Strategy

Cultivating Brand Equity To Capture Market Share.

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brand equity
Jason

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Consumers are bombarded with countless options from all angles and through numerous senses. With so many brands vying for the consumer’s attention, being seen becomes challenging, and creating loyalty seems impossible. True, establishing and nurturing consumer-based brand equity is more complex than before, but it’s still worth the investment. When planning how to create brand equity for your company, your strategy should be to make such a strong brand association; consumers become blind to competitors. 

Ok, that’s a stretch, as consumers are always willing to engage in product trials, but when you have such positive brand equity, consumers will return to your brand for the feelings your brand has. This article will teach you everything you need to know about brand equity and how to leverage it to capture greater market share in your category. 

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What is Brand Equity?

Brand equity refers to the value and strength of a brand in the marketplace. As a part of a brand strategy, we build equity over time through consistent brand consistency, brand positioning, marketing efforts, and positive customer experiences. A brand with high equity enjoys advantages such as customer preference, increased market share, and the ability to command premium prices.

It isn’t just what you say and what consumers understand that influence brand equity. Visual branding and brand equity also go hand in hand, both in consistency and emotional appeal.

Now, let’s compare this to some of the other “brand” terms that may seem similar to the definition of brand equity.

Brand Equity vs. Brand Image

Brand equity and brand image are two essential concepts in the field of marketing that contribute to a brand’s overall success. While brand equity represents the value and strength of a brand in the marketplace, the brand image refers to the perceptions and associations that consumers have with a brand. 

While brand equity focuses on the financial and strategic aspects of a brand’s value, the brand image emphasizes the emotional and psychological connections that consumers form with a brand, ultimately influencing their purchasing decisions and loyalty. Understanding and managing brand equity and image is crucial for building a strong and enduring brand presence in the competitive market.

Brand Equity vs. Brand Awareness

Brand equity and awareness are two distinct yet interconnected concepts that contributing to a brand’s success in the market. While brand equity represents a brand’s overall value and strength, brand awareness refers to the level of recognition and familiarity consumers have with a brand.

Brand equity focuses on the qualitative aspects that shape consumer perception and loyalty, while brand awareness emphasizes the extent to which consumers can recall and identify a brand. Brand equity and understanding are essential for building a solid brand presence and achieving a competitive advantage in the marketplace.

Brand Equity vs. Brand Value

Brand equity and brand value are two distinct yet interconnected concepts that play a significant role in assessing the worth and impact of a brand. While brand equity refers to the intangible assets, such as consumer perception, loyalty, and market position, that contribute to a brand’s overall value, the brand value represents the financial worth of a brand as an asset. 

Brand equity focuses on the qualitative aspects that enhance a brand’s reputation and influence consumer behavior. In contrast, brand value is a quantitative measure that evaluates the monetary value of a brand based on factors like revenue, market share, and financial performance. Both brand equity and brand value are essential considerations for businesses seeking to understand and maximize the value of their brand in the marketplace.

Components That Determine Brand Equity

Several essential factors influence brand equity and contribute to a brand’s overall value and strength. Two prominent models for understanding and measuring brand equity are the Keller Brand Equity Model and the Aaker Brand Equity Model. Let’s explore the components determining brand equity and compare these two approaches.

Brand Awareness

Brand awareness refers to how consumers recognize and recall a brand. It is a crucial component of brand equity as it forms the foundation for brand associations and customer preferences. Both the Keller and Aaker models emphasize the importance of brand awareness in building brand equity.

Brand Associations

Brand associations are consumers’ thoughts, feelings, and perceptions toward a brand. We base these associations on product attributes, benefits, experiences, values, or other factors. The Keller Brand Equity Model highlights the significance of strong, favorable, and unique brand associations as they create a strong brand image and enhance brand equity.

Brand Loyalty

Brand loyalty measures how consumers consistently choose a particular brand over others. Building and maintaining customer loyalty is a critical component of brand equity. Both the Keller and Aaker models recognize the role of brand loyalty in driving repeat purchases, positive word-of-mouth, and customer retention.

Perceived Quality

Perceived quality refers to consumers’ subjective assessment of a brand’s product or service quality. It influences consumers’ perceptions of value and willingness to pay a premium for the brand. The Aaker Brand Equity Model places significant emphasis on perceived quality as a component of brand equity.

Brand Personality

Brand personality refers to the set of human characteristics associated with a brand. It shapes how consumers perceive and connect with the brand on an emotional level. The Aaker Brand Equity Model emphasizes the importance of brand personality in creating differentiation and building brand equity.

Brand Relevance and Differentiation

Brand relevance relates to how well a brand meets the needs and desires of its target audience. In contrast, brand differentiation refers to the distinctiveness of a brand compared to its competitors. The Keller Brand Equity Model emphasizes the importance of brand salience, the degree to which a brand comes to mind when consumers think about a particular product category.

