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Brand Equity: Building a Brand That Thrives in Today’s Market

A strong brand can be a company’s most valuable asset in today’s competitive business landscape. However, having a brand is not enough; businesses must strive to build, nurture, and leverage what is known as ‘brand equity.’

Brand equity refers to the perceived value a company gains from the customer’s positive perception of its brand name, products, or services. This is over and above the inherent value of the product or service. As a result, the intangible essence can significantly influence customer preference and, ultimately, their buying decisions.

Substantial brand equity means your customers recognize your brand, have positive associations with it, perceive your products or services as high quality, and exhibit loyalty to your brand over competitors. But why does brand equity matter so much?

Substantial brand equity can lead to numerous business benefits, such as the ability to charge premium prices, reduced marketing costs, more customer loyalty, and greater company value. In essence, it can provide a business with a significant competitive edge.

This article will delve deep into brand equity, its components, benefits, and how it can be measured. Furthermore, we’ll provide an extensive guide on how to build brand equity and discuss common mistakes to avoid during the process. Finally, we’ll also explore the role of digital marketing in enhancing brand equity and provide real-life examples of successful brand equity building.

Understanding the Components of Brand Equity

Brand equity is not a single-factor concept; instead, it’s a mix of various components that together determine the strength and value of a brand. Let’s discuss these in detail:

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Brand Loyalty

Brand loyalty is the first and arguably most important component of brand equity. Loyal customers are less likely to switch to competitors, even in the face of price changes or convenience. They are also more likely to recommend the brand to others, bringing in new customers. According to a study by Yotpo, 60% of loyal customers will purchase more frequently from their preferred companies.

Brand Awareness

Brand awareness represents your target audience’s familiarity with your brand and how well they recognize it. Brands with high brand awareness are generally referred to as “trending,” “buzzworthy,” or simply “popular.” It’s estimated that a brand takes 5 to 7 impressions to be remembered, emphasizing the importance of consistent and impactful marketing.

Perceived Quality

Perceived quality is the customer’s perception of a product or service’s overall quality or superiority. This perception can be based on product performance, customer service, or the brand’s marketing communications. For instance, a survey by PWC found that 73% of all people point to customer experience as an essential factor in their purchasing decisions.

Brand Associations

Brand associations are the thoughts, feelings, and attributes consumers associate with a brand. These associations can be formed through personal experiences, advertising, word-of-mouth, price, or the brand’s logo and design elements. For example, Apple is often associated with innovation, high-quality design, and user-friendliness.

The Benefits of Strong Brand Equity

Increased Customer Loyalty

As mentioned earlier, brand equity fosters customer loyalty. Loyal customers are less sensitive to price changes and more likely to recommend the brand to others. A study by Bain & Company found that increasing customer retention by just 5% can increase profits from 25% to 95%.

Price Premium

Brands with high equity can charge a premium for their products or services because customers perceive them as superior. For instance, customers are willing to pay higher prices for Apple products because they perceive their quality to be superior.

Brand Extension Opportunities

With strong brand equity, businesses can successfully embark on brand extension strategies to extend their brand to launch new products. Think of Google extending its brand from search engines to email, cloud storage, and beyond.

Enhanced Marketing Communication Effectiveness

When a brand has high equity, its marketing communications are more effective because the target audience is already familiar with and positively associated with it.

Competitive Advantage

Last but not least, strong brand equity provides a competitive advantage. It makes a brand stand out in the crowded marketplace, making it difficult for competitors to gain a foothold.

The following section will discuss how businesses can measure their brand equity.

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Measuring Brand Equity

Once you understand the importance of brand equity, the next step is to measure it. This can be done directly or indirectly, each with advantages and drawbacks.

Direct Methods

  1. Brand Audits: A brand audit is a comprehensive examination of a brand’s current position in the market compared to its competitors. It involves analyzing a brand’s differentiating strengths, weaknesses, opportunities, threats, customer perception, and experience.
  2. Brand Tracking Studies: These are regular, periodic surveys that monitor the health of a brand over time, tracking changes in brand awareness, brand usage, brand loyalty, and brand associations. According to HubSpot, companies that measure customer satisfaction are 33% more likely to describe themselves as successful than those that don’t.

