Why You Need To Measure Brand Equity – And How To Do It?

Measuring brand equity benefits your company in numerous ways and helps you develop a solid brand. By employing it, you will have better understanding of your target demographics, know how to personalize your marketing efforts and be able to meet your consumers’ needs throughout all stages of the sales funnel.

What is brand equity and how do you measure it?

Company Value: To measure the brand equity, you could think of the firm as an asset. When subtracting the tangible assets from the overall value of the firm, you would be left with the brand equity. Market Share: What is your company’s market share? Leaders in the market tend to have a higher brand equity.

Why do you think it is important to measure both the sources and outcomes of brand equity?

Understanding the sources and outcomes of brand equity provides a common denominator for interpreting marketing strategies and assessing the value of a brand: The sources of brand equity help managers understand and focus on what drives their brand equity; the outcomes of brand equity help managers understand exactly

How important is brand equity?

Developing brand equity is vital as it allows companies to more effectively engage with their customer base in such a way that drives brand loyalty, allowing the business to grow further. Fledgling brands need as much support as possible, and so the search for customers is first and foremost.

Why do we measure branding?

One of the main reasons for carrying out brand measurement is so that you can effect changes that improve your brand performance. It not only shows you where you need to make improvements, but it also provides you with numbers that you can use to create targets and track your progress.

What are the sources of brand equity Why do we measure brand equity?

The concept of Brand Equity comes into existence when consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong and distinctive brand associations in the memory.

How sources of brand equity and customer mindset is measured?

The difference between total utility and utility of the product features is the value of the brand. According to a customer-based brand equity perspective, the indirect approach to measuring brand equity attempts to assess potential sources for brand equity by measuring consumer mindset or brand knowledge.

How do you measure outcomes of brand equity?

You can choose one of two types of methods that measure one dimension of brand equity at a time:

  1. The Qualitative Research Methods.
  2. The Quantitative Research Methods.
  3. Brand-Based Comparative Methods.
  4. Marketing-Based Comparative Methods.
  5. Conjoined Comparative Methods.

What are the benefits of brand equity to society?

By leveraging the value of your brand, you can more easily add new products to your line and people will be more willing to try your new product. You can expand into new markets and geographies. People there will recognize your brand, make an instant positive connection, and follow you.

How do you use brand equity?

These steps build from a base to form a brand equity pyramid.

  1. Step 1 – Identity: Build Awareness.
  2. Step 2 – Meaning: Communicate What Your Brand Means and What It Stands for.
  3. Step 3 – Response: Reshape How Customers Think and Feel about Your Brand.
  4. Step 4 – Relationships: Build a Deeper Bond With Customers.

How do we measure brand?

Measure brand awareness using these ten tactics

  1. Launch a brand awareness survey, stat.
  2. Check your social media followers.
  3. Use Google Trends data.
  4. Let brand tracking software do the heavy lifting.
  5. Look into your brand name mentions.
  6. Look for branded search volume in your Google Analytics.

How do you measure brand advertising?

As you’ve guessed, the best approach to measuring the impact of brand advertising is to combine both methods. Most marketers already do this: running annual marketing mix models (and more frequent mini-models), alongside consumer surveys or brand trackers.

How to Measure Brand Equity: 7 Proven Ways // Qualtrics

Get started right now with our straightforward approach to determining brand equity.

What is brand equity and why does it matter?

It is commonly recognized that people are more likely to purchase a product that they are familiar with and trust. The notion of brand equity takes use of this consumer behavioral inclination in order to optimize successful sales over a prolonged period of time. In business, brand equity refers to the additional value that a firm derives by having a strong and favorable brand name and public impression. As a result, the following is produced:

  • A market that is skewed in favor of the corporation with the most established brand equity
  • When clients pick your brand over another, even if it is more expensive to purchase, your sales and earnings increase. The ability to maintain a stronger grip on clients during future purchasing opportunities, due to increased brand equity, which leads to increased goodwill and brand recognition

More information may be found at: Read our Ultimate Guide to Brand Equity to learn how brand equity is defined, how to develop good brand equity levels, and how to monitor brand equity consistently over time in order to succeed in your business.

Two broad approaches to measuring brand equity

You may track your success regardless of whether you’re just getting started or have been working on your brand for some time. Tracking your progress allows you to see how strong your brand is in the market and how it has evolved over time. Try out these two general approaches to data types to see which one works best for you: This is operational data, such as sales data, financial data, and human resource data. Given that it can be quantified into numerical values, it may be measured repeatedly, resulting in a database of data.

  1. In comparison to emotions and feelings, this type of data is easier to collect and analyze.
  2. It is unable to predict what will happen in the future or why certain events will occur.
  3. This method of determining brand equity is based on customer experience data.
  4. Brands that spend in building their brand equity get a competitive edge over their competitors.
  5. When a client associates a brand’s messaging with their own “self-image,” this is known as brand association.
  6. As a result, the product has the ability to reflect the customer’s future potential, to inspire them, and to boost their self-esteem.
  7. It is advised that you use metric groups that monitor both operational data and customer experience data in order for brand equity to be quantified appropriately and to account for both of these factors.

This will provide you with the complete picture – the who, what, and why. Are you keeping track of your brand? Learn how to do so in our brand tracking how-to guide.

7 ways to measure brand equity

Here are seven techniques to assess brand equity, as well as some examples of indicators that may be used to collect operational and customer experience information:

1. Brand evaluation

One method of determining brand equity is to try to comprehend the overall worth of the brand as a distinct monetary asset that may be placed on a company’s balance sheet as a separate monetary asset. This measure demonstrates the value of a brand by demonstrating how the brand has contributed to the success of the firm. What is the best way to determine the financial worth of a brand? There are several schools of thought on this, and the findings might give widely disparate estimations of brand value or agreement on the direction of change from one year to the next, depending on the methodology used.

