brand equity case study

Rolex’s Brand Equity – Case Study #9

Do you know what is Brand Equity ? This is definitely what every brand that wants to grow on top of any market needs to seek.

In fact, brand equity is the combination of 5 components:

Brand Awareness

Brand association, perceived quality, brand loyalty.

• Proprietary Assets or Uniqueness

So for this week's marketing case study, we will talk about one brand with powerful brand equity, I named Rolex !

What is Rolex?

Rolex is a watch manufacturer founded by Hans Wilsdorf. Yep, not "Hans Rolex" as you could have imagined!

Indeed, Wilsdorf registered the brand Rolex in 1908. He simply wanted a name that was easy to pronounce in any language. Also, the word Rolex was onomatopoeic, making a similar sound to a watch being wound (hmm). Finally, it was practical as the name was small enough to easily fit any watch face.

I believe that most of you have heard about Rolex, so I will not do you the insult to teach you the full story of Rolex during the last 100 years, but yet, here is some famous moment in Rolex's history:

In 1926, Rolex developed the "Oyster", the first waterproof wristwatch in the world.

In 1931, Rolex will change the face of the watch industry by creating the Perpetual Movement , a mechanism that doesn't need to be manually rewound every day. Here, a little balance inside the mechanism uses the motion of the wearer's wrist to create energy. A type of mechanism that you still see, nowadays, in automatic watches .

Even better, Rolex is a synonym for exploits!

In 1927, Mercedes Gleitze crossed the English Channel with her Rolex Oyster. The cross took 10 hours and the watch remained in perfect working condition.

In 1953, a new exploit for Rolex, their iconic Oyster Perpetual Explorer accompanied the British climber Edmund Hillary to the summit of Everest, the highest mountain in the world! Hillary & Rolex's legend has just started...

I could keep going with Rolex going underwater, being part of the Pan-American outfit, or accompanying American presidents for decades but it will never stop!

Let's see how Rolex fits with the 5 points of Brand Equity.

As one of the leading luxury watch brands, Rolex is well-recognized among its potential customers. By sponsoring events or by using social media platforms to present the value of its wristwatches, Rolex connects with the people.

Also, as stated in the story of Rolex, the brand connects with extreme exploits but also with more "regular" sports competitions like the 24 Hours of Le Mans or as the official sponsor for the Women's World Golf Rankings for example.

For a big brand like Rolex, it is mandatory to be associated with positive impact activities than just a large company working in factories...

In this regard, Rolex annually funds organizations like National Geographic to support aqua and nature conservation, wildlife protection, and other environmental causes and projects.

The brand association also goes on to the relation between Rolex and technological improvements like waterproof cases and resistance.

Rolex is not only about fit & finish but also about performance and stability.

Yet, the most important aspect of the Rolex brand is its empowerment value .

With its notorious long story of success and being worn by important people, Rolex became a synonym for success.

People purchase Rolex as a recognized symbol of success. (Even though watch lovers will tell you that a Rolex is just a first step and the real prestige comes from watches made by Vacheron Constantin, Audemars Piguet, etc)

In 2014, Rolex was in the second position as one of the most reputable brands in the world.

The level of trust from consumers is still really high and they still feel that keeping a Rolex watch is like offering a present to themselves.

There is an intense and strong emotional relationship between customers and the Rolex products.

Proprietary Assets

A brand like Rolex is not only defined by its history but also by its creations and then its proprietary assets like trademarks and patents.

This is necessary to keep your loyal customer base strong as they know they will never find the same product somewhere else.

In this case, Rolex sells its watches under registered iconic trademarks like:

• Oyster & Oyster Perpetual
• Crown Device

It took decades for Rolex to have its powerful brand equity at the level it is right now.

What to be learned?

When you start your brand, never forget what you want your company to be associated with. Splitting the brand equity into 5 points makes it easier for you to prepare a full strategy by splitting the requirements for each point. Building brand equity takes time but it will be worth it as your customers will become your brand ambassadors with arguments to support you!

Check big brands and try to define what are their brand equities, you'll be surprised.

Once again, if you need help with your digital marketing strategy, Krows Digital is here to help ! Also, you can have a look at past marketing case studies you may have missed here .

Have a great week and let's do great marketing.

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Get in touch today and receive a complimentary consultation., more insights.

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More From Forbes

Brand equity: why it matters and how to build it.

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By Samuel Thimothy, VP at  OneIMS.com , an inbound marketing agency, and co-founder of Clickx.io, the digital marketing intelligence platform. 

Some Xiaomi smartphone models are comparable to the latest iPhones in terms of functionality. Somehow, they cost three times less. Tory Burch accessories are also known as a luxury brand, but they are not nearly as expensive as Hermès. What makes customers want to pay more for some brands than others? The answer is two words: brand equity. Developing your brand's equity could help you increase your margins by increasing its perceived value in the eyes of your customers. 

The Importance Of Brand Equity

Why is brand equity important for companies? There are a couple of reasons. 

1. It helps increase awareness of the brand.

Brand awareness isn't something that comes naturally. The biggest of brands spend millions of dollars on putting their names out there in front of the customers and there's a good reason for it. People are more likely to buy from the brand that they are familiar with. Just the mere fact that the brand is known brings more value to the products that are sold under its name. By gaining awareness, you develop familiarity and visibility, which serves as an anchor for other positive associations.

2. It creates brand associations and grows the perceived value.

When you hear about Apple or Hermès, what comes to your mind? That is the concept of brand associations in action. It occurs when some company traits become ingrained in the minds of customers. A brand association seeks to link it with positive attributes — "premium," "quality," "luxury" and so on. Brands with positive characteristics have a better chance of cornering the market by giving people more reasons to buy.

Perceived value is yet another important factor. Brand equity helps build the relationships between the perceived benefits and perceived costs that people relate to that product. As a result, nobody questions the prices of Hermès goods. When people see the brand, they assume it must be good. That's why they are ready to pay the high price for a Birkin bag. 

3. It builds relationships with clients by promoting brand loyalty.

Every marketer would agree that it's a lot cheaper to keep the existing customer than to acquire a new one. Companies that strive to build genuine relationships with their customers and deliberately work on promoting brand loyalty get substantial financial benefits in the long run. 

People are willing to pay more for a brand they are loyal to. Moreover, if the brand has done a really great job, the customers will buy the goods they didn't know they needed. Customer loyalty gives brands a tremendous advantage as it not only increases the brand value and gives massive leverage over the competition, but also reduces marketing costs. 

How To Build Brand Equity

Establishing brand equity has obvious benefits, but it requires a lot of work and research to achieve and maintain it. Figuring out what makes your brand unique starts with identifying the values and needs of your target audience. As your organization grows, you must keep spreading awareness to generate new business and foster loyalty among existing customers at the same time.

1. Recognize your "why" and capitalize on it.

If you look at the companies like Apple and Hermès, you can easily tell what their "why" is. It explains a lot about their advertising, which is mostly focused on their brand as a whole rather than a specific product. Such brands can expand their product lines to infinity because people love them for what they are. 

2. Test your positioning with customers.

Marketing is always a process of trial and error. Even the most popular brands take time to test how their messaging is perceived by the consumers every time they introduce something new. With every alteration, it's important to see how the audience reacts, what they like or dislike, and whether they get their needs fulfilled. The messaging and creative elements should be based on data and what appeals to your customers. 

3. Prioritize creating the best customer experience.

With the rise of social media and the ability to voice opinions and share experiences online, brands are no longer defined by how they position themselves in ads. The brands are what people say about them. If you put the customer at the center of what you do, your brand equity will grow and you'll be able to enjoy all the benefits. 

All in all, creating brand equity is more than a way to generate short-term sales. It is also a means to support long-term value creation. Your branding strategy must include the equity element because it has a profound impact on a brand's ability to create and sustain a competitive advantage.

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Brand Equity Case Studies: A Guide to Building Powerful Brands

In the high-stakes game of brand equity, winning is not just about outlasting the competition. It’s akin to striking gold in the era of the Gold Rush. So, why do some brands hit the jackpot while others merely strike dust?

Unwrap the mystery with us as we venture inside the minds behind brands that took off—one brilliant strategy at a time.

Just how powerful can a well-built brand be? Consider this: Apple, the crowned king of brand equity, is now worth over $2 trillion, equivalent to the GDP of Italy, the world’s eighth-largest economy. In this modern business world where a strong brand can dwarf the economic might of entire nations, brand equity is no longer a nice-to-have—it’s a must have.

In true chronicler style, we’ve mined gold nuggets of wisdom from the trenches of successful brand building. Veterans, rookies, or mere observers of the business world—step into this treasure trove of case studies and learn how to create a brand that could figuratively (or literally!) be worth its weight in gold.

The Power of Brand Equity: Case Studies

• Probe the intricate mechanisms of iconic brands Rolex and L’Oreal
• Uncover the dynamic strategies that fortified their brand equity
• Decipher the commercial reverberations of robust brand equity

Case Study 1: Rolex’s Brand Equity

Renowned for its unrivalled precision and unwavering quality, Rolex etches its brand identity in the bedrock of luxury timepieces. Firmly revered in consumer minds, Rolex’s brand equity didn’t simply surface overnight. Endurance, consistency, and authenticity thread together the intricate tapestry of Rolex’s brand avowal.

Rolex fortified its brand equity through meticulous craftsmanship, customer engagement, and astute product positioning. Adopting a constrictive manufacturing algorithm, Rolex curates each timepiece in-house, fostering an exclusive allure. Moreover, the brand ventured beyond functional utility, penetrating cultural, sporting, and scientific realms pageantry, which resoundingly resonated with a wide consumer base. Thus, sculpting the brand into an emblem of achievement, gradually amplifying its brand equity.

The precision timepiece maker’s strong brand equity unequivocally propelled its market position, securing a prominent spot in the luxury chronograph arena. With invincible brand equity, Rolex hones enticing purchase incentives fueled by a reputation of quality and prestige, thereby nurturing customer loyalty and ensuring premium pricing.

Case Study 2: L’Oreal’s Customer-Based Brand Equity

A cosmetic colossus looming in the beauty industry, L’Oreal strategically formulated a resonating Customer-Based Brand Equity (CBBE) model. Proclaiming “Because I’m Worth It,” L’Oreal extols individuality and empowerment, coaxing deep customer connections. This assertive clarion call shapes the bedrock of L’Oreal’s CBBE model.

Masterfully orchestrating its CBBE model, L’Oreal initially established brand salience and crystallized brand performance perceptions, cultivating strong customer associations with quality and innovation. Unveiling products aligned with contemporary beauty standards, and proactively addressing beauty gender stereotypes solidified the brand’s resonance.

The intelligent CBBE model execution facilitated L’Oreal to buttress a powerful brand equity. The model nurtures proliferative brand awareness and elicits strong consumer engagement, fashioning robust brand loyalty. Consequently, the culminating brand equity not only contributes to premium pricing and greater marketing communication efficiency but also cushions potential market volatility, signaling a potent brand equity.

With deep insights into two global giants’ brand equity voyage, one can decode the power of strong brand equity: commanding premium pricing, fostering loyalty, and weaving an indomitable market position. Crafting a compelling brand narrative and fostering customer associations are instrumental in nurturing brand equity and magnifying market pervasiveness.

The Art of Building Brand Equity: Lessons from the Case Studies

• Learn to quickly recognize your target audience
• Make your brand unique and instantly recognizable
• Consistently deliver the experience your audience expects

Understanding Your Target Audience

Getting a firm understanding of your target audience is a critical first step in building brand equity. Take Rolex and L’Oreal for example.

Rolex, already a titan in the luxury watch sector, targeted its audience not only by financial status but also by lifestyle. They understood that their watches were purchased by individuals who appreciate high craftsmanship and lead lifestyles that warrant a high-end timepiece. They target their communication around these aspects, building more equity for their brand.

In a different sector, beauty brand L’Oreal understood that their target audience is not monolithic. Rather than attempting one-size-fits-all marketing, they deeply understand the demographics and psychographics of their different customer segments to tailor messages, products, and campaigns. Their brand’s strength and equity lie in this fine-grained understanding of varied consumer preferences.

Change the way you view traditional audience segmentation, remembering that it’s essential to build your brand’s power.

Creating a Unique Brand Identity

The strength of your brand equity hinges significantly on a unique brand identity. Observe how Rolex and L’Oreal transformed their brand identities into powerful assets.

Rolex exudes elegance, tradition, and impeccable craftsmanship. Their brand identity is so unique that people instantly associate these attributes with them. Rolex invests heavily in maintaining this identity through each marketing and branding effort.

Similarly, L’Oreal carved out a unique identity by aligning the brand with beauty, diversity, and innovation. These core values reverberate across their product lines, campaigns, and overall messaging, maintaining consistency and reinforcing brand equity.

Reconsider your current brand identity. Does it offer the uniqueness and consistency seen in these examples? Your brand’s strength could lie in a shift towards uniqueness.

Delivering Consistent Brand Experience

A consistent brand experience creates trust and acts as a solid foundation to build strong brand equity. Rolex and L’Oreal showcase this effectively through their customer interactions.

Rolex delivers a consistent luxury experience across all customer touchpoints. From the in-store experience to after-sales service, Rolex buyers know precisely what to expect—a high-end interaction in line with the brand’s reputation.

Similarly, L’Oreal ensures a consistent brand experience across all customer interactions. Whether through their products, customer service, or even their social responsibility efforts, L’Oreal’s consistency builds trust and reinforces brand equity.

The key learning here is consistency. A consistent brand experience at all touchpoints builds trust and affects your brand equity positively.

Measuring Brand Equity: Key Metrics and Methods

• Three robust metrics to measure brand equity – brand awareness, brand loyalty, and perceived quality
• Practical ways of how industry leaders like Rolex and L’Oreal evaluate these metrics

Brand Awareness

Brand awareness sits high on the checklist for measuring brand equity. It quantifies how icily a brand is recognised by potential consumers and to what extent their products or services are associated with the brand name. Leveraging brand awareness can make advertising efforts more impactful, ultimately leading to enhanced sales and increased market share.

Rolex and L’Oreal are two industry giants that serve as excellent examples in this context. The coveted watchmaker, Rolex, uses surveys and social media audits to gauge its brand visibility. By asking relevant questions and tracking digital engagement, it quickly identifies the areas of strength and those that need more focus.

L’Oreal adopts a similar route by incorporating digital audits, customer surveys, and competitive analysis. It also understands the power of influencer marketing and collaborations to amplify brand recognition.

Brand Loyalty

Another pivotal metric in gauging brand equity is brand loyalty. It measures the attachment and devotion customers have towards the brand and how likely they are to repeat purchases. High brand loyalty signifies minimized marketing costs, steadier revenues, and powerful word-of-mouth advertising.

In assessing brand loyalty, Rolex and L’Oreal have distinct methods up their sleeves. Rolex banks on the prestige of its brand name and customer satisfaction surveys to determine its consumer loyalty. Promotions and advertising predominantly revolve around the brand’s legacy, craftsmanship, and the feeling of exclusivity.

On the other hand, L’Oreal relies on data from loyalty programs, surveys, and customer reviews. By rewarding recurring customers through loyalty programs, L’Oreal gets first-hand data on their purchasing habits, enabling it to better cater to their needs and retain them.

Perceived Quality

Perceived quality, though slightly more abstract, is a vital metric for measuring brand equity. It refers to a consumer’s opinion of the overall quality or superiority of a product or service in relation to its intended purpose, as well as any alternates.

Rolex and L’Oreal have unique ways to determine their perceived quality. Rolex safeguards its stellar reputation for quality and craftsmanship through strict controls and certifications. Feedback from after-sales services also provides valuable insights about the perceived quality factor.

L’Oreal follows a customer-centric approach. It focuses on product reviews, feedback and continuously evolves its products based on that. It constantly checks the temperature of customer satisfaction to fine-tune its offerings and maintain high perceived quality.

These metrics and methods together provide a holistic view of brand equity. Monitoring these elements and acting upon the insights they offer, brands can draft robust strategies to strengthen their market presence.

Managing Brand Equity for Long-Term Success

• Delve into the role of regular brand audits in safeguarding brand quality
• Recognise the significance of consistent brand communication in sustaining brand value
• Understand how successfully adapting to market changes optimizes the brand equity

Regular Brand Audits

The core purpose of regular brand audits is to verify if your brand is performing well, maintaining its intended perception, and keeping its promises to customers. It serves as an established system to monitor changes to your brand’s image, equity, and overall effectiveness in the market.

For instance, Rolex, known for its timeless elegance and precision, conducts frequent brand audits. These allow the company to ensure that their brand image remains synonymous with luxury, high-quality, and craftsmanship. They frequently review their marketing strategy, products, and customer perceptions to maintain these associations.

