Brand Equity And Brand Value Defined
What is brand equity? Brand equity is the value produced by a company or business through its recognized and reputable brand. So a highly-recognized brand will have more brand equity compared to that of a generic brand. Brand equity is often the main consideration in determining the price of a branded product or service.
If we base the meaning of value on Merriam-Webster’s definition, it is a) the monetary worth or the market price of something; b) the equivalent or fair return in money, goods or services; and c) the importance or relative worth of something. Brand value is basically the worth of a brand derived from its tangible and intangible characteristics and assets.
Tangible versus intangible assets
A brand is the sum of the tangible and intangible characteristics that differentiate it from other brands. Your brand will derive its value from the combination of the following tangible and intangible elements:
• Brand name
• Logo or symbol, tagline, and other visual/creative elements
• Boilerplate or standardized documents, procedures, and methods
• Brand colors and fonts
• Products and solutions
• Elevator pitch or speech
• Company history, philosophy, and history
• Brand promise
• Unique qualities that differentiate the brand from others
• Tone of voice
• Corporate theme
• Company culture
• Brand equity through market/customer perspective
Brand equity is not a physical asset since it is determined by market and customer perception. Brand value consists of all the physical and non-physical aspects of the brand, including brand equity which is how consumers perceive the brand. Brand equity is driven by brand visibility along with brand association and customer loyalty while brand equity is one of the leading drivers of brand value.
Brand Equity Vs Brand Value
In business, brand equity and brand value have been used in different contexts, but how do the experts define these two terms? Are they basically the same or just related to one another? Are these two terms interchangeable? Do brand equity influence brand value and vice versa? Let us find out the principles of brand equity and brand value.
Brand equity and brand value may be interrelated, but they have many differences, too. Here we find out about the differences between brand equity and brand value.
Determining Brand Equity And Brand Value
Brand value is easier to measure compared to brand equity since brand equity relies on consumer perception and beliefs. Companies are able to determine their brand’s fair market value by researching what others would pay to buy the brand. Companies will also compute all the costs required to design and manufacture the product, including the costs of marketing the brand such as advertising and marketing fees, salaries and fees of marketers, advertisers and consultants.
Brand equity can be more difficult to measure compared to brand value. Consumer perception can be hard to estimate and it may be difficult to know what drives a customer to purchase a certain brand. A customer may buy a brand simply because of preference, but other deciding factors may come into play such as pricing or convenience. Many businesses invest in market research in order to learn more about consumer preferences and behavior. Some companies attempt to measure consumer perception through surveys in order to gain insight on customer brand awareness and market preferences.
How To Create Brand Equity
Although brand equity influences the increase or decrease of brand value, it is important to note that brand equity also relies on the established brand value. During the process of brand development, brand value can already be established by recording the development costs but brand equity is still non-existent when the brand is not yet known to customers. In order to create brand equity, the company should cultivate brand awareness, brand association, and customer loyalty. Brand recognition takes the time to build but it can be achieved through continuous customer-focused marketing and branding efforts.
Improving Brand Value
A company’s brand is one of its most valuable assets so the role of brand equity and brand value in growing the company and gearing it for success is extremely important. Companies should focus on improving brand value by establishing a positive brand equity. Positive customer-based brand equity is a result of understanding your customers’ needs and wants. Consistency is key in creating brand equity and improving brand value. The positive perception of consumers and customers can create and nurture brand loyalty and brand advocacy if a company maintains consistency in providing value to their customers.