  • To calculate brand equity, one method entails attempting to comprehend the overall worth of the brand as an independent financial asset, which may be recorded on a company’s balance sheet as a monetary asset. Brand worth is measured by this statistic, which reflects the brand’s contribution to the success of the firm. What is the best way to determine the monetary value of a brand or company? Various schools of thought have varying views on this, with the outcomes resulting in widely disparate assessments of brand value or consensus on the direction of change that varies from one year to the next. When evaluating the value, it’s important to consider the following factors:

2. Brand strength

It is possible to assess brand strength, or the power of a brand, based on emotional data – the differential value that a brand has earned in someone’s mind as a result of many encounters over time. As a proxy measure for relative customer demand for a brand, equity is essentially identical with “attudinal strength” or “strong of character.” Consumer surveys, as well as a series of evaluative questions that measure the relative desire, or ‘wantability,’ that the consumer has for the brand, can be used to get this information from consumers.

  • The MDF framework developed by Millward Brown
  • Ipsos’ Brand Value Creator (BVC)
  • TNS’ Conversion Model (CM)
  • And others.

3. Brand awareness

Brand awareness refers to how well your company’s name is known by your target consumers, the general public, and other important stakeholders. Make sure to check out our comprehensive guide to brand awareness, which is available for free download today. The following questions can be used to measure brand awareness since brand awareness is an emotional-based statistic.

  • The future intent to purchase of a consumer
  • A customer’s existing and future brand awareness, both now and in the future
  • The purchasing history of prospective customers
  • And Whether there is a high level of ‘conversation share’ – a measure of the amount of time spent by customers talking about your business in ordinary conversations

Among the most important techniques to employ are:

  • Research panels or consumer brand impression surveys
  • Sales statistics
  • Customer feedback routes such as social mediareviews and comments
  • Website search volumes for your business
  • And other data.

With our free brand awareness survey form, you may learn more about your company’s presence in your target market.

4. Brand relevance

Customers’ happiness is linked to this metric, but it focuses on whether or not they believe that your brand delivers distinctive value. When your brand is regarded to be more useful and relevant to a target market, or as fulfilling a certain purpose, your brand equity level might improve. Here are a few examples of how you may assess this:

  • In order to better understand your customers’ happiness with your company’s brands, goods, services, and experiences, customer satisfaction surveys (also known as CSAT surveys) are conducted. Insight into a customer’s emotional connection to a brand may be gained via the use of a Net Promoter Score (NPS), which is a critical factor in improving brand loyalty. using a survey-based statistical approach called Conjoint Analysis to uncover important consumer decision-making processes and the value buyers place on a brand’s characteristics

5. Output metrics

Brand equity may be determined by looking at outputs such as email marketing or social media messages about the product or service. It is related to operational data on return on investment (ROI), which shows you if your effort (for example, the number of communications sent) was worthwhile. However, while email marketing will not alone decide your brand equity, it will help to increase your brand recognition and perception, and as awareness increases, income should increase as well. This information can be obtained through sales transactions involving items from a marketed brand.

“Brand equity” is frequently used to refer to a company’s pricing power, or its ability to charge a premium without losing business to a competitor, in the consumer and service industries. The following are examples of other approaches for examining outputs:

  • Testing for analysis of variance (ANOVA) to determine how various groups respond to differences in a brand’s messaging or development version
  • Pricing values are compared on the basis of their costs. Typically, customers’ replies are in response to communication call to actions – such as signing up for an email list or enrolling in a loyalty program.

6. Financial data

When you examine the financial statistics and sales performance of a company, you may gain an understanding of the brand equity of its products or services. Historical data is required in order to evaluate brand performance, such as market share, profitability, revenue, pricing, growth rate, cost to keep consumers, cost to attract new customers, and investment in brand awareness and recognition. In addition, don’t forget about several important markers of strong brand equity, which should all be rising if you’re on the right track:

  • The worth of a customer during the course of their relationship
  • In compared to your competitors, you charge a higher price premium. The rate of increase in revenue

7. Competitive Metrics

The actions of your rivals will have an influence on your brand if they are doing poorly, or if they are giving you a run for your money and launching excellent marketing efforts. When operating in a competitive market, you can examine how your brand equity operates, but you can also conductCompetitor analysis to analyze your rivals’ strengths and weaknesses, as well as how their brands compare to yours. If their brands are working well, you’ll see differences in the following areas:

  • Your acquisition rate in comparison to their rates. Having a dominant position in the market in terms of sales, social media activity, and following
  • Obtaining revenue through certain avenues that are also utilized by rivals

Start measuring brand equity today

We understand how difficult it is to generate brand equity – the finest brands in the world have spent years developing a brand experience with the goal of accomplishing just that. It may be particularly difficult to track, which is why we’ve put up a guide to help you set up your own brand tracking research.

6 Ways to Measure Brand Equity and How to Build It [Updated 2021]

Your primary goal, whether you’re a team member in a marketing department, an in-house agency, or a marketing services agency, should be to establish a sustainable advantage over your competitors by making your brand, or the brand of your client, the category leader—first in awareness, then in preference, and finally in market share. The term “brand equity” refers to the value that a company has built up through time. The process of establishing and maintaining brand equity is a long one, and it is helpful to have concrete, quantitative evidence that your efforts are driving the brand in the correct direction.

This post will present an overview of the 6 most practical approaches to evaluate brand equity, with a special emphasis on the usage of those tools and methodologies in distributed brand communities, to assist you on your path.