Similarly, L’Oreal, a leading name in the beauty industry, regularly verifies that its brand stays true to its promise of innovation, quality, and beauty empowerment. The insights obtained from these audits effectively guide L’Oreal’s brand strategies, facilitating adjustments to remain aligned with the changing customer expectations and market trends.

Consistent Brand Communication

Consistent brand communication plays a pivotal role in managing brand equity. It ensures the brand’s value and message remain unvarying across all platforms and points of customer interaction, building trust and reinforcing brand identity.

Rolex excels in this domain by maintaining a uniform brand voice and aesthetics across their marketing campaigns. It effectively communicates Rolex’s commitment to quality, precision, and high status. Every public communication from Rolex, be it in print, digital, or at their flagship stores, actively embodies these values, thereby reinforcing its brand equity.

In a similar vein, L’Oreal ensures consistent messaging by emphasizing its core values of innovation, inclusivity, and beauty empowerment across all branding initiatives. From their product design to marketing campaigns, L’Oreal’s persistent communication reiterates its promise to deliver high-quality beauty solutions.

Adapting to Market Changes

Adapting to market changes is paramount if a brand aims to sustain its equity over time. It’s crucial to remain flexible, ready to evolve with changing customer expectations and market landscapes while preserving the core brand identity.

Rolex, for instance, has deftly balanced the art of incorporating cutting-edge technology in their watches without deviating from their classic design language, effectively adapting to modern market demands. This blend of innovation, along with time-honoured craftsmanship, has enabled Rolex to consistently top lists of powerful global brands.

L’Oreal, too, has shown remarkable agility in responding to market changes. Recognizing the shift towards natural and cruelty-free beauty solutions, they’ve expanded their line-up to include vegan options, effectively aligning their product offerings with customer needs and market trends. This ability to adapt while maintaining brand consistency has bolstered L’Oreal’s brand equity in the intensely competitive beauty market.

Implementing Successful Brand Equity Strategies: Key Takeaways

• Unpack the CBBE model and its application in top brands like Rolex and L’Oréal
• Extract valuable nuggets from successful brand equity strategies, Rolex and L’Oréal in particular
• Obligation for constant development and improvement of your brand equity, with Rolex and L’Oréal as prime examples

Understanding the CBBE Model

Breaking down the rather complex model into manageable and studied blocks, the CBBE (Customer-Based Brand Equity) model holds an integral role in building and sustaining powerful brand equity 

The CBBE model, in the context of business and marketing, typically refers to the “Customer-Based Brand Equity” model. This model, developed by Kevin Lane Keller, is a well-known approach to understanding a brand’s value from the perspective of the customer. It’s focused on how consumers think, feel, and respond to a brand, and is structured around four key components:

• Brand Identity (Who are you?): The starting point where a brand aims to create awareness about who it is and what it stands for.
• Brand Meaning (What are you?): Involves establishing brand associations through attributes and benefits to give the brand a specific meaning in the customer’s mind.
• Brand Responses (What about you?): How consumers react to the brand, both in terms of their judgments and feelings related to its perceived quality and emotional resonance.
• Brand Resonance (What about you and me?): The ultimate relationship and level of identification that a customer has with the brand, including a sense of community and engagement.

To illustrate this model, here’s a simple diagram:

In this diagram:

• Brand Identity is at the top, representing the foundation.
• Brand Meaning and Brand Responses sit in the middle, indicating the development of brand understanding and customer reactions.
• Brand Resonance is at the bottom, showcasing the peak of customer-brand relationship.

This structure helps in understanding how a brand can develop its equity through various stages of customer perception and interaction. It emphasizes that strong brand equity is built when a brand consistently delivers on its promises, leading to a loyal customer base.

Big brands, like Rolex and L’Oreal, harness the power of the CBBE model to develop, monitor and manage their brand equity. Rolex, a symbol of prestige and luxury, carefully crafted its brand perception through stellar product quality, distinctive design, rich heritage and celebrity endorsements. All these facets portray the CBBE model elements significant to establishing solid brand equity.

Meanwhile, L’Oreal is another CBBE model follower. By emphasizing diversity in their product line, consistent quality, and a global presence, they have successfully built a body of loyal customers.

Learning from Successful Brands

Standing on the shoulders of giants should never be underrated. Brands like Rolex and L’Oreal are not successful by accident; they employ deliberately structured and tested strategies to develop powerful brand equity.

From Rolex’s product differentiation and fascinating brand stories to L’Oreal’s inclusivity and innovative product line, several substantial lessons can be learned. Rolex is associated with luxury and prestige due to its ability to deliver on its brand promises consistently – a lesson in standing by your brand’s benefit to the customer.

L’Oreal, on the other hand, has conquered the vast and diverse beauty market by adapting its offerings to cater to different ethnic, cultural, and age groups – a lesson in adaptability, inclusivity, and market understanding.

Continuously Improving Your Brand Equity

Brand equity is not a fixed destination; it’s a relentless journey. Forces in the business landscape are ever-changing, calling for a constant evolution and improvement of your brand equity.

It’s impressive to observe how mastering brands like Rolex and L’Oreal thrive amidst such changes. Rolex has shown noticeable evolution in their designs, continuously adapting to changing fashion trends, yet retaining their classic elements that make a Rolex unmistakably a Rolex.

Likewise, L’Oreal’s continuous innovation and expansion into new product categories illustrate their commitment to building and maintaining brand equity. Their successful navigation in the advent of the digital era and social media marketing, for instance, highlights their commitment to constant development.

Rolex, a paragon of luxury timepieces, didn’t just fortify its brand equity overnight. It’s a saga of endurance, consistency, and authenticity woven into the fabric of high-end horology.

Key Strategies:

• Meticulous Craftsmanship & Exclusivity: Each timepiece is crafted in-house, signifying quality and uniqueness.
• Strategic Sponsorships: Rolex’s associations with prestigious events like Wimbledon and the Open Golf Championship elevate its luxury persona.
• Iconic Endorsements: Collaborations with influential figures like Roger Federer and James Cameron resonate with Rolex’s image of excellence and adventure.

Consumer Perception & Competitive Edge:

• Data on Consumer Perception: Surveys indicate Rolex’s synonymous association with luxury and status.
• Differentiation: Unlike its competitors, Rolex maintains a unique blend of classic design and modern innovation, appealing to both traditional and contemporary tastes.

L’Oreal has adeptly woven the Customer-Based Brand Equity (CBBE) model into its brand fabric, championing beauty and diversity.

Application of the CBBE Model:

• Brand Identity: “Because I’m Worth It” slogan champions individuality and empowerment.
• Brand Meaning: Innovative products like the wide-ranging shade foundations cater to diverse beauty standards.
• Brand Responses: Campaigns addressing beauty stereotypes to foster positive consumer reactions.
• Brand Resonance: Loyalty programs and community-building initiatives create deep customer connections.

Diversity and Digital Strategies:

• Inclusivity Initiatives: L’Oreal’s commitment to diversity is evident in its product lines, such as True Match foundation range.
• Digital Marketing: Leveraging social media for targeted campaigns, engaging with influencers to amplify brand awareness.

Impact and Innovations:

• Market Adaptability: Introduction of vegan and cruelty-free products in response to market trends.
• Customer Engagement: Digital transformation strategies, including online beauty consultations, have enhanced customer interaction and loyalty.

Outcomes & Lessons:

• Rolex: The brand’s unwavering focus on quality and luxury has solidified its market position, allowing it to command premium pricing.
• L’Oreal: Embracing diversity and digital innovation has expanded L’Oreal’s market reach and solidified its global brand equity.

Planting the Seeds of Brand Equity

Exceptional brand equity isn’t stumbled upon, but carefully cultivated. From strategic brand positioning to a razor-sharp focus on consumer engagement, every step builds towards a stronger, more impactful brand. In all of these, consistency is your comrade and patience, your power.

This information in your hands is a roadmap to building a name that not only resonates with your audience but wins their loyalty. Undoubtedly, accruing brand equity is a marathon, not a sprint.

Start now; Implement these outlined strategies in your operations. Fine-tune your brand voice, commit to delivering value, focus on customer experience, and consistently measure your progress.

Think through this: How can you infuse more value into your customer’s journey today?

Remember, the market doesn’t just respect great brands; it rewards them. Stand out, make an impact, build your brand equity. Every action today sows the seeds for a bountiful harvest tomorrow.

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Home » Management Case Studies » Case Study: L’Oreal’s Customer- Based Brand Equity (CBBE) Model

Case Study: L’Oreal’s Customer- Based Brand Equity (CBBE) Model

Customer-Based Brand Equity is defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. The Customer-Based Brand Equity Model approaches brand equity from the perspective of the consumer — whether this be an individual or an organization. Understanding the needs and wants of consumers and organizations and devising products and campaigns to satisfy them are at the heart of successful marketing.

BRAND SALIENCE:

Over a third of the L’Oreal Group’s total turnover in this country is generated by L’Oreal Paris, making it the company’s largest division in the UK. Today there are strongly established L’Oreal Paris brands across all of the key areas of the beauty market, including the Plenitude skincare range, Elvive haircare and Studio Line styling products. Other brands include L’Oreal Paris Colour Cosmetics, Elnett, Rcital, Excellence, Fria, Perfect Blonde, Open, Casting and L’Oreal Kids.

BRAND PERFORMANCE:

L’Oreal Branding Strategy has achieved success throughout the world. Over the years, the company is successfully producing and selling different cosmetic products, haircare and skincare products in almost 150 countries of the world. This has been possible because of the well established Brand Name and Brand Image of L’Oreal.

L’Oreal has been successful in generating a worldwide Brand Identity only because of the company’s powerful and efficient Branding Strategy. This successful Global Branding Strategy of L’Oreal helped the company to earn significant levels of revenue in the past years In the year 2005, L’Oreal was valued as a $18.89 billion company. In 2004, total value of the L’Oreal Brand was $5902 million. In 2003, the company recorded a value of $5600 million.

BRAND IMAGERY :

L’Oreal has been one of the most reputed brands in the cosmetics field. The brand has made its presence felt in more than 100 countries, thanks to its numerous acquisitions worldwide. With several brands in its kitty, L’Oreal has carved a niche for itself with its unique strategies and stands out from the other cosmetics brands. The L’Oreal group develops several important communication  campaigns every year that underline the ability and the growth of the group. It is omnipresent across several media channels and the constant presence enables the brand to retain its reigning position in the market despite stiff competition from numerous cosmetic brand. The commercial communication of the group is made at a world level. The group proposes the same products and leans on the same advertising campaigns. In that case, visuals are the same, the text identical, the slogan is unchanged, and the ads are only translated with respect to countries. However, in spite of its global presence, the group realized that it could not sell the same product to all its consumers. The group knew how to diversify towards American, Asian or Latin brands.

Few of the women in the admiring crowd realize that the trendy ”New York” Maybelline brand belongs to French cosmetics giant L’Oreal. In the battle for global beauty markets, $12.4 billion L’Oreal has developed a winning formula: a growing portfolio of international brands that has transformed the French company into the United Nations of beauty. Blink an eye, and L’Oreal has just sold 85 products around the world, from Redken hair care and Ralph Lauren perfumes to Helena Rubinstein cosmetics and Vichy skin care.

Thanks to this strategy, masterminded by L’Oreal Chief Executive Lindsay Owen-Jones, the French company has not only enjoyed a decade of double-digit growth but has pioneered new ground rules for staying on top in a fiercely competitive industry. L’Oreal’s net profits rose 12% in 1998, to $768 million, while its stock has soared 900% in the ’90s.

L’Oreal’s strategy positions it beautifully to profit even further when the middle class begins to grow again in emerging markets . Says Veronique Adam, analyst at J.P. Morgan Securities Inc. in Paris: ”L’Oreal is the only real global leader in every segment of the industry.”

For Owen-Jones, the trick will be staying ahead in the game as his powerful rivals seek to play the global branding game. From giant P&G to niche players such as Los Angeles-based cosmetics maker Stila, L’Oreal’s competitors are hustling to catch up. ”L’Oreal want to become more of a global company like L’Oreal,” says Yoshikuni Miyakawa, a general manager of the cosmetics-marketing division of Shiseido Co., Japan’s No. 1 cosmetics company. Already, Shiseido is dominant at home and now expanding around the world. Meanwhile, the French company is No. 10 in Japan, trailing rivals such as Clinique and Estee Lauder.

It is customers emotional responses and reaction with respect to the brand. “L’Oreal” formed in France, Paris, brings the sophistication and elegance consequent from its French heritage to women and men all over the world. L’Oreal Paris offers leading-edge products that out-perform the competition to people who care more about the way they look. The passion for innovation, performance, style and a sense of premium is sum up in the customers money spending worth and also it’s’ philosophy. The core values are supported by strong investment in scientific research and technology.

The L’Oreal Group total turnover by the Paris franchise making it the company’s largest division in the world. Today there are strongly established L’Oreal Paris brands across all of the key areas of the beauty market, including the Plnitude skincare range, Elvive hair care and Studio Line styling products. Other brands include L’Oreal Paris Color Cosmetics, Elnett, Rcital, Excellence, Fria, Perfect Blonde, Open, Casting and L’Oreal Kids. The Consumer Products Division in the Europe is dedicated to offering consumers innovative, high technology beauty products from global brands at competitive prices. This is delivered through a global strategy combined with a local understanding of the needs of women and men of all ages.

The L’Oreal Group has three international brands named as L’Oreal Paris, Garnier and Maybelline that offer hair care, sun care, hair coloring, skin care and make-up products. All of these available from mass market retail outlets such as supermarkets, drugstores and leading chemists throughout the world. L’Oreal Paris remains the finest mass-market brand. It is offering consumers reachable luxury for skin care through providing its consumers leading-edge products that outshine the competition. “Garnier”, on the other hand, Europe’s no1 brand for natural beauty products in hair care category that offers a complete collection for healthy hair. Similarly, Maybelline offer world class quality for on screen requirements. The L’Oreal Group performance is marvelous due to its distribution channel too. The company focuses on “go native” strategy mean hire local firms in every country to distribute its products. Secondly, “First landing” strategy that is first commercialization is bad thing if the product is not available in a particular place. It has two bad impacts on the company: one would be if product is not at a particular place and company runs there commercials the negative word-of-mouth generate due to the consumers effortless struggle to search the product. The other is the huge advertising budget shatter due to pointless direction. The company by itself monitor, control and evaluate its channel performance especially distributors. The company follow same marketing mix for the whole world with a little bit variation according to the economic conditions of a certain country. L’Oreal is known for its strong control over its promotion, place, price and packaging strategy, which is decided from the headquarters. For these points, only minor product adaptations are made in different countries such as labels’ languages. All controls are very frequently checked to comply with prices and selling places of the group marketing strategy .

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Home / How to Build Insanely Good Brand Equity [Case Studies]

How to Build Insanely Good Brand Equity [Case Studies]

Ott heidmets.

Any brand strategy, whether it comes from a new or long-running company, has to be mindful of its effect on brand equity. We talked about its importance in advertising in our explainer of where the industry is heading at the moment, but we felt it was worth emphasising that people’s perception of a brand is important, but that perception is guided by actions. Here’s how to make your brand values talk to people, and keep your brand equity high.  

What Is Brand Equity?

Brand equity is the portion of a company’s value attributable to its brand(s), according to Brand Marketing Blog . In other words, a company with good brand equity can rely on its image among consumers being high before a product is released, and this can provide considerable protection from the slings and arrows of a difficult market.

So we can show you what makes good brand equity, we’ll take a look at a mainstream brand that has a high level of public goodwill, built up over many years – Apple. The technology company has now got up to the level of Rolex and Cola Cola in terms of the way its brand is regarded by the public at large, and in terms of its ubiquity in popular culture.

That level of global recognition, especially when it is overwhelmingly positive, is never easy to achieve, and so to give businesses something more achievable to aim for, we also want to highlight a smaller, newer company that is doing good work in marketing, product design, and customer satisfaction, and is being rewarded for it with great brand equity. That company is Dollar Shave Club, which you will probably have heard of if you’ve seen a YouTube ad in the past year or so.

Brand Equity Case Study #1: Apple

A brand with what seems like untouchably good brand equity is Apple. Their brand awareness is so wide that it is reckoned by Statista that the value of the Apple brand is around 300 billion US dollars . Whether you like or dislike the company itself, it’s indisputable that their brand identity is one of excellence in build quality, and the package they offer customers. How have they reached this point? It’s through years and years of perfecting their product, looking at what the competition does, and identifying how to do that better.

