“Brand is just a perception, and perception will match reality over time. Sometimes it will be ahead, other times it will be behind. But brand is simply a collective impression some have about a product.” – Elon Musk
Brand equity refers to a marketing term that describes a brand’s value. This value is highly determined by consumer’s perception and impression of and experiences with the brand. When a brand has positive brand equity, it means that consumers think of this brand highly, and when it has a negative brand equity, it signifies that the brand consistently under-delivers and disappoints to the point that consumers do not wish anyone to buy or experience anything related and from the brand.
The knowledge of the four dimensions of brand equity namely brand loyalty, brand awareness, brand associations and perceived quality is important as it can help brands in building a roadmap to establish and manage that potential value. Keep reading to understand the four different dimensions of branding equity.
1. Brand Loyalty
Brand loyalty was always considered as a repetitive purchase behaviour. It represents a customer who purchases one specific brand when presented with a set of alternatives consistently over a period of time. For products such as a house or a car, this behaviour may not occur. Attitudinal brand loyalty will occur instead, it is where how consumers feel about the brand and their willingness and inclination to recommend the brand to others are measured. Brand loyalty is the most important indicator of brand equity as it develops post purchase whereas other elements of brand equity may not determine whether a purchase was made or not.
Brand loyalty translates to a decrease in marketing expenditure as loyalty makes customers inclined to be messengers and positive advocates for the brand. A company is also benefited as they can introduce more products to the same loyal customers at less expenditure. Brand loyalty also helps brands to stay on top of the game as it creates a barrier to entry for new players in their specific industry and gives time for them to respond to threats made by competitors.
2. Brand Awareness
Brand awareness simply means that the customers is aware of the existence of the brand and call also recall what products and services it is offering. It is the first step in the brand equity building process. A company’s goal is to make sure that the customer can recall upon the mention of the product or service in an instant.
A company can build awareness by making the brand visible to the relevant target audience by various promotional methods such as sponsorships, publicity, advertising, events, instigating word-of-mouth promotion, etcetera.
3. Brand Associations
Brand association is anything that is connected to the customer’s memory about the brand. It is formed based on how they perceive the brand’s quality, their experiences and interactions with the organization and its employees, ad campaigns of the brand, the brand’s price positioning, product categories that the brand is in, product layout and displays in stores, celebrity associations and from what others tell them about the brand. And this is not an exhaustive list.
With each and every interaction consumers have with the brand, they add to brand associations. It is absolutely crucial that companies make sure that each interaction they have with consumers is positive as associations are also formed from what others tell customers about the brand. With positive brand association, not only is the brand generating good word-of-mouth publicity but also the increase in brand purchases. This can also help the company in creating strong barriers to entry for new competitors and leverage the brand!
4. Perceived Quality
Perceived quality is the perception and impression that the customer have about the overall quality of a brand. When assessing quality of a brand, the customer will assess it according to the performance of the brand on parameters that are important to them, and also in comparison with the competitor’s offerings as well. Consumer judgements will vary amongst each other as quality is a perceptual entity.
Perceived quality is highlighted in the study of brand equity as it has a profound effect on the price positing of a brand. Better quality products can be charged with a premium price and is one the main reasons for consumer preference for a brand in any product category. Thus, superior perceived quality can also be used to position the brand.
Keep all of the activities of your organisation in check as all activities relating to it will determine brand equity. These activities may enhance or diminish the brand value. Focus on activities that are in line with the overall vision of the brand as it enhances brand equity, and any activity that goes against this overall vision reduces brand equity.
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