Why is it important to measure your brand equity?

By Marketing Advisory, 3rd Eye Advisory®
Why is it important to measure your brand equity?

Any brand has a name. A face associated with it. A word or sentence that may remind one of the brand. A color that reminds its audience of its presence. All these factors be it aesthetic or representational form a value to a brand's customers. But can this value be measured? The value created is not merely abstract, it in fact creates a commercial value for the brand. This value premium generated through the brand as compared to a generic equivalent can be termed as its brand equity.

A brand's equity is formed in the following way - The consumer's perception results in a positive or negative impression which finally forms the value of the brand. This value can be either tangible or intangible. If the impression is positive it can lead to increase in sales and profits realizing tangible benefits while intangible value is generated in the form of awareness, recognition and goodwill. It is thus really important to understand what the consumer perception of your brand is.

Our experts at 3rd Eye Advisory® have understood the benefits of measuring brand equity and believe that studying the brand's perception amongst its customers can result in the ability to reach the desired position. Some of these benefits are:

  • Evaluating sustainability of the business
    Studying the current state of the brand can help one understand and evaluate its potential. Positive perceptions can lead to higher future revenues while negative ones can warn one of the effects to follow
  • Ability to command larger margins
    A Brand with high brand equity has the upper hand on commanding a premium pricing and hence larger margins. Consumers that perceive high value are ready to pay at power to the value they can realize.
  • Reduced threat from competitors
    The larger space you have established in the minds of consumers, the tougher it is for any competitor to replace it.
  • Reduced cost of customer acquisitions
    Once the brand is recognizable customers are themselves attracted towards it. Cost and efforts required to acquire new customers is reduced significantly. If the brand has an aspirational value, then it will further create a demand on its own
  • Brand extensions
    If the brand wants to launch a new product line, that would be associated with its already established brand name. For example, whenever Apple launches a product it is perceived that it will be innovative. In India, the name Tata is directly associated with Trust and any brand under this umbrella automatically has a value established.

Positive brand equity drives customer value which eventually gets passed on to the shareholders. It is important that brands evaluate and measure the associated brand elements to know their position in the mind space of their customers and the potential they can drive in the future.

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Article by: Marketing Advisory, 3rd Eye Advisory®