Brand Marketing

A Guide To Brand Equity: Model, Sources And Examples

March 17, 2023
min read

Imagine you are at the grocery store, trying to decide between two different brands of cereal. One is your usual go-to, but the other is a brand you have never heard of before. Even though the ingredients and nutritional information are virtually identical, you end up choosing your trusty old brand. Why? That's the power of brand equity at work.

Brand equity is the value a brand brings to a product or service. It is what sets one brand apart from another and makes it desirable to consumers. Understanding brand equity is crucial for any business looking to build a strong, recognizable brand.

In this guide, we will dive into the brand equity model, the sources of brand equity, and real-life examples to give you a better understanding of what brand equity is and how you can use it to benefit your business. So whether you are a small business owner or a marketing professional, this guide is for you.

What is brand equity?

Brand equity is the value a brand brings to a product or service beyond its functional attributes. It is the perception and emotions that people associate with a brand, which can ultimately impact their purchasing decisions. Simply put, it is what sets one brand apart from another and makes it desirable to consumers.

The importance of brand equity in marketing

Brand equity is an important concept in brand marketing because it has the potential to drive significant value for a business. Strong brand equity can lead to increased customer loyalty, higher prices for products and services, and improved overall brand recognition. This, in turn, can drive growth for a business and create a competitive advantage in the marketplace.

According to Edelman’s report, a whopping 81% of buyers said they need to trust a brand for them to make a purchase. So, if you want your brand to grow, you need to have influence in the market.

Benefits of building substantial brand equity

There are several benefits to building strong brand equity, including:

  • Increased customer loyalty: Customers are more likely to stick with a brand they know and trust.
  • Higher prices: A powerful brand equity can allow a business to charge higher prices for its products and services.
  • Improved brand recognition: A prominent brand equity in the market can lead to improved brand recognition and greater brand awareness, making it easier for customers to find and choose your products or services.
  • Increased credibility: Brand equity can help build credibility for a business, making it more trustworthy and reliable in the eyes of customers.

What is the difference between brand equity and brand awareness?

Brand equity and brand awareness are similar yet distinct concepts in the world of marketing. While brand equity refers to the value a brand brings to a product or service beyond its functional attributes, brand awareness refers to how recognizable and familiar a brand is to consumers.

Where brand equity and brand awareness overlap

Both brand equity and brand awareness are important for building a successful brand, and they often overlap in important ways. For example, a brand with high brand equity is likely to be well-known and recognized by consumers, and a brand with high brand awareness may have significant brand equity.

Here are some examples to help illustrate the differences between brand equity and brand awareness:

Brand equity: Coca-Cola is a good example of a brand with dominant brand equity in the market. People associate the brand with happiness, fun, and a sense of nostalgia. As a result, consumers will pay a premium for Coca-Cola products, even though there are other cola brands available.

Brand awareness: Nike is a good example of a brand with high brand awareness. People all over the world know and recognize the Nike brand and its famous ‘swoosh’ logo. However, the brand equity of Nike goes beyond simple recognition, since it also represents quality, innovation, and athleticism.

What are the factors affecting brand equity?

Understanding the influence of key factors can help businesses build and maintain unshakeable brand equity. Here are some of the key factors that can affect brand equity:

  • Quality: The quality of a brand's products and services is a key factor in building brand equity. Customers expect high-quality products from well-established brands, and if a brand consistently delivers on this expectation, it can help build brand equity.
  • Brand awareness: As mentioned earlier, brand awareness matters in building brand equity. The more recognisable and familiar a brand is to consumers, the more likely they are to associate positive emotions and perceptions with the brand.
  • Customer experience: The sum of experiences customers have with a brand can significantly impact brand equity. Brands that provide a positive and memorable customer experience are more likely to improve brand equity.
  • Advertising and promotion: A well-executed advertising and promotional strategy can help by creating awareness and driving positive perceptions of a brand.
  • Reputation: A brand's reputation can have a significant impact on brand equity. Brands with a positive reputation are more likely to be trusted and have stronger brand equity compared to brands with a negative reputation.
  • Competitor activity: The actions of competitors in the marketplace can also impact brand equity. Brands that can differentiate themselves from their competitors and create a unique brand position can build stronger brand equity.
  • Historical context: Historical events and circumstances can also play a role in building brand equity. For example, brands that have a rich history and a deep connection to their consumers may have stronger brand equity compared to newer brands.

