Brand Equity Defined

Brand equity is a marketing term used to refer to the marketing impact of a given product in association with a brand name. It tries to examine how a given product will perform in the market if it did not have the privilege of that brand name. Therefore, the basis for brand equity and its impact on a business is based on the knowledge of the customer about that product. And yet, brand plays a vital role in helping build that knowledge and awareness, as well as the choices they make based on that knowledge.

Brand equity, then, reinforces the significance of a brand’s value and produce that positive type of recall in the mind of consumers. Marketing research has revealed that brand equity is one of the most important asset to the company.

Three Perspectives of Brand Equity

As an intangible asset, brand equity only gets its meaning out of the perceived quality and associations made by a consumer on a given product. Brand equity can be viewed in three different perspectives:

• Financial: One way to understand the value of brand equity is to calculate the premium that is placed on a product. To further understand, take for example two types of products: one that is of a recognized brand, and the other is unrecognized brand. Consumers are willing to pay a bigger amount for the branded product over those which they are unfamiliar with.

• Brand Extensions: When certain products attain a certain level of commercial success, most companies consider extending their line by introducing newer products under their brand. Because of the existing brand awareness, these companies will no longer invest on large advertising expenditures just to make that newly introduced product known.

• Consumer-based: The trust and attitude exhibited by a customer towards a given product is impacted by the associations they make with that brand. Oftentimes, these associations are a product of their own experience with using the brand. Therefore, actual experience plays a crucial role in the marketing strategy, especially in a developing brand.

Benefits of a Strong Brand Equity

Not all brand equity is positive, therefore most companies invest on building a strong brand equity. After all, it offers several benefits to the company. Below are just some of the helpful benefits that a company can derive of a good brand equity:

• Establishes a more reliable stream of income.

• By increasing brand equity, companies are also able to increase their profits through increased market share and premium pricing for less promotional costs.

• If you have established a good brand, then you can sell that brand name at a given price.

Managing Brand Equity

There are three stages involved in creating, building, and managing your company’s brand equity. They are outlined below:

1.) Your first step involves the introduction of a product of a given brand into the market. You must establish a certain standard for that brand to be able to launch products in the future that will sell in the market. Your aim here is to produce a positive response from the consumer to build trust among consumers.

2.) Try to produce a brand that is unique and yet memorable. The attitude of your brand must be accessible to consumers and must also provide benefits to satisfy its users.

3.) Consistency is the key. Your message must be synchronized with your company’s overall image and reinforce the value espoused by your organization. This is one of the most effective ways to build strong brand equity.

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So when do you throw in the towel? That’s a tough question to answer as it’s different for everyone. A few years ago, before the “economic downturn”, many individuals and companies would seek expert assistance with any project that wasn’t related to their core competencies. While times have changed  for everyone from the Solopreneur to the Fortune 500 companies, there is an economic maxim you can apply which should help in your decision making process:

What is the “opportunity cost” associated with you spending several evenings trying to figure out how to answer the question “What are you doing?” in 140 characters or less in an effective way to promote your product, service, and brand?

All kidding aside, I know several attorneys and doctors who’ve told me exactly that story. At that point you have to realize that if they made a show about web marketing projects gone wrong-you could be staring on your own episode! This may or may not be you, heck it could be someone you know-the old “friend of a friend” was asking how to link Twitter updates to their Facebook Fan Page at the water cooler, and you just wanted to give “them” an answer on Monday when you see them. If you or “your friends” project doesn’t pass the sanity test, you might be in over your head. As for the hair cut there are three solutions when things go awry. One more hair products, two a hat, and three it will grow out eventually-unfortunately those solutions don’t work for your website!

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1. Southwest doesn’t charge to check your bags… OK so I am flying across the country on your plane, are you surprised I am bringing a bag? Do you really want everyone trying to drag all their stuff on the plane?

2. Southwest has more room on the plane. The bag I decide not check (and save $20) gets taken from me at the bottom of the ramp and put under the plane because there is not enough room for all the bags people are bringing on the plane. Has a light bulb gone off yet Delta? This in turn creates quite a  road block when getting off the plane at your destination as everyone is stacked up waiting on their gate checked bags.

3. After seated, after takeoff, and finally at our cruising altitude you come by and ask if I want a snack and drink. Great… except maybe you should give the impression it is not an inconvenience for you.

Everyone says this but it really is the little things that make you come back… because in the end all my flights on Delta were on time and I had no problems going or coming… but I will fly Southwest next time (and save $40).

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