Brand Experience

Brand experience encompasses all interactions and touchpoints that consumers have with a brand. It includes pre-purchase, purchase, and post-purchase experiences. Both models recognize that positive brand experiences can contribute to more substantial brand equity by fostering customer satisfaction, trust, and loyalty.

While the Keller Brand Equity Model focuses on customer-based brand equity and emphasizes brand salience, brand performance, brand imagery, and brand judgments, the Aaker Brand Equity Model emphasizes brand loyalty, perceived quality, brand associations, and brand personality. Both models provide valuable frameworks for understanding and managing brand equity, albeit with slightly different emphases.

We will dive further into several of these concepts as we outline how to engage in a brand equity overhaul.

Why is Brand Equity Important?

Many consumer goods brands are here today and gone tomorrow. A lack of brand equity is one of the principal reasons retailers delist brands. You might be able to find your way into a national grocer thanks to a powerful presentation and seek-and-destroy sales department, but staying in these retailers comes down to building equity with consumers. Here’s a look at multiple reasons why brand equity is so significant.

Enhances Brand Recall

As mentioned, brand recall is a test that occurs through development. The reason why we test for this is that a forgettable brand can never become a category challenger. Even brands in positions 4 & 5 have a significant recall, which they’ve developed by nurturing their brand’s equity. Retailers depend on memorable brands because consumers not only recall the product but also where they first purchased it. 

Builds Brand Loyalty

The cost of acquiring a customer is significantly higher than keeping one with meaningful brand loyalty. Although establishing customer loyalty is more complex now, increasing your brand’s equity is the primary way to move the needle on this performance metric. 

Stimulates Perceived Quality

When you follow the “race to the bottom” pricing strategy, brand performance becomes a steep uphill battle. But when you leverage your brand’s equity to change consumer perception about your product’s tangible value, you can shift your brand over to a premium pricing model where  

Perceived quality also protects you from the ever-growing trend of private-label products. You can use the brand equity index calculation to understand your brand’s perceived value. 

Creates Brand Associations

One step above brand recognition is when a customer sees or feels something other than your brand, yet your brand comes to mind. The correct term for this is a brand association, and your brand’s equity helps to facilitate this vital aspect of brand performance. You have a winning formula when you are visible to your target customer through various touchpoints, and they think of you even when they do not see you. 

Enables Brand Extensions

Launching a new product becomes less risky and more of an opportunity when you have high brand equity. Every brand wants to capture more market share and may feel obligated to create a brand or line extension, and a sure tell sign of a brand with low equity is when it cannot shift into a new category and make an impact. 

Provides Economic Security

Strong brands can maintain a solid profit margin across any economic environment. Much of this comes down to the company’s pivot strategy, but stabilization also depends on the brand’s equity. Substantial equity should give you confidence during any economic winter when consumers are more careful about purchasing branded products. 

How To Build Brand Equity

Building brand equity is a multi-step process that begins with brand development. During brand development, you must address creating an emotional visual response and providing messaging that cuts through the noise. Only then can you shift to activities where you put yourself out there for the world to see and experience. Here’s a look at how to increase brand equity.

Perform A Brand Audit

Every strategy should begin with a brand audit, where you conduct market research and perform brand testing to establish where you are doing well and where you can improve. Brand equity research lives within the audit process, testing for brand perception, awareness, and recall. Brand equity  

Establish Brand Consistency

To ensure you keep your brand promise (the value drivers consumers understand about your brand), you must be consistent in your branding and messaging. Without brand consistency, there is little chance you can grow your brand’s equity. Create a solid framework with clear documentation about how to keep the consistency of the brand. 

Ensure Product Availability

Due to an inefficient supply chain, many brands have failed to grow their brand equity in consumers’ eyes. Even what most deem “loyal customers” are open to brand switching when a product is not consistently in stock. From raw material purchasing to retailer stocking, keep a close eye on it to ensure your product is presented correctly across all revenue-generating platforms. 

Improve The Brand Experience

We can build significant equity when there is a positive personal experience with your target customer. The shelf presentation (where anticipation builds), the box opening, and each use are all critically important for nurturing your brand’s experience. When creating your equity strategy, consider each point in the customer journey to identify ways to improve and stand out. 

Engage In Disruptive Marketing

Every brand should have a disruptive marketing strategy. These do not have to be as in your face as you might think (although they can be). Here’s a look at three ways to disrupt: 

  • Take a contrarian point of view in your marketing.
  • Establish brand partnerships to interrupt patterns. 
  • Create timely messaging to catch the consumer’s attention.

Step Up Your Customer Service

Whether it’s AI-driven or human interaction, your customer service department plays a role in the brand equity you earn with consumers. Customer service isn’t solely phone, email, and chat support. Customer “service” is any way in which you serve the customer. Therefore, it includes your company’s resources, initiatives, and other means of serving the broader audience, providing solutions, and meeting them where they are. 

How To Measure Brand Equity

Measuring brand equity involves a series of steps where you analyze customer perception and performance metrics. We can monitor equity through brand tracking alongside other essential CPG KPIs.

