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Wednesday, March 29, 2006

Brand Equity

Did you know that your brand has value? I'm talking about real, bankable value.

Brand equity is the value that the marketplace attributes to your brand, in both tangible and intangible terms. It is important to know that brand equity is a dynamic parameter, not a static one. Brand equity is a changing, evolving thing.

Over the course of its life, through every customer and marketplace interaction, your brand either builds or detracts from its equity. A story about a company who does a good deed today, like a charitable sponsorship announcement or a major hiring notice, increases that brand's equity. Of course, then, a subsequent product recall ... or a management scandal for that same company could more than wipe out the increase in brand equity from the prior good deed.

From an accounting perspective, Brand Equity is equivalent to the goodwill on the balance sheet. It is equivalent to the difference between shareholder's equity and paid-in capital. This is the tangible value.

From a marketing research perspective, Brand Equity is the difference between the measured audience affinity today and the brand's prior measurement of audience affinity. Affinity can be assessed in terms of satisfaction, value and perceived quality, as well as overall regard. These are the intangible, qualitative values.

There are many ways to increase brand equity. The two most important ones are as follows:

1- Take care of the customer with good service and consistently high quality of product, service or experience; this is not just good marketing ... it's good business. Nothing builds brand equity like a strong and growing base of satisfied customers.

2- Be mindful of consistency. If the audience (or marketplace) cannot identify the brand, it cannot properly attribute goodwill or affinity to the proper source. For example, do not depart entirely from a brand name and design scheme when evolving the brand. Keep some elements of the former design, for consistency, and to help the audience identify the brand. Keep things consistent and avoid frequent, drastic changes, working instead for a gradual, strategic evolution of the brand.

Marketing geniuses everywhere are keeping an eye on their brand equity. They know it is something to be treasured.

1 Comments:

Anonymous Marc said...

Hi Skip,

I found your article very interesting, but I think this concepts are very theoretical as well, the milion dolar question is: how to mesure the brand equity?? which are the kpi that participates in the equation?? it has economic value, I think yes, I think brand equity is an intangible asset, but how to mesure it?? Do you have any idea or do you know where I could find some information about that.
Thanks in advance for your reply.

4:17 AM

 

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