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Brand Equity

Brand equity in marketing refers to the intangible features associated with a product. It is often the name of the product with which we associate a product. The intangible features can be the Goodwill of the business, the brand loyalty by the people, the quality of the product, the price that the company charges, etc. All these come under the category of Brand Equity. Studies have shown that Brands are one of the valuable assets of a company. It is one of the factors which can increase the financial value of a brand to the brand owner.

Brand Equity for a product is an essential feature, as every customer asks for it. For ex: How good the company is in the industry, what is the level of quality that they maintain, how the customers of the product feel. All these and more are some of the questions that potential customers ask. 

There are at least three ways to perceive a brand.

Financial: A better way to find the brand equity is to check the price a brand commands over other or ordinary brands. The extra price that the consumers are willing to pay for a branded product over an unbranded product is the brand equity of the product. 

Brand Extensions: Another way is to see whether a company is launching a product or a similar product on the lines of its prior brand. Ex: Apple launching i-pod and now i-pad after its successful brand establishment of its prior brand i.e. macbook

Consumer-based: A strong brand increases the consumer’s attitude towards that particular brand. The attitude towards the product is built by the prior usage or experience with the product. If the product is better than other generic products, then definitely the consumer will pay the higher price to own the product.

Building and managing Brand Equity

Peter H. Farquhar in his paper Managing Brand Equity, outlined the following three stages that are required in order to build a strong brand:

Introduction: Introduce a product with best quality, with the strategy to use the brand as platform to introduce new products.

Elaboration: Make the brand easy to remember and use, so that the consumer will not forget the product and will definitely get back to you.

Fortification: The brand should carry a consistent image for some time as the case may be. Of course the brand must not be rigid without any changes over time, but not so fast that people find our product hard to use as the company’s always experimenting with the product and changing its features. Consumers easily connect products which are user-friendly and consistent for some time.

Marketing mix should focus on protecting the brand equity of a product. The quality of the product must be consistent, with what the customers expect from the brand. The price of the product, the distribution channels should be clear so as to allow the product into the market. 

 

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