Brand equity is the value a well-known brand name brings to your company. Brands are an asset to your company, one which can increase in financial value over time. Your brand includes the name, logo, image, and attributes of your product or service.
Your brand builds equity as people place greater trust in the promise about its quality. With higher equity you are able to leverage your brand and generate more income from other products and services you promote at a premium price under that name.
There is not a single formula that marketers agree on to measure brand equity. Yet, it does include consumer recognition of the logo, your profit margins, market share and perception of quality compared to competitors.
Coke was the number one global brand in 2012. In fact it’s been the leading brand for many years. The Coke brand is so powerful that if everyone associated with the company disappeared overnight, it would still survive. All you would need to revive the company would be its logo and its product formulas. Now that’s brand 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.
Quality Product or Service in a Niche Market
Your brand begins with a quality product or service you develop to fulfill an unmet need in the market. Because of its superior qualities, your product or service can become a leader in this market niche. Quality can include product or service features and the benefits they provide customers. The more these features and benefits fulfill the needs and desires of your target market, the more valuable the brand becomes to your customers.
The unique thing about building brand equity is to “own” the market niche. When you own a market niche you get to charge premium prices. This enables you to earn higher profits and gives you a distinct competitive advantage.
The way to own the market niche is for you to first identify and then fulfill an unmet need in your target market. Its takes market research and innovation, and it takes marketing know-how.
Think about some of the top 100 brands in the world and what market niche they own.
- Coke is the leader in the soft drink market. Although it started out with just the soda, its brand now includes fruit juices, water and other healthier beverages.
- Apple is the leader in computer and mobile technology. Its brand is associated with superior innovation and engineering. It also leads in consumer training and retail for technology products.
- Google is the leader in Internet search. As it built its brand equity, Google also developed into a leader in online advertising solutions. Plus, it has one of the most recognizable logos in the world, despite the short amount of time it’s been in business.
Recognizable Name and Logo
A recognizable name and logo is essential to build your brand equity. People worldwide recognize leading brands, even if they’ve never bought their products or services. The name and logo have inherent value. It compacts the entire brand with a title and image.
Your company can build brand equity by creating a clever name and a unique logo. Of course, you’ll need to register the trade name and trademark to protect your brand.
Ideally, your brand name should stand out from competitors. It should be simple to pronounce and remember. If possible, it should contain a key benefit of your product or service.
- The name Coke insinuates that it contains a potent substance that increases pleasure.
- The name Nescafe includes its product, coffee; it’s popular in Europe and other places.
- The name Visa implies acceptance worldwide; most countries accept its credit cards.
Your logo includes the design and colors. A distinct logo design that integrates your product or market niche is the key to building brand equity. It should also be simple, so your audience can picture and remember it. Think about the logos for Colgate, Kentucky Fried Chicken and Ralph Lauren. They each have an attribute associated with the product.
- Colgate’s logo looks like a box of toothpaste.
- Kentucky Fried Chicken has a picture of Colonel Sanders, who made the product recipe.
- Ralph Lauren, the brand for Polo line of clothing, has an image of a polo player.
The most important thing you need to build brand equity is loyal customers. Without customers, you can earn no money. Your customers’ experiences with your product or service impacts the equity of your brand. When your customers have a repeated good experience, they tend to buy more from you and refer other people or companies to your brand. By retaining customers to your brand, you also prevent your competitors from gaining new business.
The best way to determine brand loyalty is through market research. You can survey customers and prospective customers to learn how they perceive your brand. They’ll tell you about your strengths and weaknesses, why they buy from you or why they go elsewhere. The more you find out, the better able you are to improve your product or service and customer experience.
You can also determine loyalty to your brand by looking at how often customers buy from you again. Look to see how much they spend on each purchase and compare these to what consumers or businesses spend with your competitors. The more customer share you have, the higher your potential is for increasing your brand equity.
Your Brand’s Future
Building brand equity is a long and arduous task. Your effort to identify and develop a niche product or service, create a recognizable name and logo and develop a following of loyal customers can reap financial rewards in both the short and long term. Building brands can also provide more security for your company, especially in dire economic periods. Your brand may in fact be the most valuable asset in your company. Just ask Coke.