What is Brand Equity?
Brand equity is one of the added values for a business' product/service in the mind of customers and consumers. This value reflects how consumers perceive, feel, evaluate, compare, react about a brand (product/service, business) compared to other competitors in the market.
In a nutshell, brand equity is what customers and consumers think about your products/services and your business when you're not there.
Brand equity is formed and accumulated throughout the course of business operations, from the way the business distributes products/services to consumers, to the customer's perception & experience during use. products, how businesses treat employees, workers, how businesses behave with society...
Elements that make up brand equity
Brand equity is made up of the following four factors: brand awareness, brand association, brand perceived quality and brand loyalty.
- Brand awareness: How many customers and consumers in the market know the existence of that brand.
- Brand association: When mentioning the brand of your business, what will customers immediately think of?
- Brand perceived value: In addition to product quality and price, what other benefits do customers perceive when choosing to use products bearing that brand?
- Brand loyalty: How many loyal customers does your business have, what percentage of the total number of customers of your business? Who are they? Why are they loyal to the brand of the business?
Characteristics and the importance of brand equity
The formation and existence of brand equity is due to the difference in the way consumers react. Without this distinction, a brand is merely a brand, and competitive advantage is based almost exclusively on price. Therefore, brand equity is one of the important factors that makes customers able to accept to pay a higher price than competitors to be able to own products/services of the business.
Brand equity is reflected in the perceptions, emotions and behaviors of consumers in matters related to the business.
Brand equity is a factor that helps businesses survive and develop sustainably in the market for a long time.
Benefits from brand equity
As mentioned in the definition, brand equity is the perception, perception and attitude of customers and consumers towards the brand of the enterprise. Therefore, those perceptions, emotions, and attitudes can be positive or negative. Only positive factors make brand equity, while negative factors will harm the development of the business.
Here are the benefits of brand equity:
- Raise awareness of consumers and customers about the value of products
- Increase customer loyalty
- Limit the risk of harm caused by the impact of competition
- Limit the risk of damage caused by the economic downturn
- Increase profit margin
- Limit negative thoughts of customers and consumers when businesses increase or decrease product prices
- Greater opportunities for cooperation and investment and support
- Improve efficiency in communication and promotion
- Improve efficiency in recruitment
- Increase stock value