What is brand equity, and why is it important?
Brand equity is commercial value that arises from the buyers’ perception of the name of the products and not from the perception of the goods and services themselves.
Everyone knows that the more they get to know you and the more trust you inspire, the more potential customers will be willing to buy from you.
Thus, brand equity is converted into added value to what the company already has.
Brand equity is the added value a company has when it has a strong and positive brand and public opinion.
Forbes writes that companies that seek to build genuine relationships with their customers and work purposefully to promote brand loyalty reap significant financial benefits over the long term.
Brand equity is significant because it helps:
- create trading platforms that work with a strong brand
- increase the overall profit of the company
- better retain customers thanks to the built loyalty
How to measure brand equity?
Measuring your brand equity is essential to understanding the progress of your market action. That is why it is necessary to take these measurements.
Usually, two indicators are used to measure brand equity: Economic and Emotional.
Economic shows sales data and financial indicators. In general, it is the leading indicator of brand performance. The emotional metric tries to find qualitative reasons to explain emotional decisions and how brands “sit” in people’s minds. Ipsos says that one popular theory is that low attention processing is more critical for ads designed to work emotionally, with less reliance on the information content or rational arguments that depend on or contribute to higher-level cognitive processing.
It is due to the customer attaching their “self-esteem” to the brand messages. By purchasing a product, they agree with the brand values with which they identify themselves. In this way, the product can represent prospects for customers, inspire them, or enhance their self-esteem.
Five ways to measure brand equity:
1. Brand evaluation
This metric determines the value of a brand by reflecting its contribution to the company’s success. You can measure the financial value of a brand considering the cost of creating and developing a brand, the market value of the offered product/service, the profitable deal that has benefited the company through brand development.
2. Brand strength
This is a more emotional indicator that considers the value difference that a brand has acquired in someone’s mind as a result of many interactions over time.
3. Brand awareness
This metric provides insight into how well your brand is known to your target customers, market, and key stakeholders.
4. Relevance of the brand
Brand Relevance indicates whether your customers agree that a brand has a unique value. It provides an opportunity to increase your brand equity as the brand is perceived as more valuable and relevant to your target market or to fulfill a specific purpose.
5. Financial data
It is the easiest way to understand if you are successful with your brand. Analysis of financial indicators always gives dry numbers and data about your marketing policy.
How to start measuring your brand equity?
We know building brand equity is not accessible – top companies spend years building a brand to do just that.
However, you can contact MLSDev – software development company, for expert opinion and reliable measures of brand equity.
Author’s bio: Anastasiia Lastovetska is a technology writer at MLSDev, a software development company that builds web & mobile app solutions from scratch. She researches the area of technology to create great content about app development, UX/UI design, tech & business consulting.
