How Does Your Brand Value Stack Up in the Marketplace?
Branding, and particularly brand equity, often get a bad rap in companies, most especially in the marketing department. But they shouldn’t. They're one of the most powerful aspects of a business that can have a dramatic impact on a company’s bottom line. I can’t tell you how many companies I’ve worked for that made phenomenal products and were marketing those products well, but paid absolutely no attention to their brand or treated it as some icky thing that dinosaur marketers cared about before the advent of digital marketing.
At one particular company, I surveyed every employee and found out they hated the company’s primary logo color. When I asked the CEO about it, assuming he had been a part of the team that had originally selected it, he told me that he wasn’t the one who selected it and that he hated the color too. It turns out that every single person in the company hated the color and no one knew how, why or when it was selected. The company had been using this color for over 12 years! This sounds almost too strange to be true. But it is actually more common than you might think. At another company, whose marketing department is filled with recognized digital marketing experts, they also had a logo and color that no one liked. When I began the process to rebrand the company, I sent out a survey to the leadership team. One question asked them to think about the current brand persona and what values it conveyed. Not a single leader in the company understood what the company’s brand persona was or agreed on the values it should be conveying. What I’ve learned is that although we are often dismissive of brand, branding is an art and not a science, and because it’s an art, it isn’t easy. It’s something most companies struggle to do correctly because there is no predictable formula for getting it right.
Over the last 10 years, marketing has shifted from being a cost center to a revenue center. This shift has exacerbated the problem. As modern marketers have become more and more obsessed with big data, analytics, and “science” in marketing, we have come to largely eschew our “art.” I’ve included disqualifying quotation marks because in the postmodern world we currently inhabit, it is no longer cool [read profitable] to suggest that marketers are artists. As marketing departments spent years trying to extricate themselves from old labels and associations—such as being the “paint palette department,” we have forgotten that while science may bring predictability to business, it is art—creating stuff that inspires people to buy–that determines a business’s success.
But what I’ve also noticed across the board is that companies that fail to recognize the importance of branding struggle to ever gain brand awareness and more importantly struggle to ever achieve true advocacy from their customers, partners, and influencers. Companies whose marketers claim to be digital marketing gurus, yet don’t care a whit for their brand, often find themselves lagging behind their competitors or wondering why their NPS scores are -30 – in short, wondering why they cannot break through and achieve high growth. And I would argue that the reason for their stunted growth lies in the fact that they have poor brand equity.
What is Brand Equity?
Brand equity is a term that refers to "the value of a brand in the marketplace." The first and most telling effect of brand equity is the ability of that brand to create a "positive differential response" in the market. A positive differential response means that a brand is easily recognized or that its audiovisual cues bring to mind a certain mindset, keyword or action in the minds of the targeted audience.
Put more simply, Brand Equity is a brand’s power derived from the goodwill and name recognition that it has earned over time, which translates into higher sales volume and higher profit margins against competing brands. Indeed, the response that your brand gets in the market translates into real dollars through the premium that a consumer pays in order to be associated with that brand.
How Does Brand Equity Contribute to Your Bottom Line?
For the end-user or consumer, brand equity can:
- Identify a product or company
- Signify quality
- Reduce marketing costs
- Create barriers to entry
- Serve as a competitive advantage
- Secure a price premium
- Increase market share
In short, Brand Equity is not only critical to your business’s bottom line, it is everything. Literally, everything. You think I’m exaggerating? Take a look at this photo of two cups of coffee. Why does one brand of coffee cost so much more than the other when there is no real qualitative difference between the two? The answer lies in the fact that Starbucks has brand equity and Dunkin Donuts doesn’t, allowing Starbucks to secure a price premium with an otherwise commodified product.
But how do you achieve Brand Equity?
Achieving Brand Equity isn’t easy. Your brand has to move slowly across the spectrum in your audience’s mind—from Awareness all the way to Loyalty.
Some things to keep in mind:
- Strong brand equity is created primarily at the “loyalty” stage
- Brand equity doesn’t happen overnight; It’s difficult to develop and takes time
- Companies must “invest” in their brands and manage them diligently
Building Brand Equity Step by Step
Here are a few of the proven ways to improve brand equity and participate in the positive feedback that comes from it.
Position Your Brand
The equity that your brand has in the marketplace is all about how your customers perceive the experience of association with your brand. Your customers must recognize your brand as different from, and better than, its competition, and you must back this up with a quality product that engenders loyalty over time.
