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January 2020
7 Min read

Measuring Brand Equity

Irina Yaroshenko

International Sales Manager +4314120126

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If product or services your company supply do not meet your customer expectations, then your business is not going to be successful.

The quality of your goods or service is far not the only factor that influences your company prosperity. It is important to find out your customer’s attitude to the label.

People usually have a universal perception of products from the world-known companies, and such acceptance contributes a lot to the company’s value. This value is a company’s brand equity (BE). 

Definition: What Is Brand Equity In Business

A brand is a promise of benefits to a customer or consumer (company or individual client). In turn, BE is an expectation or desire for a label to live up to its promise of benefits.

BE is a complex concept that includes two parameters: label strength and its value. The value of a label is determined by studying the added cost that a consumer is willing to pay for purchasing brand products. Label strength is responsible for the long-term preservation of current brand’s value.

In world practice, the following components of BE are distinguished:

  • Price markup — an additional cost that consumer is willing to pay for the label in comparison with competitive products.
  • Retail price.
  • Loyalty — label satisfaction level, which ensures regular purchases of goods and helps overcoming price sensitivity.
  • Perceived quality — label’s image characteristic endowed by consumer in relation to other market goods.
  • Leadership — market position, expressed in market share, market share stability.
  • Brand identity — label’s characteristic properties that differentiate it from other market products.
  • Awareness — an indicator showing the degree of brand awareness in the market.
  • Degree of distribution — market coverage.

Why Is Brand Equity Important to Business?

BE is a combination of assets. If you manage creating a strong label, you will gain the following benefits:

  • keep a fairly high price for a particular product;
  • create additional cash flows through a fairly high trade margin;
  • it is relatively easy and without additional costs increasing the base of loyal consumers;
  • expand the list of offers under one label and at the same time reduce the cost of their promotion;
  • receive high competitive advantages and reduce competitors’ influence in the market.

How to Measure Brand Equity?

There are 3 metrics for measuring BE:

  • knowledge (estimates your label popularity);
  • preference (identifies the way clients perceive label);
  • financial (analyzes your company financial situation).

BE can be measured following 3 strategies.

Reach Agreement.

Make sure your colleagues know what BE term means. Everyone should be aware of its analysis goals and importance. Single aim and choose an appropriate metrics.

Analyse Concerns and Trends.

Investigate your sphere as a whole. Evaluate your competitors. Take a look at your enterprise. What do you do for strengthening customer loyalty or offering added value to fans? How have you adapted your service to customer expectations? Were these initiatives worth the effort? Identify problems and spot their reasons. Aim at understanding your customers’ needs and desires.

Conduct quantitative and qualitative assessment.

Using surveys and questionnaires, evaluate and consider your customer satisfaction, label recognition and emotional connection.

How to Improve Brand Equity?

Analyzing the process of BE formation, David Aaker, a marketing, advertising and branding specialist, identified 5 consumer groups that differ in their attitude to the label, namely:

  • no brand loyalty;
  • a consumer has no reason for changing addiction to this product;
  • a buyer suffers losses when changing the brand;
  • a customer appreciates the label;
  • a client is devoted to it.

These five categories of assets (consumer label loyalty, label awareness, perceived label quality, label associations, other label-related assets), also called brand metrics, are the basis for emergence of BE, which in turn creates value for customers and company. The BE value depends on how many customers can be attributed to the last three groups in terms of their relationship to the label. Thus, we come up to the point of increasing brand loyalty that contributes to strengthening BE.

Scheduling Worldwide Approach

In case you have a need to measure brand equity of your enterprise, our marketing experts can conduct brand open audit at your request and provide valuable advice. Just make one click for learning more.

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