Brand Equity is a marketing term that describes a brand’s value which is determined by consumers’ understanding and exposure to the brand. If people think favourably of a brand, it is regarded as positive brand equity.
Businesses establish brand equity by creating positive experiences that entice consumers to continue purchasing from them over competitors who make similar products.
Brand equity is typically attained by generating awareness through campaigns that speak to target-consumer values, delivering on promises and qualifications when consumers use the product, and loyalty and retention efforts.
When a brand dissatisfies and continuously does not meet the required standards, people tend to recommend others to avoid it. Hence, it has negative brand equity in that case.
Brand Equity consists of seven key elements: awareness, reputation, differentiation, energy, relevance, loyalty, and flexibility.
Each element contributes toward the overall value of the brand, and an analysis of each one of them can help you figure out where to focus your marketing efforts. The 7 elements of Brand Equity are as follows:
- Awareness – Awareness of the brand name among target customers is the first step in the equity-building process. In simple words, awareness means that the customer is aware of the existence of the brand. Building awareness involves making the brand visible to the relevant target audience by various promotional methods such as publicity, sponsorships, events, advertising, instigating word-of-mouth promotion, etc.
- Reputation- Increasing brand awareness is not always enough to have positive brand equity. Building a strong reputation among consumers plays a vital role that contributes toward positive equity. Providing high-quality products and high-quality service helps build strong positive equity.
- Differentiation- Being distinct from the competition serves a major part in enhancing the value of your brand. Having a different personality helps stand out from the pack which helps build positive equity.
- Energy- Brands convey energy in the form of presenting innovative ideas to the public. It creates an image for the outside world that the brand is always creating something new which enhances excitement and updates convey energy.
- Relevance- It is very important to know that you are targeting your brand to the right audience. Your products or services may be applicable but not useful to the customers you are targeting. Hence, the target audience plays an important role in positive equity.
- Loyalty- It is really important to examine the customers that are loyal to you, why are they loyal? There has to be a reason. It can be an extra service provided by your corporation that is not provided by others.
- Flexibility- Being flexible means being able to incorporate some other products under your brand in case you develop one in the future. Also, it gives you a chance to identify your brand as a whole.
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