What does brand equity mean? The simple answer is that it’s the value of a brand. But why is brand equity important and how do you build or measure it? Brand Equity is made up of seven key elements: awareness, reputation, differentiation, energy, relevance, loyalty and flexibility. Some of these are easier to build (or damage) than others. Each contributes to the overall value of your brand, and an evaluation of these different elements can tell you where you need to focus your marketing efforts.
What percentage of your audience or industry is familiar with your brand? Are your logo, name and brand identity as recognizable to your customers and potential customers as the Starbucks mermaid or Target bullseye? And beyond knowing you exist, do they know everything you offer?
Just because people have awareness of your brand doesn’t mean their perception is positive. What do the people who have heard of you think of your brand? Is your product considered premium? Or are you the value brand? Do you have high quality products but low-quality service or vice versa?
Part of the value of your brand is its ability to be distinct from the competition. Even if you have low awareness, you may still have potential equity if your brand has a different personality or the ability to stand out from the pack.
Here’s one more reason that brands want you to think they’re innovative: it gives the brand perceived energy and momentum. If you look like you are always innovating and not just resting on your laurels, you always have something new to say to your customers. And updates convey energy.
You may have a great product and your brand may check all the other boxes, but if it isn’t useful or important to your customers (anymore or yet) then it won’t do you much good. If it isn’t relevant to the audience you’re targeting, is there another audience or industry that would be interested?
What would it take to woo your customers away from your brand? Just a small price cut? An additional service? Or would your customers stay with your brand even if you had to give them bad news? It’s also important to examine why they’re loyal (if they are).
If you developed a related product, could you add it in under the same brand? Or would the association with your brand do more harm than good? If your brand is too narrowly defined, you may find it difficult to leverage it for anything else in the future.
Evaluating your brand is a crucial step in making many sales or marketing decisions such as acquisition, expansion, rebranding and even simply annual planning. If you know where your weaknesses are, you can work harder at those areas. If you have multiple brands playing in and around the same market, evaluating the equity of each can also give you the foundation to make changes to your brand architecture.
You were probably mentally evaluating your brand while you were reading through the list, but it’s important to go through these elements thoroughly and objectively if you’re going to make any serious decisions for your brand. It can be difficult to remove emotion from your analysis when you live with a brand every day, but a research firm or marketing agency can help provide an outside perspective.
Want to take a closer look at your brand equity? We’d love to help.