Brand Equity: How to Measure the Strength and Effectiveness of Your Brand

According to statistics, 88 percent of consumers say quality makes them loyal to a brand, and only 50 percent say price is their primary concern. [1] Also, when people have a negative experience with a brand, 50 percent said they were unlikely to consume content from that brand again. Clearly, this data shows how important it is to ensure your brand is sending the right messages to your customers, and making them want to align with it for the right reasons.

Image via www.business2community.com

What is a Brand, and Why is Brand Equity So Important?

Your brand encompasses your total offering to your customers,[2] from what it stands for, to its personality, the experience it gives your customers, what it promises to deliver consistently, the language, tone of voice and messaging it uses to express itself throughout its communications, the fundamental culture of the organization it represents, its brand collateral and the people who represent it.

In short it’s the sum of all its parts from the quality of its offering to its attributes and the emotional meanings associated to it together with all its brand collateral which includes visual identifiers like its logo, website, packaging, printed literature, trade stands, staff uniforms, interior and exteriors site design and signage, vehicle livery, video content and so forth.  All of these elements collectively are what make up your brand when they all consistently and congruently engage your primary audience in a way which is relevant to them, yet are distinctive, different and memorable.

Brand equity is then derived from the overall perception of your brand, the way customers perceive your total brand offering, products or services, rather than the just the isolated features and benefits of the offerings themselves. When customers have a favorable brand perception with a consistently good experience, it’s far more likely they’ll remain loyal to your brand, and recommend it to others. In order to achieve strong brand equity, your brand needs to be unforgettable to your customers — it must resonate both with their hearts and their minds.

However, strong brand equity has more advantages than just customer loyalty: [3]

• It enables you to form stronger ongoing relationships and negotiating power with vendors
• Positive brand equity supports long-term company growth e.g. expansion into new markets, product extensions etc.
• Strong brand equity could partially shield you if you hit a bump in the road e.g. reputational ramifications related to something unusual such as defective product or atypical manufacturing delay — assuming you handle the situation appropriately
• Fundamentally customers are willing to pay more for a brand they trust and value

Although brand equity may seem intangible, it has real dollar, euro, or pound value. Brand equity can be tracked and measured using a combination of specialist research and specific algorithms applied on a comparative annual basis.

Measuring brand equity accurately is a niche expertise, with a number of companies specializing in this particular field. Interbrand is one of those companies and they annually track the brand equity value of companies and brands from year to year. By way of example, in 2014 the brand equity of credit card company American Express was $19.5 billion. That figure is impressive in itself, but it’s even more striking to note the brand’s equity value had grown 11 percent from the previous year. [4]

Evaluating Your Brand Equity: Auditing its Current State and Identifying Weaknesses

The first step in analyzing your brand equity is to get a reading of customer perceptions. It’s also important to research employee perceptions for comparative alignment. If there are underlying problems with a company’s brand culture there are also likely to be underperformance issues coupled with incongruent communications that customers will pick up on — all of which means they will be less likely to embrace your brand, and may even doubt its authenticity, which in turn causes a lack of trust.

A brand audit health check is a very useful and practical way to gauge how your primary audience and staff feel about your brand. It can also enable you to identify weaknesses that might not have been noticed previously. Once you identify weaknesses and inconsistencies in your brand, you’ll be in a much better position to convert them into strengths, or at least minimize the aspects of those weaknesses that make your brand less effective when pitched against your competitors. A brand audit health check also enables you to uncover and identify new opportunities for growth and innovation.

Make Your Brand Stronger using Keller’s Brand Equity Principles

When working with our clients to help them develop stronger brand equity, we also advocate principals from Keller’s Brand Equity Model, also known as the Customer-Based Brand Equity (CBBE) Model. It suggests before you’re able to strengthen brand equity, you must first shape how customers think and feel about the brand. [5]

The model is a pyramid shape, with brand identity at the bottom. That section represents the key characteristics and personality of the brand. It’s important customers recognize those attributes correctly, and believe they are different from what competitors offer.  

The next level of the pyramid relates to brand meaning. In other words, what does your brand stand for, and how well does it meet customers’ needs, both in terms of performance, and on social and psychological levels? Think about the ways you want customers to experience your brand, and use those factors to create your brand personality and key characteristics.

Brand response represents the third tier of the pyramid. Credibility, actual and perceived quality, and comparisons with competing products all help shape brand response. Your goal is to make your brand evoke direct feelings and innate emotions.

The top level of the pyramid is brand resonance. When customers actively engage with your brand even when not purchasing it, that demonstrates brand resonance, as does a desire to be associated with a “community” of fellow purchasers. Customers also show brand resonance through behavioral loyalty, such as repeat purchases.

Measuring Brand Equity with the Six-Stage Brand Development Model

The six-stage brand development model is a diagnostic tool that combines proven metrics and a framework to guide brand equity strategies. Below, you’ll find the different characteristics a brand should have [6], plus how to make improvements if necessary.

• A Brand Should Be Recognizable: If your brand lacks recognition in the marketplace it’s crucial to develop your brand strategy and enaction it tactically with a fully intergrated branding plan in order to raise its profile. Brand recognition increases through repeated exposure.

• The Brand Must Be Memorable: The brand should be among the first called to mind when customers decide what to purchase. If that’s not happening, educate your target market about what your brand offers and why it’s unique – while remembering to enage your aduience at both emotional and rational levels.

• A Brand Should Be Viewed Favourably: As we often remind our clients, it’s not enough for people to be aware of a brand. The target audience must also believe the brand is able to meet their needs with trust and respect for what the brand represents.

