What is Brand Equity?

Sep 05, 2019 8431 views

To try to make your life easier, let's understand the outlook, the concepts and some applications, and I'm sure that the rest will make more sense! But what about these terms in English? Calm down, I'll help you! Brand is very simple, it means brand, so a direct translation to Brand Equity is Brand Equity, that is, the value perceived by consumers and the level reached in the subconscious.

Marketing efforts when we talk about branding have the ultimate goal of generating Brand Equity, which is nothing more than the strength and valorization of the Brand.

I will make it clear to you in the following example. Imagine a plain white shirt without a visible mark, what would be its value in the market? One, ten reais? Now we are going to add to that same shirt a brand, through a label or logo visible. Think of something great, a powerful and valuable brand like Adidas or Nike, now what would be the value of this jersey? At the outlet, maybe a hundred reais?
In short, this difference in value is what we call Brand Equity, that is, the power and value of a brand when it comes to pricing a product, and that addition in the final value comes directly from the strength that the brand has acquired over of time.

Therefore Brand Equity is the value that the brand carries with it, something that influences the purchase decision, and how the consumer thinks, feels, and acts according to the relationship that he has with the brand. Just as in prices, market share and profitability are also related to brand value. Brand Equity, although intangible to some, is an important asset in any company, it corresponds to the psychological and monetary value of the organization. Imagine a million-dollar transaction between these companies that we used in the example above, if Nike were to buy Adidas, it would definitely pay more for the brand than for the tangible assets such as machines, stocks, buildings and products.

The power of a strong brand and its value

Surely having a strong and relevant brand makes all the difference! Brand Equity directly impacts an organization's ability to be more profitable and to remain valuable to its competitors, being loved by its consumers.

There are at least 3 important conditions that will directly impact Brand Equity:

Influence and power in the market.
The fact is that stronger and stronger brands are always the ones that will dictate market movements. I'm not just talking about consumers when I talk about the market, it goes far beyond the relation of consumption. This influence will affect the behavior of competitors, partners, distributors, press and everything else that has some kind of relationship to the organization's business.

Brands of power exert such a powerful force in their market that they are able to influence the launch date of new products, distribution, values ​​practiced, positioning, and even the marketing strategy of their competitors.

The stronger and better managed, the easier the expansion of participation and increased profitability, compared to competitors, not to mention the increase of success with its customers, both in new products and new lines.

The value of customer perception.
Even more valuable than the power to influence markets is the power of the perception of value generated in consumers, Brand Equity will determine how much people are willing to pay to acquire that concept, which goes far beyond the value of the product.

That is, the stronger the brand, the greater the value that the customer will be willing to spend for it. What does this mean in the practice and growth of an organization?

Not infrequently are cases where companies charge more for similar products (sometimes less than the competition), but still gain the preference of their consuming public.

The prestige gained will be reflected in the other items of the company mix, and the high degree of consumer confidence will provide more space for innovation and expansion of the lines, the launch of new brands will be carried out in a much more assertive way and success will be guaranteed.

More than customers, fans!
One of the biggest achievements of a brand is the loyalty of its consumers, something not so easy to achieve, but certainly will be achieved by those who dedicate themselves to Brand Equity.

Customer feedback is synonymous with loyalty, something that will eventually evolve into fans of your brand. By interacting and interacting with the brand's communication channels, advocates will become ambassadors, and ultimately will be recommending their products and services.

Needless to say, it was clear that these actions will represent bigger profits and better sales, right?

After all, advocates in addition to bringing new customers organic, something that will save you a lot, they usually have a higher average and recurring ticket.

Brand Equity in action

As I always try to do in my articles, let's take a look at two examples of Brand Equity's role in brand success and profitability, and how valuable it can be to its growth.

That Apple is one of the most valuable brands in the world, you already know! Now I'll show you that she has reached that position through a lot of work on Brand Equity of the company, how much she has earned and still wins from it.

The company is one of the greatest examples of how much the power of a brand makes a difference, under each of the conditions cited above. Apple seeks to differentiate itself in every detail and this starts in the name of its products. A notebook for them is a Macbook, an iPad is much more than a tablet, and the cell phone is not a simple smartphone, it's an iPhone! These names are so strong, that today they virtually name a new category of products in their segments.

If we compare some of its technical specifications, not always Apple takes the best, but it leads to sale! Its products, which are often more expensive than those of direct competitors, remain among the most wanted and sold on the market.

Another point worth mentioning here is the appreciation of Apple products, they almost do not lose sales value, even the oldest and outdated. All this success is a result of the brand's brand equity, which today puts it as one of the most valuable in the world.



The above example shows the success of brands that sell more expensive products. As a demonstration of what Brand Equity is capable of doing, however, we can not exclude companies that work with cheaper items.

Brand Equity does not have as its main function to increase the prices of products, this is a big mistake made by marketing departments, some of the most valuable brands in the world are extremely popular and cheap products.

The goal is to make the brand recognized by others, in the same way it is seen internally, and to succeed in it.
If your company is looking to sell premium products, your audience needs to see your brand as Premium, but if the idea is to sell to the masses, it needs to be seen as affordable.

It is important to emphasize that the recognition of a trademark does not have to imply in its credibility. Surely you recognize some names of politicians and brands involved in scandals, there is the recognition of the brand, but that does not mean that these politicians would have their vote, nor that these brands would count on their purchase. Brand credibility and reputation are very different concepts and are directly linked to your decision.

After all, there are several examples of brands that are recognized and in many cases this recognition is not related to something positive. What really counts is how your consumers will recognize your brand, because ultimately it is their perception that will make a difference in the company's value and profits.

Investments in Brand Equity are of extreme importance for the transformation of a common business into a power in the market. If well planned and executed, a good marketing plan is all your business will need to achieve the results that only the big brands can achieve.