Sources of brand equity

Brand value is built over time through a variety of sources like:

Customer perceptions

This source of brand equity can significantly impact its brand equity. Positive perceptions, such as trust, reliability, and quality, can lead to impactful brand equity, while negative perceptions, such as poor customer service or inferior quality, can damage brand equity.

Brand awareness

As mentioned earlier, brand awareness is a vital source of brand equity. Brands that are well-known and easily recognisable by consumers are more likely to have unwavering brand equity.

Customer loyalty

Brands that can build strong customer loyalty have a significant advantage in building brand equity. Customers who are loyal to a brand are more likely to purchase that brand's products and services, which can drive brand equity over time. Look for consumers who give you a 9 or 10 on an NPS survey.

Trademarks and logos

Trademarks and logos are a key source of brand equity, as they serve as visual representations of a brand and help to differentiate it from its competitors. Brands with trademarks and logos are more likely to have dominant equity.

Customer experience

Brands that provide a positive, memorable, and consistent customer experience are more likely to build equity in the market. Ensure this by building a customer-first mindset and by training your customer-facing staff well.

Sponsorships and endorsements

Source: Cristiano Ronaldo

Receiving this from well-known individuals or organisations can also contribute to brand equity. For example, a sports brand that is endorsed by a famous athlete is likely to benefit from increased brand awareness and a positive perception of the brand.

Brand equity models

Here are the most popular brand equity models:

Keller's Brand Equity Model

Keller's Brand Equity Model [also called the Customer-Based Brand Equity (CBBE) model] is a framework developed by Kevin Lane Keller that outlines how a brand adds value to a product or service. The model comprises 4 levels of brand equity, which are:

Level 1: Brand identity (Defining your brand's distinctiveness)

This level delves into the essence of your brand, the elements that make it stand out and differentiate it from others. It lays the foundation for all that follows and must be solid for the rest of the brand equity pyramid to thrive. Crafting a strong brand identity begins with creating an impression in the minds of customers who may not be familiar with your products or values. You can then engage and captivate them with tailored marketing campaigns and advertisements that raise their awareness and leave a lasting impact.

Level 2- Brand meaning (Uncovering your brand’s personality)

As customers become familiar with your brand, their curiosity piques and try to understand what your brand represents. They wonder about quality, reliability, and aesthetic appeal, as well as the calibre of customer service and whether you offer value for money. This is where brand meaning comes into play, and it encompasses two crucial aspects:

  • Brand performance: When a brand consistently delivers on its promises and delivers top-notch performance, it will earn the trust and loyalty of its customers (think of brands like Apple, Google, and Starbucks).
  • Brand imagery: The image that customers associate with your brand and the perception they have of it. For example, a sports bike brand may want to showcase its ruggedness, while a women’s clothing line may try to appear soft and comforting. They must communicate effectively this messaging through targeted marketing efforts.

Level 3- Brand response (Gauging your brand’s emotional impact)

The true test of a brand comes when customers have experienced it for themselves. If they love the product and it exceeds their expectations, they will feel a strong emotional connection to it and become brand advocates, spreading the word to friends, family, and social media followers.

But if the product falls short, their judgment of the brand will be negative and they will probably not make another purchase. They may even become brand detractors, criticizing it on social media platforms. So, it is crucial for companies to monitor customer reactions and emotions at this level to ensure positive feelings and build a strong, loyal brand following.

Level 4- Resonance (Cultivating unbreakable bonds)

At this level, customers have formed a deep and unbreakable emotional connection with a brand. They are the highly prized and rare breed of brand advocates, so dedicated to a brand that they would never consider switching to another one.