• A Brand Should Be Distinctive: When customers are ready to buy an item (product or service), they must feel compelled to do so because they think the product offers a unique brand promise unlike what any competitors can provide. Brand perception occurs at both functional and emotional levels, so the goal is to position your brand effectively by stressing attributes that motivate purchases.

• The Brand Must Be Preferred: Ideally, customers will prefer your brand over all others, and be willing to purchase it repeatedly. If preference for your brand is low, you’ll need to evaluate why through a brand audit and then implement changes based on the analysis and findings made. Fundamentally you must build brand trust if you want to engender long term brand loyalty.

• Your Market Must Be Satisfied with the Brand: Ideally, customers will be so happy with what your brand offers they aren’t just personally content, but eager to recommend your brand to friends — become brand champions. If that isn’t currently happening, you may need to evaluate where the discontent lies and work on improving your product or service in terms of both percieved and actual quality.

Image via www.mindtools.com

Let’s briefly examine three case studies where improving brand equity was the central goal:

Image via www.starbucks.com

Starbucks

Starbucks has become a global brand worth $10 billion. In 2011, the brand went through a brand identity expansion to boost brand equity. A recognizable green mermaid traditionally decorated bags of the brand’s trademark coffees.

However, Starbucks wanted to expand its future vision by also using its identity more broadly on other products besides coffee, and associate it with offerings like teas and lemonades. The transition to use the mermaid logo more broadly was lauded by industry experts [7], with some believing strongly the broader use of the logo would trigger new growth and bolster recognition, without compromising acquired brand equity.

Image via www.veritaswines.com

Veritas Winery

Established in 2002 as a family-run business, Veritas Wineries was one of the first businesses of its kind in Virginia. The company realized its history and provenance helped establish its brand equity and wanted to implement some brand enhancements without compromising its valuable legacy.

The company commissioned a full brand audit, which resulted in small but meaningful changes [8] to the brand’s identity and made the overall brand more consistent to promote prolonged marketplace success. These alterations have enabled the brand to maintain its dominance, despite increasing competition.

Coca-Cola

Coca-Cola used “Open Happiness,” as a global campaign, to appeal to its consumers’ desire to feel optimistic and be comforted despite a weak economy. At the time, it was the brand’s first new campaign in three years. Advertising spots ran in both print and television media.

Although previous campaigns won awards, some analysts felt they required localized tweaking to resonate with culturally different audiences in different parts of the world. [9] The intention was that “Open Happiness” would have mass worldwide appeal. In the end, that goal was achieved, and the campaign achieved widespread industry praise for its ingenuity.

In conclusion, brand equity is measured one brilliant customer experience at a time. That’s why it’s so important to maintain a positive brand tone, understand how to relate to your target audience in a way that matters most to them, while simultaneously meeting their needs. Building and maintaining brand equity is an ongoing process, remember successful brand building is as much about all the small things you do consistently well coupled with the bigger campaigns and new initiatives.

Key Takeaways:

• Brand equity can make the difference in how customers experience your brand, and whether they want to align themselves with it.

• Brand equity is derived from customer perceptions. Strong brand equity increases the likelihood customers recommend your brand to others.

• A brand audit can indicate how customers perceive your brand, and enable you to identify weaknesses.

• Brand equity is tied to how customers both think and feel.

• Brands should be preferred, distinctive, favorably viewed, recognizable and memorable if strong brand equity is to be achieved.

Questions to consider:

• What actions or brand strategies could be implemented to increase customer engagement with your brand?

• What would help improve the actual and perceived quality of your brand?

• Have you taken steps to become informed and evaluate your brand’s weaknesses compared to competitors?

• Do you feel your brand adequately conveys why and how it meets your customer needs?

• Does your brand connect with people globally, and is that necessary for its brand equity?

You might also like:

• Brand Personality: Is Your Brand’s Character Big Enough to Compete?

• Rebranding Strategy: Why Your Rebrand Must Embrace Storytelling

• Brand Loyalty: 5 Key Steps to Building Your Loyal Fan Base 

• Brand Audit: Tips for Determining Your Brand’s Health – Can It Be Improved?

• Humanizing Your Brand: Why It is Key to Commercial Success

• Brand Differentiation: 30 Ways to Differentiate Your Brand

• Brand Profiling: Top 6 Components to Creating a Strong Brand Personality

• Creating New Brands: Top 10 Tips for Brand Success

• Brand Profiling: How to Use Emotion to Make Your Brand More Profitable  

[1] Eric Hammis, http://www.business2community.com, “How Important is Brand Identity?”, April 2015.

[2] Lois Geller, http://www.forbes.com, “Why a Brand Matters”, May 2012

[3] John Fatteross, http://www.thehartford.com, ” Advantages of Strong Brand Equity”

[4] Jennifer Connelly, htttp://www.entrepreneur.com, “‘Brand Equity’ is an Intangible That’s Worth Real Money”

[5] https://www.mindtools.com/, “Keller’s Brand Equity Model: Building a Powerful Brand”

[6] http://rockresearch.com/a-brand-development-model-how-to-define-and-measure-brand-equity/, “A Brand Development Model: How to Define and Measure Brand Equality,” December 2013

[7] Carl Johnson, http://www.adage.com, “Why Starbucks Logo Change Doesn’t Equate to Brand Change,” January 2011

[8] http://www.designbywatermark, “What is a Brand Refresh?”

[9] Betsy McKay and Suzanne Vranica, http://www.wsj.com, “Coca-Cola to Uncap ‘Open Happiness’ Campaign” January 2009