Remember Apple was once the company which struggled to replace the Apple 2 desktop computer, and which committed missteps like the Lisa tablet, something which was arguably before its time, but was heavy, bulky, and required a stylus for entering messages, unlike its distant descendant, the iPad.

How the company picked itself up and became stronger than ever is something detailed in the Walter Isaacson biography of Steve Jobs, and two movies about the Apple cofounder’s career.

[Not entirely related, but, if you’re interested, our opinion is that ‘Jobs’, starring Ashton Kutcher, was superficial and unsatisfying, while ‘Steve Jobs’, starring Michael Fassbender, is brilliantly scripted, but still a subtle fictionalisation of the protagonist’s interactions with others.]

To take the example of the smartphone market, Apple did not release the first touchscreen smartphone, but they did release what has become by far the global market leader, the iPhone. This took what people liked about their breakthrough handheld product, the iPod, and put it into a package with a big screen that could be tilted to landscape, a body that was reasonably resilient but still a slim, light, attractive design, and a camera that was, at the time, among the best on the market.

We’re seeing this again with the current trend for experimentation in the smartphone market: Apple is not averse to trying new things – in fact, they are known for it – but they’re rarely the first to try something. This is because they believe that it’s better to let other manufacturers try out design solutions that may or may not work, see what the flaws and successes are, and then build their own version that works well enough to preserve their reputation.

For Apple, brand equity comes in offering customers a product that works well straight out of the box, and has good reliability. It also comes in providing design that is clean, simple, and yet has enough unique identifiers that it seems desirable to consumers, meaning owners of it feel they have a certain social capital from using the product. If Apple released a poor-quality product, its brand equity would suffer; the key to maintaining brand equity is in keeping product quality high, bringing customer satisfaction.

Brand Equity Case Study #2: Dollar Shave Club

There are other, newer, smaller companies who have achieved great brand equity through similar means to Apple, but without the same behemoth scale.

One of these companies is Dollar Shave Club, a four-year-old company which has made its name through mail-order sales of razors and other shaving accessories. So far, so rudimentary? Well, yes, except that they offered to send monthly packs direct to customers’ doors for only $1 a month. As their CEO put it in a promotional video, “do you really want to pay $20 per month for branded razors, when 19 of those [dollars] go to Roger Federer?”

He was making his point in a jokey way, but somehow that fitted in with the image of the company. It was also a major contrast with other razor manufacturers’ ad campaigns, which could make you feel like you were watching the most serious thing in the world at times.  

The other thing that people like about the company is its customer service – packages routinely come on time, with special gifts and bonuses, while cancellation can happen at any time with no penalty fee – and the way it is often seen to be doing the right thing.

An example of this last point came when a US soldier in Afghanistan asked for an order for his company, and was told that he would be sent the packages, but that he wouldn’t be allowed by Dollar Shave Club to pay for them. The troops instead got free packages, along with a personal note from the CEO.

These things might seem like marketing ploys – and they are – but they also come from a basis of being honest with customers, not pulling any tricks, and not charging more than the company needs in order to make money. Put simply, this is a company that employs, and understands, Gen-Z consumers.

As we’ve explored in other articles, the new group of younger consumers appreciate authenticity as much as grand gestures, and from their rinky-dink, seemingly thrown-together ad (which is actually expertly scripted and choreographed), to their confidence in keeping their customer base through clear and honest communication, Dollar Shave Club seem rough-and-ready, and scrappy, but have a brand equity that was part of the reason for it being bought by Unilever for $1bn.

As part of their customer care programme, every Dollar Shave Club subscriber gets a monthly magazine in their package, and this also helps to build brand loyalty, and hence brand equity, as consumers look at the company and feel that whatever they do next, based on the evidence presented so far, will be good, and will be beneficial to the customer.

For anyone interested in brand building, this is a great case study in how to make consumers care about what you’re doing.

Want more tips on how to make people take notice of your brand? Here are some easy hacks!  

What Can We Learn from these Companies?

Brand equity is difficult to earn, and very easy to lose, particularly if a brand takes the loyalty of its customers for granted, and tries to circumvent rules that are there for everyone’s benefit. Neither of the companies we have profiled have done this – in fact they have spent years assiduously building their profile with consumers, not only through one-off campaigns, but through sustained hard work in appealing to, and broadening, their customer base.

It’s also important to note that both of the mentioned brands have achieved brand equity by understanding their core proposition, and what customers like about it, and by caring about product design, customer service, and continued excellence, enough to keep customers loyal.

If this were not the case, their brand equity would not be as strong as it is, because brand equity comes hand-in-hand with real-life brand performance, something you might think about the next time you see a premium brand licencing its name out to a less-than-premium product.

To find out about the state of advertising now, take a look at Nexd’s Digital Advertising Guide

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Brand Equity: What It Is and How to Build It

Michelle Leighton is a seasoned content writer and social media specialist with a remarkable track record in building thriving online communities. Michelle excels at translating customer insights and market trends into compelling content strategies that spark engagement and foster meaningful discussions. Michelle's work has been featured by The Indie Media Club, The CMO, The Ecomm Manager, Narcity Canada, Input Magazine and more.

Brand equity programs can be a silver bullet to your growth strategy, if executed properly. Here's how to build a brand equity program that aligns with your business goals.

Brand equity is the secret weapon behind companies that thrive while others struggle. 

Businesses dedicated to consistent branding experience 20% greater overall growth, according to Marq’s State of Brand Consistency Report . Also, those with positive brand equity enjoy 33% higher revenue than other organizations.

It’s a tough market out there: budgets are shrinking, growth is slow, and advancements in marketing software are changing how we approach marketing strategies. As Bob Dylan sings, “ The times they are-a changin’,” and it’s more important than ever to consider what influences your brand value right now.

Today, we're dissecting the layers of brand equity, diving into equity-building strategies that leverage social media management , content marketing, customer service, and more. But first, some definitions.

What is Brand Equity?

Brand equity refers to how much people value your brand based on quality and desirability. 

Consider it your brand’s reputation – the intangible force that defines your brand identity or attaches trust and recognition to your brand name. It’s what makes buyers choose your brand over the competition. You can measure brand equity via KPIs like brand awareness, customer loyalty, and customer satisfaction.

Your brand can have either positive or negative brand equity. Positive brand equity is like the Apple phenomenon – where the brand is so valuable and loved that people passionately argue about it. This is evident in the ongoing Apple vs. Android debates.

On the other hand, we have negative brand equity. The Facebook/Meta rebrand is an excellent example of this.

Before rebranding to Meta, Facebook was flying high with a value of over $1 trillion. However, consumers weren’t impressed with the new company vision. A study by Harris Brand Platform found Meta's trust score plummeted from 16% to just 5.6%. Trust matters big time – Meta's valuation took a hit, dropping $650 million within a year of the rebrand. 

This demonstrates what is known as the brand equity chain, which links brand image to brand value. When Meta altered its brand image, it decreased its brand strength, leading to a drop in its valuation. 

Why is Brand Equity Important 

According to the Edelman-LinkedIn B2B Thought Leadership Impact Report , 64% of C-suite executives say their companies have tightened their procurement processes.  

Here’s the thing: that same report found that 91% of decision-makers are still open to non-critical businesses, so long as the business can demonstrate their value. 

This is where your brand equity starts to move the needle. When you come to the table with a strong reputation and positive brand associations, your chances of winning business improve thanks to the perceived value of your brand. 

Positive brand equity lends you the power to justify price premiums, expand into new markets, and drive stock prices up, up, up! It’s a necessary element to compete in a time of tight budgets and economic fears.

As the CEO of UserGems, Christian Kletzl , says: 

“When spending is down overall, dominating mindshare is a long-term investment that pays off in dividends.”

The Building Blocks of Brand Equity

Much of brand equity is intangible – tied to emotions, thoughts, and discussions that we marketers can’t quite measure. This makes it necessary to break the concept of brand equity into measurable categories. 

To better visualize these categories, we can turn to The Aaker Model by “The Father of Modern Branding,” David Aaker . This brand equity model breaks the concept into four distinct building blocks:

• Brand awareness: How well consumers recognize or recall a brand.
• Brand associations: The mental connections customers make between a brand and specific attributes, features, or benefits.
• Perceived quality: Also known as brand perception, it focuses on customers' opinions about the overall quality or excellence of a brand.
• Brand loyalty: The degree of customer commitment and repeat business to a particular brand.

Think of it like this: brand equity is a cake, where each element of The Aaker Model serves as an ingredient in the recipe. Much like a well-executed recipe, a mix of these elements results in a brand with a rich and irresistible appeal, leaving a lasting impression on the taste buds of your target audience.

Consider Starbucks, for example. Before Starbucks, coffee culture wasn’t prevalent in North America. Starbucks put immense effort into connecting its brand to coffee culture to grow the company into the behemoth it is today. 

What is that brand culture if we break it down? 

• Brand awareness: Remember the saying “a Starbucks on every corner?” Starbucks puts immense effort into brand placements across locations their customers frequent. Today, their Siren logo is immediately recognizable.
• Brand associations: Starbucks brought Italian cafe culture to North America, building a unique brand around a “coffee experience” rather than just a cup of coffee. Today, their name is synonymous with both coffee and cafe culture.
• Perceived quality: Customers associate Starbucks with a certain level of sophistication and quality, thanks to their commitment to using premium coffee beans, employing skilled baristas, and creating an ambiance that reflects a “premium” experience.
• Brand loyalty: Ever wonder why all Starbucks locations look the same? This is to remind you that no matter where you are, you can get the same cup of Starbucks coffee. This also makes it far easier for customers to remain loyal, as it’s available anywhere.

Case Study: Leveraging Customer Reviews for Brand Equity

Once you grasp the foundational elements of high brand equity, you can deconstruct them into a ladder approach. Take Grooveshark's success story, which began with a dedicated focus on the user experience and led to a loyal customer base that propelled the company to 30 million monthly members and $15 million ARR.

Sam Taratino, Fractional CMO of Harmonic Reach Marketing and former CEO of Grooveshark, explains, "At Grooveshark, we understood the paramount importance of building brand equity, particularly in the SaaS landscape.” “

Grooveshark's strategy began with a focus on delivering an exceptional music streaming experience. They simplified their process to just two steps, search, and play, which resulted in heightened user engagement. “It's not just about having a good product; it's about presenting your unique value proposition in a compelling way," Tarantino notes.

Their positive user experience led to heightened perceived value and strong brand loyalty. This translated into enthusiastic reviews on platforms like TechCrunch, which contributed to increased brand awareness and trust. With several elements of brand equity working together, Grooveshark successfully built a positive reputation and strong brand equity.

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How to Build Brand Equity

We’ve covered what brand equity is. Now, how do we build it? 

Managing brand equity in 2024 and beyond will require a careful approach. Decision-makers demand value for their company dollars, especially in times of constrained budgets. 

The challenge is real, especially with your shrinking budget, but possible. The first step? Get the fundamentals of your brand right. Then maximize brand-building through a strategic mix of thought leadership, excellent customer service, employee advocacy, and social proof.  

Share High-Quality Thought Leadership from Your C-Suite 

Thought leadership can sometimes feel cringey (remember your LinkedIn feed?), but it is underappreciated as a brand management strategy. In 2021, 54% of B2B decision-makers spent more than one hour per week reading thought leadership, and 48% awarded business to the organization responsible for the content. Regarding the components of brand equity, thought leadership and personal brand support brand awareness, brand perception, and brand associations. That’s precisely why Wojciech Chrzan, Head of Insights at Brand 24 , highlights thought leadership and storytelling as his go-to strategies to build brand equity. 

His tips include regularly publishing insightful content on industry trends, sharing case studies to highlight product use cases, and personalizing your content for your target audience.

Prioritize Customer Reviews and Referrals

Data from Big Commerce’s Global B2B Buyer Report indicates customer ratings and reviews strongly influence B2B buying decisions. Given how competitive the SaaS industry is, social proof holds significant importance – especially when building brand equity through perceived quality. 

That was precisely the case of PartnerStack , as shared by Joe Kevens, Director of Demand Generation at PartnerStack and Founder of B2B SaaS Reviews . The company's intentional focus on online user reviews led to a boost from under 40 to over 500 reviews, propelling them from 9th to 1st in their category on a major review site. Joe emphasized the substantial impact of this approach, stating, "This significantly enhanced our brand awareness, loyalty, and trust, influencing 40% of our revenue." 

Use Employee Advocacy to Build Brand Loyalty 

Your employees, as key contributors, naturally become influential brand advocates. The positive experiences of employees (or unfavorable) impact consumer perception, media coverage, regulators, and purchase decisions.

At a time when institutional trust is eroding, employees rank trust in their employer 23 points higher than average for other institutions, including government, NGOs, and media. This is an opportunity for building brand equity from the inside out. 

To make the most of this opportunity, foster a positive workplace culture, implement advocacy programs, provide branded items, and encourage social media engagement. 

Take it from Sujan Patel , founder of Single Grain, who explains how company shirts attributed to a $500k growth in revenue: 

“These days, our Single Grain shirts are our uniforms. Everyone on our team wears them, so when we all go to lunch together, we roll deep.  Even our book keeper wears our shirts every single day. In our SOMA neighborhood – where we’re surrounded by hundreds of other startups and entrepreneurs – this kind of publicity and name recognition is huge. ”

Deliver Outstanding Customer Service 

When a customer has a bad experience with your brand, who hears about it first? Their friends, family, and colleagues. This negatively influences brand perception, brand loyalty, and brand associations. 

However, the opposite is true as well. Happy customers lead to increased sales and higher profit margins. Positive experiences support word-of-mouth marketing and referrals, leading to a consistent stream of new customers. Excellent service also helps during tough times, steering brands through challenges and keeping a good reputation. Customers often are okay with paying more for the comfort of a great customer experience.

How to Measure Brand Equity

Measuring brand equity is a big task, but it helps to recall the building blocks of brand equity – brand awareness, brand recognition, perceived quality, and brand loyalty. 

We can break down our approach to measurement through these four components:

Brand Awareness 

Brand awareness assesses how well consumers recognize or recall a brand.

How to measure it: Use brand management software to track your social media metrics (followers, shares), analyze website traffic, and conduct surveys to measure brand awareness with a focus on metrics such as unaided/aided brand recall, NPS scores, and earned media coverage.

Brand Associations

Brand associations involve customers' mental connections between a brand and specific attributes, features, or benefits.

How to measure it: Utilize content analysis, surveys, social listening, and focus groups to identify and strengthen positive associations, fostering a solid and desirable brand image.

Perceived Quality

Perceived quality, also known as brand perception, focuses on customers' opinions about a brand's overall quality or excellence.

How to measure it: Analyze customer reviews, product performance metrics, and market research to gauge and enhance consumer perceptions of your brand's quality.

Brand Loyalty

Brand loyalty measures the degree of customer commitment and repeat business to a particular brand.

How to measure it: Measure repeat purchases, customer retention rates, and loyalty program engagement to assess your customer commitment. Most brand advocacy software solutions can help you keep track of these metrics.

Challenges and Solutions to Growing Brand Equity

Ensuring your company goals match up with building a strong brand isn't just a good idea – it’s necessary for long-term success. Let's break down this vital link with some practical tips you can implement.

Dealing with Resource Limitations

Tight budgets have a chokehold on many marketers at present, but it’s not impossible to increase brand value on a budget, though it will require creative solutions. For example, swap paid brand awareness campaigns for word-of-mouth marketing tactics. 

Referral programs are a fantastic way to build brand recognition through word-of-mouth marketing. Take Dropbox, for example; their referral program helped them grow 3900% in 15 months , all with minimal brand marketing spending. 

Other low-cost equity-building activities include: 

• Organic brand promotion through social media content.
• Showcase user-generated content to enhance authenticity.
• Establish industry thought leadership with webinars or online events.
• Brand collaborations with partners or micro-influencers for affordable brand endorsements.
• Reward customer loyalty through effective loyalty programs.
• Create shareable content via blogs, videos, or podcasts.
• Participate in online forums to connect with your target audience.

Adapting to Market Changes and Trends

In the last three years, we’ve had to navigate a worldwide pandemic, economic recession, and now the emerging AI revolution. These market dynamics influence your approach to building brand equity. 

The organizations that come out on top in turbulent times are agile and proactive. As marketers, we must monitor our competitors, industry benchmarks, and trends and react to them.

Do not fear change; embrace it. Charles Kettering, considered one of America’s greatest inventors, once said, “The world hates change, yet it is the only thing that has brought progress.”

