Brand Equity Models: Importance, Measurement, and Success Factors

Brand Equity, a critical marketing concept, is the commercial value derived from customer perception of a Brand. It represents intangible assets fueling brand success: customer loyalty, awareness, and overall performance. This article examines why brand equity matters, popular models and frameworks for thinking about it, how to measure it, the critical ingredients in Aaker’s and Keller’s Brand Equity Models, differences between them, what sort of businesses they are suitable for – and what contribution brand equity makes to a brand’s success. We throw in examples of successful brands, too.

What is brand equity – and why does it matter?

Brand equity is a commercial valuation based on customer perception. Essentially, it encompasses all reputation-related intangibles that contribute to a company or product doing well: branding (awareness), perceived quality, emotional connection with customers, associations, etc. Brand equity matters because these things can influence consumers’ decision-making processes and commitment levels – both significant factors in commercial performance.

For instance…

Think Nike. Creating iconic ads and aligning itself with top athletes over time, among other things. The sportswear firm has built up substantial ‘brand equities’: its name is recognised by many people… many see it positively… those who often feel strongly about their association with the label… And so on. Such hefty ‘brand equities’ help ensure Nike can charge premium prices for its products, giving it an advantage over rivals in the sports kit sector.

What are some popular brand equity models and frameworks?

Several brand equity models and frameworks have been developed to understand and measure brand equity. Two popular models are Aaker's Brand Equity Model and Keller's Brand Equity Model.

Aaker's Brand Equity Model, which stresses brand assets and liabilities, consists of five key components: brand awareness, loyalty, perceived quality, brand associations and proprietary assets. Brand awareness refers to customers' recognition and recall level for a brand; loyalty represents the degree of customer loyalty and commitment; perceived quality is customers' perception of the overall quality/superiority (or lack thereof) of a product/service associated with a particular brand; brand associations are any attribute(s), feature(s) or benefit(s) that people associate with a brand; proprietary assets are unique (perhaps legally protected), distinctive elements.

For example, let's consider Apple as a case in point. By focusing on its sleek design, user-friendly interface and innovative products/services – all core aspects/qualities of its offer – Apple has built up substantial amounts of ‘brand equity'. Its logo is instantly/easily recognised around the globe (i.e., it enjoys high levels of ‘brand awareness'). Loyalty towards Apple is vital – so much so that many eagerly await launching new products. In terms of what people think about quality-wise when they see/hear mention/are asked about Apple, perceptions here tend to be excellent/high (people tend to believe that buying an Apple product guarantees above-average/premium quality). What do people associate with the ‘Apple' name? Think innovation/creativity/status… Finally, proprietary assets. Look at patents/exclusive software, etc.

By contrast…

Keller’s Brand Equity Model puts more stress on shaping customer perception. It has four dimensions: ‘brand identity’, ‘meaning’ ‘response’ and ‘resonance’. The strategic positioning/image the company wishes/wants to convey/take ownership/own … Target audience… How the company wants them to respond… Ultimate level = resonance = deep relationship.

For example, let’s look at Harley-Davidson as an example…

The company has worked hard to build a strong ‘brand identity’ – all about freedom/rebellion/unique lifestyle. Think of different ways people want to use such a product/service and think of the kind of person likely to buy this kind of thing…Functional benefits? Emotional benefits? What do people associate with the name Harley-Davidson in terms of what the company stands for? The whole biker culture, freedom, etc.… The brand’s marketing efforts/story/values resonate well with the target audience (feel an emotional connection). Resonance = deep relationship between customer and company.

How can brand equity be measured?

You can use various quantitative and qualitative techniques to assess brand equity. These will evaluate overall performance, loyalty, perception, and awareness. To determine the extent to which your company’s brand has value – financially and to customers – consider conducting a survey or audit.

Surveys will enable you to gauge how much people know about your brand: Do they recognise it? Are they familiar with what it stands for? You can also use surveys to gather feedback on perceptions of quality, attributes associated with your brand, etc.

