Brand equity is the commercial worth derived from the consumer’s perception of the brand name of a particular product or service. It is the social value of a well-known brand. It can make the brand owner generate more revenue simply from brand recognition.
Brands want equity because it helps increase consumer loyalty and, therefore, sales and profits. It is believed that positive brand equity enables the brand to charge higher prices due to the perceived value in the market.
Brand equity can be measured using two methods:
- Economic (O Data): Operational data like sales, HR, and finance. It can be calculated into quantified numerical values. It can be estimated more easily than emotions and feelings but is wholly based on past events.
- Emotional (X Data): Measuring brand equity using experience data such as qualitative reasons people’s thoughts about the brand. The process of building a mental advantage
1. Brand Awareness
Brand awareness refers to the capability of a business to understand how well the target market and key stakeholders know the brand. It is based on the emotional metric of measuring data. It can be measured by asking various questions such like:
- Customers future intention about buying the product
- Customers current brand awareness
- The measure of the customer’s time that is passed speaking about the brand in day-to-day conversations
- Purchase history of Target market customers
Essential usage medium to collect information would be-
- Customer feedback
- Sales data
- Brand perception surveys
- Website search volumes of brand
2. Brand Evaluation
Brand evaluation is a process of measuring brand equity and trying to understand the total value of the brand as a monetary asset that could be included in the business balance sheet. It shows that the worth of the brand reflects the brand’s contribution to the company’s success.
The estimation of the brand value or the agreement of direction changes and differs from year to year.
The brand equity worth is to be considered in three terms:
- Cost value: Cost value refers to creating and building a brand. It could include the budget of spending on an advertisement, trademarking, or licensing.
- Income value: Income value refers to the value brought into the company or how much the company has saved by growing the brand.
- Market value: Market value refers to the worth of anything when put into the market to sell. Comparison is to be made with similar companies and brands
3. Brand Strength
Brand strength is the power of the brand that can be measured using the emotional data of measurement. Emotional data calculation refers to the brand’s differential value due to the requirement in someone’s mind that leads to multiple interactions over the period.
A company’s equity is always in alignment with “Attitudinal strength or the strength in minds. ” It can also be considered a proxy measure for relative consumer demand for the brand.
The consumer’s want ability and relative preference for the brand can be measured through a series of evaluative questions and frameworks. Consumer surveys are also helpful in calculating brand strength.
Some standard models for establishing companies’ brand strength are Millward Brown’s MDF framework, Ipsos’ brand value creator (BVC), and TNS’ conversion model (CM).
4. Brand Relevance
Brand relevance is directly connected to customer satisfaction. It should be considered whether the customers agree that the brand provides unique value to society. Knowing brand relevance helps increase brand equity level as the brand is perceived to be more valuable and relevant to the target market for specific purposes.
Some ways to calculate and measure the brand relevance are:
- Customer satisfaction surveys. They will help understand customer satisfaction level with the brand, product, services, and experience.
- Net promoter score could help provide insight into the customer’s emotional connection to the brand, indirectly increasing brand loyalty.
- Using conjoint analysis is based on statistical service technique. Eight boards reveal the consumer decision-making process and customers’ value on the brand’s features and abilities.
5. Output Metrics
Using output methods such as email marketing or social media messaging, one can build up brand equity. Output metrics relate to the actual operational data that could talk about the business’s effort and worth of investment. Email marketing will improve brand equity and enhance brand awareness and perception. When the brand awareness grows, the revenues are also considered to improve.
It can be measured using the information gained from sales transactions about some of the promoted brand products. The pricing power and brand-ability to command a premium market without losing business to a competitor are directly associated with the brand equity in the consumer and service market.
Methodologies for investigating outputs can be termed as:
- Analysis of variance testing (ANOVA)
- Cost comparison of pricing valuations and abilities
- Customer responses to the communication call in action.
- Loyalty program establishment
6. Competitive Metrics channel
Knowing about the company’s situation in the competitive market is very important. Every business must understand how their brand equity performs within the competitive circular market. Our competitor’s analysis can be conducted to evaluate the competitor’s strengths and weaknesses and, in turn, compare it to the brand.
Some variance points can be:
- Acquisition rate
- Dominance in the market and position
- Social media engagement and following
- Revenue generated through channels
7. Financial Data
It is easy to understand product or service brand equity through the business’s financial results and sales performances. It is measured using the economic measurement data tool. Historical data is necessary to assess brand performances in various sections like revenue, price, profitability, growth rate, the cost to retain customers, cost to acquire a new customer, and branding investment of the business.
Critical indicators of good brand equity are:
- Value of a customer for lifetime
- Premium segment of price in comparison to competitors
- Revenue growth rate
The Bottomline
Brand equity can be built keeping in mind various vital segments. Building good brand equity can increase sales and gain of the business. The customer is the king of the market, and thus the perspective is crucial for establishing a good image and market standing. Through these seven ways, businesses can build a strong vision and function efficiently with the loyalty of consumers. Maction can help take your business to the next stage of growth. Through proven practices of market research and cutting-edge technology, we are known to bring you fresh insights and perspectives that will change the way you look at your business. Book a call today and see what a market research strategy can do for your business.
