Brand equity determines the degree of influence a brand name has in the minds of customers, and the importance of creating an identifiable and well-thought-out brand. By delivering meaningful interactions that entice customers to continue buying from them over rivals that make similar products, organizations build brand value.
This is achieved by increasing awareness through promotions that address performance measures, improving on commitments and skills as customers use the product, and customer satisfaction.
Why Brand Equity is Important?
The primary objective is to assess a brand's value, as the strength of brand equity also increases in accordance with a company's growth. Brand equity is a vital element that affects the ability of a business to draw and motivate more customers to stay committed.
How to Measure Brand Equity?
The method of measuring a brand's equity is to calculate a brand value company has in the market. In other words, it is the equivalent amount of money that the brand is willing to pay for an individual or a business. Following are some of the ways to measure Brand Equity for a company:-
1. Brand Valuation –
One method of determining brand equity is to try to understand the brand's overall value as a separate economic asset, which can be included on the balance sheet of a company. This metric illustrates the brand's value, representing the contribution of the brand to the success of the business.
2. Comparative Assessment –
This approach is used to measure brand equity on the basis of similar transactions that occurred in different companies operating in the same market. The calculation takes account of the premium charged by other similar companies and applies it to their own brand.
3. Consumer Preference –
In everyday buying decisions, consumer preference is a powerful factor; it is the reason why a customer will decide to drive further and spend more cash to access a product or service they really want. Factors that can be considered while assessing consumer preference are the degree to which your consumers believe that your brand offers unique and relevant value that your rivals do not deliver. And, a calculation of how much your customers are willing to pay for the goods and services offered by the company.
4. Customer Experience –
Brands are no longer only identified by what ads say, because of the growth of social media and the voice of the individual user, now the brands are what customers discuss about or interpret. Focusing on the consumer and positioning them at the forefront of your business will help boost your overall brand.
5. Output Metrics –
The Output is a marketing activity measurement that analyses the marketing assets that are published to the consumers. The output looks at the frequency of release of marketing materials and the type of asset that is released to the market. Performance can also be calculated in local markets through the effect of your brand-created offers.
6. Financial Value –
You can appreciate the brand value of a product or service by looking at the company's financial statements and sales performance. To determine brand success, statistical data is important, such as market share, profitability, sales, price, growth rate, cost of maintaining customers, cost of customer acquisition and investment in branding.
In various ways, measuring brand equity benefits a business and help companies to build a strong identity. You will have a clearer understanding of your target demographics by using it, know how to tailor your marketing efforts and be able to fulfil the needs of your customers in all phases of the supply chain.