It can be easy to be misinformed with what a brand actually is and does. To many people a brand is simply a logo that acts as a differentiator between competitive products. Whilst this is correct in the most fundamental understanding of a brand, the reality is much more developed, with successful brands carefully crafting a narrative and personality that sculpts an identity and backstory to reinforce the message behind the product or services offered.
A brand needs to be a dynamic and receptive entity that has the ability to grow and adapt to market changes, but most importantly customer needs. It can be said that a brand only really lives in the mind of the consumer, where various brand elements are accumulated to create the consumer’s perception of what the brand and product stand for.
It is therefore vital that the identity of a brand creates an extension of the values that underpin the unique selling point of the product. Over time, with consistent and clever marketing, this perception of product and brand can be become intertwined to embody each other, and create a singular identity where brand and product boundaries are blurred.
This emotive understanding of the brand and product helps influence the purchase decision of the customer by creating added values through brand associations and intangible benefits of purchasing this brand over a competitor. In the marketing world, creating added brand value in addition to the value provided by the product or services is a term referred to as Brand Equity.
Brand Equity is a way of measuring how creating a successful brand name through various brand assets can provide additional value to both the customer and the brand, which in turn will be converted into revenue.
Brand Equity can be achieved in a variety of different ways, with some of the key assets summarised below…
1. Brand Awareness
This asset is quite self-explanatory. The more people that are aware of the brand obviously increases the chances of them purchasing the product or services. This can help build trust through familiarity of a brand, particularly when a consumer is purchasing a product in a market sector they don’t often shop in. It is therefore essential to increase the reach of marketing campaigns to interact with the widest audience possible.
There are two levels to brand awareness:
- 1. The consumer being able to recall the brand from memory.
- 2. The consumer being able to recognise the brand from a stimulus such as the brand logo or product.
2. Perceived Quality
This asset helps position the product in the market, and determines how the consumer perceives the product – whether it is a short life item, or a product with more longevity that is worth investing more money into. This also determines the price of the product, as it is important to ensure the product isn’t overpriced for it’s perceived quality, as this will immediately reduce the influence on Brand Equity.
For some products (cars, machinery etc.) this asset will also lend itself to the brand personality and intangible value of the brand, where product quality is expected and needs to be met, otherwise it could be detrimental to the success of the brand, which it may struggle to recover from.
3. Brand Associations
Brand Associations are vital in fulfilling the reputation and emotive attitudes towards a brand. This asset provides the brand with a personality and presents it as more than just a product. This is especially important for products with an emotive value to them, such as cars, clothing and lifestyle items. Whether it is a conscious decision or not, consumers purchase brands to present an extension of themselves, therefore it is important the brand captures an emotive association to further influence the purchase decision. This is often achieved through product placement or celebrity endorsement to give the brand context within the consumer’s lifestyle, which in turn also helps to increase brand awareness and brand recall.
4. Brand Loyalty
Brand loyalty is an extremely important asset. It helps turn loyal customers into essentially brand ambassadors, who will then promote the brand within their social groups. This promotes the brand in an honest, personal format and people are more inclined to trust their friends experience and opinion of a brand and are therefore more likely to give it a try. This is essentially free marketing – therefore it is a good idea to look after existing customers.
Another advantage of maintaining loyal customers is the ability to dominate a market sector. This ensures the brand has time to react once a new product enters the market without the fear of loyal customers immediately leaving the brand.
Results of creating added value
The results of these processes can help create added value for the customer, which becomes an influential factor during the purchase decision, and consequently increases the value to the company through revenue and reputation.
Increasing the Brand Equity provides value to the customer by providing a rationale and clarity to the purchase decision, and provides a confidence in the brand over a competitor even when the functional elements of the product are equal. It also increases customer satisfaction due to the emotive consumption of the brand in addition to the product.
Brand Equity increases the value of the company by enhancing the effectiveness of marketing campaigns due to the name of the brand being recognised more frequently, and this can act as a competitive advantage within the market sector. It also allows for the price of the product to be offset against the brand, which could result in a premium price being charged due to brand loyalty, emotive lifestyle consumption and product demand.