In this arena, customer feedback is gold – as it’s direct insight into changing preferences that your brand can use to stay ahead. Flexibility in marketing strategies and a commitment to social listening ? That’s your ticket to adapt swiftly to the market's twists and turns. Lastly, keep your workforce (and yourself) informed and engaged. An insightful and motivated team is your secret weapon to staying ahead.

Psst – an easy way to stay informed is The CMO newsletter! Sign up to have it sent straight to your inbox.

Aligning Brand Equity with Business Goals

As much as 90% of organizations fail to execute their strategies successfully. According to data from PMI , 61% of executives believe this failure springs from an inability to align strategy development with strategy implementation. 

Aligning your equity-building tactics with company goals isn't just a good idea – it’s necessary for long-term success. Let's break down this important link with some practical tips you can put into action:

1. Define clear brand objectives: Nail down precisely what you want your brand to be in the market. Ensure you tie your brand goals to the bigger picture company goals. Clarity is your best friend here.

2. Integrate brand into business strategy: Don't treat your brand like a distant cousin. Weave brand-building right into your business strategy. It’s not an add-on; it's the beating heart of your growth plan.

3. Understand customer expectations: Your brand isn't for you; it's for your customers. So, sync your brand efforts with your customers' expectations and cravings. Dive deep into their world to ensure your brand hits the sweet spot.

4. Integrate customer feedback: Don't play in the dark. Soak in feedback from your customers and stakeholders. It’s not just about listening; it’s about tweaking your brand game based on what they tell you. It's like having your audience write the playbook for your success.

Your Next Move: Take Charge of Your Brand’s Destiny 

Growth rates dip, and economic uncertainties linger, but the power of brand equity trudges on.

Trust is currency, and positive brand equity is not a luxury but a necessity. It's the force that propels your brand above the competition, justifies premium prices, and fosters unwavering customer loyalty.

As you embark on the journey to master brand equity for SaaS success, stay informed and inspired with weekly insights from marketing leaders. Subscribe to The CMO newsletter for marketing leaders to have these insights, strategies, and tips delivered to your inbox. 

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What is Brand Equity? Definition, Measurement, Examples

Appinio Research · 18.03.2024 · 31min read

Have you ever wondered why some brands seem to effortlessly capture the hearts and minds of consumers while others struggle to gain traction in the market? Understanding the concept of brand equity holds the key to unraveling this mystery. Brand equity isn't just about logos and slogans; it's about the intangible value that a brand holds in the eyes of consumers. It's about the trust, loyalty, and emotional connection that consumers have with a brand, influencing their purchasing decisions and behaviors. In this guide, we'll explore the fundamentals of brand equity for businesses, delve into the components that contribute to brand equity, examine strategies for building and enhancing brand equity, and discuss challenges and risks in managing brand equity. Whether you're an entrepreneur looking to establish a new brand or a seasoned marketer aiming to strengthen an existing one, understanding and effectively managing brand equity is essential for driving success in today's competitive marketplace.

What is Brand Equity?

Brand equity is a fundamental concept in marketing that encompasses the intangible value and perception associated with a brand . It represents the accumulated goodwill, trust, and loyalty that consumers have towards a brand, influencing their purchasing decisions and behaviors. Brand equity is built over time through consistent delivery of superior products or services, effective marketing strategies, and positive brand experiences.

At its core, brand equity reflects the differential effect of brand knowledge on consumer response to marketing activities. It goes beyond tangible assets such as revenue and market share, capturing the emotional and psychological connections that consumers have with a brand. Understanding and managing brand equity is essential for businesses to maintain a competitive edge, foster customer loyalty, and drive long-term growth and profitability.

Importance of Brand Equity for Businesses

• Competitive Advantage : Brand equity serves as a powerful competitive differentiator , allowing businesses to stand out in crowded markets and command premium prices for their products or services.
• Customer Loyalty and Advocacy : Strong brand equity cultivates customer loyalty and advocacy, leading to repeat purchases, positive word-of-mouth recommendations, and increased customer lifetime value.
• Price Premium : Brands with high equity can charge price premiums compared to competitors, as consumers perceive greater value and quality associated with the brand.
• Market Expansion : Brand equity facilitates market expansion and diversification by providing a solid foundation for launching new products, entering new market segments, or expanding into new geographic regions.
• Resilience to Adversity : Businesses with robust brand equity are better equipped to weather crises, economic downturns, or competitive threats, as consumers are more likely to remain loyal to trusted brands during challenging times.
• Investment Attractiveness : High brand equity enhances a company's attractiveness to investors, lenders, and strategic partners, as it signals strong market positioning, customer loyalty, and growth potential.

Components of Brand Equity

Brand equity is comprised of several key components, each playing a vital role in shaping consumers' perceptions and behaviors towards a brand.

Brand Awareness

Brand awareness refers to the extent to which consumers are familiar with a brand and its offerings. It encompasses both brand recognition, where consumers can identify the brand when presented with its name or logo, and brand recall, where consumers can retrieve the brand from memory when considering a purchase. High brand awareness is essential for attracting new customers and maintaining a competitive edge in the market.

To enhance brand awareness, businesses employ various marketing strategies such as advertising campaigns, sponsorships, and content marketing. Leveraging social media platforms, search engine optimization (SEO), and influencer partnerships can also help increase brand visibility and reach a broader audience.

Brand Loyalty

Brand loyalty reflects the strength of the bond between a brand and its customers. Loyal customers are not only repeat purchasers but also advocates who actively recommend the brand to others. Building brand loyalty requires delivering consistent value and positive experiences that exceed customer expectations. Loyalty programs, personalized communication, and exceptional customer service are effective strategies for fostering brand loyalty.

Moreover, emotional connections play a significant role in fostering brand loyalty. Brands that resonate with consumers on an emotional level by aligning with their values, aspirations, or lifestyles tend to cultivate deeper and more enduring relationships with their customers.

Perceived Quality

Perceived quality refers to consumers' subjective assessment of a brand's products or services in terms of their performance, reliability, and value. It influences consumers' purchase decisions and willingness to pay a premium for the brand. Maintaining high perceived quality requires continuous investment in product innovation, quality control, and customer feedback mechanisms.

Brands can enhance perceived quality through transparent communication about product features and benefits, showcasing customer testimonials and reviews, and consistently delivering products that meet or exceed customer expectations. Building trust and credibility through certifications, awards, and endorsements can also reinforce perceived quality perceptions among consumers.

Brand Associations

Brand associations are the mental connections and attributes linked to a brand in consumers' minds. These associations can be based on various factors such as product attributes, emotional benefits, or symbolic meanings. Positive brand associations contribute to brand differentiation, preference, and loyalty, while negative associations can detract from a brand's reputation and value.

To shape positive brand associations, businesses must align their brand messaging, imagery, and actions with desired brand attributes and values. Creating memorable brand experiences, fostering partnerships with reputable organizations or influencers, and leveraging storytelling techniques can help cultivate strong and favorable brand associations among consumers. Regular monitoring and management of brand associations are essential to ensure alignment with brand objectives and adapt to evolving consumer perceptions and preferences.

How to Build Brand Equity?

Building brand equity is a strategic endeavor that requires concerted efforts across various dimensions of brand management. Let's delve into the key strategies for building a solid brand equity foundation.

Establishing Brand Identity

Your brand identity serves as the cornerstone of your brand equity. It encompasses the visual and verbal elements that convey your brand's personality, values, and unique attributes to consumers. Establishing a compelling brand identity begins with defining your brand positioning, target audience, and brand values.

Crafting a memorable brand name , designing a distinctive logo , and selecting brand colors and typography that resonate with your target audience are essential components of brand identity creation. Consistency is paramount in ensuring your brand identity remains cohesive and recognizable across all touchpoints, including your website, packaging , marketing materials, and social media profiles.

Moreover, your brand identity should reflect your brand's essence and resonate with your target audience on an emotional level. By articulating a clear brand story and value proposition, you can forge deeper connections with consumers and differentiate your brand from competitors.

Creating Brand Consistency

Consistency is vital to building and reinforcing brand equity over time. Consistent branding fosters brand recognition, builds trust with consumers, and reinforces your brand's values and positioning in the minds of your audience . Achieving brand consistency requires aligning all aspects of your brand, including messaging, visuals , and customer experiences.

Developing brand guidelines that outline your brand's visual and verbal standards ensures that everyone within your organization understands and adheres to your brand's identity. Consistent use of brand elements such as logos, colors, fonts, and tone of voice across all communication channels helps reinforce your brand's identity and messaging.

Additionally, maintaining consistency in product quality, customer service, and brand interactions across all touchpoints is crucial for building consumer trust and loyalty. Regularly auditing and monitoring your brand's consistency across various channels and touchpoints allows you to identify and address any inconsistencies or deviations from your brand standards.

Delivering Exceptional Customer Experiences

Delivering exceptional customer experiences is a fundamental aspect of building brand equity. Positive interactions with your brand at every touchpoint along the customer journey can leave a lasting impression on consumers and contribute to brand loyalty and advocacy.

To deliver exceptional customer experiences, businesses must prioritize understanding their customers' needs, preferences, and pain points. Personalizing interactions and tailoring solutions to meet individual customer needs can enhance satisfaction and foster long-term relationships.

Investing in employee training and empowerment is also essential for delivering exceptional customer experiences. Equipping frontline staff with the knowledge, skills, and authority to address customer inquiries and resolve issues promptly and effectively can elevate the overall customer experience and reinforce positive brand perceptions.

Moreover, leveraging technology to streamline processes, anticipate customer needs, and deliver seamless omnichannel experiences can enhance convenience and satisfaction. Collecting and analyzing customer feedback through surveys, reviews, and social media monitoring allows businesses to identify areas for improvement and continuously optimize the customer experience.

Leveraging Brand Communication Channels

Effective communication is critical for building brand equity and fostering meaningful consumer connections. Leveraging a mix of traditional and digital communication channels enables brands to reach and engage with their target audience in meaningful ways.

Traditional advertising channels such as television, radio, print, and outdoor advertising remain relevant for reaching broad audiences and building brand awareness. However, digital channels such as social media, email marketing, content marketing, and influencer partnerships offer unparalleled opportunities for targeted messaging, interactive engagement, and measurable results .

Developing a comprehensive brand communication strategy involves identifying the most relevant channels for reaching your target audience and crafting compelling messaging that resonates with their interests, aspirations, and values. Consistency in messaging and visual branding across all communication channels reinforces brand identity and fosters brand recognition and recall.

Moreover, fostering two-way communication with consumers through social media engagement, customer feedback mechanisms, and community-building initiatives allows brands to build trust, gather insights, and cultivate brand advocates. Monitoring and analyzing communication effectiveness through key performance indicators (KPIs) such as engagement rates, reach, and sentiment analysis enables brands to optimize their communication strategies and drive positive brand outcomes.

How to Measure Brand Equity?

Measuring brand equity is essential for assessing the effectiveness of your brand-building efforts and understanding how consumers perceive your brand. By analyzing both quantitative metrics and qualitative measures, you can gain valuable insights into your brand's performance and identify areas for improvement.

Quantitative Metrics

Quantitative metrics provide tangible data and numerical indicators of your brand's financial value, market share, and customer lifetime value.

Brand Value

Brand value represents the monetary worth of your brand and its ability to generate revenue for your business. Several financial valuation models, such as the Interbrand or Brand Finance methodologies, can be used to estimate brand value based on factors such as brand revenue, market trends, and brand strength.

Brand Value = (Revenue from Branded Products or Services - Operating Costs) x Brand Multiple 

Calculating brand value allows businesses to assess the financial impact of their brand on overall company performance and compare their brand's value relative to competitors.

Market Share

Market share measures the percentage of total sales within a specific market that your brand captures. Monitoring changes in market share over time provides insights into your brand's competitive position and market performance relative to competitors.

Market Share = (Brand Sales / Total Market Sales) x 100% 

Increasing market share indicates growth and expansion opportunities for your brand, while declining market share may signal challenges or threats that require strategic intervention.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) represents the total value a customer contributes to your business over their entire relationship with your brand. Calculating CLV involves multiplying the average purchase value by the purchase frequency and customer lifespan.

CLV = (Average Purchase Value x Purchase Frequency) x Customer Lifespan 

CLV analysis helps businesses identify high-value customers, tailor marketing efforts to maximize long-term profitability, and allocate resources effectively to acquire and retain valuable customers.

Qualitative Measures

Qualitative measures provide insights into consumers' perceptions, attitudes, and emotional connections with your brand, offering a deeper understanding of brand equity beyond financial metrics.

Brand Perception Surveys

Conducting brand perception surveys allows businesses to gather qualitative data on consumer perceptions, attitudes, and associations with their brand. Surveys may include questions related to brand awareness, brand loyalty, perceived quality, brand associations, and purchase intent.

Analyzing survey responses provides valuable insights into strengths, weaknesses, and areas for improvement in your brand strategy. It helps businesses identify brand attributes that resonate with consumers and areas where additional investments or adjustments are needed to enhance brand equity.

To effectively measure brand equity and gain actionable insights into your brand's performance, consider leveraging advanced market research tools like Appinio . With Appinio's intuitive platform, you can conduct brand perception surveys with ease, gathering qualitative data on consumer perceptions, attitudes, and associations. By analyzing survey responses in real-time, you'll uncover valuable insights into your brand's strengths, weaknesses, and areas for improvement, empowering you to make informed decisions to enhance brand equity.

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Brand Equity Index

The Brand Equity Index combines various brand metrics, including brand awareness, loyalty, perceived quality, and brand associations, into a single measure of brand health. It provides a comprehensive view of your brand's overall performance and competitiveness in the market.

Calculating the Brand Equity Index involves weighting and aggregating individual brand metrics based on their relative importance and contribution to brand equity. Regular monitoring of the Brand Equity Index allows businesses to track changes in brand perception over time and evaluate the effectiveness of brand-building initiatives.

By leveraging both quantitative metrics and qualitative measures , businesses can develop a holistic understanding of their brand's performance and make informed decisions to strengthen brand equity and drive sustainable growth.

How to Improve Brand Equity?

Enhancing brand equity is an ongoing process that requires a strategic approach and continuous innovation. Here are some key strategies for elevating your brand's value and relevance in the marketplace.

Innovation and Adaptation

Innovation lies at the heart of brand growth and differentiation. By continuously innovating your products, services, and customer experiences, you can stay ahead of the competition and meet evolving consumer needs and preferences. Here's how you can foster innovation and adaptation:

• Research and Development (R&D) : Invest in R&D to develop new products or improve existing ones. Conduct market research , gather customer feedback , and stay abreast of industry trends to identify opportunities for innovation.
• Technology Integration : Embrace emerging technologies such as artificial intelligence , augmented reality, and the Internet of Things (IoT) to enhance product functionality, streamline processes, and deliver personalized customer experiences.
• Iterative Improvement : Adopt an agile approach to product development and iteration. Test and iterate on new ideas quickly, and make continuous improvements based on real-time data and insights.

Brand Extension Strategies

Brand extension involves leveraging your brand's equity and reputation to introduce new products or enter new market segments . When executed thoughtfully, brand extensions can capitalize on existing brand loyalty and associations to drive sales and expand your brand's reach. Consider the following brand extension strategies:

• Line Extensions : Introduce new variants or flavors of existing products to cater to different consumer preferences and occasions. For example, Coca-Cola offers Diet Coke, Coca-Cola Zero Sugar, and Coca-Cola Vanilla to appeal to diverse taste preferences.
• Category Extensions : Expand into related product categories that align with your brand's core values and target audience. For instance, Nike successfully extended its brand into apparel, accessories, and digital fitness platforms to offer athletes and fitness enthusiasts a comprehensive range of products and services.
• Co-Branding : Collaborate with other brands to create co-branded products or experiences that leverage the strengths and complementary attributes of each partner. Co-branded partnerships can help enhance brand visibility, reach new audiences, and generate buzz around new product launches.

Strategic Partnerships and Collaborations

Strategic partnerships and collaborations offer opportunities to amplify your brand's reach, relevance, and credibility through mutually beneficial relationships. By partnering with like-minded organizations or influencers, you can tap into new audiences, access new distribution channels, and leverage partner expertise.

• Influencer Partnerships : Collaborate with influencers or brand ambassadors who align with your brand values and resonate with your target audience. Influencers can help amplify your brand message, create authentic content, and engage their followers on social media platforms.
• Industry Alliances : Form alliances with other companies or organizations within your industry to share resources, knowledge, and best practices. Industry alliances can foster innovation, drive industry standards, and strengthen your brand's positioning as a thought leader and innovator.
• Cause Marketing Initiatives : Align your brand with social or environmental causes that resonate with your target audience's values. By supporting meaningful causes and giving back to the community, you can enhance your brand reputation, build customer loyalty, and differentiate your brand from competitors.