Your product quality and marketing go hand-in-hand when you decide what aspects of your product to prioritize in advertisements. You know the old adage: "sell benefits, not features." In short, benefits are what the product does for the customer, while features are simply explanations of product characteristics. Your R&D team may be excited about the features they have created in the new iteration of your product, but the product benefits are what will ultimately build brand equity in the market to the consumer.
Solve a Problem
Brand equity is all about solving consumer problems. However, you must be sure that you are solving the problem that your consumer actually considers an issue.
For instance, what problem does Rolex solve with its luxury watches? Although this may seem counter-intuitive on a certain level, the people who purchase Rolex watches are not concerned with keeping time. Although the watch needs to work, the real problem that the watch solves is one of social esteem. A consumer could wear any watch to tell time - when a person wears a Rolex watch in public, the social esteem that he or she receives from the association with the luxury brand is the true benefit. A Rolex may help a person gain entry into an exclusive club or social circle. It may draw attention from people whom the consumer considers important or attractive. None of these solutions have anything to do with the time of day.
This is how you must think of your brand in terms of its equity. Find the real problem that your consumer is looking to solve, which may be quite different from the basic function of your product. Properly identifying your brand with the right audience will go a long way in helping you to determine the motivations of your target market and position your product accordingly.
Drill Down into Branding; Do Not Expand
The purpose of a brand, especially a brand that is building equity, is not to serve the largest number of people. If you have to give up a few ancillary sales in order to solidify the position of your business in the marketplace, then you should do this. The sacrifice will be well worth it if you build your brand equity up to a point where the premium far outweighs the loss in sales from second-tier customers. Do you think Rolex cares that entry level job holders cannot purchase one of its watches?
Drill down into your branding so that you market yourself to a particular niche through a strong, singular benefit. This benefit will be your lead in and showcase how your company solves a problem for its audience differently from any of its competition. Push this singular benefit in all of your marketing until your position is solid. From here, you have the choice to expand if you believe that your brand can serve a larger audience without losing its equity.
As stated before, brand equity is not necessarily built on functionality. The problem that your product ends up solving may have nothing to do with the actual feature set of your product. If you are trying to build brand equity, you must focus on engaging the emotions of your target audience. Prospects will take much greater action with products if they have an emotional connection to them.
For example, jewelry companies do not approach their customers from the angle of accentuating a dress or garnishing a look. Viewing most jewelry commercials, you will see that the exchange of jewelry is associated with an emotional event such as a holiday or a birthday. Silhouettes kissing romantically in the background is a common theme, and voiceovers in jewelry commercials appeal to the emotional connections between romantic partners. Does any of this have much to do with the actual function of jewelry? Think of your brand in the same way as you create your advertisements.
Keep in mind that the emotions you cater to do not have to be completely positive. Certain luxury products solve the problem of social esteem through jealousy or exclusivity. If this is the problem that your audience is trying to solve, you cannot be afraid to move there with that audience.
Create a Story for Your Product
Products are much easier to sell when they have a story, especially if you are trying to sell a product with a premium. Customers associate emotions with back stories, and you also gain an excuse for charging the premiums that you charge. For instance, Nike associates itself with top athletes with rags to riches stories and puts forth adventurous slogans, insinuating that you can have the same rise in your lifestyle if you purchase the shoe. This story should permeate all of your advertising, including social media and mobile advertisements.
Your logo and slogan should speak to the emotions of your audience and tell your story at the same time. The Nike swish is one of the best examples of this type of logo. Its close resemblance to a checkmark brings up feelings of acceptance and victory in many people, because a checkmark is usually associated with a job well done in school or at work. Nike's target market becomes highly familiar with the checkmark at an early age through school assignments, and the association continues into the professional careers of most people.
Xerox is another brand that has achieved such ubiquity that the company name actually became a verb in the dictionary. This is the kind of story that you want to create for your brand – one that is so closely tied to the everyday activities of your target market that they begin to see you as a part of their lives.
Analyze and Revise
It is very important to analyze all of your branding and marketing efforts from the beginning of the program. No marketing strategy will be perfect at its inception; even Fortune 500 companies must move through many iterations of their strategies before truly engaging the target market at eye level. Fortunately, digital technology makes it easier than ever to aggregate social trends and respond quickly to any confusion or rejection that comes from your target market. Apps such as Miappi allow you to quantify the feelings of potential customers in your social media threads using sophisticated tools that discern attitudes and conversion rates from comments. Use these tools judiciously in order to further discern the motives of your target market, feeding advertisements back to them that solve their problems and increase your brand equity.
Do you have a good definition of brand equity? I'd love it if you could share it with me below. Leave a comment and we'll start a dialogue :)
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