Do customers plan to buy again from you or recommend your company? From answers like these (and plenty more), researchers can start to measure customer loyalty towards your brand.

Financial analysis is another way of assessing how much value there is in your firm’s brand(s) – by looking at its market value and financial performance.

Market research helps brands better understand their target market, what makes them tick when shopping, any changes that could be in the pipeline for consumer behaviour, goings-on among competitors … That sort of thing!

What are the critical components of Aaker's Brand Equity Model?

Aaker's Brand Equity Model consists of five key components: brand awareness, brand loyalty, perceived quality, brand associations, and proprietary assets. These components help assess a brand's equity by focusing on its assets and liabilities.

Brand awareness refers to customers' recognition and recall level for a brand. It is an essential component of brand equity as it represents the foundation of customer knowledge about the brand. High brand awareness can lead to increased customer consideration and preference for a brand.

Brand loyalty represents the degree of customer loyalty and commitment towards a brand. It is essential to brand equity, as loyal customers contribute to a brand's long-term success. Brand loyalty can be measured by repeat purchases, customer retention, and willingness to recommend the brand to others.

Perceived quality is customers' perception of the overall quality and superiority of a brand's products or services. It is a vital component of brand equity as customers are likelier to choose and remain loyal to a brand they perceive to have high quality. Perceived quality can be influenced by product performance, durability, and customer reviews.

Brand associations are the specific attributes, features, or qualities customers associate with a brand. They can be functional, emotional, or symbolic. Brand associations contribute to brand equity by shaping customer perceptions and creating a unique brand identity. For example, a brand like Coca-Cola is associated with happiness, refreshment, and sharing joyful moments.

Proprietary assets are the unique and distinctive brand assets that differentiate a brand from its competitors. These assets can include patents, trademarks, copyrights, and exclusive technology. Proprietary assets contribute to brand equity by creating barriers to entry and strengthening a brand's competitive advantage. For example, patenting a unique ingredient can give a food brand exclusivity and enhance its brand equity.

What are the critical components of Keller's Brand Equity Model?

Keller's Brand Equity Model consists of four dimensions: brand identity, brand meaning, brand response, and brand resonance. These dimensions focus on shaping customer perception and fostering brand loyalty.

The brand identity encompasses the strategic brand positioning and image a company wants to convey to its target audience. It involves defining the brand's vision, mission, values, and personality. Brand identity is crucial for brand equity, representing the foundation for all brand-related activities and communications.

Brand meaning refers to the functional and emotional benefits that customers associate with a brand. It includes reliability, performance, trust, and emotional connection. Brand meaning influences customer perceptions and attitudes towards a brand, ultimately contributing to brand equity.

The brand response represents customers' judgments and feelings towards a brand's marketing efforts and communications. It includes brand awareness, image, communication, and positioning factors. Positive brand response increases customer engagement, preference, and loyalty, enhancing brand equity.

Brand resonance is the ultimate level of customer loyalty and engagement, where customers have a deep and enduring relationship with a brand. It represents a strong emotional connection and loyalty towards the brand. Brand resonance is critical to brand equity, leading to repeat purchases, positive word-of-mouth, and brand advocacy.

What is the difference between Aaker's and Keller's brand equity models?

Aaker's and Keller's brand equity models differ in focus and emphasis. Aaker's Brand Equity Model focuses on building and leveraging brand assets and associations. It aims to create a solid, distinct brand identity that stands out from competitors. Aaker's model takes a broader perspective by including critical components of brand awareness, brand loyalty, perceived quality, brand associations, and proprietary assets.

For example, Aaker's model benefits luxury brands like Louis Vuitton. Louis Vuitton has built a strong brand identity through its iconic monogram and distinctive design elements. The brand associations with luxury, elegance, and exclusivity have contributed to its success. Additionally, Louis Vuitton's proprietary assets, such as its patented canvas material and craftsmanship, differentiate it from other luxury brands.