Continuous Brand Monitoring and Analysis

Continuous monitoring and analysis of brand performance are essential for identifying opportunities and threats to your brand equity. By staying vigilant and proactive, you can detect emerging trends, monitor competitor actions, and assess the effectiveness of your brand-building efforts.

• Brand Tracking Surveys : Conduct regular brand tracking surveys to measure brand awareness, perception, and loyalty among your target audience. Track changes in key brand metrics over time and compare your brand's performance against competitors.
• Social Media Listening : Monitor social media channels, review sites, and online forums to gauge consumer sentiment, identify emerging trends, and respond to customer feedback in real time. Social media listening tools can help automate data collection and analysis for more efficient monitoring.
• Competitive Analysis : Analyze competitor strategies, messaging, and market positioning to identify strengths, weaknesses, and opportunities for your brand. Stay informed about industry trends, new product launches, and competitive threats to adjust your brand strategy accordingly.
• Data Analytics : Utilize data analytics tools and platforms to gather insights from customer interactions, website traffic, and sales data. Analyze customer behavior, preferences , and purchase patterns to inform marketing decisions, personalize customer experiences, and optimize brand performance.

By embracing innovation, exploring brand extension opportunities, forging strategic partnerships, and adopting a proactive approach to brand monitoring and analysis, you can enhance your brand equity and position your brand for long-term success in the marketplace.

Examples of Successful Brand Equity Management

Examining case studies and real-world examples of brands that have effectively managed their brand equity can provide valuable insights and inspiration for your own brand-building efforts.

Apple Inc. is a multinational technology company known for its innovative products, including the iPhone, iPad, Mac computers, and Apple Watch. The company's brand equity is built on a foundation of innovation, design excellence, and a loyal customer base.

Brand Strategy:  Apple's brand strategy revolves around simplicity, elegance, and user-centric design. The company focuses on creating products that seamlessly integrate hardware, software, and services to deliver intuitive and delightful user experiences.

Key Success Factors:

• Product Innovation : Apple continuously pushes the boundaries of technology innovation with groundbreaking product releases and iterative improvements. The company's commitment to innovation ensures that its products remain at the forefront of consumer demand.
• Design Aesthetics : Apple's minimalist design aesthetic and attention to detail set its products apart in the marketplace. From sleek hardware designs to intuitive user interfaces, Apple prioritizes form and function to create products that are both visually appealing and easy to use.
• Brand Experience : Apple emphasizes the importance of the overall brand experience, from the moment customers interact with its products in-store to the seamless integration across devices and services. The company's retail stores serve as experiential hubs that showcase its products and provide personalized customer support.

Impact:  Apple's strong brand equity has translated into market leadership, premium pricing power, and unwavering customer loyalty. The company consistently ranks among the world's most valuable brands and continues to innovate and expand its product ecosystem to maintain its competitive edge.

The Coca-Cola Company is a global beverage company renowned for its iconic soft drink brand, Coca-Cola. With a history spanning over a century, Coca-Cola has established itself as one of the most recognizable and beloved brands worldwide.

Brand Strategy:  Coca-Cola's brand strategy centers on delivering moments of happiness and refreshment to consumers through its products and marketing campaigns. The company emphasizes universal values such as optimism, joy, and togetherness to connect with consumers across cultures and generations.

• Emotional Branding : Coca-Cola's marketing campaigns evoke emotions and nostalgia, fostering strong emotional connections with consumers. The brand's iconic advertising, such as the "Share a Coke" campaign and holiday-themed commercials, resonate with consumers personally.
• Brand Consistency : Coca-Cola maintains consistent branding across its product portfolio and marketing initiatives, reinforcing its brand identity and messaging. The company's distinct red and white color scheme, timeless logo, and signature contour bottle are instantly recognizable symbols of the brand.
• Global Reach : Coca-Cola's extensive global distribution network and localized marketing efforts enable the brand to reach consumers in diverse markets worldwide. Coca-Cola maintains relevance and resonance across cultures by adapting its messaging and products to local preferences and customs.

Impact:  Coca-Cola's brand equity extends beyond its core product to encompass a lifestyle and cultural phenomenon. The brand's ubiquitous presence, emotional resonance, and commitment to social responsibility have solidified its position as a global leader in the beverage industry.

Nike is a multinational corporation specializing in athletic footwear, apparel, equipment, and accessories. The brand is synonymous with sports performance, innovation, and inspiration, with a diverse product portfolio catering to athletes and fitness enthusiasts worldwide.

Brand Strategy:  Nike's brand strategy revolves around empowering athletes and inspiring individuals to reach their full potential. The company leverages the power of storytelling, celebrity endorsements, and innovative product design to connect with consumers and foster brand loyalty.

• Athlete Endorsements : Nike collaborates with elite athletes and sports personalities to endorse its products and embody the brand's values of determination, excellence, and perseverance. Celebrity endorsements, such as the partnership with basketball legend Michael Jordan, elevate Nike's brand image and resonate with consumers.
• Innovative Products : Nike invests heavily in research and development to develop cutting-edge technologies and materials that enhance athletic performance and comfort. Iconic product innovations like the Air Max cushioning system and Flyknit technology demonstrate Nike's commitment to innovation and excellence.
• Brand Purpose : Nike's brand purpose goes beyond selling products to inspire and empower individuals to pursue their passions and dreams. The company's marketing campaigns, such as "Just Do It," encourage consumers to push beyond their limits and embrace their inner athletes.

Impact:  Nike's brand equity is built on a foundation of performance, innovation, and inspiration. The brand's strong emotional connection with consumers, coupled with its relentless pursuit of excellence, has propelled Nike to the forefront of the athletic footwear and apparel industry, commanding premium pricing and brand loyalty.

Challenges and Risks in Managing Brand Equity

Managing brand equity comes with its own set of challenges and risks that businesses need to navigate effectively to maintain and enhance their brand's value and relevance in the marketplace.

• Brand Dilution : Expanding into new product categories or markets without proper alignment with the brand's core values and positioning can dilute the brand's identity and erode brand equity.
• Negative Publicity and Crisis Management : Public relations crises, negative media coverage, or social media backlash can damage a brand's reputation and erode consumer trust, leading to long-term consequences for brand equity.
• Competitor Actions and Market Dynamics : Intense competition, disruptive market forces, and shifting consumer trends can pose challenges to brand differentiation and market leadership, requiring businesses to adapt and innovate proactively.
• Consumer Perception and Shifts in Preferences : Changes in consumer preferences, values, and behaviors can impact brand perception and relevance, necessitating continuous monitoring and adjustment of brand strategies to stay aligned with evolving consumer needs.
• Lack of Brand Consistency : Inconsistent branding across different touchpoints and channels can confuse consumers and weaken brand identity, undermining efforts to build and reinforce brand equity.

Strategies for Employer-Employee Collaboration in Brand Equity Management

Effective collaboration between employers and employees is essential for fostering a brand-centric culture and maximizing brand equity. By aligning employee engagement with brand values and objectives, businesses can leverage their internal resources to strengthen brand equity.

• Internal Branding Initiatives : Educate and empower employees to become brand ambassadors by instilling a deep understanding of the brand's values, mission, and promise. Internal branding initiatives, such as brand workshops, training sessions, and employee handbooks, can help align employee behaviors and actions with brand principles.
• Employee Training and Engagement : Invest in employee training programs emphasizing the importance of delivering exceptional customer experiences and embodying the brand's values in every interaction. Foster a culture of open communication, recognition, and feedback to encourage employee engagement and commitment to the brand.
• Encouraging Brand Advocacy Among Employees : Encourage employees to share their positive experiences and insights about the brand on social media, review platforms, and industry forums. Recognize and reward employees who demonstrate exemplary commitment to upholding the brand's reputation and values.
• Cross-Functional Collaboration : Facilitate collaboration between different departments and teams to ensure alignment and consistency in brand messaging, customer experiences, and product offerings. Encourage cross-functional teams to collaborate on brand-related projects and initiatives to leverage diverse perspectives and expertise.
• Employee Feedback and Input : Solicit feedback and input from employees at all levels of the organization regarding brand strategy, product development, and customer interactions. Actively involve employees in decision-making processes and recognize their contributions to fostering a brand-centric culture.

By fostering a collaborative environment where employees are aligned with the brand's values and objectives, businesses can harness the collective efforts and enthusiasm of their workforce to strengthen brand equity and drive sustainable growth.

Conclusion for Brand Equity

Brand equity is the lifeblood of successful businesses, providing them with a competitive edge in the ever-evolving marketplace. By cultivating strong emotional connections, delivering exceptional customer experiences, and consistently delivering on brand promises, companies can build enduring relationships with consumers that transcend transactions. As we've explored throughout this guide, brand equity is not just a measure of financial worth; it's a reflection of the trust, loyalty, and perception of consumers towards a brand. However, managing brand equity is not without its challenges and risks. From maintaining brand consistency across various touchpoints to navigating crises and market dynamics, businesses must remain vigilant and proactive in protecting and enhancing their brand's value. By embracing innovation, fostering collaboration between employers and employees, and staying attuned to changing consumer preferences, businesses can navigate these challenges and position themselves for long-term success in the competitive landscape. Ultimately, brand equity is more than just a marketing buzzword—it's a strategic asset that fuels growth, inspires loyalty, and shapes the future of businesses around the world.

How to Easily Measure and Improve Brand Equity?

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What is next for consumer-based brand equity in digital brands research itineraries and new challenges.

1. Introduction

2. conceptual framework, 4.1. brand equity research itineraries for digital brands, 4.2. characterization of the theoretical field, 5. discussion and research agenda, 5.1. highlighted trends and challenges, 5.2. brand equity evolution in a digital context and future approaches, 5.3. limitations and practical implications, 6. conclusions, author contributions, institutional review board statement, informed consent statement, data availability statement, conflicts of interest.

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Share and Cite

Enes, Y.d.S.O.; Demo, G.; Porto, R.B.; Zulato, T.S. What Is Next for Consumer-Based Brand Equity in Digital Brands? Research Itineraries and New Challenges. Sustainability 2024 , 16 , 5412. https://doi.org/10.3390/su16135412

Enes YdSO, Demo G, Porto RB, Zulato TS. What Is Next for Consumer-Based Brand Equity in Digital Brands? Research Itineraries and New Challenges. Sustainability . 2024; 16(13):5412. https://doi.org/10.3390/su16135412

Enes, Yuri de Souza Odaguiri, Gisela Demo, Rafael Barreiros Porto, and Thaiyan Sun Zulato. 2024. "What Is Next for Consumer-Based Brand Equity in Digital Brands? Research Itineraries and New Challenges" Sustainability 16, no. 13: 5412. https://doi.org/10.3390/su16135412

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What is brand equity.

In an increasingly competitive marketplace, brands are now more than ever presented with the challenge of capturing and sustaining market share and keeping their customers loyal.

This article will show that one significant way a brand can achieve this is through understanding what is meant by brand equity Brand equity represents the value of a brand. It is the difference between the value of a branded product and the value of that product without that brand name attached to it. , and will highlight the importance of building and managing brand equity in the long-term.

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Table of Contents

Defining Brand Equity

Brand equity is a multi-dimensional and complex concept, but its understanding remains central to a brand fulfilling its competitive potential. Its complexity is demonstrated by a wide range of perceived interpretations and attempted definitions by both academics and professionals.

A popular definition of brand equity is that of renowned marketing theorist and Professor David Aacker, who defines brand equity in his book ‘Managing Brand Equity’ as:

“A set of assets or liabilities in the form of brand visibility, brand associations and customer loyalty that add or subtract from the value of a current or potential product or service driven by the brand.” (Aaker, 1991)

Put simply, brand equity represents the value of a brand . It is the simple difference between the value of a branded product, and the value of that product without that brand name attached to it (Rosenbaum-Elliott, 2015).

Components of Brand Equity: David Aacker’s model

Aacker has derived a simple framework, which features the key components comprising brand equity: brand awareness, brand association, perceived quality, brand loyalty, and other proprietary assets.

Brand Loyalty

Brand loyalty dictates that a consumer who truly believes in the value of a brand’s offerings will often make frequent and repeat purchases from it instead of switching between brands.

High brand loyalty ensures that business is stable and consistent, and enables the organization to capture a larger market share.

Brand Awareness

Brand awareness concerns the extent to which a brand is known or recognizable to a consumer.

A brand with high brand equity will spring to mind when a customer searches for a particular product. This is also termed brand salience; the brand occupies a prominent position in consumers’ minds.

Perceived Quality

This element centers on the brand’s reputation for high-quality products and customer experience.

Good quality is favored more highly than particular product features, with consumers often willing to pay premiums for high-quality products relative to other brands.

Brand Association

Brand association involves anything related to the brand, which evokes positive or negative sentiments, for example, a product’s functional, social or emotional benefits.

More broadly, this relates to the brand’s overall image, and what consumers associate with that image – if consumers associate predominantly positive attributes with the brand, then the brand possesses high brand equity.

Other Proprietary Assets

Proprietary assets include patents, trademarks, and channel or trading partner relationships.

These assets are vital to ensuring that other brands cannot compete by operating under a similar name or using very similar packaging, which may confuse consumers and compete away from a brand’s customer base.

Keller’s Customer-Based Brand Equity Model

Keller, a leading branding author and professor, has comprised a CBBE brand equity model, whereby brand equity addresses four key questions, which relate directly to how a consumer perceives a brand and their requisite attitudes towards it.

Brand Identity: Who are you?

Building strong brand equity requires formulating your brand in a way that causes it to be prominent in the minds of consumers; it’s all about enhancing your brand’s identity and salience.

Brand Meaning: What are you?

How you communicate what your brand stands for will significantly impact your brand equity. It is essential to deliver on both performance (how well your product meets the needs of customers) and imagery (meeting the psychological needs of your customers through developing your brand’s personality and overall image).

Brand Response: What about you?

This concerns how consumers respond to your brand, based on their emotions and perceptions. Brand response is predominantly based upon the brand’s perceived quality and credibility. Therefore, managers should establish a superior level of expertise within their requisite field, communicate clear sets of values, and better fulfill the consumer’s needs relative to competitor brands.

Brand Relationships: What about you and me?

Brand equity can be built by strengthening the connection, or resonance, established between your brand and your customer, evidenced through factors such as repeat purchase or active engagement on social media (both with the brand and those within the brand’s community).

How to Build Brand Equity?

Building strong brand equity is the foundation for an organization’s long-term success. Marketers can reinforce brand equity by actively investing in the components of brand equity.

Some ways you can do this include:

1. Building Brand Awareness

This can be done by creating positive, strong, and unique brand attributes which consumers will retain in their minds, for example, by:

• Advertising your brand on different media
• Engaging with various communities on social media
• Creating viral content (videos, campaigns)

2. Positioning your Brand Consistently within the Market

A brand’s overall culture (including its beliefs, values, and USPs) should remain consistent, such that consumers are not left confused or in doubt about what the brand stands for. This is not to say that managers cannot make tactical strategic changes, such as introducing new packaging or rewriting their slogans, if this is necessary to re-align with changing consumer needs, or external economic and social factors. Here are some examples:

• A conscious, consistent conveyance of the brand’s core values and meaning
• Relaying to consumers what your products represent, and the core benefits they supply
• Clarifying what your brand is and is not, as compared to the competition

3. Emphasizing Positive Brand Associations

Strong brand associations are crucial to building loyalty towards your brand. Ways of enhancing the way consumers view your brand might include:

• Using innovative and eye-catching means of advertising, highlighting the core functional, social, or emotional benefits of your product
• Ensuring that the business behind the brand is socially responsible and establishes ethical business practices
• Celebrity endorsement

4. Focusing on Building Relationships

It is mainly consumers who determine the strength of your brand’s equity; it is, therefore, essential to build and maintain positive relationships with your target segments. Managers can do this in simple ways such as:

• Staying in touch with customers via social media
• Providing excellent customer service at all times
• Tracking any negative press or feedback, listening and responding

Measuring Brand Equity

Perhaps the most challenging aspect of brand equity is how to calculate it, for there is no unique or consistent metric that brands can use to measure consumers’ subjective emotions and responses.

However, it remains an essential function since losing sight of the strength of your brand equity can impact your bottom line and your ability to compete.

