Importance of Brand Equity For Growing Business

04 Mar, 2024 weblizar 0 Comment

• Brand Association , Brand equity , Brand Experience , Brand Loyalty , Brand preference , Quality
• Brand Association, Brand Equity, Brand Experience, Brand Loyality, Brand Preference, Quality

Importance of Brand Equity For Growing Business: When you’re considering both accountants and marketing professionals also include certain intangible assets when they calculate the value of a business. Whether they refer to it as “goodwill” or “brand equity”, the effects of a great brand will always be reflected in a company’s books.

There is a bit of confusion about what makes up brand equity and what it contributes to a business’s bottom line. This article will help you understand the concept of brand equity and explain how to build and maintain it.

What is brand equity?

Strictly speaking, brand equity is the sum of assets and liabilities that are associated with a business’s brand name. It is a reflection of the relationship customers build with the brand. Marketing experts believe brand equity has six components.

Brand awareness

The first step in establishing brand equity is creating awareness of the brand. This means customers know what the brand is and can associate it with certain product categories.

Brand association

The goal of brand association is to make customers associate brands with certain key attributes. For example, if you manufacture and market sports apparel, you may want to associate your brand with talent, competitiveness, and brawn.

Brand experience.

This is the total of your customer’s experience with your brand. When you can provide quality products or services, they will start preferring your brand over others.

Quality

A brand is a promise, and quality is the way your company fulfills that promise. Customers compare different brands in terms of the quality of similar products.

Brand loyalty.

Customers tend to be loyal to brands that they think offer them the best quality compared to similar products. This results in repeat business and helps reduce the market cost.

Brand preference.

Once a brand has established loyalty, it can then capitalize on that preference to charge more for the same type of products.

Importance of Brand Equity For Growing Business

Now that we’ve defined what makes up brand equity, we can determine why brand equity is important to businesses. Good brand equity has four main effects on your business.

• It is an asset. While it is intangible, brand equity is something that your organization can monetize. You may license it, lease it, or sell it to others.
• It allows you to charge more. Android users argue that phone brands like Huawei or Samsung put out faster, more reliable phones, but the Apple iPhone remains the brand for smartphones.
• It increases your market share. Good brand equity results in customers who prefer one brand over the others, which results in higher market shares.
• It lets you introduce your brand to new markets. When Apple introduced the iPod in the early 2000s, it was one of the most eagerly-anticipated product launches of its time.

How do you build brand equity?

You don’t build a brand overnight. Good brand equity is the result of years of hard work, research, and strategy. Building brand equity takes place in three stages.

• Introduction. Your first product will most likely influence how your customers perceive your brand. For example, Apple introduced the iPod to glowing reviews. These reviews influenced customers to move over from portable MP3 players to Apple products.
• Elaboration. Apple ensured that new products used iterations of the same user interface, look and feel, and operating systems to prevent customer confusion.
• Reinforcement. When Apple moved towards a touchscreen and discarded the scroll wheel, it was because they had already decided that their brand was strong enough to handle the shift.

What happens if you take care of brand equity?

Building brand equity won’t have apparent benefits right away. However, if you keep plugging away at it, you’ll see its effects in the form of customer preference and public perception. Maggi, the Swiss manufacturer of instant soups, is one brand that took good care of its brand equity.

The brand is very popular in India, where customers consumed over 400,000 tons of Maggi products in 2014. Not even a food safety scandal could wean consumers away from the brand. In 2015, the Indian government banned nationwide sales of Maggi products due to high MSG content. Maggi kept up its marketing efforts and brought itself back to the shelves before the end of the year.

What happens if you don’t take care of brand equity?

If your organization does not take care of its brand equity, two things could happen. First, customers could be antagonistic towards the brand. First, they could express their dislike of the brand openly.
Alternatively, people can stop caring about your brand, which is worse. One illustration of a brand not taking good care of brand equity is BuzzFeed. Many feel that the brand jumped the shark when one of its email campaigns sent out a newsletter titled “Hi, You’re Fired”.

The email contained a link about people who failed spectacularly at work. The newsletter title seemed like a good idea at the time. However, it also led to numerous people getting upset, including BuzzFeed’s staffers.

The rise and fall of BuzzFeed. Chart from Trackalytics. The “Hi, You’re Fired!” email newsletter also foreshadowed a string of layoffs within the company itself — BuzzFeed cut 100 jobs in 2017 and daily pageviews also dropped from a high of 36 million to just 8 million. It is very crucial to follow the right email marketing practices, especially when the brand name is at stake.

Conclusion – Brand Equity Importance 2024

Brand equity is often overlooked, underestimated, and unnoticed, especially since its value is not immediately apparent. But, as we’ve seen in the examples we’ve given in this article, it is one of a company’s most important assets.

It serves as a valuable asset, influencing consumer perception, purchasing decisions, and long-term relationships. A well-established brand creates a positive image, distinguishes a business from its competitors, and contributes to sustained growth.

Consequently, investing in and actively managing brand equity is integral for businesses aiming to thrive in competitive markets and forge enduring connections with their target audience.