Understanding the Importance of Brand Equity in Business



Brand equity might just be the most underrated superstar in the business world.

Want to trouble the competition? Thinking of increasing customer loyalty? Then please, please, pay more attention to this undeniably important asset.

Here, we'll dig deeper into the magnificent yet at times terribly chaotic and dynamic world of brand equity. It is the number one bee in the bonnet for most marketers out there.

Best strategies to build up the momentum, easy-to-understand definitions, and business results boost — let's dive in and see how you can profit from it!

What is Brand Equity

Brand equity might seem like a nebulous concept, but its impact on a whole company's stock price and value is anything but abstract.

Let's consider an exact example

Apple, a global tech leader, boasts a brand value estimated at a staggering $947 billion. This figure is a sharp contrast to what you see on its balance sheet—their reported assets don't include a brand worth $516.6 billion. Similarly, Google and Amazon showcase immense brand values of $819.6 billion and $705.6 billion, respectively, far exceeding their physical assets.

These tech giants bring with them brand equity that raises their market value at a very high level and gives them one of the most invincible competitive advantages. In fact, allowing them to command premium prices and yet not lose their loyal customers against very strong market competition. Brand equity represents the value related to brand perception, which influences the financial success of a company directly, not fully captured in traditional financial metrics.

Now, enough with the textbook

These are examples of companies with proven power in brand equity.

Kirkland Signature

Kirkland Signature by Costco is a prime example of how a store can build positive brand equity that can transcend its branded product category. According to various analyses, Kirkland Signature has benefited immensely from the positive associations that Costco has nurtured over the years. This has allowed the brand to grow "unlike any other store brand," suggesting that Kirkland Signature has built substantial brand equity that goes beyond the recorded assets of Costco itself.


Jeep may be examined as one of the most loyal audience keepers in its market full of established players. Jeep owners don’t just drive their vehicles; they flaunt them on social media and attend special Jeep-themed events. This trusted brand goes way further than relying on tangible assets only. They've built step by step the level of engagement some aspiring marketers can only look up to.

Halo Top, Evol, Krave, and Ugly Beverages

FMCG is traditionally not only the fastest-moving goods market, but also the one with fastest-scaling marketing industry wars. Differentiating against the Unilevers and Coca-Colas of the respective FMCG sectors is a challenge only the most daring brands can handle. Halo Top, Evol, Krave, and Ugly Beverages, for example, have been able to win market share by building meaningful brand equity, demonstrating that even newer and smaller companies can leverage brand recognition and perception to disrupt traditional markets and grow their influence despite relatively modest asset bases.

Why Is Brand Equity So Important

Brand equity guarantees the success of a business in the long run. Here are several compelling reasons why brand equity is crucial:

Increased Profit Margins

The strong brand equity of a company allows it to charge a higher price for its products and services versus its competitors, though the costs remain comparative. This premium pricing capability leads to enhanced profit margins and lets businesses invest more in innovation and growth.

Competitive Differentiation

Strong branding differentiates a firm from the faceless masses in crowded markets. Ideally, products and services turn more into experiences and memories this way. Remember, the best way to market a simple nail is not by explaining how its metal is stronger than the one in other nails. It is to visualize the joy of the whole household when they gather for dinner and contemplate a family picture or a majestic painting that hangs on this nail. This kind of approach will differentiate the product or service perfectly.

Customer Loyalty and Retention

High brand equity fosters customer loyalty, encouraging customers to keep purchasing from the brand and try new offerings. Loyal customers then further increase the brand's value through word-of-mouth.

Expansion Opportunities

For well-established brands, it's easier to venture into new product categories or markets. This is especially true for umbrella brands. If there are some brands already familiar to customers, they will be more willing to explore further into the umbrella, be it new products or simply the undermarketed ones. Reducing new product launch risks — what's more to wish for?

Resilience to Challenges

Strong brand equity provides resilience against economic downturns and other market challenges. Customers tend to stick with brands they trust during tough times, providing a stable income stream.

Increased Brand Value

Brand equity is an intangible asset that significantly contributes to a company’s overall valuation. There aren't so many purely B2C brands after all. The company's attractiveness to partner businesses is sometimes even more important than ringing the bell inside reguler buyers' minds. Potential investments are never to be underestimated.

Briefly, the benefit of brand equity plays out against competitors with more pricing latitude, customer loyalty, the potential to expand, and resilience for the business. Together, these benefits result in enhanced financial performance and long-term success.

How To Measure Brand Equity

Brand Equity measurement is not an easy task. Some call it science while it's often even considered marketing art. We won't fall into this trap of pompous descriptions, and will just help you with a list of quantitative and qualitative methods designed to capture the brand's real market value.

