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Closely linked to this and as companies concentrate more on the customer than the product, brand perception has become more crucial. Also, about 74% said they expect brands today to deliver the value above factors better regarding customer, employee, and environmental relations. To counter this emerging trend, organizations must consider the fit and role of numerous distinctive marketing communication efforts to enhance their general brand image as well as other organizational measures of performance, such as revenue generation and customer retention.
What is Brand Equity?
Brand equity is the extent to which the consumer knows the brand name and the worth of having a brand name that consumers are familiar with and hold in high esteem. Therefore, Brand equity is developed by creating favorable experiences to get consumers to keep purchasing from specific organizations even when similar goods are available in the market. Various measures of brand equity include building awareness through appealing to values in value-speaking campaigns, meeting promises and qualifications where the consumer adopts the product, and retaining and strengthening the bond with the target consumer.
The points that can be used to redeem a gift certificate that the brand can offer customers when they get to a certain number or a product gifted on the customer’s birthdate may make consumers stick to your brand rather than experimenting with another brand. Awareness and experience are the two fundamental tenets of brand equity:
- Brand Awareness: Is your brand recognizable by the consumers? Your brand’s dialogue and iconography should be sufficiently integrated so that they can recognize it regardless of the product. To answer this question, one must first evaluate consumers’ values of the brand. Maybe they consider the sustainability, quality, or child-friendliness of the car and the location of the sellers. It is imperative to realize that a positive brand image contributes a lot to positive brand equity.
- Brand Experience: How many first-party experiences do you recall with your brand? This could indicate that the product fulfilled their expectations, that interactions with brand ambassadors and customer support were cordial and resourceful, and that those reward programs were useful.
Why is Brand Equity Important?
One of the main advantages of creating positive brand equity is the brands’ impact on ROI. Companies that build brand equity make more profits than their rivals while in-consumption, investing less in areas such as production, advertising, and so on. For instance, positive brand equity allows brands to set very high prices. If the consumers understand and hold on to the beliefs that a particular brand offers sound values and that all its products are of a high standard, they will be willing to spend more to get the products from that brand.
Furthermore, should an organization plan to diversify into new products, it will find it easier to popularize since the known brand creates a link that fosters trust. This becomes a concern, especially when a growing number of customers now stands at approximately 80%, will not engage in or purchase goods from a company they do not trust, and close to 90% will continue to drop their business with a company they perceive to have violated their trust.
To answer the first two questions, one must understand the definitions of brand equity and brand awareness and evaluate the extent to which these attributes are related.
It is also crucial to note that though brand equity and awareness appear to be very close siblings in the grand family of branding, they have distinct functions in the overall health of a brand in an organization. As it stands, it isn’t easy to categorically differentiate between brand equity and brand awareness. This will depend on a customer’s capacity to respond to one of these questions.
- If the communication objective is brand awareness, the question to be asked to the consumer would be, “Do you know this brand?”.
- For the assessment of brand equity, the question would be, “Considering everything that you have heard about this brand, in your opinion, how useful is this brand?”.
Brand awareness here is defined as knowledge about the existence of a brand, without judgment between high and low, famous and unknown, expensive and cheap, and everything in between Brand equity, on the other hand, involves understanding the brand’s position in the market, and often, it is valued as a positive or negative brand image.
Brand equity and its effects on ROI
It is necessary to point out that apart from the advantages of brand equity, how brand equity can help you enhance your bottom line is probably the most crucial benefit. Let’s look at how captivating the time to build positive brand equity can create revenue benefits. Let’s take a look at how taking the time to build positive brand equity can create revenue benefits down the road:
Expands the Size of the Orders Made by Each Customer
When a particular brand enjoys positive brand equity, consumers are willing to spend more money to purchase that specific brand’s products. Which subsequently leads to better profit margins. This means that some firms may end up costing an equal amount as rival firms to manufacture a product. However, consumers are willing to pay for the brand name; thus, a pair of designer shoes may be of more value to consumers than a generic or lesser-known brand.
Reduces ad spending by boosting the company’s reputation.
If your products are well known to have a certain quality, then people will flock to your brand as their provider of products. This means that advertising money is cut down, and sales are boosted when one introduces a product in the market due to gained customer trust.
- Customer Lifetime Value: This is perhaps one of the most basic business facts; if customers trust your brand, they will patronize your business. Apple is invariably among the top organizations enjoying tremendous brand value. Apple users are also likely to own other Apple-related products. On the other hand, Android users are not expected to be loyal to any specific provider of PC technologies.
- Customer Loyalty: Loyal customers are seven times more likely to accept Brands’ failures. Also, customers are more willing to experiment with new products from familiar brands – they are nine times more likely to do so.
- Stock Price: Brand management equity may enhance stock market processes by organizations provided the belief that the brand shall keep on performing.
Increases Profit Margin
When a company has high positive brand equity, its products, and services perceived value increases relative to its competitors and a generic brand. Whether those goods and services delivered are of better quality is almost immaterial – the perception created by positive brand equity is most instrumental in the brand’s capacity to command higher prices. This reveals that the ability to offer goods and services at a premium, at the exact acquisition cost of competing brands, places the company with high positive brand equity in an enviable position of widening its profit per unit of output without compromising volume or cost.
