What Is Brand Equity?

Business is more than selling a product or providing a service. It isn’t trading. Business is supposed to build loyalty, trust, identity, position, and equity.

Brand equity is not just a measure; it’s a benchmark of a product’s perceived worth. The brand name’s and reputation’s value often surpasses the product’s value.

Let’s discuss what brand equity means and review the components of brand equity.

What Is Brand Equity? Illustration With Example

The market is filled with luxurious brands that sell average products. For example, if I pick a random bag, it will cost me around $100, but if I buy a Gucci bag, it will cost around $3000.

All because of the brand label. The price of the Gucci label is worth more than the suitcase itself, and this is brand equity.

Definition of Brand Equity 

Brand equity is a fancy way of depicting a brand’s value. It’s how much customers think a brand is worth based on their perception of its quality, reputation, and overall experience. 

A brand that succeeds in forming loyalty, therefore, forms brand equity. Brand equity somewhat differs from brand identity, position, and loyalty; however, they are components of brand equity.

Components Of Brand Equity

Brand identity, position, loyalty, equity, perception—everything is part of the big branding game. They are all dependent on each other, and if they fail to establish themselves, they will all be useless.

Let’s discuss the three main components of brand equity.

Brand Perception

Brand equity is 70% dependent on brand perception. Customers who perceive the brand positively will pay extra money to purchase its product.

Perception is built over years of quality, efficiency, and struggle. To create a positive brand perception, one must apply a branding strategy. You can shape your logo design to promote different feelings.

Brand Recognition

No one will pay extra for a brand if they don’t know it. To form brand equity, your brand must be known, easily identified, and recognized among other businesses.

Your brand should be famous for its product quality, efficient service, excellent customer care, highly professional workplace, and timely deliveries.

Brand Awareness

Imagine your brand is famous and has a good perception, but no one knows your new products. What discount is going on? What is new in your brand?

You need to spread awareness of your brand; otherwise, it will remain in the old tales. Attract customers, engage with them, and associate the brand with them. You can use color psychology to decide and maintain the theme across your brand.

Main Focus Point For Brand Equity

You might wonder where to focus your energy while building brand equity. Let us give you three main points to focus on.

Customer Expectation

Every customer has a problem and looks to you to solve it. You need to identify the problem and then state the solution. Fulfilling the customer’s expectations is one way to create brand equity. 

For example, John is a designer who stitches customized dresses. His key to working is attentive listening. He constantly notes every word the customer says and goes over the board to bring their vision to light.

One day, a lady named Mary told him to design her a beautiful, full-length olive green dress with peals around the waistline. John brought her a customized dress that she loved. She asked him to customize another dress the next time, and he fulfilled her vision. 

After a few times, Mary started believing that only John could bring her vision to light. So she started depending on John, and now she no longer gives him details. She trusts John more than herself, and John can leverage her trust by selling her clothes at higher costs.

Quality Of The Service

Product quality is the best way to communicate your values and standards. Customers judge a brand based on the quality of its products.

Let’s bring back our guy, John. Why do you think Mary went to him the second time, or third, and all the time? Because John brought quality to the table along with the vision.

And because of the excellent quality, Mary was happy to pay John as much as he requested. You can ensure quality by adding a slogan depicting your values in your logo design.

Customer Preference

Customer preference plays the leading role in brand equity because customers choose to neglect all other brands, selling the same product as you at less cost.

Don’t you think Mary had other people to design her dress? Maybe people are offering her the same service at less cost, but Mary chose John because of the quality of his work and her trust and loyalty to him.

Customer preference also boosts word-of-mouth marketing and helps you attract new customers while retaining old customers.

Benefits Of Developing Brand Equity

Let’s discuss the benefits of brand equity so you can incorporate brand management into your brand.

• Charge premium price.

• Exceed product line.

• Significant impact on the company.

• Develop a more significant market share.

• Build strong loyalty.

• Attract more investors.

• Engage new customers.

• Promote brand awareness.

How To Measure Brand Equity

How would you know if your brand has brand equity or not? Let’s discuss the parameters through which you can measure brand equity. You can measure it through financial, strength, and consumer metrics. 

Conclusion

You can analyze your brand’s qualitative and quantitative aspects to ensure substantial brand equity.

Brand equity is the price of the brand alongside the product. It is a crucial element of branding. You can hire a brand agency to manage brand equity.

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