In brand equity tracking, you have two primary categories to track. Let’s look at those now as we learn how to calculate brand equity.

Financial Metrics

The saying “the numbers don’t lie” does apply to brand equity. Within a brand equity analysis, you will include financial metrics such as market share, customer lifetime value, and price differential.  

But more is needed when calculating brand equity as financial numbers look historically to determine the “what.” Next, we need to look at what is historical, which may also show a change in real time.

Consumer Based Metrics

Changes in lifetime value give us an idea of how things are progressing or regressing with what we deem loyal customers, but more information is needed to determine the “why.” We can find further information to provide context to our financial picture through a brand equity survey, consumer monitoring, and package design testing. 

With financial and consumer insights, we can now see where we land on the brand equity index and change our strategy accordingly.

Protecting Brand Equity

Managing brand equity requires a company to prepare for subtle and substantial changes. Equity downturns can occur through category competition, economic adjustments, or recent media attention. Here’s a look at the areas we must protect to retain and grow our equity.

Trademarks and Intellectual Property

Protecting trademarks and intellectual property is a must unless you are a local start-up serving a small community. Just look at the craziness that occurred during the Bang & Reign controversy. Brands, big and small, must safeguard their uniqueness and value proposition through legal protection.

Registering trademarks, patents, and copyrights help prevent unauthorized use and protects the brand’s distinctiveness. Regular monitoring and taking appropriate legal action against infringements preserve brand equity.

Reputation Management

Managing the brand’s reputation is crucial for protecting brand equity. Negative feedback can easily sway consumers (whether factual or not), and it can significantly hurt your brand’s equity. 

Monitoring online conversations, social media mentions, and customer reviews allows brands to address negative sentiments promptly. Maintaining open communication, addressing customer concerns, and resolving issues demonstrate the brand’s commitment to quality and customer satisfaction.

Crisis Communication

In times of crisis or adverse events, effective communication is essential. Transparent and timely communication helps maintain trust and credibility. Brands that handle a problem with empathy, take responsibility, and provide solutions can minimize damage to brand equity.

Brand Equity Strategies

 One of Gary Vaynerchuk’s most popular sayings is “clouds and dirt,” meaning you need to think high level while being willy to get your hands dirty. The same applies when working through strategies to identify the best brand equity insights. Here’s a look at four strategies you should consider as you create your equity strategy.

Walk A Mile In The Customer’s Shoes

To understand existing and potential customers, you need to experience your brand from their viewpoint. Becoming the customer is an effective equity strategy few brands consider. Visit the store, consider your product, ask questions from the staff, take it to the checkout stand, unbox it at home, and then consume the product.

Then identify problems, questions, and concerns. Look at your website and contact your customer service department to see how your brand addresses these issues. Go so far as to file a complaint and see how far up the chain it goes.

You will learn valuable lessons from this process, helping you identify any areas of improvement with your brand equity strategy.

Lean on Innovation 

Innovation can help you enable more significant equity with consumers. It doesn’t replace the human touch but permits you to do a better job of it. From QR codes on your product packaging to advancements in sustainability, you can use technology to further every aspect of equity with your target audience.

Become Socially Responsible

In many categories, brand building in today’s world includes embracing and creating social responsibility initiatives. Brands that actively participate in sustainable practices support social causes and demonstrate corporate social responsibility build a positive brand image: ethical business practices and a commitment to making a difference enhance brand equity.

Pursue A Brand Refresh

Periodically evaluating and refreshing the brand can revitalize brand equity. A brand refresh or complete Rebranding may involve updating the visual identity, messaging, or brand positioning. This strategic move can help the brand adapt to changing market dynamics, attract new audiences, and reinstate its relevance.

Data-Driven Brand Development For Consumer Goods

SmashBrand is a brand development agency for FMCG and CPG companies. From brand strategy to packaging design testing, our Path To Performance™ process guarantees a retail performance lift. Book a time to discuss your project with our team.

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FAQs

How long does it take to build brand equity?

Building brand equity is a long-term process that requires consistent effort and dedication. With an exception for unicorn brands, building substantial brand equity takes several years of strategic branding initiatives, positive customer experiences, and effective marketing campaigns.

Can small businesses benefit from brand equity?

Absolutely! Brand equity is not limited to large corporations. Small businesses can also benefit from building a strong brand that resonates with their target audience. Small businesses can build brand equity that differentiates them from competitors by delivering quality products or services, creating a unique brand identity, and nurturing customer relationships.

How can negative brand equity be reversed?

Negative brand equity can be reversed through effective crisis communication, reputation management, and proactive steps to address customer concerns. By acknowledging shortcomings, taking responsibility, and implementing corrective measures, brands can rebuild trust and restore positive brand associations.

Is brand equity only relevant to consumer products?

Brand equity is relevant across industries and applies to consumer and B2B brands. Regardless of the nature of the business, brand equity plays a significant role in shaping customer perceptions, driving loyalty, and establishing a competitive edge.

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