Building a strong brand with great equity creates a whole host of benefits to an organization
such as greater customer loyalty and less vulnerability to competitor activity, more favorable responses from the public to price increases and decreases, increased marketing communication effectiveness, greater trade and intermediary support among others.
But what is brand equity? Some define it as ‘the value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent’. Yet others define it as ‘a brand’s power derived from the goodwill and name recognition that it has earned over time, which translates into higher sales volume and higher profit margins against competing brands’. Put together, I would define brand equity as ‘the superiority or the authority a brand earns from consumer knowledge, perceptions, and experiences with the brand. Consumers hence are willing to spend more to purchase this brand rather than it’s equivalent’.
It is however important to note that brand equity can be negative or positive. A case in point is if consumers are willing to pay more for a generic product than for a branded one, the brand is said to have negative brand equity. This might happen if a company had a major product recall or caused a widely publicized environmental disaster.
Brand equity is important in building any organization and companies that have successfully achieved this understand just how important it is to the bottom line. For instance, when a company wants to expand its product line, positive brand equity can increase the likelihood that consumers will buy its new product by associating it with an existing successful brand. When Coca Cola released a new brand of water, the positive perceptions consumers already had for Coca Cola gave the brand of water an easy penetration into the market.
In addition, companies with high brand equity are able to price their products at a premium. This is not only accepted, but is also expected. Again, Coca Cola’s brand of water is charged a little higher than most competing brands yet is still doing very well in the market. Strong positive brand equity also helps a brand position itself for success in that small hitches are easily forgiven by consumers due to the deep emotional connection with the brand. On the contrary, organizations with little or negative brand equity find it harder to sail through hitches because consumers have little or no emotional connection with the brand.
Building brand equity nevertheless requires patience, effort and consistency. It requires a deliberate effort to ensure that your products and services are of superior quality, reliable, easily recognizable, memorable and accessible. It is typically the result of brand loyalty which is brought about by a consistently great brand experience. In that, a consumer is certain that they will have an amazing experience with your brand, whatever time, day or season it is. They know they can rely on your brand at all times. Notice that in all that, the consumer, not the organization, determines how far the brand grows. Building brand equity is a continuous process and you need to keep monitoring it to ensure you’re on the right track.
There are several factors that go into building brand equity whose core should be customer-centric; in that it is not what the organization thinks is right, it is what the consumer thinks and believes is right. A few of those factors are discussed below:
Why is your brand different from its substitutes? Is it better priced? Does it perform better, faster, more efficiently? Does it offer the consumer more benefits? Is it more easily accessible? Whatever the differentiating factors are, consumers must be able to easily pick them out from other brands in the market. If they can’t, well then, more work needs to be done. Even so, picking them out is not enough. Consumers must also understand and believe that these differentiating factors are actually relevant to their needs and wants.
For instance, a phone company may decide to develop a phone with a clearer reception for FM radio and then price it at a premium. When making purchase decisions for a phone, a clearer reception for FM radio may not be as important, because anyway, radios are everywhere nowadays; in the car, in the office, in the elevator, pretty much everywhere and besides, there’s the bare minimum reception that is accepted and good enough. Depending on your target audience, such a differentiating factor may not necessarily be relevant; other factors like speed, memory, battery life among others may take precedence. Consumer understanding at this point is very key. Ensure you understand what is relevant to them before developing your brand.
As consumers begin to pick out the benefits of your brand against competitor brands, they start off a journey hoping to have a wonderful relationship with the brand. During this journey, your brand should endeavor to make the journey fun for the consumer otherwise the consumer will move on to other fun brands.
Consider a brand like Apple. Apple is one brand that has had lots of consumer engagement that it has become one of the strongest relationship brands in the world. As it constantly evolves and gets more exciting, Apple has managed to engage consumers on social media platforms and build communities of brand enthusiasts who boost word of mouth marketing, sales and ultimately brand equity. Groups of loyal followers are very powerful and can catapult your brand to places you’ve never imagined.
Consumers need to believe that your brand shall deliver its promise throughout every touch point in their journey with it. They must believe that they can depend on the brand to meet their expectations based on their perceptions of it. This means that the brand must ensure that every promise it makes has been met; better yet surpassed.
A perfect example is Toyota. Toyota made a series of recalls a couple of years ago and though the problem registered a short-term blip in their results, it managed to weather the storm because of its brand equity. Due to Toyota’s track record of consistently meeting its brand promise of quality, consumers believed its promise to fix the situation and continue meeting their expectations in the future.
Early 1985, The Coca-Cola Company decided to work on a new kind of Coke as a response to the emerging challenge from Pepsi, an upstart then. The New Coke was launched with pomp and glamour including prime time TV ads and the works. The brand had been positioned as ‘smoother, rounder and bolder, more like fine wine than a carbonated treat.’
Public reactions? Overwhelmingly negative! In fact, some people likened the change to trampling the American flag. What followed were people hoarding cases of the old Coke, with some savvy entrepreneurs selling it at crazy prices. About three months later, Coca-Cola brought New Coke down from store shelves. The company president then, President Donald R. Keough is reported to have said that they ‘did not understand the deep emotions of so many of our customers for Coca-Cola.’ New Coke thus joined the bandwagon of marketing goofs and products that seemed like good ideas at the time. The biggest mistake was the failure on Coca-Cola’s part to ask the critical question to their users, ‘Do you want a new Coke?’ and by failing to do so, they had to backpedal very fast to fix the situation.
Emotional connection with a brand is built over time as consumers experience the brand and begin to understand and believe in it. As trust develops, they begin to depend on a brand just as they would a friend. They develop deep emotional connections as a result of consistent performance of the brand. Overtime, consumers develop brand love which sometimes becomes cult-like. A consumer becomes so loyal to the brand that a substitute is unthinkable. The more consumers develop such emotions for a brand, the stronger its brand equity becomes.
Building brand equity is an ongoing effort that never ends. Once consumers reach the loyalty stage, your work isn’t done; it has just started. The challenge is not only to build widespread loyalty, but also to sustain the loyalty and positive brand equity for years to come. As our Swahili sages wisely put it, siring a child is not hard work, bringing it up is. Have a growth-filled month!