Quantitative measurements

This involves measuring brand equity by looking at financial metrics, which reflect the requisite strength of the brand. Such metrics include:

• Profit margins
• Price sensitivity – known in economics as price elasticity, and concerns the extent to which consumer demand will react to changes in price
• Profitability
• Growth rate
• Market share percentage
• Purchasing frequency

Qualitative Measurements

These measurements cannot measure brand equity as such, but are an essential means of insight. Qualitative methods might include:

• Monitoring social media reactions towards your brand to assess the level of ‘buzz’ your brand creates
• Conducting surveys or focus groups to evaluate consumers’ emotions and feelings towards your brand, indicative of the value of your brand to consumers
• Conducting focus groups to assess consumers’ knowledge of various brands within a market, their favorite brands, and evaluate the relative prominence of your brand within this mix

The Importance of Managing Brand Equity

Managing brand equity over time is essential in achieving several competitive benefits, which will drive profitable growth.

Higher price points

Brands with strong brand equity are in a position to charge premiums, which are not attributable merely to product-related benefits but are attributed to the value and strength of attaching the brand name to that product.

Such products will also enjoy a low price elasticity, meaning that consumers will be less inclined to switch to even those competitors with lower prices.

Product line extensions

Brands with high brand equity are exposed to significantly less risk when introducing line extensions or extending their brand name to new products since the brand name alone carries a value.

If a high brand equity organization such as Apple were to introduce a new line of products, many consumers would likely not hesitate to purchase them. This is due to the positive associations which the Apple brand triggers, and therefore the brand loyalty it inspires.

Increased market share

Brand equity is said to enhance a customer’s ability to interpret and process information. It improves confidence in the purchase decision (Aacker, 1991).

Therefore, an organization with high brand equity can capture and retain a large portion of the requisite market share by acquiring a loyal customer base and better-withstand promotional pressures from competitors.

Brand resilience

Brands need to take a forward-looking approach, recognizing that the added value created by a brand name can act as a security against uncertain market conditions, ever-more-complex consumer demands, shifting behavioral trends, and increasing numbers of competitor market entrants.

Asset for the relationship with other stakeholders

Brands with strong brand equity are often better able to attract talent. Such brands may also be better positioned to gain investors’ trust, who will have greater confidence in yielding returns on their investments.

The same goes for suppliers, who can be more certain of consistent business when entering into contracts.

Brand Equity Examples

Negative brand equity: volkswagen.

Failing to adequately manage your brand equity can have negative consequences. The brand name attached to the product harms the business, and the company would be better off producing without their original brand name.

A key example is the Volkswagen emissions scandal of 2015 , where it was revealed that the brand had been falsifying their emissions figures using technology, which could cheat on emissions tests. Volkswagen’s brand equity was left subsequently damaged.

The relative perceived quality of Volkswagen contributed highly to this, with consumers undoubtedly feeling as though other mid-market car brands could provide greater overall quality only by fitting their cars with reliable and fully functioning emissions technologies.

Crucially, its brand associations deteriorated since the public could no longer associate the brand with positive feelings of trustworthiness or reliability.

Financial value : using a market share metric, we can see a decline in brand equity given that following the scandal, Volkswagen lost nearly a quarter of its market value (23%) , a reduction of approximately $17.6 billion.

Positive Brand Equity: Nike

Positive brand equity is demonstrated effectively by the apparel brand Nike.

Nike has successfully built up strong brand awareness using various sponsorships and advertisements at major sporting events, using bright orange shoe boxes, and creating innovative, customer experience-focused stores. Its highly recognizable slogan, “Just Do It”, paired with its infamous ‘swoosh’ logo means that many Nike campaigns do not need to mention the brand name, because brand awareness is already so strong.

When consumers think of Nike, a majority of them are confronted by positive brand associations of innovation, motivation, and determination. These positive associations are created predominantly through their inspiring advertising campaigns and collaborations with influential athletes, such as LeBron James or Michael Jordan, which encourages consumers to believe that Nike is just as expert in the retail field as their representatives are in theirs.

These celebrity endorsements also contribute significantly to the brand’s perceived quality ; if Nike is good enough for famed athletes, then it is good enough for us.

This in turn enhances brand loyalty. Consumers feel confident that Nike will deliver consistently high-quality products and customer service. The customer relationship is further enhanced through investment in the customer journey, with collaborative features such as the Nike Run Club, allowing consumers to track their fitness goals and receive top quality coaching, or the ability to personalize sneakers with Nike By You.

Financial value : These branding features add significant extra value to Nike products, making Nike the world’s most valuable apparel brand. In 2020 Nike’s brand value was $39.1 billion, which almost matched its brand revenue of $39.3 billion .

Adidas, its top competitor, comparatively faced a 1% decrease in brand value in 2020 , at just $16.5 billion.

Brand equity represents the value of a brand, and comprises a consumer’s awareness of a brand, the associations they make with the brand, the way they perceive the quality of its products, and the extent to which consumers show loyalty towards it.

Brand equity forms a significant component of marketing strategies, given its significant impact on a brand’s ability to sustain competitive advantage in the long term.

Brands must consistently monitor their brand equity using quantitative or qualitative measures so that their brand strategy can be tailored to strengthen brand equity in line with fluctuating economic trends

• Aacker, DA. (1991). Managing Brand Equity. Simon and Schuster.
• Elliott, R., Percy, L., & Pervan, S. (2011). Strategic brand management. Oxford: Oxford University Press.
• Keller, KL. (1997). Strategic Brand Management. Prentice Hall.

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The Effect of Brand Equity on Customer Satisfaction: A Case Study of Dashen Breweries S.C

2019, St. Mary's University

Customer satisfaction is important to long term business success to protect/gain market shares, organizations need to overtake competitors by offering high quality product or service to ensure satisfaction of customers. Through satisfying customers, organizations could improve profitability by expanding their business and gaining a higher market share as well as repeat and referral business. There is a strong and positive relationship between customer satisfaction and loyalty. A satisfied customer is six times more likely to repurchase a product and share his experience with five or six other people. The general objective of the study was to examine the effect of brand equity on customer satisfaction: a case study of Dashen breweries S.C. In order to get a comprehensive data 340 customers are included in the study. The study used both primary and secondary data that were collected through a semi-structured questionnaire. Out of the 390 questionnaires that were distributed 340 questionnaires were filled and returned successfully. This represents a response rate of 87.1 percent. Data was analyzed using descriptive and inferential statistics. The study found that brand association, brand loyalty has positive and strong effect on customer satisfaction. Brand awareness and perceived quality have low significant effect. Based on these findings, the study recommends that Dashen is advised to work on customer brand awareness since it have a big impact on the customer satisfaction by making the brand easily and quickly recalled by the customer, to give good attention on improving the customers brand association of Dashen by improving the aspect of the brand image when compared to other competing brands, by making their logo easily to recall.

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Brand Equity Explained: How to Maximize Your Business's Most Valuable Asset

In this comprehensive guide, we dive into the world of brand equity, its importance for businesses, and how to maximize its potential for your company's growth. Learn how to build, manage, and protect your brand equity through proven strategies, and explore the role of technology in brand equity management.

Brand Equity at a Glance

Brand equity refers to the perceived value a company gains from its brand name, which influences customers' purchasing decisions and loyalty. It comprises factors such as brand awareness, brand associations, perceived quality, and brand loyalty. A strong brand equity can lead to increased customer retention, higher profit margins, and greater marketing efficiency. To build and maintain brand equity, businesses should focus on creating consistent, high-quality experiences, fostering positive brand associations, and engaging with their target audience through multiple channels.

Brand Equity Explained:

• Introduction
• What is Brand Equity?
• The Benefits of Strong Brand Equity
• Factors Influencing Brand Equity
• Measuring Brand Equity
• Building Brand Equity: Strategies and Best Practices
• Managing and Protecting Brand Equity
• The Role of Technology in Brand Equity Management
• Case Study: Driving Business Value With Brand Equity

Before we continue, consider using our free Chat GPT-powered business case generator to see how measuring brand equity can drive success within your own organization...you might be surprised with the findings.

1. Introduction

Brand equity is a powerful force that can make or break a business. "When a company has positive brand equity, customers willingly pay a high price for its products," says Adam Hayes of Investopedia. It's a key determinant of a company's success, driving customer loyalty, purchase decisions, and long-term value. But what is brand equity, and how can you maximize its potential for your business's growth? In this article, we'll explore the ins and outs of brand equity, discuss its importance, and share strategies for building and managing this essential asset. By the end of this guide, you'll have a comprehensive understanding of brand equity and how to leverage it for your business's success.

2. What is Brand Equity? Introduction

At its core, brand equity is the value a brand adds to a product or service beyond its functional benefits. It's the sum of consumers' perceptions, experiences, and associations with a brand, which ultimately influences their behavior and loyalty. Per Marketing Evolution, 80% of consumers refuse to do business with a brand they don't trust . Brand equity comprises four primary components: brand awareness , brand associations, perceived quality, and brand loyalty.

Definition of Brand Equity

Brand equity is the added value a brand provides to a product or service in the eyes of the consumers. This value is based on the consumer's perception of the brand, shaped by their experiences and associations with it. A strong brand equity can lead to higher prices, customer loyalty, and overall business success.

Components of Brand Equity

Brand awareness : The extent to which consumers are familiar with a brand and can recall or recognize it. High brand awareness is crucial, as it's the first step in establishing a relationship with potential customers.

Brand associations : The mental connections and associations consumers make with a brand. These can be shaped by factors such as advertising, product packaging, and customer experiences. Positive associations can enhance brand equity, while negative associations can harm it.

Perceived quality : Consumers' overall perception of a brand's quality, based on their experiences and the brand's reputation. A high perceived quality can lead to higher prices and customer loyalty.

Brand loyalty : The likelihood that a customer will choose a brand over its competitors, based on their positive experiences and emotional connection to the brand. Loyal customers are more likely to repeat purchases and recommend the brand to others.

How Brand Equity Impacts Business Value and Growth

Strong brand equity can have a significant impact on a business's overall value and growth. When a company has a positive brand equity, it can enjoy benefits such as:

Increased customer loyalty: Customers are more likely to stick with a brand they perceive as valuable, leading to higher retention rates and long-term profitability.

Higher prices: Consumers are often willing to pay a premium for products or services from a brand they trust and perceive as high quality.

Easier market entry: A strong brand equity can make it easier for a company to introduce new products or enter new markets, as consumers are more likely to trust and try offerings from a well-known brand.

Competitive advantage: A robust brand equity can set a company apart from its competitors and help it gain market share.

Improved company reputation: A positive brand equity can enhance a company's overall reputation, making it more attractive to potential customers, employees, and investors.

3. The Benefits of Strong Brand Equity

A strong brand equity comes with numerous advantages that can propel a business to new heights. By understanding and leveraging these benefits, companies can create a competitive edge and enjoy long-term success.

Higher customer loyalty and retention . One of the most significant benefits of strong brand equity is increased customer loyalty. When consumers have a strong emotional connection to a brand, they are more likely to remain loyal, leading to higher retention rates. This loyalty can translate into a steady stream of revenue and increased profitability for the business.

• Increased customer lifetime value . Customer lifetime value (CLV) represents the total revenue a company can expect from a single customer throughout their relationship. Strong brand equity can lead to higher CLV, as loyal customers are more likely to make repeat purchases and recommend the brand to others. This, in turn, can boost a company's bottom line and long-term growth prospects.
• Greater pricing power and profitability . A well-established brand equity allows companies to charge a premium for their products or services, as consumers are often willing to pay more for a brand they perceive as high-quality and trustworthy. This pricing power can lead to increased profitability and financial stability for the business.
• Competitive advantage and market share growth . A strong brand equity can provide a company with a significant competitive advantage in its industry. Consumers are more likely to choose a well-known and respected brand over its competitors, leading to increased market share and overall business growth.
• Enhanced company reputation . Positive brand equity can bolster a company's overall reputation, making it more appealing to potential customers, employees, and investors. This improved reputation can lead to increased business opportunities, attracting top talent, and securing valuable partnerships.

Clearly, the benefits of building brand equity are immense as a part of a broader brand measurement strategy. Let’s next look at the things that impact brand equity.

4. Factors Influencing Brand Equity

Building and maintaining strong brand equity requires a strategic approach that considers various factors. By understanding these elements, companies can implement targeted strategies to strengthen their brand equity and reap the associated benefits.

• Consistent and compelling brand identity . A strong and consistent brand identity is crucial for establishing and maintaining brand equity. This identity includes visual elements such as logos and color schemes, as well as the brand's messaging and positioning in the market. By developing a compelling and cohesive brand identity, companies can create a memorable impression on consumers and foster positive brand associations.
• Quality of products or services . The quality of a company's products or services plays a significant role in shaping brand equity. High-quality offerings can lead to positive consumer experiences, enhancing perceived quality and brand loyalty. Conversely, poor-quality products or services can damage brand equity and deter potential customers.
• Customer experiences and satisfaction . Positive customer experiences can significantly impact brand equity. When consumers have enjoyable interactions with a brand, they are more likely to develop a strong emotional connection and become loyal customers. Companies can enhance customer satisfaction by providing excellent customer service, addressing concerns promptly, and exceeding customer expectations.
• Effective marketing and communication efforts . Marketing and communication efforts play a crucial role in building and maintaining brand equity. Through targeted campaigns, companies can raise brand awareness, shape brand associations, and reinforce their brand positioning. Successful marketing efforts can also help businesses connect with their target audience and foster loyalty.
• Corporate social responsibility and ethical practices . Today's consumers are increasingly concerned about the social and environmental impact of the brands they support. By engaging in corporate social responsibility (CSR) initiatives and adhering to ethical practices, companies can enhance their brand equity and appeal to a broader audience. Demonstrating a commitment to social and environmental issues can also help businesses stand out from competitors and gain a competitive edge.

Great, now we know what brand equity is, why it’s important and how to impact it. Next, let’s focus on how to measure brand equity.

5. Measuring Brand Equity

To manage and optimize brand equity, it's essential to measure its various components. A combination of quantitative and qualitative brand metrics can provide businesses with a comprehensive understanding of their brand's value and performance.

Quantitative metrics can help businesses assess the financial impact of their brand equity. Key indicators include revenue, profit margins, and market share. By monitoring these financial metrics, companies can gauge the effectiveness of their brand equity strategies and identify areas for improvement.

Qualitative measures offer insights into the more intangible aspects of brand equity, such as consumer perceptions and attitudes. Important qualitative metrics include brand awareness, brand associations, perceived quality, and brand loyalty. These metrics can be gathered through surveys, focus groups, and other research methods.

Various tools and methodologies are available to help businesses measure and analyze their brand equity. These can include brand valuation models, brand tracking studies , brand lift experiments , and brand health research . By utilizing these tools, companies can obtain actionable insights into their brand's performance and develop targeted strategies to strengthen their brand equity.

6. Building Brand Equity: Strategies and Best Practices

Developing strong brand equity requires a strategic and consistent approach. The following strategies and best practices can help businesses create a powerful brand presence and drive long-term growth.

• Developing a strong brand positioning and messaging . Effective brand positioning and messaging are crucial for establishing a unique and memorable brand identity. Companies should clearly articulate their value proposition, target audience, and competitive advantage to create a compelling brand narrative that resonates with consumers.
• Ensuring product and service quality. High-quality products and services are essential for building and maintaining strong brand equity. By focusing on continuous improvement and innovation, businesses can enhance their offerings and strengthen consumer perceptions of quality.
• Creating memorable customer experiences . Delivering exceptional customer experiences can foster loyalty and encourage positive word-of-mouth marketing. Companies should invest in customer service training, user-friendly digital platforms, and personalized interactions to create memorable experiences that keep consumers coming back.
• Leveraging integrated marketing communications . Integrated marketing communications (IMC) can help businesses create a cohesive and consistent brand presence across all channels. By coordinating messaging and visual elements, companies can reinforce their brand identity and ensure a seamless experience for consumers.
• Fostering brand advocacy and loyalty . Encouraging brand advocacy and loyalty can help businesses maximize their customer lifetime value and drive long-term growth. Strategies for building loyalty include creating loyalty programs, offering exclusive benefits to repeat customers, and engaging with consumers on social media.

7. Managing and Protecting Brand Equity

Once strong brand equity is established, it's essential to manage and protect it proactively. The following strategies can help businesses maintain their brand value and safeguard against potential threats.

• Regularly monitoring brand equity metrics . By regularly monitoring brand equity metrics, businesses can identify potential issues and address them promptly. This proactive approach can help companies protect their brand value and maintain a positive reputation in the market.
• Identifying and addressing potential threats to brand equity . Potential threats to brand equity can include negative publicity, poor customer experiences, or competitive pressures. Companies should have a crisis management plan in place to address such threats and minimize any potential damage to their brand equity.
• Implementing brand equity management processes . Implementing formal brand equity management processes can help businesses maintain a strong and consistent brand presence. These processes may include regular brand audits, brand strategy reviews, and employee training programs.
• Nurturing long-term relationships with customers and stakeholders . Building and maintaining strong relationships with customers and stakeholders can help businesses protect their brand equity. By fostering trust and loyalty, companies can create a supportive brand community that promotes long-term success.

