How Brand Equity is Measured and 7 Simple Strategies To Grow Yours
Major Points of the Article
Brand equity adds monetary value to your products/services and can encourage potential customers to choose your brand over your competitors.
Six components make up brand equity.
The Brand Equity Calculator simplifies how brand equity is measured.
There are 7 ways you can increase the brand equity of your business.
If I told you to “Just Do It”, what brand comes to mind? Nike right?
Why do you or your friends choose to buy $200 shoes from Nike when you could get the same style of shoes minus the signature tick from a generic brand for $20? This is an example of Brand Equity: the added value that a company generates from their recognisable products compared to the generic equivalent.
When a brand such as Nike has positive brand equity, you associate it with high quality, performance and prestige. So, you continue to buy the more expensive branded shoes because you trust and admire the brand and know that the people around you will too.
In fact, it is something that your potential customers will consider when shopping around for their new purchase. So don't you want them to choose you over your competitor?
How Brand Equity is Measured
Brand equity is one of the biggest indicators of your company’s strength and performance. So let’s get into how brand equity is measured. Six components make up your brand equity. These include:
Brand Awareness: This is how many people recognise your brand name, logo or slogan.
Brand Association: What words or concepts do people associate your brand with? Are they positive or negative?
Perceived Quality: Do your customers believe your products are durable or your service is efficient and reliable?
Brand Experience: What do customers think about your business? Are they leaving good reviews or are they contacting you with complaints?
Brand Preference: If your product was sitting on the shelf alongside all of its alternatives, would customers reach for yours first or only if their favourite is out of stock?
Brand Loyalty: Would your customers continue to purchase from you even if there are cheaper and more convenient alternatives in the market? How long do your customers stay with you?
Now that you’ve thought about how your business performs regarding these six components, you’re probably wondering how you can quantify the results and interpret what it means for your business.
How To Value Brand Equity
There are plenty of brand valuation methods out there to choose from which can make measuring brand equity a little confusing. But luckily for you, we have made this process extremely easy. The Brand Equity Calculator is a tool that allows you to simply input some of your brand statistics and generate a Brand Equity Index which tells you how strong your brand equity is. The higher the Brand Equity Index, the healthier your brand equity.
So once you have established where you are, how can your Brand Equity Index improve?
7 Strategies to Improve Your Brand Equity
Here are seven simple strategies you can implement right now to improve your brand equity.
1. Increase brand awareness
This one is obvious. It is the first component of brand equity and will determine the scale of the strategies that follow. A study by Huang and Sarigöllü confirmed that there is a positive correlation between brand awareness and brand equity. The results of the study also revealed that price promotion was the most effective method for increasing brand exposure and as a result, brand awareness.
You can do this by offering first-time discounts to new customers or adopting a freemium pricing model. A company that has perfected and profited from the freemium pricing model is the music streaming service Spotify. Other than listening to advertisements between songs, it is essentially free to use Spotify. This increased brand awareness and encouraged usage experience by eliminating the financial risk you take when trying out a new product/service.
However ads are annoying, and Spotify knows this. So to convert you into a paying customer, they offer paid subscriptions that eliminate ads, along with other extra benefits.
2. Build a collection of strong brand assets
Brand assets are visual or auditory elements that represent your brand’s identity and help customers recognise you. These might take the form of logos, fonts, colours, slogans, songs or packaging.
If designed well, brand assets can work together in harmony to aid you in delivering a unified customer experience. For example, a quick browse through the Paradelta Strategy website will tell you that our brand colours are red, black and white, but it is a particular red, black and white... Much like Coca Cola's signature colour red and stylised swish.
3. Communicate your message
Why did you start your business in the first place and what makes you different from your competitors? Are you solving a pesky consumer problem? Do you only source your ingredients from the best local farmers? Or perhaps you’re committed to being environmentally sustainable.
Let your customers know! Integrate this message into your marketing material and make sure to keep it consistent. Eventually, you will attract like-minded customers and even employees who share the same values, creating advocates that encourage others to buy from your brand.
4. Change how customers think and feel about your brand
Positive brand equity stems from a positive association with your brand. If you use celebrities or influencers to endorse your products or services, ensure you take the time to choose the right people for the job. Ideally, you would want their content, personality and values to align with your brand as working with the wrong influencer can very negatively impact how customers perceive you.
5. Listen to feedback and act on it
Unsatisfied customers will hurt your brand equity by spreading negative word of mouth. Look at your recent Google reviews, Instagram comments and customer complaint emails. Customers will typically only share their experience with your brand in the most extreme case – either if they have had a horrible experience or an amazing experience.
Use these reviews to your advantage by keeping up with the things you’re being praised for and take constructive criticism to assess how you can improve for the next customer.
6. Refine the customer experience
Customers are the core of your business and every interaction they have with you matters. These interactions are called customer touchpoints and some examples include reading online reviews, looking through your social media posts, clicking on a link to your website, visiting your store in person, talking to an employee, making a purchase and signing up for the mailing list.
To ensure that your customers are being nurtured throughout their entire experience, review your touchpoints in the shoes of a customer and address any complications that arise.
7. Develop meaningful customer relationships
The most challenging yet rewarding strategy to improve brand equity is to build deep and meaningful relationships with your customers. Depending on the type of business you operate, you can achieve this by:
Building organic rapport with your customers over time through consistent and tailored conversation.
Holding community brand events.
Actively engaging in your brand’s social media by responding to comments.
A great example of the latter is the Lime flavoured Skittles inside joke between the Skittles marketing intern and Skittles Facebook followers. Skittles is a confectionary brand, selling inanimate edible goods. However, the joke has fostered an almost human-like relationship between Skittles and its consumers, where the brand’s social media posts act as a witty conversation between two friends.
From this article, by now:
you have understood how brand equity is measured
calculated your company’s Brand Equity Index
brainstormed how you can make some improvements based on the 7 strategies above
However, if you think you would benefit from more tailored advice and assistance in implementing these strategies, you should consider Paradelta Strategy; a business strategy and brand equity building company that specialises in this area to review and improve your business. Over the years, we have helped businesses across Australia to grow and expand, nationally and internationally and grow significantly in profits. To get assistance with your business, simply email us at firstname.lastname@example.org or schedule a no-obligation discovery call here.