In today’s rapidly evolving world, buyers have an attention span of just 8 seconds. Worse still, that attention span decreases by 88% year on year. To add to that problem, there are hundreds of companies competing for your audience’s attention. Hence, building a brand and creating brand equity is no longer just an option. It’s a must.

In this two-part blog, we will take you through our Simplified definition of brand equity, how you can develop it, and the best ways to measure its success, with several case studies as examples.

Brand Equity – An Overview

In simple terms, brand equity is the premium value a company generates with its product, values, or identity. The customer’s perception of the brand determines this. Therefore, it can be positive or negative.

Brand Equity Meaning

Brand equity helps you achieve the critical aim of raising the value of your brand while also giving insights into what your customers want. It has three basic components, namely:

  • consumer perception (what consumers believe the brand represents)
  • positive and negative effects (what the brand’s reputation is viewed to be)
  • resulting value ( the ROI of the brand for the business)

When writing a brand equity definition for your company, remember that it will have a direct impact on the company’s sales volumes and profitability (more on this in the next blog). Additionally, often companies in the same domain compete on the basis of brand equity.

Importance of Brand Equity

  • Companies with positive brand equity can charge a premium for products (think of designer brands).
  • Positive brand equity can be transferred to a different product line. This in turn increases sales and revenues for the company.
  • Furthermore, companies with positive brand equity can increase market share, as the brand is widely known and trusted by consumers.

Related: Your Ultimate Guide To Product Branding

How do you develop Brand Equity?

There are multiple models for developing brand equity. Keller’s Customer-Based Brand Equity Model is the most commonly used model today. Let’s take a look at how it works.

Keller’s Brand Equity Model

Keller’s Brand Equity Model is also known as the Customer-Based Brand Equity Model. Kevin Lane Keller, a marketing professor at the Tuck School of Business at Dartmouth College, developed the model and published it in his widely used textbook, “Strategic Brand Management.”

How customers think and feel about your products forms the core of this model. You have to build the right experience around your product so that customers have optimistic, positive feelings about it.

The four steps of the Keller’s Pyramid represent the four fundamental questions that your customer will ask about your brand.

Source: Papirfly

Step 1: Brand Identity- Who Are You?

At the foot of the pyramid is salience. In simple terms, this represents how aware people are of the existence of your brand. This can also be referred to as brand awareness. On average, it takes 5 to 7 impressions for people to remember your brand.

If people don’t know who you are, they won’t be able to form an opinion about you. It’s important to realize that you’re not just creating brand awareness here. You’re also making sure that people perceive your brand the way you want them to at each stage of the buying cycle.

Step 2: Brand Meaning- What Are You?

Performance and Imagery form two segments of the second level of Keller’s Customer-Based Brand Equity model. Performance covers the following aspects of your product:

  • Functionality
  • Reliability
  • Style/Design
  • Price
  • Durability
  • Customer Service
  • Customer Satisfaction

Your product must deliver the promises you made during your brand awareness campaign. Moreover, authentic experiences are key in developing loyalty amongst your customers.

Alongside performance is imagery, which is more about how your brand meets your customers’ social and psychological needs.

Step 3: Brand Response- What Do I Think, or Feel, About You?

Similarly, Keller’s pyramid also splits the third strand into two. It covers judgments and feelings. To be precise, this strand covers how people feel about your brand.

Typically, the judgment of a brand can be broken down into four segments:

  • Quality: the brand’s actual and perceived quality
  • Credibility: the brand’s reputation
  • Consideration: the brand’s relevancy
  • Superiority: the brand’s status against its competitors

People can also form an opinion about your brand from word-of-mouth. In fact, 64% of marketers agree that word-of-mouth is the most effective form of marketing.

The other half of this level is feelings. As the name suggests, this covers how people feel about your brand. There are 6 main positive feelings that most companies should aspire to be associated with:

  • Warmth
  • Security
  • Excitement
  • Fun
  • Social Approval
  • Self-Respect

According to research, 64% of women and 68% of men have felt an emotional connection with a brand. Associating with any of the above feelings is crucial to customer-based brand equity and building trust amongst consumers.

Step 4: Brand Relationships- How Is Your Brand Resonating With Customers?

Finally, we’ve reached the last step, the holy grail of customer brand equity- resonance. This is what you should strive for. Your relationship with your customers has surpassed buying and loyalty, and they’re now your advocates. Keller breaks down resonance into 4 parts:

  • Behavioral Loyalty- regular, repeat purchases
  • Attitudinal Attachment- the love and connection people feel towards your brand
  • Sense of Community- the sense of belonging your customers feel amongst themselves
  • Active Engagement- this is the strongest pillar of brand loyalty. Measures how actively customers are engaging with your brand. Includes social media, subscribing to newsletters, and more.

Related: What We Learned From The Best Marketing Campaigns of 2020

We hope you found this blog helpful for getting started on defining a brand equity model for your company. In the next part of this blog, we’ll take you through an exercise of building the Keller’s Brand Equity model, how to measure brand equity, and some case studies. Watch out for more!

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