8. The Role of Technology in Brand Equity Management

Technology plays a crucial role in building and managing brand equity in today's digital landscape. By leveraging innovative tools and platforms, businesses can enhance their brand presence and stay ahead of the competition.

Digital platforms such as websites, mobile apps, and e-commerce portals offer opportunities for businesses to create a consistent and engaging brand experience. By ensuring these platforms are user-friendly, visually appealing, and aligned with the overall brand identity, companies can strengthen their brand equity and drive customer loyalty.

Social media platforms provide an opportunity for businesses to interact with their audience, showcase their offerings, and build brand awareness. By utilizing social media effectively, companies can create a strong brand presence and foster positive associations with their brand. Additionally, online reputation management tools can help businesses monitor and respond to customer feedback, ensuring a positive brand image is maintained.

Data analytics tools can help businesses gain valuable insights into customer preferences, behavior, and sentiment. By analyzing this data, companies can make informed decisions about their brand strategy and optimize their marketing efforts for maximum impact.

9. Case Study: Driving Business Value Through Brand Equity

An online leader in higher education for health sciences professionals was facing increased pressure to hit enrollment goals given increased competition and declining numbers of high school graduates. The university was looking to understand how brand perceptions impacted its enrollment pipeline across its network campuses in multiple states to help determine how much of its marketing budget to allocate to brand-related strategies.

The university employed Brandata to study and help strengthen its brand equity to achieve significant enrollment growth. Brandata first developed and launched a brand tracking program with location-based quotas to create a detailed brand metric profile for each campus.

Next, Brandata compared brand metrics for each campus to its enrollment pipeline numbers using regression analysis and machine-learned modeling. The resulting analysis uncovered a relationship between brand positive, brand frequency and enrollment growth.

With these powerful insights in hand, the university’s media and creative agencies were able to make adjustments to the media plan and creative assets in order to impact brand sentiment, frequency and ultimately an increase in enrollment numbers.

This case study highlights the importance of a proactive and strategic approach to brand equity management. Businesses should regularly assess their brand performance, identify areas for improvement, and invest in initiatives that will strengthen their brand equity. By doing so, brands can enhance their business value and achieve long-term success.

10. Brand Equity, in Conclusion

Brand equity is a critical factor in determining a business's value and long-term success. By building strong brand equity, companies can enjoy numerous benefits, including higher customer loyalty, increased profitability, and a competitive edge in the market.

Investing in brand equity management is essential for businesses seeking to maximize their value and growth potential. By implementing the strategies and best practices discussed in this article, businesses can create a powerful brand presence that drives long-term success.

(Editor's note: this article was created and edited by the author using ChatGPT-4).

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Brand Equity: What it is, Why it’s Important, How to Measure and Improve it, and Examples

Discover your brand's unique character. Reveal the truth with our free quiz!

What makes customers want to pay more for one brand over another? What prompts people to buy every product launched by Apple even when they don’t need it?

That’s the power of brand equity at work.

What is brand equity?

Brand equity is the value premium a brand achieves based on how consumers perceive and value the company. A company with a well-known brand name and strong brand equity can command higher prices for its products and services even if competitors offer cheaper ones.

Brand equity can make or break your brand.

Brand equity is heavily influenced by marketing psychology and a company’s reputation for service and product quality. If you want to build a successful business, brand equity must be a part of your branding strategy .

Over the past fifteen years, our team has built successful businesses in traditional and innovative industries. We’ve also helped thousands of entrepreneurs and small business owners develop successful businesses with strong loyalty and brand recognition. We frequently mentor entrepreneurs and business owners on increasing loyalty and growing their brand equity. This guide shares the actionable insights, tips, best practices, and expertise we’ve developed after helping over one hundred thousand brands worldwide.

The five elements of brand equity

The five core components of brand equity are:

Brand recognition

The most critical question in brand recognition is whether a person recognizes a brand when seeing a company’s branding . For example, what comes to mind when you see a “swoosh”? Did you think of Nike ? If you did, that’s brand recognition.

Your visual identity will strengthen brand recognition if consistent and executed well.

Brand recognition will be difficult if you’re starting a new business because people won’t know anything about your business. That’s why a strong brand identity is so vital to new companies. A strong identity helps to build brand recognition.

Brand perception

Brand perception isn’t what your company says it does – it’s what customers perceive you do.

Most brands have recognizable features that identify a product as belonging to a particular brand. For example, many people could easily recognize products created by Apple even if those products didn’t have an Apple logo . Apple’s brand perception is so strong that other companies often try to design products to reflect the highest standards for design to make consumers think Apple created those products.

Brand perception also includes brand awareness – your unique selling proposition. Brand awareness is about knowledge, values, and beliefs. What do consumers think of your brand? What do they say your brand is about? Netflix, for example, has a “reputation for competence,” according to a 2021 study by Pulsar .

Brand image

Brand image is a feeling, so the most crucial question is how your brand makes people feel. For example, Disney has spent a lot of money telling people that the happiest place on earth is Disneyland. And not surprisingly, Disneyland has a strong brand image among families with younger children.

If your brand image is weak or tarnished, consider a rebrand . Even successful brands rebrand periodically to align their brand image with their vision.

Brand value

Do consumers think your product or service is worth the price they pay? Would customers spend more money on your products or services than on cheaper alternatives?

According to BrandFinance , Apple is the world’s most valuable brand in 2022. Apple makes terrific, high-priced products and has a very loyal customer base. No wonder people line up for the latest Apple gadget, no matter how ridiculously high the price tag!

Why is brand equity important?

Brand equity directly impacts your company’s sales, profits, and growth. And it affects your return on investment (ROI) across your marketing campaigns.

Strong brand equity helps small businesses and startups to do the following:

Mark-up and charge a premium price

Customers who trust your brand are willing to pay more. They will not think twice about spending top dollar on your products and services because they associate your brand with quality.

More successful product launches

People are drawn to and will seek to replicate positive experiences. This is why we all have “favorites” – a favorite snack brand, a favorite shirt, etc.

And when customers associate your brand with positivity, they become more open to trying and buying new products or services because they expect to get that same level of quality and experience they received previously.

Reduced ad spend

When customers have a positive experience with a brand, they usually don’t need prodding or convincing to return and repurchase. Your brand equity will do the heavy lifting for you.

Bigger profit margins

You can achieve higher profit margins by charging more for your products and services while spending less on marketing.

Increased order value per customer

Positive brand equity inspires brand loyalty. Customers are more inclined to try your company’s other products and services. This makes up-selling and cross-selling easier. And, as your customers buy more products and services, your customer lifetime value will increase.

Better customer retention

Customers who believe in the value of a brand will keep coming back. They’ll do so because of convenience, familiarity, and, more importantly, loyalty.

Loyal customers will have your brand on “top of their mind” and the first option when it’s time to repurchase.

Brand ambassadors

Never underestimate the power of a referral. Positive brand equity mobilizes your customers to become ambassadors for your brand. They will voluntarily recommend your brand to others because they want to share positive experiences with their friends and family.

How can your business improve brand equity?

Brand equity is an essential element in a company’s branding strategy. Companies must nurture a genuine rapport and develop trust with their target audience to build valuable brand equity.

Here are four actionable strategies for building your brand equity:

1. Create greater and more consistent brand awareness

You must ensure that your customers and prospects recognize your brand among competitors. Here are a few good ways to do this:

• Choose and use a unique company logo to represent your brand.
• Adopt the right brand architecture model for your related sub-brands, products, or services.
• Create a brand style guide to ensure that your brand looks consistent on your business website , social media, and print.
• Show and tell the real story behind your brand .
• Identify and communicate your brand’s unique value proposition (also called unique selling proposition).
• Consistent and timely communication with your customers and prospects via email, newsletters, social media, and other channels.

2. Communicate what your brand stands for

Think about how your product and service address the needs of your customers. And then focus your messaging to emphasize how you help customers.

Take inspiration from others on how to position your brand . For example, years ago, Apple’s “Think Different” tagline conveyed a position of simplicity, innovation, and creativity.

Don’t hide that your brand is committed to social and environmental causes. Today, consumers, especially younger consumers, favor companies that genuinely support ecological or social causes.

3. Nurture and maintain positive customer experiences

When customers feel safe and comfortable with your brand, they’re likelier to become loyal customers and tell others about your company.

This is called the “halo effect.” The halo effect correlates to brand strength and loyalty and contributes to brand equity.

The halo effect helps you build a brand and increases your mindshare (a marketing term that describes the amount of brand awareness or popularity surrounding a product, service, or company).

But to feel safe and comfortable, people must trust that your brand is credible and competent.

For example, when people think about Starbucks , they think about comfortable chill-out spots, places to meet friends, and safe locations for a first date. Positive experiences like these create loyal customers.

The halo effect’s opposite is the horn effect. When people have a negative experience, they correlate that negative experience with everything associated with that particular brand.

For example, this happens when an otherwise powerful brand does poorly on social media, managing customer expectations and complaints. Brand loyalty suffers.

If you want to build a brand and have strong brand equity, be proactive and deliberate in helping shape how customers and prospective customers perceive your brand and your products and services.

4. Strengthen customer loyalty

To build a loyal customer base, you must help people develop an emotional and psychological bond with your brand.

This takes time, so be patient. Take measures to make customers feel like they’re part of a community. Create and nurture social groups (online and offline) where your customers can meet and interact. Provide loyalty rewards and recognition to encourage repeat purchases and referrals.

How to measure brand equity

Brand equity is difficult to measure and quantify. But here are several ways you can measure brand equity.

Measure financial value

Think of your “brand” as an asset. The difference between the value of your overall company and your tangible assets is the value of your brand equity.

For example, if you believe your company is worth $5 million but your tangible assets are worth only $1 million, you can assume that your brand equity is worth $4 million.

Companies with a more significant market share tend to have higher brand equity. Similarly, companies with growing revenue see an increase in their brand equity.

The market value of companies like Apple, Coca-Cola, Amazon , Facebook, and others is heavily affected by their brand equity value and not only their tangible assets.

Measure product value

As we pointed out above, a company with a well-known brand name and substantial brand equity can command higher prices for its products and services even if competitors offer cheaper products and services.

You can measure product value by comparing a generic product to your branded product. If customers are more likely to purchase your branded product than a generic product, you can assign the value to brand equity.

Do a brand audit

You can review competitors, comparison sites, social networks, and web analytics data to see how consumers talk about your brand and your competitors. And you can assess whether consumer sentiment about your brand is consistent with your vision and messaging for the brand.

Examples of companies with high brand equity

Apple has a strong and loyal customer base by creating and selling high-quality products based on innovative design.

The Apple brand is synonymous with a modern, reliable, stylish brand. When Apple introduces stylish new products, its zealous and loyal fans wait hours overnight to be the first to pay premium prices to own those products.

Few companies command the type of brand equity Apple has earned over the past four decades.

Coca-Cola is one of the world’s top three food and beverage companies. The brand is so ubiquitous that soda can be called a “coke” in many regions of the southern United States.

Coca-Cola owes much of its success to the consistency of its branding and the brand equity it built over many years in business. And while other brands regularly rebrand their identities, Coca-Cola’s branding has barely changed since it was founded in 1892.

Starbucks is the most famous coffee house in the world. The Starbucks logo in green and white has become so recognizable that Starbucks didn’t even put the company’s name on it. The company operates in almost 80 countries with over 31,000 stores worldwide. Starbucks is successful for three reasons: a strong visual identity, a compelling brand story , and the commitment to put its customers at the heart of its business.

These and other brands demonstrate that establishing positive brand equity can affect the bottom line. With these insights and strategies, you now have the tools to strengthen your company’s brand equity.

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Brand Equity

What is brand equity?

Components of brand equity, why is brand equity important, company examples with positive and negative brand equity, how to measure brand equity, how to build brand equity, build a brand customers love to reinforce brand equity, see how qualtrics strategic brand works, brand equity and how to build it.

20 min read Why are customers willing to pay higher prices for brand-name items over cheaper non-branded goods? Brand equity is the measure of the perceived worth of a brand-name product, and nurturing yours could help increase profit margins. Here’s how you can build brand equity in the eyes of those who matter most.

What really defines brand equity is the additional value that having a recognizable brand name adds to a product offering. So, what is brand equity? It’s that perceived quality that comes from brand awareness and reputation. It is a fierce driver of brand loyalty, and it can even determine the price – so building equity should be a key part of any good business strategy and marketing mix.

Other words that are used to describe brand equity are ‘sway,’ ‘good standing,’ or ‘commercial value’. Brand equity is also often linked to brand recognition , as a customer must be aware of the brand name initially, but it differs because brand equity emphasizes the added value that the brand name provides to the product.

Let’s take a look at an example. Pharmacies have many different varieties of Paracetamol available to buy. Some versions are pharmacy-owned brands, while others hold a recognizable brand name that the brand-owning company created.

Each Paracetamol product may have identical ingredients and produce the same outcome when used. Yet, some branded products may hold a stronger ‘standing’ (brand equity level) in the minds of the consumer. This higher level can be an influencing factor in the customer’s buying decision, meaning companies that own these brand-name products can gain an advantage in sales performance.

The brand-owning Paracetemol company, for example, can further capitalize on brand equity if it raises the purchase price of its product. The cost of production for a brand-name version and a generic non-branded version remains the same.

However, as the customer opts to pay extra for the branding in addition to the base product itself, the brand-owning company increases its profit margin and gains a stronger market share in the pharmaceutical industry.

Free eBook: The ultimate guide to building a world-class brand tracker

Brand equity is created as your customers become increasingly and more personally aware of your brand . They must first know that it exists, then form positive or negative opinions of it through their own interactions, and finally, arrive at a subconscious value they associate with your brand.

In that way, when you create brand equity, you’re adding to your overall brand health.

1. Brand perception

Brand perception is what customers believe a product or service represents, not what the company owning the brand says it does.

“Marketing managers spend 70 hours a week thinking about whatever product they are marketing, but the consumer is spending seven seconds,” says Professor Ravi Dhar of the Yale School of Management.

Those seven seconds in which a customer forms an impression of a brand can be influenced by marketing campaigns, slogans, or desired brand association, but at the end of the day, a consumer’s perception of a brand is something they create themselves.

This can happen during the following sub-stages:

Brand recognition

Brands have recognizable features that identify a product as belonging to a certain brand. An example would be the advertisements of McDonalds, which feature a specific logo , a consistent brand ambassador, and a love-it-or-hate-it catchy jingle.

The visibility of a brand has a large impact on our opinions – when a brand becomes a household name, the perceived value is higher. Consequently, the brand carries higher brand equity.

Brand awareness

Being aware of what the brand stands for (its unique selling point) can provide a level of familiarity and transparency that can impact a customer’s perception of a branded product.

For example, knowing the ins and outs of an iPhone and the Apple product range would provide more certainty and comfort when faced with an iPad over an Android phone. While brand recognition is about features, building brand awareness relies on the customer understanding more about your brand’s products, brand values , and brand image. Brand awareness is deeper than recognition, in other words, and it goes hand in hand with brand association – i.e. ‘I associate this brand with X characteristic’.

2. Positive or negative effects

The way a customer perceives a brand can directly impact their actions towards it. Their reaction will be subjective, and could be based on several factors:

Customer experience:

The positive user experience of a branded product can create a favorable impression of the brand. (You may now understand why Apple has so many Apple stores, where you can handle and use its full branded product line – and why they come preinstalled with easy-to-win games. Angry Birds anyone?)

The brand name is associated with a good supply chain, reputation, and trust level. LEGO Group has topped the list of the most reputable companies in the world repeatedly based on its performance across several reputation markers (products, governance, leadership, financial performance, how innovative they are, and their “citizenship”).

Customer preference:

Would a customer use the branded product themselves? The success of the sale relies on whether this brand represents the customer’s beliefs and values, and could easily feature within their life now.

Preferences could be because of more emotive reasons: UK cereal organization, Kellogg’s, was launched in the 1920s and engaged children with strong brand mascot characters on their packaging. Hence, customers who have grown up with Kellogg’s breakfast cereals will have strong associations with childhood and home.

When consumers react positively to a brand, they may buy the product and recommend the brand on social media, leading to increases in the brand-owning company’s reputation and bottom line. When a brand is perceived negatively, the customer’s reaction may be to boycott products, downplay, or criticize the product to others, which could lead to the opposite effect.