Indirect Methods

  1. Residual Methods: These methods measure brand equity by analyzing the residual impact of a brand on the consumer’s mindset. This could include elements like the number of brand mentions in social media or the level of customer engagement.
  2. Brand Valuation Methods: This approach measures the monetary value of a brand, considering factors like market share, brand awareness, brand loyalty, and profits. As of 2021, Apple was considered the most valuable brand in the world, with an estimated brand value of about 263.4 billion U.S. dollars, according to Statista.

Quantitative Measures

  1. Brand Equity Index: This is a composite score derived from various factors like brand awareness, brand quality, brand associations, and brand loyalty.
  2. Customer-based Brand Equity Pyramid: Proposed by Kevin Lane Keller, this pyramid model measures brand equity in six stages: brand salience, brand performance, brand imagery, brand judgments, brand feelings, and brand resonance.

The methods and measures you apply will depend on your business and marketing goals. However, remember that building brand equity is a long-term process, so monitoring and measuring it regularly is crucial.

Now that we understand brand equity, its benefits, and how to measure it, let’s move on to the exciting part – how to build brand equity.

How to Build Brand Equity

Building brand equity is a long-term commitment that involves strategic planning, consistent execution, and continuous monitoring. Here’s a step-by-step guide to help you build strong brand equity:

Establishing Brand Identity

  1. Choosing a Strong Brand Name: The brand name should be unique, easy to remember, and reflect your business’s nature. According to Siegel+Gale, easily pronounced brands can see their stock prices increase significantly more than their difficult-to-pronounce counterparts.
  2. Developing an Effective Logo: An effective logo helps to create a strong visual association with your brand. For instance, McDonald’s golden arches or Apple’s apple are universally recognized symbols immediately bring the brand to mind.

Building Brand Awareness

  1. Effective Marketing Strategies: From traditional advertising (like TV and print) to digital marketing (like social media and email), businesses should use a mix of strategies to reach their target audience. According to Statista, in 2022, over 4.6 billion people were active Internet users, making digital marketing a must-have strategy.
  2. Leveraging Social Media: Social media platforms are a great way to reach a large audience and engage with them directly. As of 2021, there were around 3.96 billion social media users worldwide, according to Datareportal.

Enhancing Perceived Quality

  1. Consistent Product Quality: Ensuring your products or services maintain a high-quality standard is essential. A study by McKinsey found that for 70% of buying experiences, quality is the key driver of customer satisfaction.
  2. Excellent Customer Service: Top-notch customer service can enhance your brand’s perceived quality. A study by PWC found that 73% of consumers say a good experience is vital in influencing their brand loyalties.

Fostering Brand Associations

  1. Sponsorship and Partnerships: Associating with other brands or events can help create positive brand associations. For instance, Coca-Cola’s association with the Olympic Games has helped reinforce its global, inclusive brand image.
  2. Creating Emotional Connections: Brands that evoke strong emotions often create strong brand associations. According to a study by the Harvard Business Review, emotionally connected customers are more than twice as valuable as highly satisfied customers.

Fostering Brand Loyalty

  1. Reward Programs: These encourage repeat purchases and foster loyalty. Yotpo found that 52.3% of consumers would join a loyalty program for a brand they frequently buy from.
  2. Consistent Engagement with Consumers: Regularly communicating with your customers, listening to their feedback, and addressing their concerns can help foster brand loyalty. A study by Microsoft found that 96% of consumers worldwide say customer service is an essential factor in their choice of loyalty to a brand.

The following section will look at real-life examples of successful brand equity building.