Brand Equity Definition

As stated by the Harvard Business School, brand equity is the value that your brand provides to your firm. Increased revenues, cheaper marketing expenses, premium pricing, and even advantageous negotiation leverage with vendors can all contribute to the creation of value. The crucial thing to remember is that all of these sources of value can be stated numerically, which means they can all be quantified. The problem, of course, is to determine what proportion of these figures is due to brand equity in particular.

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Do the results of that analysis take into consideration the effect that your brand recognition had in bringing the sales team into the door in the first place?

By taking the time to assess your brand equity across the six dimensions discussed in this post, you will be able to more persuasively argue for the role that your brand equity efforts have played in your company’s most important KPIs—and to fight for the investments that are necessary to maintain your brand equity.

1. Brand Awareness

Understanding of your products and services by your customers is a crucial aspect of building brand equity. Customer awareness is important, but much more important is the fact that customers are unable to resist thinking about your brand. The “conversation share,” or the number of time your brand is mentioned in regular discussions concerning the products and services you provide, is a leading indicator of a consumer’s awareness of your firm. Measurement of brand awareness among your target clients can take on a variety of shapes and sizes.

  • Surveys and focus groups
  • Foot traffic in local stores
  • The amount of searches for your brand and goods Mentions in the local media
  • Mentions and reviews on social media

2. Preference Metrics

When it comes to everyday purchasing decisions, consumer preference is a strong influence. It is the reason that a customer may choose to go longer and spend more money in order to acquire a product or service that they truly enjoy. Focus groups, sales data, and surveys can all be used to determine various aspects of client preference, including the following: Customers’ perception of your brand’s relevance is measured by the extent to which they believe your brand delivers unique and distinct value that is not provided by your rivals.

Emotional Connection: Your ability to establish emotional ties with consumers, which is a critical aspect in building client loyalty.

3. Channel Partner Engagement

When determining brand choice, it’s crucial to consider not just your consumers, but also your channel partners and other stakeholders. Are they excited about the prospect of participating in national marketing and campaigns at the community level? Are they in accordance with the brand’s standards and guidelines? Look for possibilities to strengthen and expand the brand’s presence in local stores and locations, or do they prefer to stay on the sidelines? Do they use the methods that you supply for local marketing, or do they prefer to “go rogue” and create their own?

Modifications in your organization’s attitude toward, and support for, channel partners can have a significant impact on your organization’s performance on this front.

Your channel-partner community may be seen as a method of maintaining tabs on the power and popularity of your brand.

This is especially true in dealer- and agent-based partner networks, where the brand must fight for mind-share and loyalty with other organizations and goods in order to remain relevant.

4. Financial Metrics

It is intimately related to sales performance in terms of financial indicators regarding brand equity. If these indications, which are connected to the financial worth of your brand, are rising, it is likely that your income will be expanding in the same manner. Brand equity may be measured in a variety of ways, including via financial factors.

  • Customer lifetime value, average transaction value, and rate of sustained growth are all important factors to consider.

5. Output Metrics

What should you do if your company is devoting time and resources to brand equity development but isn’t seeing any results? Output is a metric for measuring marketing activity since it tracks the marketing assets that are made available to the public. The output looks at the frequency with which marketing materials are issued, as well as the sort of asset that is pushed into the marketplace. The influence of your brand-created offers in local marketplaces may also be used to monitor the output of your business.

That can be a convenient and rapid method of determining output in the field.

In a similar vein, poor-quality output – such as a direct mail offer that has been amateurishly edited by a local franchisee – may have a significant negative influence on your brand’s reputation.

  • Campaigns and asset usage by local marketers
  • Sales of advertised items
  • Customer uptake of loyalty schemes

6. Competitive Metrics

Indirectly, the brand equity of your rivals has a direct impact on the direction of your company’s brand equity. Customer preference may decline if your competitors escalates its efforts and starts a campaign announcing a price reduction. The cause for this decline may have nothing to do with the job you’re doing and everything to do with your competitor’s brand. Competitive measurements can highlight areas where your rival is not giving value to customers, such as the absence of certain items, poor customer service, or high price, among others.

Metrics used here include, but are not limited to, the following:

  • Customer acquisition rate, market share, sales lift, and return on investment (ROI) of distribution channels are all measured.

Part Two: How to Build Brand Equity

Every “touch” or encounter with a consumer contributes to the development of brand equity. Your advertising at the national and local levels helps to build brand equity, but so do the face-to-face contacts with customers that your local marketers have on a regular basis with customers. As long as brand managers recognize that each outbound communication and every in-store encounter represents an additional chance to contribute to a favorable brand impression, they can exert control over the process and not only measure but also develop brand equity.

1. Build Your National Brand

Distributed brand managers do not have direct influence over the execution of local marketing campaigns, but they do have power over the implementation of national marketing initiatives at the national level. Some recommendations for ensuring that your national or global brand activities are amplified and reinforced at the local level are provided below. Create local “legs” for national or global initiatives from the outset of the planning process.

Challenge your agency partner or in-house agency to come up with simple and reasonable solutions for your channel partners to become a part of your overall efforts by establishing a local presence in their respective markets.

  • To ensure the success of a new promotion or campaign, it is important to solicit input from key local partners. In this context, franchise councils and dealer councils may be quite beneficial. If you have a field force, make an effort to connect with them on a regular basis throughout the year so that marketing efforts do not catch them off guard. Celebrate successful local expansions of national programs that have been successful. Recognize and reward channel partners who are assisting in the strengthening of your brand through your extranet and yearly convention, respectively. Improve your tools for maintaining brand consistency on a regular basis. Local marketers have come to anticipate that brand-level solutions would be as simple to use as the top ecommerce websites in the modern day. Make certain that your systems comply with this requirement. Is it simple to locate, alter, download, and use the items you’ve created? Ensure that access is automated to the greatest extent feasible (think Single Sign-On or SSO)
  • Provide customers and local marketers with several chances to provide feedback—and make it clear that you are eager to listen and respond to their concerns.