Managing brand equity is a driver of brand loyalty, then; people who make positive brand associations when they think of your company are more likely to become repeat buyers.

3. Resulting positive or negative value

The return from the effects of a positive or negative brand perception falls into two categories: tangible and intangible value.

• Tangible value is a result that can be easily measured and is often physical in nature. An example of positive tangible value is increased revenue due to a greater number of sales. An example of negative tangible value could be a decrease in company stock price value as a result of a loss of confidence in the product’s ability to sell.
• Intangible value is a result that can’t be tracked or replicated easily and isn’t physical in nature. Positive intangible value could be gained with greater brand awareness and goodwill or through word of mouth. Negative intangible value could be the perception of a brand as dangerous or as being in bad taste.

Managing brand equity is a hugely important part of any company’s success because it represents the overall value and reputation of the brand.

Having a positive brand reputation makes it easier for a company to attract new customers and retain existing ones, since customers are more likely to choose a company with a strong brand reputation, and are also more likely to pay a premium for products or services from a well-known and trusted brand. Brand equity can also differentiate your company’s products or services from your competitors. So investing in building and maintaining strong brand equity can help you increase your chances of long-term success – but how do you calculate the ROI of your brand equity efforts?

As with any ROI calculation that looks at a single part of brand-building efforts, it’s tricky to attribute exact growth to exact measures. Ultimately though, the most important thing is to look at industry trends to see the value that a strong brand can create. Branding, and brand value, represent some 20% of the value of the entire S&P 500 , while 77% of consumers are likely to refer to certain items by brand names, rather than product names.

Consistent presentation of a brand, meanwhile, can increase revenue by 33% – meaning that time and money spent on building your brand equity can pay big dividends.

In general, strong brand equity leads to increased customer satisfaction and loyalty, the ability to demand a higher price, and a greater share of voice across every channel and platform, all of which can help drive revenue.

The benefits of developing your brand equity

You can develop greater market share: In some saturated industries, your brand needs to stand out and appeal to customers through your unique selling point or distinct branding. Developing your brand equity will give you a competitive edge in the marketplace. When you can be remembered by a customer at a point of sale, then you have given yourself a greater chance of successfully selling your product.

You can charge a price premium: The price premium – also known as relative price – is the percentage that a product’s selling price exceeds or falls short of a benchmark price (in this case, the market average for a product). When you have better brand equity, you’re able to charge more for the product and increase your price premium percentage over the market average. This can be a good overall metric to measure your product’s financial performance.

You can extend your product line easily: When you have a high level of brand equity, customers will be more likely to continue their business with you and be the first to try any new products and services. You could ask your community of customers for testers at the product development stage, or launch directly into the market for customers to buy.

You have a greater impact as a company: With your increased revenue and market dominance, you may find yourself in a powerful situation. You can use your high brand equity to form new partnerships, look around for better supplier rates, or be considered worthy of a ‘seat at the table’ with other large brands. This could open the door to collaborations, business ventures, or investment opportunities that would otherwise not be available to you.

Some products or services fall in and out of positive or negative brand perception, which then creates corresponding positive or negative actions and value results:

The Coca-Cola Company

The Coca-Cola brand is worth an estimated $271 billion and sells in every country of the world (aside from Cuba and North Korea!).

It is consistently adapting to suit its customers’ lives, with past products offering label personalization for younger audiences, creating Christmas advertising featuring a Santa in a red suit to welcome in the holidays, and past taglines emphasizing positive experiences: “Make it real” (2005), “Open happiness” (2009) and “Taste the feeling” (2016).

Great brand equity means that a company can add to its product range within the brand, safe in the knowledge that customers will trust the brand enough to try the new products. Coke was able to do this through product expansion – and today they own over 20 brands.

WW (formerly Weightwatchers)

A word of caution to those of you that think changing your brand is easy. There have been some examples of companies that have faced backlash and negativity when trying to make a positive change.

In 2008, the dieting company then called Weightwatchers rebranded to try to focus on general wellness and self-care, by dropping the word ‘weight’ from their name and adding the tagline: ‘Wellness that works’.

While WW was reacting to the changing times, a backlash against their changes caused negative customer experiences and took its toll on their share price. To restore their lost brand awareness and recognition, WW soon changed its approach and became ‘Weight Watchers Reimagined’.

There are three core brand equity drivers that you need to track when measuring brand equity: financial, strength, and consumer metrics:

Financial metrics

The C-suite will always want to see a positive balance sheet to confirm that the brand is healthy. You should be able to extrapolate from the data market share, profitability, revenue, price, growth rate, cost to retain customers, cost to acquire new customers , and branding investment. You can use solid financial metrics data to demonstrate how important your brand is to the business and secure higher marketing budgets to continue growing.

Strength metrics

Strong brands are more likely to survive despite change and deliver more brand equity. You’ll need to track awareness and knowledge of the brand, accessibility, customer loyalty , retention , licensing potential, and brand ‘buzz’. Also, monitor social media and survey the public to get a picture of how your brand is known and loved (or not).

Consumer metrics

Companies don’t build brands; customers do. You must track consumer purchasing behavior and sentiment toward your brand. Track and measure brand relevance, emotional connection, value, and brand perception through surveys and social media monitoring. The right text analytics software that can interpret open text comments is particularly useful to gather sentiment and suggestions.

Measuring brand equity is an ongoing challenge. The aim is to make practical changes that fuel positive associations for your customers, measure the change, and then repeat the process.

Brand equity is the value of your brand for your company. It’s based on the idea that a recognized brand that’s firmly established and reputable is more successful than a generic equivalent. It’s also based on customer perception: customers will tend to buy a product they recognize and trust. When a brand is recognized and trusted to the point that the customer recognizes it and feels a deep psychological bond with it, your brand equity is valuable indeed.

So how do you build positive brand equity? What are the practical steps you can take to garner high brand equity and that greater sense of perceived quality?

Here are four brand management tactics that can help shape your ongoing brand equity model:

1. Build greater brand awareness

You need to make sure your customers recognize your brand identity when they’re looking for goods or services, and that they perceive it in the way you intend. There are several ways you can do this:

• Using the same logo or image to ensure your branding is consistent
• Great customer service
• A heart-warming story behind the brand
• Keeping the brand in front of your market
• Providing ongoing value
• Keeping in touch via email or newsletters
• Tap into social media and share more – blogs, tweets, Facebook groups, Instagram photos
• Word of mouth, positive customer experience, and targeted marketing all help you develop greater brand awareness.

2. Communicate brand meaning and what it stands for

Consider how well your product meets the needs of customers — not just the physical ones, but their social and psychological needs as well. A company that produces a useful product, and genuinely commits to social or environmental responsibility will attract customers and employees who share those values and who will be sufficiently connected and enthusiastic to be advocates.

IKEA, for example, has invested in sustainability throughout its entire business operation: 50% of its wood is from sustainable sources, 100% of its cotton is Better Cotton standard and 700,000 solar panels power its stores. With feel-good eco-credentials like these, spending a Sunday afternoon assembling an IKEA flat pack seems more of a pleasure.

3. Foster positive customer feelings and judgments

When customers have a positive impression of your product, they’re more likely to become loyal customers and pass the word on. Judgments are made about a brand’s credibility, capability, quality, relevance to need, and superiority over the competition, so it’s important to maintain the integrity of all these things. Positive feelings can be excitement, fun, peer approval, security, trust, and self-respect, to name a few.

A brand that can maintain positive judgments and feelings is a winner. For example, the iPad: did you think you needed one before you saw one and appreciated its capabilities? For many of us today it’s our computer, gaming console, TV, radio, alarm clock, mobile bank, and messaging service… we love our iPads.

4. Build a strong bond of loyalty with your customers

Brand loyalty is a powerful, yet very difficult, aspect of brand equity to attain. Loyal customers are customers that have formed a psychological bond with your brand. They make repeat purchases. They may feel like they’re part of a community of fellow consumers.

They will act as your brand ambassadors, inadvertently selling your products for you through social media, online forums, and even physical events. Establishing a brand equity connection that borders on customer evangelism is an invaluable part of brand management.

People shop more with brands they’ve had great experiences with. In fact, some 73% say that the customer experience is an important part of their future purchasing decisions . Customer satisfaction breeds customer loyalty, referrals, lifetime value, and positive brand equity. So really, the best way to build brand equity is to employ a brand strategy that puts customers at the heart of your business.

Technology can make this daunting task easier by automating the jobs that enterprise-scale makes impossible to do manually, intelligently monitoring what customers are saying, and finding parts of the customer journey that are currently letting your customers – and your brand ,by extension – down.

In other words, the right technology under your belt can help you manage and measure brand equity, build brand loyalty, and improve consumer perception.

Software like Qualtrics Brand Experience Management platform can turn your customers into fans by listening to feedback across every touchpoint as well as intelligently monitoring the customer journey on a person-by-person level to identify gaps in their experience that need closing.

BrandXM™ knows which parts of those experiences are hurting your brand – the ones that drive negative brand equity – and which ones are helping it flourish in the minds of consumers. And, crucially, it can proactively suggest exactly what to do to quash the former and squeeze even more from the latter.

By working 24/7 to deliver best-in-class customer experiences, you’ll create positive brand associations and boost your brand’s perceived quality. And that’s what powers a brand’s equity and grows market share at the same time.

Related resources

Brand research 14 min read, brand value 7 min read, customer-based brand equity models 10 min read, brand equity research 5 min read.

Market Segmentation

Market Fragmentation 9 min read

Brand Perception

Brand Sentiment 18 min read

Brand intelligence 12 min read, request demo.

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The Impact of Social Media Marketing on Brand Equity: A Case Study of Luxury Fashion Brands

• First Online: 02 May 2024

Cite this chapter

• Mohammad Fayez Abu Sulaiman 4 &
• Mohammed Hedar Sakallah 4  

Part of the book series: Studies in Systems, Decision and Control ((SSDC,volume 516))

147 Accesses

This study examined the transformational impact of social media marketing on brand equity with a special emphasis on the distinctive setting of luxury fashion businesses. This study investigated the complex relationships that exist between social media techniques and the aspects of brand equity, which include brand awareness, perceived quality, brand associations, and brand loyalty. A questionnaire was developed using the descriptive-analytical method to collect data from a small, random sample of Gazan people in Palestine. 304 respondents provided the data, which was then analyzed using simple regression. The results showed that social media marketing affected brand equity. The results of this study provided a detailed knowledge of how old branding paradigms are altered by digital channels, opening the door to strategic insights that make brand management easier in the dynamic environment of luxury fashion marketing.

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Sulaiman, M.F.A., Sakallah, M.H. (2024). The Impact of Social Media Marketing on Brand Equity: A Case Study of Luxury Fashion Brands. In: Khamis, R., Buallay, A. (eds) AI in Business: Opportunities and Limitations. Studies in Systems, Decision and Control, vol 516. Springer, Cham. https://doi.org/10.1007/978-3-031-49544-1_15

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What is brand equity can it give my brand more value.

Brand equity is the value that clients associate with a company’s name, which is why they are willing to pay more for brand names than non-branded items.

This article will look at what components of branding will give you brand equity and actionable ways you can do it.

• What is Brand Equity?

Brand equity is the value that clients associate with a company’s name, which is why they are willing to pay more for brand names than non-branded items. In marketing, every brand has worth, just purely in its name and reputation, regardless of its product or service. In a small community, for example, John, who has grown up in the town and down everyone’s plumbing for thirty years, will have higher brand equity with the locals than, say, Steven, who has just arrived from another town and has no connections, reputation, or credibility yet with the locals.

John will be able to charge more than Steve because he is better known and has a higher equity. Steven will probably charge less to compete with John so that he can get a foot in the door with a few jobs and start his journey towards getting the same equity as John.

The higher a brand’s equity, the more positive its effect on the company’s sales volume and profitability will be.

Why is brand equity important?

The overall brand equity encompasses several components that collectively contribute to the overall perception and worth of the brand in the minds of consumers. Strong brand equity will add the following benefits:

• Competitive advantage: A loyal customer base will give you a significant edge over any competitor. You’ll influence industry standards with premium pricing or launch new products with consumers already waiting in line.
• Customer trust and loyalty: High equity usually results in a higher trust with consumers . They know your brand and what kind of quality and customer service they will get
• Resilience to market fluctuation: Better business equity will create a buffer against market changes or economic downturns. Loyal customers are less likely to switch to competitors, even when things get tight.

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What are the components of brand equity?

Here are a few components that you need to start your journey to brand equity.

1. Brand awareness

Brand awareness is how familiar consumers are with your brand name, offerings, and goals. We are all familiar with the term “household items,” which is a goal for many businesses. You want to be the name that people associate with that product.

If you do it really well, you could even take over the product name completely. For example, “Lego” is a household name, but the real name of the childhood toy is actually “interlocking toy building blocks,” which is long and complicated.

High brand awareness will lead to an increase in consumer trust and preference, making it easier to introduce new products under the same brand name.

2. Brand loyalty

Brand loyalty, or customer loyalty, is the degree of consumer attachment to the brand. Once you have it, consumers will repurchase and recommend your brand to others, resulting in a steady revenue stream.

Ironically, the two top examples of brand loyalty companies are competitors. Apple and Android have been at each other for years, and both have incredibly loyal customers.

Technically, they are just operating systems at the end of the day, but they have expanded their product range, so once you start with one of them, you’ll need the whole set. For example, if you have an Apple computer, then you need an Apple Watch, which goes with your Apple HomePod.

3. Brand associations

You can build brand loyalty with consistent quality. However, another way to do it is to not sell the product so much as the idea behind it.

Let’s continue with our Apple and Android analysis. Both provide a great product and services, but Apple gets its loyalty because consumers have bought into the idea of “Apple.” It has branded itself as innovative, advanced, contemporary, and aesthetically pleasing. They are not just making an operating system — they are making the future.

Android, on the other hand, is definitely more user-friendly . They define themselves as having an ‘open’ operating system that technically-inclined consumers can open up and poke around in. They want people to play with their system and be innovative with it rather than the system itself being innovative.

Attributes, benefits, and appeal are all associations that influence the consumer’s behavior and the brands with which they associate themselves. This is also connected to their loyalty because if they believe that the brand represents them like they are an “Apple” person or an “Android” fan, then they will stick with it.

Another association is the premium of the brand. Android has always been a “people” brand and marketing itself to be open for all, while Apple has gone for a more luxury brand association with influencers and celebrities wearing their products.

Actionable ways to increase your brand equity and customer loyalty

Brand equity doesn’t happen overnight — it happens over time. Like brand awareness , you must build it up with every interaction you have with your consumers and every marketing campaign you employ.

Brand equity is a goal that all businesses should strive for. But how exactly do you build your brand equity and your customer loyalty?

Here are a few ways:

Be consistent

All of your communications should consistently reflect your values, missions, and identity. We are not only talking about what your brand represents — the communication tone should also be the same. Images need to be similar, and your brand guidelines should be impeccable.

A great example of this is Coca-Cola. They go above and beyond with pushing their fonts and logo, not even to mention what they have achieved with their signature red.

Did you know that Santa Claus’s coat was originally forest green? Coca-Cola did a Christmas campaign, changed the color to match their brand guidelines, and changed Santa worldwide in one advertising season.

They have brand-managed themselves since the very beginning of the company, and you should too. Even if you are just starting out, in a few years or a decade, your business might be huge to the point that you can alter the holidays!

All consumers want to feel like they are being heard, and in a world where everything is instant, that includes customer service. Actively engaging with customers through various touchpoints, such as social media, personalized marketing, and email, has now become almost a worldwide standard. Consumers expect it.

Be your best

Having a quality product might sound like a basic point, but it is an important one. There are a lot of businesses out there that make items for cheap and sell them for cheap. While it might be enticing to consumers, it becomes quickly obvious that corners have been cut.

Having a quality item builds trust with your consumers. They will be willing to spend a little extra if they know your product will last and make up for it in terms of sustainability and performance.

Couple a high-quality product with high-quality service, and you have a golden ticket to earning your branding equity.

Build your brand with WebFX

Now that you know what brand equity is and how to build it, the next step is getting a partner that will help you reach those objectives. That’s where WebFX can help!

We have 28 years of experience helping our clients build their brands and grow their customer loyalty. We offer our clients a range of services that will enhance their customer’s experience and implement creative marketing campaigns and content that resonates with their target audience.

Look at our case studies to see what we have done for others and how we have helped them build their brand. Contact us online or call us today at 888-601-5359 to speak with a strategist!

Table of Contents

• Why is Brand Equity Important?
• What Are the Components of Brand Equity?
• Actionable Ways to Increase Your Brand Equity and Customer Loyalty
• Build Your Brand with WebFX

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