00a0<\/span><\/p>\n I\u2019m sure you\u2019ve come across a friend or acquaintance who buys <\/span>only<\/span><\/i> from a specific brand and won\u2019t accept replacements. I mean, what other laptop could replace my trusty Macbook?<\/span><\/p>\n I\u2019ve grown to love it and how it functions so much, that buying another Macbook when it\u2019s time to replace it is a no-brainer. And there are millions like me.<\/span><\/p>\n That\u2019s the epitome of customer loyalty, which is different from customer retention (coming up in a few paragraphs).<\/span><\/p>\n Customer <\/span>advocacy<\/span><\/i> is when that loyalty is taken one step further.\u00a0<\/span><\/p>\n In essence, the customer becomes someone who will promote your brand to their friends and acquaintances, sometimes to the point of convincing them to switch brands.<\/span><\/p>\n Brand equity is of great help here. Not only do customers have a much easier time advocating for a brand that is well known, but the actual process of loyalty can be sped up tremendously.<\/span><\/p>\n Customer loyalty relies on great experiences, that\u2019s true, but the opinions of others also matter. A <\/span>HubSpot study<\/span><\/a> on the topic found that 81% of consumers would rely on referrals from friends and family to choose & try a brand over an advertisement. This means that you\u2019ll likely need a recommendation simply to get on the customer loyalty ladder in the first place!<\/span><\/p>\n Having strong brand equity means that people are more open to trusting you from the get-go, which makes climbing that ladder from customer to loyal customer to brand advocate that much quicker.<\/span><\/p>\n Your customer retention rates are one of the key metrics that help your business keep going. After all, if your customers leave unsatisfied and don\u2019t return it\u2019ll hurt your performance in the long run. A mere 5% increase in your retention rates can bring <\/span>up to a 25% increase<\/span><\/a> in profits!<\/span><\/p>\n Your churn rate, or the rate at which you lose customers over time, is another measure that\u2019s similar to customer retention, just in the opposite direction.<\/span><\/p>\n <\/p>\n It\u2019s calculated by taking the number of customers who stopped interacting with you over a set period of time and dividing it by the number of customers you had at the start of the time period, then converting it into a percentage.<\/span><\/p>\n If your churn rate is high, your customer retention rate is low. Churn is often a more useful metric to look at than retention since it\u2019s more directly comparable over different periods of time.<\/span><\/p>\n So, what does brand equity have to do with customer retention? After all, retention rates are solely about customer experience, right? Well, not entirely.<\/span><\/p>\n Research has shown that customers care about more than simply their experiences with you, with <\/span>80% being willing to change brands<\/span><\/a> based on <\/span>\u201ca company\u2019s social responsibility, inclusiveness, and\/or environmental impact.\u201d <\/span><\/i>How does news on these topics spread? Via brand equity of course.<\/span><\/p>\n An apt metaphor to describe this would be meeting someone for the first time. Consider what would happen in the following circumstances.<\/span><\/p>\n You meet someone who is clearly in a bad mood, is rude to you, and snaps over minor things. You\u2019d feel insulted, maybe even a little scared. You mark this person in your brain as bad news, and won\u2019t want to deal with them again.<\/span><\/p>\n You then tell people that you know about this encounter, and how you felt. They have met this person before and reassure you that they aren\u2019t normally like this, that it must have been a bad day or something similar.\u00a0<\/span><\/p>\n From this, you decide to revise your opinion, and the next interaction you have with them is great! Clearly, it was just an off day and they\u2019re not normally like this.\u00a0<\/span><\/p>\nWhat is brand equity?<\/b><\/h2>\n
Keller\u2019s brand equity model (aka brand equity pyramid model)<\/b><\/h3>\n
The impact of brand equity on customer interactions<\/b><\/h2>\n
Customer spending<\/b><\/h3>\n
Customer loyalty & advocacy<\/b><\/h3>\n
Customer retention<\/b><\/h3>\n