2. Improve Local Marketing Performance

The consistency of customer encounters and the quality of the brand experiences are important factors in building brand equity at the local level. It is possible to establish long-lasting local brand equity if your clients see a product in your national commercials and then go out and purchase it after having a positive experience with it. When you develop equity via strong execution, it is just as easy to see how bad local performance may undo all of your hard work. Brand management teams must clearly define expectations and implement processes, typically through the use of technology, that make it simpler for two-way communication between local marketers and brand management teams to take place at local storefronts.

3. Support Local Innovation

How monotonous would it be if your company sent out the same same direct mail flyer year after year with no changes or updates? It’s a little monotonous. Brands must reinterpret concepts in new and intriguing ways in order to keep their customers interested and passionate about their products. In order to attain balance, brand managers must be aware of the two basic forms of brand consistency: (1) visual and (2) verbal. Repetition is defined as doing the same thing over and over again. Innovation is defined as the repetition of the same concept in a different way.

It is critical to achieve a balance between these two aspects in order to continue to develop your existing equity.

  • Two-way communications
  • Brand guidelines
  • Brand voice and tone guidelines. Digital asset management technology.

Elevate Your Distributed Brand Equity

Distributed brand equity is difficult to build and as difficult to lose. Long-term, loyal customers may be turned off by your brand after just one negative experience at their favorite business. Making the most of the equity you’ve already built by providing a consistently excellent experience is a difficult endeavor. When you’re in charge of a network of thousands of affiliates, it might seem nearly impossible to accomplish. Traditionally, organizations have measured brand equity by looking at things like consumer knowledge, preference, and financial data.

  1. With a firm grasp of dispersed brand equity as a starting point, your company will be better positioned to develop equity through national initiatives, increasing local marketing effectiveness, and supporting regional innovation.
  2. Working to enhance the equity measurements of your local marketers will have a direct impact on the execution and equity of your local campaigns.
  3. Businesses gain a comprehensive picture of their marketing assets when they use our secure platform, which centralizes marketing assets across franchise and enterprise locations.
  4. It is possible for brand managers, designers, and local marketers to have the tools they need to stay on brand standards while also automating and streamlining procedures to produce more output in less time.

And the greatest thing is that getting started is straightforward and straightforward! You may join up for one of our daily product demonstrations by visiting the following link:

How To Measure Brand Equity?

Brand equity is the monetary value attached to a brand that determines its worth. Many brands have a significant amount of brand equity. Forbes magazine has identified the top five most valuable brands in the world and their respective valuation as of 2018, which are as follows:

  • Microsoft received $104.9 billion, Facebook received $94.8 billion, Apple received $182.8 billion, Google received $132.1 billion, and Amazon received $70.9 billion.

Measuring brand equity is the process of determining the worth of a company’s reputation. In other words, it is the amount of money that a person or a corporation is willing to pay in exchange for the use of the trademark.

Need To Measure Brand Equity

The technique of estimating the worth of a brand is known as measuring brand equity. For better or worse, it is the monetary equivalent of the amount of money that a person or organization is willing to spend for the brand.

Approaches to Measure Brand Equity

For different groups of individuals, the term “brand value” might signify different things. Given that it is an objective phrase, determining the qualitative value might be difficult to determine. Although it is tough, and the process of determining brand equity can be time-consuming, it is not impossible to do so successfully. When it comes to determining brand equity, there are several methods available. The following are the most often used valuation approaches:

1. Cost-Based Brand Valuation

This approach of determining brand equity is really straightforward and straightforward. It is the entire amount of money spent on the development of a brand from the beginning to the present. It is the sum of all of the individual expenditures involved in the process of building a brand, such as advertising costs, campaign costs, promotion costs, registration fees, and licensing costs, among others. The maximum amount for which a brand can be sold is its overall worth. This technique of determining brand equity will need you to assign a monetary value to the brand’s acquisition cost and determine the real expenditures paid in the process of determining the current cost.

b) Replacement Cost Method

There is nothing complicated or difficult about this approach of brand equity measurement. A brand’s overall investment in its development from the beginning to the present. In the case of a brand, it is the sum of all the individual expenditures associated with its creation, such as advertising costs, campaign costs, promotion costs, registration costs, and license fees. This is the maximum amount of money that a brand may be sold for in one transaction. Putting a monetary value on the brand’s initial cost as well as accounting for real costs incurred in the present cost will be required by this way of calculating brand equity.

c) Recreation Cost Method

Using this approach, the current cost of reproducing a brand is estimated by comparing current prices to the cost of the original brand. The historical cost technique is being replaced by this method in an attempt to address the issues that existed previously.

d) Conversion Method

According to this technique of measurement, brand equity may be determined by calculating the degree of awareness that would have to be developed in order to achieve the current level of sales. This strategy is based on the conversion model, which takes into account the amount of awareness in consumers that will prompt them to make a subsequent purchase.

The outcome will be used to assess the cost of acquiring new consumers, which is essentially the cost of building brand equity in the eyes of the public.

e) Customer Preference Method

If you use the conversion technique to calculate brand equity, you may estimate how much additional awareness must be developed in order to achieve the present sales level. Using the conversion model, this strategy takes into account the amount of consumer awareness that will prompt them to make a purchase. The outcome will be used to assess the cost of acquiring new consumers, which is essentially the cost of building brand equity in the eyes of the customer.

