I had a friend who lived in an Arabic-speaking country in the Middle East. I remember he told me something strange about the interest of the people of that country in the Apple brand and its products, especially the iPhone. “Here, some people take out loans so they can buy the latest iPhone!”

We also saw people around us or our friends who are important to have an iPhone, that half-bitten apple. And it is more important for them to take a picture of themselves with the iPhone 12 Pro Max in front of the elevator mirror. Everyone should know that they also have an Apple.

Among household appliance brands, it can be said that the Bosch brand has the same situation. We heard that it was said that so-and-so’s kitchen service was Bosch! It is not just that Bosch is an expensive brand. It is about something about the Bosch brand itself. The credibility that brand has and as a result makes whatever it produces authentic, desirable and attractive. Everyone knows that the price of Bosch or Apple should be expensive. There is no problem.

The market is willing to pay for some brands. It means that no matter how expensive that brand becomes, it still has customers and is popular. But why? What makes these brands different from others? The difference in Brand Equity (or brand value or special brand value, which of course are not very correct translations and will be explained later) is in the eyes and mind of the market.

What is brand equity or brand value? What are its features and why is it important for businesses (brand owners)? In this article, I will tell you what brand equity really is, why it is important, and how it differs from Brad Value.

What is Brand Equity?

To understand this combination (Brand Equity), we must first see what equity means. Equity literally means justice and fairness, and in the field of economics, it has two other meanings: net value and specific value. When a company’s shares are valuable and sell very well, and the company does not need to borrow or spend money from anywhere, the total net profit from the sale of shares is called equity.

What does this word mean now in the field of digital marketing and branding? When a brand has equity, it sells well and generates net profit for the company and the brand owner. In fact, Brand Equity is a non-financial value and credit that creates financial value (profit) for a product with a specific brand. It means that the product is sold in the market only and only because of the credibility and well-known and influence of that brand and it is given an advantage over similar and competing products.

If you compare the features of the latest iPhone model and the Samsung Galaxy phone, you will realize that they are really similar. Maybe some features of Samsung phone are actually better than Apple. But if they put both in front of someone, the only thing that makes him choose iPhone is Apple (Apple brand).

In marketing, brand equity is the level of sway a brand name has in the minds of consumers, and the value of having a brand that is identifiable and well thought of.

Therefore, the most suitable translation and equivalent for Brand Equity in marketing is the non-financial value of the brand or its special value.

Brand Equity vs. Brand Value

Before discussing the components of brand equity and its importance, I need to talk a little about the difference between Brand Equity and Brand Value. By comparing the two, the brand equity is better understood. It also explains why brand value is not a good equivalent for brand equity.

Brand equity refers to the importance of a brand in the customer’s eyes, while brand value is the financial significance the brand carries. Both brand equity and brand value are educated estimates of how much a brand is worth.

Therefore, brand value and brand equity determine the material value of the brand. Brand value is used to estimate brand profitability, and brand equity is used to measure its credibility and impact in the market.

Why is Brand Equity important?

From what has been said so far, it is clear why eigenvalue is important. Brand equity is important for financial and non-financial reasons. One of the most important factors in the market that causes a customer to choose between two completely similar and competing products; the more impact and credibility of the brand is one of the two.

So, the special value of the brand has a direct effect on the profitability of the product, the company, and also the increase in sales. Businesses should not forget that the brand is also a part of the product they produce. Brand voice must be created and developed. When a brand has superior value, it means that the product line can be expanded under its name. Because the sale of the product is somehow guaranteed.

The market is competitive and new brands are introduced to the market every day. Brands are all looking for longevity and more penetration. Meanwhile, the brand that has superior value and dominates the mind of the consumer of certain goods and services is a more durable brand (Brand Resilience).

The higher the specific value of a brand, the more valuable it is not only for the consumer. Investing in that brand, buying shares of that brand, and even working for that brand are all considered valuable. Therefore, that brand has more chances to attract human capital and talent as well as material.

What are the components of brand equity?

If a brand has the following 5 components at the same time, it has Brand Equity:

  • Brand Awareness: The customer of a specific product is aware of the existence of that brand in the market of that product. That means he knows that brand and its products.
  • Brand Association: Everything that is related to a brand and causes a positive or negative feeling in the customer towards that brand. In other words, the overall image of a brand in the eyes of customers is positive or negative.
  • Perceived Quality (tested and guaranteed quality): The customer is confident that the products that bear the name of this brand are of high quality. The customer’s experience of the brand and its products has been satisfactory.
  • Brand Loyalty: If a customer wants to make a purchase, he first goes to the brand he is loyal to.
  • Other Proprietary Assets: Specifically, it means the trademark and registered rights for a brand, which gives the market and the customer a message about who the brand is for and does not allow a competitor to confuse the customer with the same brand.

How is brand equity created?

There is a very clear answer to this question: businesses must invest in acquiring all 5 components of brand equity. One of the main goals in digital marketing strategy and all decisions and activities related to digital marketing should be to highlight the brand in the mind and opinion of the audience/user.

Marketing professor and author, Kevin Lane Keller, has designed a model based on 4 basic questions that helps businesses build and strengthen their brand influence. This model is known as CBBE brand equity model. When you want to design and manage your brand, answer the following 4 questions accurately:

  1. What is your brand identity? (Brand Identity): This question can be asked in another way, “Who are you, a business?” What is the brand supposed to introduce to the audience? The business must present its identity and its brand superior to others in the eyes of the audience.
  2. What is the meaning of your brand? (Brand Meaning): What does your brand represent? Your brand should represent the excellent performance of the product (satisfying the customer’s need) as well as a distinctive image for the audience.
  3. What is the reaction of the audience (customer) to your brand? (Brand Response): The business must also find the answer to the question of how the customer sees his brand. What is the customer’s judgment and feeling towards the brand? Does your brand mean high quality services and products in the opinion of customers? Does your brand mean a pleasant and satisfying experience?
  4. How is the relationship between the brand and the customer? (Brand relationships): There must be a continuous and productive relationship between the brand and the customer. This connection extends from the brand to the people involved in the business. In order to build this connection, the influence of social networks should not be neglected.

How is brand equity measured?

As mentioned, brand equity is a non-financial concept and an intangible value. That is, it is a more subjective concept. Now, how can this non-financial and mental concept be measured and measured? And asked how much is the value of the brand and the credibility of the brand and the dominance of the brand in the mind and opinion of the customer? It’s hard work. There is no direct way to measure it. Rather, some criteria and figures should be used to reach a general estimate.

Quantitative criteria that can be used to measure Brand Equity include: sales volume, sales growth, profit margin, customer sensitivity to product price, and the number of times the customer has purchased.

The qualitative criteria that can be used include: the reaction of users and customers to the brand in social networks, a survey of customers about their opinion and feeling towards the brand, and also a survey of them about competing brands.

An example of strong and weak Brand Equity (positive and negative)

You probably remember that in 2015, the Volkswagen scandal was the main news for a while. This reputable company had lied about the software that determines the amount of emissions of its cars. After the news of this lie was revealed, the shares of this company fell. This company is still involved in that scandal and has lost a lot of its credibility in the market. It has to work for a long time in order to restore its prestige and influence and its position in the car market.

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