Real-Life Examples of Successful Brand Equity Building

To better illustrate the concepts we’ve discussed, let’s examine three real-life examples of brands that have successfully built strong brand equity:

Example 1 – Apple

Apple has built its brand equity through innovative products, high perceived quality, and strong brand loyalty. According to Forbes, Apple will be the world’s most valuable brand in 2023, with a brand value of $263.4 billion. In addition, apple’s simple, sleek logo is instantly recognizable worldwide, and the company’s dedication to product quality and innovation has fostered a loyal customer base willing to pay premium prices.

Example 2 – Nike

Nike is another excellent example of successful brand equity building. It has fostered strong brand associations through celebrity endorsements, partnerships, and a powerful message of empowerment and achievement. A survey by Statista in 2020 found that Nike was the most popular apparel/footwear brand among average-income teenagers in the United States. Nike’s iconic swoosh and “Just Do It” slogan is instantly recognizable, contributing to its strong brand awareness.

Example 3 – Coca-Cola

With its strong brand equity, Coca-Cola has become more than just a beverage company; it’s a part of global culture. Its logo, packaging, and the distinctive shape of its bottles have made it one of the most recognized brands in the world. Coca-Cola also leverages emotional marketing effectively, associating its products with happiness and togetherness. According to a report by Interbrand, Coca-Cola was the sixth most valuable brand globally in 2021.

Common Mistakes in Building Brand Equity and How to Avoid Them

Building brand equity is a complex process and, as such, prone to mistakes. Here are some common errors businesses make and how to avoid them:

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Inconsistent Branding

Whether in visual elements, messaging, or customer experience, brand inconsistency can confuse consumers and weaken brand equity. To avoid this, create a brand style guide that clearly defines your brand’s visual elements, tone, voice, and overall messaging.

Neglecting Customer Feedback

Ignoring customer feedback can lead to decreased perceived quality and brand loyalty. To prevent this, regularly solicit customer feedback, respond promptly, and use it to improve your products or services.

Over-reliance on Price Promotions

While price promotions can drive short-term sales, over-reliance on them can damage your brand equity in the long run as it may lower perceived quality. Instead, focus on building value through quality improvements, customer service, and nurturing positive brand associations.

In the next section, we’ll explore the role of digital marketing in building brand equity.

The Role of Digital Marketing in Building Brand Equity

Digital marketing is pivotal in building and enhancing brand equity in today’s increasingly digital world. Here’s how:

Utilization of Social Media

Social media platforms are a powerful tool for building brand awareness, fostering brand associations, and improving customer service. Brands can engage with their audience, promote their products, and handle real-time customer queries or complaints. According to Datareportal’s 2021 report, people spend an average of 2 hours and 25 minutes on social media daily, underlining the platform’s importance for brands.

The Power of SEO and Content Marketing

Search engine optimization (SEO) and content marketing help brands reach a larger audience and build brand awareness. SEO increases a brand’s visibility on search engines, while high-quality content can establish a brand as an industry expert. For example, a study by HubSpot found that brands that blog generate 67% more leads than those that don’t.

Influencer Partnerships

Influencer marketing can create positive brand associations and increase brand awareness. Businesses can reach a larger and more engaged audience by partnering with influencers whose values align with the brand. According to a report by Mediakix, 89% of marketers say the ROI from influencer marketing is comparable to or better than other marketing channels.

Businesses can significantly enhance their brand equity by leveraging these digital marketing strategies. First, however, it’s crucial to ensure that digital marketing efforts align with the brand’s overall identity and goals to maintain consistency and authenticity.


Building brand equity is a long-term process that requires strategic planning, consistent execution, and continuous measurement. It involves establishing a strong brand identity, building brand awareness, enhancing perceived quality, fostering brand associations, and promoting brand loyalty. Digital marketing is crucial in this process, helping brands reach a larger audience and engage with them effectively.

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By avoiding common mistakes and leveraging the strategies discussed in this guide, businesses can build strong brand equity, giving them a competitive edge and driving long-term success. Remember, your brand is your promise to your customer, so make it count. Whether you’re a new business or an established one looking to boost your brand, the importance of brand equity cannot be overstated. So, start building your brand equity today, and watch your business grow.

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