What is Brand Equity?

In marketing, brand ownership refers to brand value and is determined by consumer perceptions of brands. Brand value can be positive or negative. If consumers think well of a brand, it's a positive brand. On the other hand, if a brand consistently fails to deliver, fails to meet consumer expectations, and generates negative word of mouth, it will have negative brand value. Simply put, brand equity is the reputation of a brand.

The importance of brand equity:

Marketing researchers have concluded that brands are the crown jewels of a business. Brand equity brings significant value to companies:

Companies can charge a premium for products with positive brand equity (think designer brands).
Positive brand equity can be transferred to another product line, which in turn increases the revenue and revenue of the company.
Positive brand equity increases market share as the brand is widely known, trusted, and trusted by consumers.

Examples of brand equity:

An example of a brand with special value is the Apple brand. Apple products are very similar in features to other brands, but the company's demand, customer loyalty, and price premium are among the highest in the consumer technology industry. Apple is regularly ranked as one of the most valuable brands in the world.

Stock model from Keller brand:

Kevin Lane Keller is a professor of marketing at the Tuck School of Business at Dartmouth College and has developed a model in his widely used textbook, Keller's Brand Equity. Strategic Brand Management" The concept of Keller's brand equity model is simple. Creating brand equity requires shaping the consumer's perception of the brand. To create positive emotions, beliefs, opinions, and perceptions about your brand, you need to build the right types of experiences around your brand. The Keller brand capital model has four steps to creating a successful brand.

Step 1: Brand Identity: The first step is to create a brand that stands out—a brand that customers recognize and know. It is important to ensure that the consumer's perception of the brand matches how the brand perceives it.

Step 2: Brand Meaning: Creates the meaning of your brand. The two components of this stage of creating brand meaning are performance (brand meaning) and image (brand meaning). Performance refers to how well the products or services meet customers’ needs.

There are five categories:

(1) primary characteristics and features;

(2) product reliability, durability, and serviceability;

(3) service effectiveness, efficiency, and empathy;

(4) style and design;

(5) and price.

Imagery refers to the ability of your brand to meet customers’ needs on a psychological and social level. For example, companies that are committed to “going green” build loyalty from customers who identify with and support the company’s values. US clothing retailer Patagonia’s brand performance involves reliability and durability – customers acknowledge that the products are well-designed, stylish, and meet their expectations. The company’s brand imagery is its commitment to environmental programs and social causes. Patagonia’s customers feel good knowing that they are purchasing products from a company that takes into consideration its environment.

Step 3: Brand Response: It involves customers’ responses to your brand – “judgments” and “feelings.” Customers make a judgment about a brand, which falls into four key categories:

Quality: The perceived and actual quality of a product/service.
Credibility: The trustworthiness, likability, and expertise (innovation) of the brand.
Consideration: The relevance of a product/service to a customer’s needs.
Superiority: The superiority of a brand over other brands.

Customers also respond to brands based on their feelings. A brand can evoke emotions such as warmth, fun, excitement, security, pride, and more.

Step 4: Brand resonance: It involves building a deep relationship with the customer. This stage is the most difficult to achieve and means that customers have developed a deep bond with your brand. This can be through repeat purchases, attachment to your brand or product, active participation as a brand ambassador, attending events, or following your brand on social media. Brand resonance is basically the connection that customers have with a brand.

An example of creating brand equity:

Keshav is the marketing manager of a company that sells coconut water. Although the product is high quality, fair trade, and healthy for consumers, the company has never been able to make meaningful sales or gain loyal customers. Keshav decides to consult ABC brand equity model to develop brand equity for the company's product.

Step 1: Brand identity: Keshav first identifies the company's target audience, people who want a thirst-quenching drink that is not only good but also healthy. Keshav develops the brand identity by positioning the brand as a healthy and tasty drink. Keshav creates a slogan for the company: "A delicious drink that is good for the mind and soul".

Step 2: Brand Meaning: Keshav defines what the brand means to consumers. Keshav concluded that coconut water performance is high. This is fair trade coconut water with higher quality than competing products. The product is also much healthier than its competitors and is competitively priced.

However, product branding images are few. Branding does not meet the social needs of customers and fair trade awareness is unclear. Keshav decides to utilize social media and post fair trade stories about the workers who help harvest and make the coconut water. By doing so, Keshav hopes that customers will realize the impact they are making on workers in developing countries when they purchase the company’s coconut water.

Step 3: Brand Response: Keshav examines the brand response judgments and concludes that the perceived quality of the brand is not up to par. Although coconut water itself is of high quality, the product is poorly packaged and lacks innovation. Therefore, Keshav decides to consult with the R&D department to develop an innovative package to improve the product’s perceived quality.

Step 4: Brand Resonance: To build brand resonance, Keshav pushes the brand’s imagery of fair trade. Keshav decides to create several initiatives with the help of social networks to involve customers in the company’s fair trade efforts. Among other things, Keshav decides to host several fair trade events around its community and create a social media page dedicated to discussing issues regarding fair trade.