Increases Sales
As with other cases of SEEB, substantial brand equity can increase sales and, therefore, higher profit margins. Regardless of what is being sold, be it a car, a soft drink, a hamburger, or other product. Everyone wants the best product, the cheapest one, the most efficient, the most extended-lasting, the flashy one, or almost anything. This desire for the best leads to higher sales as consumers make a beeline to purchase the company’s bestselling products, regardless of the other players in the market.
Maximizes Customer Retention
High positive brand equity also leads to high customer loyalty, meaning that a company can invest less money in marketing and drawing new customers because existing ones are always with the firm. Think of a company like Apple: consumers are, in a way, purchasing from the brand a set of products that are linked together and do not use them till they become useless before rushing back to the brand for the latest on the market as soon as possible. Whether it’s Apple’s innovation, ease of use, aesthetic, or another element that keeps customers coming back, one thing is sure: Of course, their high positive brand equity certainly cannot be detrimental to customer retention.
Four Elements of Brand Equity
David Aacker created a model which features all the components of brand equity. We aren’t going to break down all of them, but here are four of the most important ones:
- Brand Awareness: Are your products recognizable by the consumers? This may require consistency in the message and associated images of a brand so that the consumers may always associate it instantly, even if it is adopted for a new product. Which of the following categories of values do consumers have concerning any branded product? Maybe they associate it with sustainability, the quality of the product, or the fact that it is formally produced for families.
- Brand Attributes: What has been the reception of first-hand experiences with your brand? This may acknowledge that the product met the expected utility, and contact with brand ambassadors and support services has been pleasant and helpful. Membership in the brand’s reward programs has been beneficial.
- Perceived Quality: Thus, increasing the perception of value will improve the status of customers and consequently boost sales. Perceived quality is the product quality evaluation from the customer’s overall brand experience. The product may be fine, but if such a customer did not have a positive experience with the said brand. Then the effects can be seen through the adverse reaction towards the product and the brand.
- Brand Loyalty: Loyalty in the context of brand loyalty encompasses past experiences with the brand. Current impressions of the brand, brand knowledge, and the characteristics of the brand. It is, however, significant to note that while brand loyalty is mainly a customer decision, accumulating these other brand elements will assist you in enhancing your profit borders and better controlling your customer relations.
Merging the four assets will keep your brand aligned with the consumer all the time, and you, as a business owner, will secure a lifetime consumer. Since overall consumer perception is one of the essential components that contribute towards the development of positive brand equity, it is of tremendous importance that your brand’s current and potential consumers have a positive perception of the brand and its products.
How Brand Equity Develops Organically
Some businesses have what might be described as ‘accidentally’ good branding, meaning they never had to sit down and map out a plan to have such substantial positive brand equity. As it is now possible to observe, positive brand equity seems to grow like a field of wildflowers for these firms regardless of the environmental conditions. Speaking of organic brand equity, describing how it is usually built is essential.
- Awareness: This is one of the effective customer touchpoints where a customer belonging to the brand’s TG/segments interacts with the brand through its tangible products or intangible service offerings.
- Recognition: Sometimes, the customer repurchases it; they come across the same brand through face-to-face interaction or the internet and remember it.
- Trial: Should the interaction increase the level of comfort a customer has with a brand, the individual tries the branded product or service.
- Preference: Once the customer has had a good experience with the brand. They will gradually switch to purchasing or using it.
- Loyalty: As the number of positive encounters with the customer has increased. The customer is likely to begin recommending the brand to anyone they come across and become brand loyal, where they will prefer it to any other brand in that industry.
How to Create Brand Equity
Therefore, A primary sense can be made of the fact that there are unmistakable benefits in deliberately developing brand equity. Still, the process and effort require much time, energy, resources, and possibly research. It starts with the data collected regarding the targeted audience’s values and necessities and distinguishes the brand’s uniqueness. Once an organization has created awareness. It requires constant promotion to attract more business and clock in on a good brand score while encouraging conservatism among the repeat clientele.
Understand Your Why
In his abovementioned book, Simon Sinek, over a matter of time. Insists that there is a way for each organization to propagate and support a brand. Advertisers often drive the communication with the message How my product can help to make your day easier, instead of exploring Why that organization exists. It is pronounced with entities like Apple, where the Why is already evident. It’s imperative if you want to innovate and push the boundaries that they don’t fit the mold. Since Apple’s ad campaign promotes the Apple name (and not the computers), they can diversify into phones and music, which has failed in the hands of other computer companies. Apple is now considered a great example of Positive Brand Equity because it complies with its “Why.”
Test Your Messaging
It should also be noted that this must be tested for positioning with the consumers while creating messaging. How do they react? What do they seem to interact with most strongly? Have you identified their pain points or the issues they are sympathetic to as an audience? Are you creating the kind of message they will take time to read? Protecting and cohesiveness of the messaging and creative elements should be construed as a science. The changes of which must be based on what your specific consumers are attracted to. This is especially important today due to a relatively unconsolidated market.