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2. Market-Based Brand Valuation

The brand equity is calculated using this technique based on the same transactions that have occurred in the same sector for the firms in question. They take into account the premium paid by other firms of similar kind and apply it to their own brand in order to calculate the value.

b) Equity valuation Method

The brand value is estimated using two criteria when utilizing the Equity valuation technique of determining brand equity. For the first parameter, profits are earned through investments that increase demand for the product, such as advertising, which increases the likelihood of making a profit on the investment. Secondly, they will save money on marketing expenditures for their branded items, which is a significant savings. This might include the money saved during a new product launch as a result of the previously established brand’s presence on the market.

c) Residual Method

Two characteristics are used to calculate the worth of a brand in the Equity valuation technique of calculating brand equity. For the first parameter, profits are earned through investments that increase demand for the product, such as advertising, which increases the likelihood of making a profit from the product. Secondly, they will save money on marketing expenditures for their branded items, which is a significant save. This can include the money saved during a new product launch as a result of the existing brand’s popularity.

3. Income-Based Brand Valuation

The brand value is computed using this technique of brand equity assessment by first calculating the price difference between a branded product and a generic product, and then multiplying the price difference by the total amount of branded product sold in the market. This strategy is based on the notion that a branded product provides customers with an additional value, and that consumers are prepared to pay a premium in exchange for this additional benefit.

b) Royalty Relief Method

In the calculation of brand equity, the royalty relief approach is a widely common method that is generally utilized by large firms. When adopting this technique, brand equity is determined based on the licensing payments that an organization would have to pay for utilizing a trademark if it did not own the trademark in question.

c) Excess Earnings Method

The calculation of brand equity in this methodology is based on the intangible return on investment.

The returns on all of the firm’s tangible assets, as well as the returns on all of the company’s financial assets, are computed and then subtracted from the overall returns of the company. The brand is then awarded a share of the excess returns that have been received.

d) Competitive Equilibria

Brand profits from a branded firm’s market share are compared to those of an unbranded peer company that is not affected by factors such as pricing, distribution, investment, and marketing. This method of brand equity evaluation is used to determine the value of a brand. When the value of the brand equity is calculated, it is discounted to obtain the value of the brand.

Brand equity: why and how should you measure it?

Consumers have various connections with brands, according to the first piece in our series on brand equity, which we published earlier this year. The strength of these connections serves as a brand’s ticket in a buying scenario; the faster a brand is brought to mind, the more probable it is that consumers would purchase it – which is why mental availability is important in purchasing decisions. If you are looking to develop a long-term brand and achieve sustainable growth, having an emotional connection with your customers is essential.

This is why a brand should be more than just well-known; it should also be meaningful and distinctive.

To measure or not to measure

It seems logical to proceed with the cocktail of KPIs that will ensure the growth of your brand equity, as well as the optimal tracking frequency for each of these metrics. However, the title of V. F. Ridgway’s 1956 study, “Dysfunctional Consequences of Performance Measurements,” which was aptly titled, resounds in my brain. The statement is correct in that not everything that matters can be measured, and not everything that can be measured is significant. Brand equity, on the other hand, is important, and it can and should be quantified.

Because it is “brand magic,” as Dom Boyd puts it, and it is a necessary first step in ensuring that brand marketing is firmly entrenched in the company’s long-term growth plan.

Your brand is one of your business’s most valuable assets

Many businesses throughout the world are attempting to determine the monetary worth of brands. The only thing we can say with certainty is that a brand’s equity in the eyes of customers is the game-changing multiplier when it comes to calculating a brand’s worth. In addition to accounting for the actual assets on a company’s balance sheet, Kantar’sBrandZmeasurement technique takes into consideration the intangible opinions that consumers have of a brand. For the most part, adding brand equity in financial assessment indicates the future value of the contribution that the brand’s investment is making.

BrandZ’s approach is unique in that it peels away all of the financial and other components of brand value to get to the heart of the matter – how much the brand itself contributes to enterprise value – rather than the other way around.

And it accomplishes this through the use of Brand Power, a statistic that has been independently validated.

What is Brand Power and its relationship to sales?

Meet Brand Power, a terrific proxy for understanding and measuring long-term revenue that can be measured and understood. It is deserving of such a formal introduction since it bridges the gap between perceived reality and actual reality. Many of our research have demonstrated that it is a straightforward, yet comprehensive collection of brand equity measurements that both explain and anticipate a brand’s market reality. The BrandZ top 100 most valuable global brands were unaffected by the slowdown in the global economy (-3.3 percent in 2019-2020) and continued to prosper, with brand value increasing by 5.8 percent in 2020.

How did they do it?

A number of well-known (and less biased than me) brand consultants have spoken about (and appreciated) Brand Power’s “secret sauce.” Mark Ritson writes in his article Bothism as a cure for marketing that the industry has moved on from the “differentiate or die” mantra of the previous 30 years to one that “combines salience and meaningful difference,” adding that “Kantar has been politely proving for years that such a combination is greater than the sum of its parts.”

So, 1 + 1 + 13. But what do we mean by each term?

  • Intuitive: this brand fits people’s requirements, and they develop an emotional attachment to it as a result. Distinctive: this brand is regarded as a trend leader in its industry and as one of a kind
  • In a buying situation, a salient brand is one that springs to mind immediately.

