Brand Equity’s Role In Building A Better Business
Building a brand takes time, but it can be well worth the effort. Brand equity is one of the essential elements in any business, large or small; its achievement and continued growth have far-reaching benefits for your company’s success. We’ll explore how it can help improve businesses, both large and small, as well as practical steps to build a more significant presence for your organization.
What is the Difference Between Brand Equity and Brand Awareness?
To most, the terms “brand equity” and “brand awareness” may seem quite similar – after all, they are both related to the branding of a company or product. However, there is an essential distinction between them.
Brand awareness is how well a brand is known or recognized by a customer. It can be determined by tracking how often customers recall seeing the brand in ads, websites, or stores. It also includes how often customers recognize the brand when encountering it and how quickly they can remember its name.
Brand equity measures how valuable a brand is to its customers. It’s the total sum of a customer’s perceptions and feelings about a particular product or service, including perceived quality, name recognition, customer loyalty, and other factors. Various techniques can measure this, such as surveys, interviews, and focus groups.
In short, Brand Equity measures the value of a brand, while Brand Awareness tracks how familiar customers are with it. Both are important considerations for marketers looking to build long-term relationships with their customers and create powerful brands in the marketplace.
Why Is Brand Equity Important?
Brand equity is vital for businesses because it can help them increase their profits, build customer loyalty, and strengthen their reputation. Strong brand equity means customers are more likely to choose your product or service over a competitor’s, even if the price is higher. Customers who have a positive experience with your brand may be willing to pay more for your product or service because they know and trust it. Additionally, substantial brand equity can make it easier for businesses to access capital and other resources as investors are more likely to invest in companies with valuable brands.
What are the four elements of brand equity
What exactly constitutes “brand equity”? Brand equity involves four essential components: Awareness, Loyalty, Association and Quality. Each element plays a key role in helping businesses to stand out from the competition. We’ll delve into each of these elements in more detail to understand why they are so important.
Brand loyalty refers to a consumer’s willingness to remain loyal to one brand over a long time. It can serve as an emotional or psychological connection between the customer and the brand, encouraging them to continue buying the same products or services, despite external influences or competitive offerings.
Brand awareness refers to the degree of brand recognition in the marketplace – how well potential customers know its name, logo, and other distinguishing characteristics. It can also define consumers’ familiarity or exposure to a particular brand.
Brand associations refer to consumers’ mental connections with a brand and its products, services, values, culture, and more. A strong brand association can provide a significant competitive advantage.
Perceived quality refers to how customers perceive the value and quality of a product or service, which is then associated with its brand name. Product quality often depends on combining tangible features (e.g., material, design) and intangible features (e.g., customer service, after-sales support).
Examples of Brand Equity
Let’s look at examples of how various companies have developed successful brand equity strategies, from finding innovative ways to engage customers to launching high-profile campaigns.
Positive Brand Equity
Positive Brand Equity is when customers have an overwhelmingly positive opinion of a brand based on their experiences and associations. An example of Positive Brand Equity can be seen in Nissan’s long-running success.
Nissan has been around since the 1930s, and its brand has stood for dependability and quality ever since. The company consistently develops innovative products, from fuel-efficient cars to autonomous driving technology, emphasizing its commitment to constantly improving customer experience.
Negative Brand Equity
Negative Brand Equity occurs when a brand is associated with something negative. It can have a significant impact on the success of a business as customers may be deterred from purchasing or engaging with it due to their perception.
An example of Negative Brand Equity is Volkswagen, which back in 2015 was embroiled in a major scandal involving emissions testing. As a result, consumers were not interested in buying their products due to the company’s unethical behavior, resulting in a significant drop in demand.
How Brand Equity Impacts Return on Investment (ROI)
Brand equity directly impacts ROI through higher faithful customers and willingness to pay more for products or services, resulting in increased revenue. Additionally, having substantial brand equity can help to reduce marketing costs, as customers are more likely to recognize and purchase a brand they trust. Besides, good brand equity results in increased customer satisfaction, which leads to better customer relationships and retention rates. It can result in solid word-of-mouth referrals for the company, increasing its ROI.
Other Benefits of Developing Brand Equity
It’s no secret that branding is critical to companies competing in today’s market. But did you know other powerful benefits to developing strong brand equity? Let’s dive deeper into the advantages of building brand equity.
It is about meeting customer needs and providing them with a positive, memorable journey throughout their interactions with your brand.
Customers have varied preferences that can take time to keep up with. Companies must recognize and pay attention to these preferences to develop strong brand equity. Customers want products and services that are easy to use, reliable, aesthetically pleasing, competitively priced, of good quality, and provide superior customer service.
Build greater brand awareness
Building greater brand awareness is critical to success in today’s competitive marketplace. It involves creating an identity that resonates with customers and allows them to recognize your company, products, and services easily.
Elevate How People Experience Your Brand
It’s clear that brand equity is an essential part of business building, and there are many steps to take to ensure that your brand leaves a lasting impression on your customers. But, most importantly, remember that brand equity isn’t something that should be taken for granted – it needs regular maintenance to affect your business positively.
To make things easier, check out TagPrints – we will help you develop promotional campaigns, social media strategies, and more to help grow engagement around your brand. So visit us today and start making an impact with your marketing efforts.