In contrast, Keller's Brand Equity Model emphasises shaping customer perception and fostering brand resonance. It focuses on building emotional connections and promoting brand loyalty. Keller's model takes a more customer-centric approach, including brand identity, meaning, response, and resonance.

For example, Keller's model applies to brands like Starbucks. Starbucks has successfully created a strong brand meaning by positioning itself as a place for high-quality coffee, community, and relaxation. The brand has fostered a sense of belonging and emotional connection with its customers through its welcoming store environment and personalised customer experiences. This has resulted in solid brand resonance, as customers have a deep and enduring relationship with the brand and are willing to pay a premium for Starbucks' products.

Which brand equity model is more suitable for B2B businesses?

Keller's Brand Equity Model suits business-to-business (B2B) companies with strong customer relationships. Keller's model focuses on creating brand meaning, fostering brand response, and building brand resonance. B2B companies often have long-term relationships with their customers, and emotional connections play a significant role in their decision-making process.

For example, Keller's model applies to software companies like Salesforce. Salesforce has built a strong brand meaning by positioning itself as a trusted partner in helping businesses manage customer relationships. The brand has created resonance by providing excellent customer support, continuous innovation, and a community of users who actively engage with the brand. Salesforce's strong emotional connection with its customers contributes to its brand equity and long-term success in the B2B market.

Which brand equity model is more suitable for mass-produced products?

Aaker's Brand Equity Model suits mass-produced products and brands that must differentiate themselves in competitive markets. Aaker's model focuses on building and leveraging brand assets and associations, which are crucial for standing out from competitors.

For example, Aaker's model is suitable for brands in the fast-moving consumer goods (FMCG) industry, such as Coca-Cola. Coca-Cola has successfully differentiated itself from its competitors through its brand assets, such as the distinctive contour bottle and the red and white logo. These brand assets have become synonymous with Coca-Cola and help the brand stand out on store shelves. Additionally, Coca-Cola has created strong brand associations with attributes such as happiness, refreshment, and sharing joyful moments, further enhancing its brand equity.

How does brand equity contribute to a brand's success?

Brand equity is crucial to a brand's success by influencing customer behaviour and creating a competitive advantage. Substantial brand equity leads to increased brand awareness, customer loyalty, and positive brand perception, ultimately driving sales and business growth.

For example, brands like Nike and Apple have leveraged their substantial brand equity to achieve remarkable success. Nike's significant brand equity has allowed it to command premium product prices and attract a loyal customer base. The brand's high awareness, customer loyalty, and positive perception have contributed to its market dominance in the sportswear industry. Similarly, Apple's brand equity has helped the brand become synonymous with innovation, quality, and design excellence. Apple's substantial brand equity has created a loyal customer base and a competitive advantage in the technology market.

Examples of successful brand equity

Many brands have had extraordinary success in marketing by building substantial brand equity and leveraging it. Apple is an excellent example of this strategy. It has established a robust identity and meaning around its products with innovative designs that are easy to use.

Apple is seen as high quality and premium, attracting customers willing to pay more for its products. Its robust brand equity gives it a competitive edge over rivals in one market after another.

Another great example is Coca-Cola, which has created emotional connections through decades of advertising and its heritage. Global recognition means the brand resonates emotionally with consumers worldwide – something few brands can achieve.

So, what is brand equity? It’s a critical idea in marketing – the commercial value from customer perception of a brand. Aaker’s framework shows how this is created by assets such as trademarks or logos, associations such as linking the brand with exciting activities, awareness among potential customers, loyalty among paying ones, and perceived quality.

Keller puts less emphasis on specific assets but focuses on shaping consumer perceptions and encouraging “brand resonance” – where customers feel so strongly about a product that they seek ways to connect with it.

Both approaches have their strengths and are suitable for different types of business – something shown by successful brands like Apple or Coca-Cola – showing just how important getting it right can be.

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