Brands that are meaningful AND different AND salient:

  • Capability to acquire much more volume
  • The ability to charge a higher price
  • And the possibility to achieve a significantly bigger proportion of value share in the future

The combination of all three is the holy grail for brands; the proof is undeniable:

  1. Salience takes flight when there is a meaningful difference. Increased salience when starting from a position of strong equity results in a threefold increase in market share as compared to when starting from a position of poor equity
  2. Marketers should, as a result, attempt to identify and develop significant difference first. This last point, when turned on its back, reinforces the truth: our research have demonstrated that falling companies have over-invested in salience alone and have ignored boosting their significantly distinct brand associations. Kodak, Blackberry, Nokia, Toys R Us, and IBM are just a few of the companies that were once on top of the world, only to crash and burn. Despite the fact that deciphering their demise is a complicated and subtle endeavor, they all had a powerful historical legacy as well as a high degree of salience. Despite this, they were unable to survive since fame is insufficient for growth. In terms of percentages, a Kantar study of growth brands throughout the world discovered that just one-quarter were able to expand solely on the basis of salience. Working on building a reciprocal relationship with customers that results in repeat purchases (a focus on’meaningful difference’ according to J Walker Smith’s The Courage to GrowWhite Paper) resulted in the remaining three-fourths of revenue growth. The eccentric ‘differentiate or die’ mantra holds great truths. It has been demonstrated time and time again that the most important distinguishing factor in brand growth and resilience during challenging times is uniqueness. For rising brands, the graph below plainly depicts how distinctiveness is the unquestionable competitive advantage. The impression of a brand as being meaningfully different is also closely related to its profitability. Whatever their motivation is (brand first, then price) or what they are motivated by (can’t resist a good bargain), customers are prepared to spend more for brands that stand out as being substantially different from the rest of the pack. Consumers who are motivated by brand spend 37 percent more than those who are motivated by price, and 14 percent more than those who are motivated by quality. Diesel CEO Massimo Piombini expresses the notion succinctly: “When you believe a brand is pricey, it is because your image of the brand is incorrect. When your assessment is correct, there is no opposition to the price movement. When you suddenly find yourself spending €250 for a pair of pants, you believe you’ve gotten a wonderful bargain.”

How much of your sales are driven by your brand equity? And how can you influence them?

You’ve worked hard to develop your strategy, and you’re ready to put it into action. Brand equity, or more specifically, those equity indicators of your Brand Power that are indicative of your sales may be affected by even little shifts in the positioning of your company’s brand. You can now engage in role-playing, puppeteering the image associations that distinguish your brand as relevant, distinctive, and prominent, and testing the impact of various situations on your brand equity and sales.

Getting brand equity wrong. It can happen to the best of us

Even the most successful brands can lose sight of their long-term brand equity when short-term objectives take precedence. Adidas’ senior director of global media, Simon Peel, has been candid about the company’s effort to transform itself from an efficiency-focused organization to an effectiveness-focused one. Adidas overinvested in their digital advertising and interim sales as a result of the need to generate results in the near term, at the price of strengthening their long-term brand equity.

  • Research by Binet and Field on their 60/40 rule – which serves as a universal guide to how much money should be spent on marketing in the short and long term – has revealed that sales activation is becoming significantly more efficient.
  • Over the last eight years, their scores for’meaningful difference’ – the impressions they leave in people’s thoughts as well as in their ‘gut’ – have been declining.
  • We are well aware that having an emotional connection with consumers is critical to brand development.
  • Our four-pillar strategy is designed to provide thirsty-for-growth firms in the United Kingdom and throughout the world with the tools and resources they need to improve their businesses.

Brand equity is defined as a movement in the minds of customers, as well as a shift in the marketing strategy. To summarize, here are some hard truths:

  • ‘Brand’ has never been more essential than it is now. The better the brand, the larger the superiority of shareholder returns, and the greater its resilience in times of crisis – a proven truth that has been emphasized by the epidemic. ROI is fantastic, and we are all in agreement that it demonstrates what works and what doesn’t. However, its effects last only for a brief period of time. The realization that we are in this for the long haul is the first step toward successful brand growth. A lightbulb moment when it dawned on me that brand building is not an expense, but rather an investment
  • Monitoring and evaluation are not (or, at the very least, should not be) vanity projects
  • Rather, they are an important input into the decision-making process, an input that generates engagement and exerts influence in the boardroom. Only if there is consistency under the surface is it meaningful to measure and track development. It is first and foremost important to develop or refine one’s plan
  • Searching for the world’s top brand tracker comes later. Trade-in just on fame may put a brand in an exposed position, as a brand’s relationship with customers erodes, which in turn leads to the brand’s value deteriorating.

It appears to me that the ancient adage “good things” don’t “come to those who wait” is unfitting: “good things” DON’T “come to those who wait.” Good things come to those who put forth the effort to obtain them on a consistent basis. Securing a sale and increasing your market share are not the result of a single action, but rather the consequence of a series of acts that require rigorous preparation. In order to effectively monitor and grow your brand equity, it is necessary to use the appropriate brand guidance system.

Keep an eye out for the next piece in our series on brand equity, which will discuss how to increase your brand equity.

What is Brand Equity? Definition and Importance

As businesses progressively shift their attention away from the product and onto the customer, the whole impression of a brand is becoming more crucial than ever. Additionally, almost 74% of today’s customers have higher expectations of companies in terms of how they treat customers, employees, and the environment than they did five years ago. Organizations must analyze how their different marketing strategies contribute to brand recognition in order to keep on top of this transition and remain competitive.

What is Brand Equity?

In marketing, brand equity refers to the amount of influence a brand name has on the minds of consumers, as well as the benefit of having a brand that is easily recognized and well remembered. Organizations build brand equity by providing consumers with favorable experiences that encourage them to continue purchasing from them rather than from competitors that manufacture identical items. This is accomplished through the creation of awareness campaigns that relate to the values of target customers, the fulfillment of promises and qualifications when consumers use the product, and the promotion of loyalty and retention initiatives.