Drive Awareness
Once you have identified an excellent story, you must create awareness of your brand and the company’s area of interest. It can be paralleled by shifting the focus from. The product benefits and features to a company’s values and from sales figures to people’s emotions. Of course, it is a tough sell to appeal to such. Thinking in a world where people are concerned mainly with. The next thing they want to buy or the next sale they want to make.
Brand campaigns must be executed on longer horizons so consumers can deem messages and link them to the branded items. This way, the increase in brand focus will pay off in the long run if implemented correctly. As it will increase sales volume even in the short run and increase brand equity.
Maintain Consistency
Consistency should be the other thing practiced after the brand identity is developed. This includes using typefaces and style guides in the design brand with. The same respect that a writer does to a character. Of course, if the concept is brilliant for advertising but does not fit within your brand’s personality, reject it.
Customer Experience
Social media and, therefore, the word of the individual consumer has changed. The way brands are defined not only by a given advertisement. It is brands that consumers talk of or think about. The importance of the customer and its ideas with putting. The customer in the middle of the company will enhance its brand worth on a higher level.
Consider Amazon’s review system. The site also ensures the customers are actively reviewing products and contacting. The sellers/merchants to ensure that what they are buying is what they need, not just selling the products. They always opt for the customer on the balance between transactional short-term gains and the customer’s requirements.
Amazon realizes that providing customers with a consistent and long-term approach to interacting with. The company favors bottom-line performance and the firm’s brand image.
Thus, social media can also get face time, or as close to it, with your actual consumers. For instance, Nike has a microblogging page on Twitter known as NikeService. Which addresses the consumers’ needs at any time of the day and in any of the seven languages. Engaging directly with consumers and listening to them can indicate some areas in which your brand might be lacking. And this information can be use to make improvements.
Benefits of Developing Brand Equity
Of course, some of the benefits of developing brand equity may be trivial, but others are well hidden. All of them, nevertheless, are essential to the well-being and functionality of any growing brand. Even if their benefits are sometimes virtually imperceptible.
- Developing Greater Market Share: It is crucial in industries where competition is fierce or business consumers. Have lots of space to carve out a significant market share. High Positive brand equity directly indicates the company’s ability to achieve this. That is essential in creating early revenues and growth for companies just starting.
- Charging Premium Prices: Using such strategies, brands with high positive brand equity can command a premium price. Which not only does not lead to increased cost but also increases. The average value per customer and the profit margins.
- Quickly Expanding Product Lines: This benefit may seem relatively self-explanatory. Of course, if the concerned brand has a syndicated, well-selling, and high brand-image lineup. The following lineup would logically be more accessible to sell and command increased prices.
- Having a Greater Influence as a Company: Brand equity can also be conceive of as a potent ‘magic’. Key that unlocks the door to far richer possibilities. Higher positive brand equity gives a brand more influence over customers and suppliers. With lower prices and better and richer partnerships.
Can Brand Equity Increase Profits?
Absolutely. Brand equity assures a firm has better returns since it involves developing a product with a strong brand. It connotes the degree of awareness by the consumers of your brand. And it is possible for consumer loyalty to give you an extra edge during purchasing. Even if your brand comes at a higher cost than other brands in the market.
For instance, people with seasonal allergies will look for Claritin and would not know that it is call “Loratadine.” On the other hand, they may consider. Claritin better than the store brand even though the composition of the two are almost alike. This is because Claritin has embarked on an investment in its brand equity.
Loyalty is also inevitable once brand equity has been create because. The customers know they are dealing with a well-established firm. This will ensure frequent customer returns and mean profitability for several years ahead.
This paper seeks to found whether the current business model for the measurement of brand equity is ideal or there is a need for its improvement by answering the following questions;
Brand equity can sometimes be describe as abstract, making it hard to determine or even put into value units. Base on the branding objectives, several ways can be applie to evaluate brand equity when conducting brand tracking.
Brand tracking not only gives insight into the tangible monetary value of. A brand campaign but also offers insight into awareness, linkage, and much more. These studies are narrowly inching on either the business effect measures. Such as retention and conversion rates, or the price or the consumer effect measurements. Such as consumer research, consumer sentiments, etc.
Thus, knowing how they are conduct and how they should be use while recognizing their demerits/limitations is good. Marketers are expect to justify the returns of branding investments. So it is ideal to quantify and maximize the branding’s contribution to the overall profitable incremental sales. Until recently, it had to involve high-level and costly conventional modeling methodologies that map trending. Variables to conventional business-oriented metrics such as website registration, membership subscription, and sales. Such approaches are wrong because they combine types of models designe. For different purposes not to be combine and then fed to other models. It is also a tragic mistake that when models are mix together, their model errors are enlarge.
Today, there are numerous contemporary scientifically back approaches that you can incorporate with. AI and machine learning algorithms that translate massive datasets to measure the effectiveness of branding in sales. Today’s marketers should ensure they consciously take their time to get acquainte with the update measuring tools.
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