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Brand Equity

Brand equity is the customer’s quality perception about the product/service delivered by the producer/ service provider. In the capital markets, equity is a word used to indicate the value of the capital that is invested by the investors with a particular company. Similarly in marketing - brand equity is the aggregate trust developed in the minds of the customer about a particular product.

Brand equity can be developed in the short-term that is in the same year the product is launched. These are products which become a quick success with the customers. For instance, in movie industry, movies either become a quick success or quick failure, there is no ‘long-term’.  Brand equity can also be developed in the long-term as well, for instance; an insurance company that developed its brand value after 5 years of brand building initiatives such as advertisements and more importantly the core service aspect that is claim-settlement.

In other words, Brand equity is the happiness quotient of the customers in the market about a product/service provided by a particular producer. Brand equity is the user’s satisfaction level of the customers about a particular product and this satisfaction/happiness is termed as equity developed for a specific brand of the product.

For instance, Daimler AG is the name of the German producer of Mercedes Benz cars. Mercedes has got immense brand equity /brand value for its cars in the luxury and high-end buyer segment. Mercedes is a brand and there are other product categories such as Trucks, Buses, Limousines and Vans within the same brand, in addition to the luxury car segment. Although when it comes to the name Mercedes, people remember the luxury car segment.

Similarly there are various companies that manufacture photocopy machines and everyone calls the service as Xerox and not photocopy. As we know, Xerox is the name of a manufacturer of photocopy machines and does not mean photocopy. But Xerox being the first manufacturer of Xerox machines, it is easy to recall the name ‘Xerox’. People always say Xerox and they do not say photocopy.

This is the power of brand equity – Say the name, Mercedes Benz and the first impression you get is a luxury/status symbol and then Mercedes is recognized as a car/a transport medium.

Brand equity also reflects the goodwill the company has in the market. The greater the value of the brand, the higher price the people will be ready to pay for it. The same is observed in the case of mobile industry where people are ready to pay for iPhones compared to the cheaper mobiles offered.  Customers are prepared to pay for the branded products, when they have greater functionality , security and durability in comparison to the ones in the market.

Brand building is not easy and requires strategic brand management . To increase the brad equity of the company to new heights, sequential steps have to be taken to position the brand strongly in the minds of the customers. The 4 sequential steps are

*      Brand positioning

*      Brand  marketing

*      Brand performance

*      Brand value

Brand positioning

For the purpose of brand positioning, the marketer has to research different brands in the industry and observe the differentiating factors.  By analyzing the differentiating factors, the brand can look for unique position in the customers’ mind . such unique positioning will impact the overall brand performance. So positioning is essential first step in strategic branding.

Brand marketing

Brand marketing is the next step in enhancing the brand. To increase the brand value, the marketers should take the help of media to facilitate brand marketing. Brand marketing is a middle step between planning phase and implementation phase in strategic brand management.

Brand performance

There should be time-to-time analysis of the performance of the brand. Brand audits should be performed periodically to know the actual performance of the brand, and how it is helping the company. The position of the brand should also be evaluated time-to-time, and adequate measures should be taken.

Building up of the brand value

The final step is to build the value of the brand by taking necessary steps. The time duration to acquire brand value can take decades.  So for increasing brand value, the company can enter new markets, launch new products and modify the brand positioning.

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