How strong is your company's brand? This one simple question can make or break your business. A strong brand allows you to grow and reach more customers while carrying industry influence with you. But how do you identify the strength of your brand? Looking at the bottom line and expense reports only go so far. In fact, these lines on a spreadsheet document only paint a very small portion of the greater picture. You need to look at brand equity.
Brand equity has nothing to do with current corporate growth or whether you're pushing into a new market. It instead has everything to do with how the perspective audience perceives your business. The way the target demographic views your company, brand and products says so much more than any amount of website analytical data. It has the ability to forecast upcoming quarters and determine whether or not a new product release will prove successful or a failure. All this points to why you need to know what brand equity is.
What is Brand Equity?
Brand equity is the value of a company not in dollars and cents, but in the name of the company and its logo. Do people view the brand and logo favourably? What kind of influence does it hold? Does a release from the company turn heads? All of this goes into brand equity. Companies like Apple, Nike, McDonald's and Walmart all possess unique brand equity based on consumers and how they view the company. In the simplest term possible, brand equity is how an individual perceives a business, both through their own experience and through a psychological connection.
Breaking Down Brand Equity
There are a few different ways to break down what goes into brand equity. The brand equity pyramid is a great way to identify ways of building up brand equity. However, in terms of defining it, brand equity can be broken down into three main categories: brand loyalty, brand awareness and brand association.
This is how aware of a product people are. Are they familiar with the brand and its logo. A company such as Nike possesses extremely high brand awareness as most people know of Nike and its logo. The more people know about a company the higher it boosts brand equity.
With an increase in brand awareness, a company can actually reduce marketing costs. People already know about the company and what it stands for. This also helps bring in trade leverage while attracting new customers thanks to awareness.
Do people come back to the company? Apple, for example, has extremely high brand loyalty as customers continually return for updates. Plus, when a consumer is loyal to a brand they are more likely to tell others.
What do people associate your company with? Do they perceive others as being hip and cool when using your brand? Are you considered an industry innovator, or has negative PR diminished brand association?
If your business is not yet taking into consideration brand equity, it needs to. Brand equity indicates exactly what consumers think of your brand, not only on its own but in relation to the competition. The stronger your brand equity the easier it is to expand, release new products and move into new markets. This is information your corporate bottom line simply can't provide, yet it plays a vital role in potential growth and development. So remember, regardless of your industry, the kind of products you sell or how long you've been in business, the stronger your brand equity, the stronger your overall business model is.