The rise and fall of brand equity

The rise and fall of brand equity

The concept of building up equity in something is one that most of us are familiar with when it comes to the property market. Purchasing a property with a mortgage means building up equity in that investment the more the mortgage is paid off. Brand equity is very much a similar concept, essentially a way of identifying the value of a brand and looking at the ways that it successfully interacts with a customer base. The more equity a brand has, the more it is worth. Brand equity is not just a smart piece of jargon; it's a real metric that has a lot of insight to offer.

What is brand equity?

Brand equity is something that every business has, whether that be a start-up or a well-established enterprise. In very simple terms, it's the commercial value of the brand in the eyes of the consumer. Brand equity comes from how the customer feels about the brand as a whole, rather than from the products and/or services that it provides. This may have been developed from a range of different sources, including the experience that a customer has had with the brand. The idea behind brand equity is that the higher the brand is valued by the customer, the more loyal consumers will be, and the more they will be prepared to pay and buy from it.

Why is brand equity important?

It gives an impersonal business a relatable face

Brand equity emerges when the business begins to develop a personality that is based around brand values and the attributes that make the brand engaging and relatable.

Brand equity is crucial when it comes to being competitive

Businesses with low brand equity tend to fare less well against competitors than those that have built up a high level of brand equity over the years. In a crowded marketplace, brand equity can help to distinguish one enterprise from another, and create bonds with consumers that lead to loyalty.

It feeds into internal culture - which is reflected in the outward face of the brand

Brand equity is defined by initial core values and also reinforces them. Without a degree of focus on brand values over the years, those values can begin to distinguish, creating a weaker culture and a less distinct sense of what the brand is really about. Strong internal culture and strong brand equity reflect each other and help to generate positive perspectives, internally and externally.

Creating brand advocates

When brand equity reaches a certain point, it can begin to convert both customers and employees into strong brand advocates. It's those advocates who go out into the market and organically sell the brand and its attributes. Not only is this process crucial to the success of a brand, it can also be much more effective than relying on more impersonal, less organic methods, such as advertising.

Brand equity is crucial to cultivate for any business today. Investing time and resources in generating positive brand equity can make the business culture stronger, and improve customer and market perception, too - often with impressive results.

But, brand value is under threat!

In our increasingly digital-first world, brand loyalty is on the wane. The era of the disloyal consumer is upon us; as confirmed in our 2017 survey "Buying Tomorrow". Shoppers are now prioritising speed, innovation, and convenience when they shop. And, with 45% currently using (or likely to use) Amazon Echo, Alexa, or Google Home in the next 12 months, brands may be further squeezed as these devices serve up their preferred products as the order or re-order choice.

Find out more about brand disloyalty