Here’s how it’s typically done.

Share of Voice (SOV)

This metric measures the share of all brand mentions (both offline and online) that belong to your brand versus the competition. Share of voice is a comparison of the distinctiveness of your brand within the market versus competitors. Visibility and presence — the key factors you will find out with the SOV analysis.

Brand Loyalty and Engagement

Measure customer connection by examining customer retention rates, Net Promoter Scores (NPS), and brand affinity survey results. In this way, you can understand the level of brand loyalty and customer engagement to measure the likelihood of them remaining loyal. This is one of the most important steps in building long-lasting customer relationships.

Competitive Performance

Compare your brand's market share, customer satisfaction, and awareness against those of your competitors. Excelling in these areas typically indicates strong positive brand equity.

Total Brand Value

This comprehensive approach includes both financial metrics, like market share and revenue, and non-financial aspects, such as customer loyalty and reputation. Mixing tangible and intangible assets here is useful to accumulate the whole picture about your brand's chances to shine bright.

Brand Equity Surveys

Direct surveys of consumer perceptions, associations, and feelings toward a brand are crucial. This is of great help to businesses in easily noting some of the key metrics at a glance. Brand awareness, loyalty, perceived quality and value — basically, all you need to know.

Such an approach would allow for brand equity to be evaluated, which is assessing the financial value and the intangible value of the brand name to a firm among consumers. It offers a dual system, meaning businesses can understand both the economic impacts and emotional effects on the audience as they build their brand.

Strategies for Building Brand Equity

Brand equity is the perceived value and impact of a brand on reputation, influence, and financial results. Strong brand equity supports a strategically holistic approach for long-term success. Here are key strategies to build and enhance your brand equity.

Build a Strong Brand Identity and Personality

Make your brand emotionally relatable to customers. Implement efficient and creative storytelling that would highlight the brand's core values and beliefs and make its mission understandable for everybody.

Your brand's vision is 100% clear to you, though you should aim to deliver this same understanding to both your team members and the audience.

A great asset to help you on this quest for a place in people's hearts are logos, colors, typos, and other elements that constitute a complete visual identity of the brand.

Appeal to your target market on a new level by making sure to adjust the brand identity to real painpoints of your buyers.

Ensure High-Quality and Consistent Product and Experience Delivery

Take a customer-needs-based approach, naturally extending your brand into every interaction.

Meet or exceed customer expectations for quality and dependability.

Add a human touch at each customer journey point to foster satisfaction and loyalty.

Promises are meant to be kept. Business is no exception. Help the market trust you with every successfully implemented initiative.

Increase Brand Awareness and Recognition

Partner with a complementary brand or influencer sharing similar values to reach new markets, making your brand visible and strengthening it in potential new customers' minds.

Targeted marketing, online PR and advertising are your guiding stars on the way to consumer awareness.

Develop a brand awareness program using Keller's Customer-Based Brand Equity Model framework.

Remain top-of-mind for customers thinking of your product category to increase the likelihood of your particular brand being chosen.

Engage and Solicit Feedback from Customers

Each business pursues the goal of accumulating capital. Though on your way to financial success, you should always keep track of how successful your customers are when using your products or services. Customer feedback is more accessible than it might seem, and if implemented correctly, surveys will bring you even more insights on what's right and what's the correct way to improvement.

Actively engage with customers through social media, feedback surveys, and other channels to foster positive customer feelings and a sense of community and responsiveness.

Keep your brand relevant to the needs of customers. Make sure to use the insights delivered by your audience to adjust products or services accordingly. The brand experience your customers perceive is like a high quality road that helps your success truck move faster.

Personalization is king. Only fully satisfied customers who see a personal touch in your offerings will eventually grow to become loyal brand advocates.

Be a Good Corporate Citizen

Another area to be aware of is the responsibility of your brand. Today, everybody knows that every business leaves its own portion of impact on environment, social spheres, and whatnot. Your footprint should be as clear from negativity as possible.

Demonstrate your brand's commitment to social responsibility, sustainability, and ethical practices, which can significantly enhance brand perceptions.

Align your brand's values and actions to build trust and foster positive brand associations, which are increasingly important to modern consumers.

Implementing these strategies requires a customer-centric approach that not only addresses the functional needs of your audience but also connects emotionally, building a brand that customers are proud to endorse and remain loyal to.

Here at Bolder, we proudly help responsible brands become the rockstars of their respective categories. Contact us via info@bolderagency.com or use our website's contact section to start your journey to multiplying your brand's force!

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