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The two most important aspects of brand equity are awareness and experience:

  • Brand Recognition: Can people quickly and readily recognize your company’s brand? The messaging and images associated with your brand should be consistent so that consumers can always recognize it, even when a new product is introduced. The brand is associated with what sorts of values, according to the customers. It’s possible that they’re thinking about sustainability, quality, or family-friendly characteristics
  • Brand Experience: How have your customers’ first-hand encounters with your company gone? For example, it might indicate that the product functioned as expected, that interactions with brand representatives and customer support teams have been kind and helpful, and that loyalty programs have shown to be useful.

Why is Brand Equity Important?

One of the most significant advantages of building excellent brand equity is the favorable impact it may have on return on investment. Organizations that take use of the power of branding frequently generate more money than their competitors while spending less money – whether on manufacturing, advertising, or other expenses. Positive brand equity, for example, permits companies to demand higher prices for their products. When customers trust in a brand’s values and the quality of its products, they are willing to spend a greater price for the things they purchase from that brand, according to research.

This is especially essential since a growing number of customers, over 80%, are now refusing to do business with or purchase from a company that they do not trust, and almost 90% want to disconnect from a brand that violates their trust.

How Brand Equity Impacts Return on Investment (ROI)

The following are some examples of how brand equity may have a beneficial impact on the bottom line:

Order Value per Customer

People are more inclined to spend more money on things if they have a favourable perception of your company’s brand. Profit margins are therefore increased as a result of this. It is possible that corporations will incur the same manufacturing costs as their competitors. Nonetheless, customers are prepared to pay a premium for brand recognition. For example, a pair of designer shoes may be worth significantly more to consumers than a pair of shoes from a less well-known or generic brand.

ReputationLess Ad Spend

In the event that your items have a positive reputation, customers will seek you out as their preferred brand. As a result, less money is spent on advertising, and sales increase when a new product is introduced as a result of the established level of confidence in the brand.

  • Your Customer Lifetime Value (CLV) is the amount of money your customers will spend with you over the course of their lifetime. In several surveys, Apple is consistently ranked as one of the companies with the strongest brand equity. Apple consumers are more likely to own additional Apple devices, but Android users are less likely to be devoted to a certain PC technology vendor.
  • Customer Loyalty: Customers who are loyal to a brand are seven times more inclined to forgive the business if it makes a mistake. Additionally, customers who are devoted to a brand are nine times more inclined to try new items from that brand.
  • Stock Price: Strong brand equity may lead to a rise in the stock market process for businesses, as investors anticipate that the company will continue to perform well.

How to Build Brand Equity

Establishing brand equity has clear benefits, but it requires a significant amount of effort and research up front in order to achieve and retain this position. It all starts with thorough research into the values and demands of a target audience, as well as defining what distinguishes your company from the competition. Once established, businesses must continue to raise awareness in order to attract new clients while also cultivating customer loyalty among existing customers.

Understand Your Why

In his book, Start with Why, Simon Sineck believes that organizations that are compelling have a reason for being in the first place. Too many advertisers are concerned with the how (how my product will make your life easier) rather than the why (why my product will make your life easier) (Why does this organization do what it does). For firms such as Apple, the reason for their existence is instantly clear. They challenge the current quo and push the boundaries of what is possible. The fact that Apple’s advertising concentrates on their brand (rather than their computers) allows them to expand their product lines into new areas such as phones and music, when other computer firms have struggled to do so.

Test your Messaging

When developing message, it is still critical to do consumer research to determine your posture. What is their reaction? What elicits the most positive response from them? Are you addressing the issues that they are experiencing? Are you delivering the sort of message that will compel them to stop and connect with you? It is important to use statistics to guide the development of message and creative aspects, which should be inspired by what your individual consumers are drawn to. This is particularly important in today’s fragmented economy.

Drive Awareness

Once you’ve developed a compelling message, you’ll need to raise awareness of both your brand and the company’s primary focus. The emphasis on brand values over product qualities, as well as on emotional connections over conversions, is common in this context. It can be difficult to argue for such long-term planning in a society where everyone is focused on the next transaction that comes up.

Brand campaigns must be carried out over a longer period of time in order for consumers to register messages and make connections between them and branded items. In the long run, if this increase in brand emphasis is carried out effectively, it will produce results.

Maintain Consistency

Once your brand has gained recognition, it is important to maintain consistency. This involves employing fonts and style standards that are uniform across the board. Approach your brand in the same way that a writer would treat a fictional character. Even if the advertising concept is sound, if it does not fit with your company’s “personality,” it should not be pursued.

Customer Experience

Because of the development of social media and the ability of consumers to express themselves, businesses are no longer defined solely by what they say in commercials. Brands are the topics of conversation or perception among customers. The ability to put the customer first and to place them at the core of your company’s operations will assist to enhance your entire brand. Take, for example, Amazon’s review system. Instead of just completing a deal, the site encourages customers to participate actively in product reviews and communication with vendors to ensure they get precisely what they need.

Amazon recognizes that having a long-term approach to customer experience will have a positive influence on the company’s financial performance.

To provide customer service around the clock in seven languages, Nike, for example, maintains a dedicated Twitter feed (NikeSupport) to respond to customer demands 24 hours a day.

Can Brand Equity Increase Profits?

The value of a brand has a direct relationship to its profitability. When people identify your brand, they are more likely to prefer your product over a rival brand – even if your product has a higher price tag than the competitor’s goods. People suffering from seasonal allergies, for example, will hunt for Claritin and may not even be aware of the term “Loratadine.” While at the same time, people may believe that Claritin is more effective than the generic store variety, despite the fact that the components are almost same.