Reaching the pinnacle of brand resonance opens up a world of opportunities for a brand to leverage its customers' loyalties and attitudes. By breaking down the brand equity model into these four levels, marketers gain valuable insight into what their customers want and need, even before they make a purchase or are even aware of their desire. It also helps companies understand the value and strengths of their brand and to identify areas for improvement.

This understanding allows them to tailor their marketing strategies and connect with customers on an emotional level, fostering lifelong loyalty and brand advocacy.

Aaker’s brand equity model

According to Professor David Aaker, brand equity is a straightforward concept built on the foundation of recognition. Brands that are easily recognized and evoke quick emotional connections in customers are the ones that drive the most success — think McDonald's and its iconic golden arches and Ronald.

Aaker views brand equity as a combination of brand recognition, brand associations, and brand loyalty, all of which contribute to the value that a brand's products or services offered.

Aaker outlines five key elements to manage brand equity:

  • Brand awareness: It talks about how well-known the brand is in the market. This component is the foundation of building brand equity.
  • Brand loyalty: How dedicated are people to your brand? Loyalty is difficult for competitors to mimic, providing the brand with time to react to the existing or upcoming competition.
  • Quality perception: Is the brand known or expected to offer high-quality products? Quality over features can give a product an advantage over others, but for a limited time only.
  • Brand associations: What emotions do people experience when they see the brand? This includes their split-second cognitive reaction, how good the brand makes them feel, and other extensions or differentiators.
  • Proprietary rights: Brands with more patents, IP, and trading partners have an advantage over their competition.

To reach brand equity, these components must be measurable and monitored through the right platforms. Branding must be consistent throughout the customer journey, allowing for data collection and analysis to improve customer loyalty and differentiate the brand from competitors.

The Aaker Model assists organisations in crafting a brand strategy that sets their brand apart from competitors and propels it forward, through the thoughtful selection and implementation of key brand components.

Brand equity examples

Here are top brand equity examples to learn from:

B2B brand equity example

Cisco is a technology company that provides networking and communication solutions to businesses, governments and other organizations around the world. They have significant brand awareness in the B2B market, as their products are well known for their quality, reliability, and innovation. The brand is associated with leadership and expertise in the technology industry, which makes it highly desirable for businesses looking to purchase networking solutions.

Cisco's brand loyalty is also very evident. Many businesses trust their products and services and rely on them for mission-critical operations, making it difficult for competitors to gain a foothold in the market. Also, Cisco has established long-standing partnerships with many organisations, further solidifying its position in the market.

In terms of brand associations, Cisco is associated with trust, innovation, and expertise in the technology industry. They have invested in research and development, and have a large portfolio of patents and proprietary technologies, which enhances their position in the market.

B2C brand equity example

Apple's brand equity is built upon a foundation of sleek design, user-friendly interfaces, and cutting-edge technology. Consumers widely recognize Apple products, such as the iPhone, iPad, and MacBook worldwide. The company's brand is strongly associated with innovation, creativity, and simplicity, making it a desirable choice for many consumers.

Apple has also built a powerful community of brand advocates and loyal customers globally. These customers are passionate about the brand and often promote it to friends and family, further strengthening Apple's brand equity. The company's successful marketing campaigns and product releases, as well as its focus on customer experience and satisfaction, have helped to solidify its brand equity.

Apple's brand equity has also allowed the company to expand into new markets and product categories, such as wearable technology like the Apple Watch and home automation, with roaring success. The brand's reputation and perceived value drive demand and differentiate it from competitors, contributing to the company's continued growth and success.

Summing up

Brand equity is a valuable asset that helps companies differentiate themselves from their competitors and build a strong reputation in the market. Understanding and applying brand equity models, such as Keller's CBBE model and Aaker's 5 components model, can help companies drive brand recognition and higher value.

From Coca-Cola's strong brand personality to Apple's reputation for quality products, there are many examples of brands that hold a significant chunk of brand equity. Building brand equity takes time and effort, but the rewards are well worth it.

By creating a unique brand identity and consistently delivering a high-quality experience for customers, companies can increase brand awareness, customer loyalty, and perceived value.

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