Customers will become loyal to your brand once it has gained recognition and equity in the marketplace.

How to Measure and Understand Brand Equity

In some ways, brand equity might appear to be an abstract term that is difficult to define or assess. According to the objectives of your branding initiatives, there are a variety of ways for measuring equity that may be utilized in conjunction with brand tracking operations. Brand monitoring not only helps to understand the return on investment of a marketing effort, but it can also be used to assess awareness, association, and other factors.

There are two types of effect measurements studied in these studies: business impact measures (such as retention, conversions, and price) and consumer impact metrics (such as consumer research or sentiment analysis). Here are a few examples of how to assess goals from a branding standpoint:

Financial

Take into consideration the following when attempting to assign a numerical value to a brand:

  • Company Value: You might think of the company as an asset if you wanted to quantify brand equity. When you reduce the value of the tangible assets from the total worth of the company, you are left with the value of the brand equity. Market Share: What percentage of the market does your organization control? Leaders in the market have a larger level of brand equity than their competitors. What is the revenue potential for your product? What does the revenue potential for your product look like? What is the relationship between this and the present income of your company?

Product Value

It is possible to think of the company as an asset in order to evaluate brand equity. You would be left with the brand equity if you deducted the value of the tangible assets from the worth of the company. Share of Market: What percentage of the market does your firm hold? Leading brands tend to have greater brand equity than their competitors. What is the revenue potential for your product? What does the revenue potential look like? When compared to your existing revenue, how does this compare?

Brand Audit

It is also possible to have a better knowledge of your brand’s performance by conducting a brand audit of your own. To begin a brand audit, look at comparison sites, social media platforms, and web analytics data, among other things. Bring all of this information together to understand how customers are talking about you and whether or not this is consistent with your brand’s vision.

Brand Association – Keller’s Brand Equity Model

Kevin Lane Keller, a Dartmouth professor, established this brand equity concept, which highlights the importance of molding the feelings connected with a company’s products. By establishing positive links between your goods and your clients, you may influence how they perceive your brand. According to the concept, brand equity is built up in a hierarchy, starting with the establishment of a brand’s identity and distinction and culminating in the creation of brand resonance and connection with target customers.

The steps are as follows:

  • The following topics are covered: brand awareness, communicating the idea behind a brand, understanding customer response, brand resonance/connection, and more.

Understanding Consumer Perception

Although it is not as quantitative as brand equity, mapping customer perception to your brand is a crucial component of determining your brand’s value.

  • Recall and Recognition: Do consumers recall your brand without being reminded (unaided brand awareness) or do they require prompting (aided brand recognition)? (This contributed in raising awareness.) Understanding how acquainted people are with your brand may assist you in identifying and filling any gaps in the market.
  • If consumers recall your brand without prompting (unaided brand awareness) or whether they require prompting (aided brand recognition). made people more aware of what was going on Understanding how acquainted people are with your brand may assist you in identifying and filling any gaps in the marketplace.

Examples of Companies with High Brand Equity

Recall and Recognition: Do consumers recall your brand without being reminded (unaided brand awareness) or do they require prompting (aided brand awareness)? (It helped to raise awareness.) Being aware of how familiar people are with your brand will assist you in filling any gaps in the market.

Apple Computer

A former executive of Pepsi who later joined Apple, John Sculley, told the Guardian newspaper in 1997 that “People speak about technology, but Apple was first and foremost a marketing organization. It was the most successful marketing business of the day.” Apple was on the verge of going out of business in the 1990s. As Marc Gobe, author of Emotional Branding, put it, “It goes beyond just being a business.” This company should have been closed ten years ago, but people insisted that we must continue to support it.” This support stems from the devotion of Apple product consumers, which ensured that when Steve Jobs returned to Apple, he had a solid foundation upon which to develop.

They understand why you do what you do.” Many businesses attempted to make the transition away from computers and into other products, but were unsuccessful.

They dared customers to question the current quo with them, which resulted in consumers being eager rather than bewildered when new goods such as the iPod or iPhone were presented. Focusing on brand builds client interactions while simultaneously distancing a corporation from a particular path.

Coca-Cola

The continual argument between Pepsi and Coca-Cola is one of the most prominent examples of the importance placed on brand recognition. While Pepsi shares may be stronger today owing to the company’s more varied portfolio, Coca-Cola continues to outperform Pepsi in the two firms’ major product lines. After being compelled to examine their product range as part of one of their marketing initiatives by the Pepsi Challenge campaign in the 1980s, the Coca-Cola business finally did so (The Pepsi Challenge).

Coca-Cola began to place a greater emphasis on its brand rather than its product.

Logo, typeface, and color scheme are instantly recognizable since they are constant throughout the business.

Adidas, for example, has announced plans to shift away from short-term KPIs in order to place a greater emphasis on overall brand health.

Instead of using a 60/40 split between long-term brand development initiatives and short-term conversion ads, they intend to move away from this strategy altogether.

With this in mind, businesses should spend resources to developing campaigns that are centered on the values and experiences of their customers.

Final Thoughts

The shift in emphasis from the organization to the consumer means that organizations must actively consider the brand image they are creating for themselves, as well as how each action and initiative contributes to overall brand awareness and perception, as well as how each action and initiative contributes to overall brand awareness and perception. Organizations may obtain insight into what it is about their brand that resonates with customers by implementing solutions such as Marketing Evolution’s brand optimization software.

Additional Tips and Resources

  • What to Look for in a Brand Tracker
  • Trend Analysis: The Shift from Product to Brand
  • Measuring the Power of Your Brand

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