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Brand Equity Part 1: Why Is Brand Equity Critical to Ultimate Business Success?

By Deborah Kurfiss, Umbrella Content Marketing Director on Mar 10, 2023

Brand equity is the difference between the respected companies everyone wants to do business with and companies that few know and more forget. In this blog post, we will discuss what brand equity is and why it is vital to ultimate business success. In next week’s blog post, we will discuss how to create brand equity.

What Is Brand Equity?

Brand equity refers to the value of a company’s name recognition as opposed to that of a lesser known brand or generic product. Brand equity is what makes people choose one brand over the competition even though the competition may be much cheaper.

Brand equity means that people know your client’s company, they respect it, and they value their products and services. And that translates into increased sales and profits.

Why Is Brand Equity Critical to Ultimate Business Success?

Now that we’ve covered what brand equity is, let’s move on to why it’s so important to a successful business.

Increased Awareness

Brand awareness focuses solely on whether or not the audience has heard of the brand. Brand awareness is sometimes used interchangeably as a term with brand equity, but actually it is only one of its elements.

Whether your client offers products or services, your client is not going to get a lot of business if nobody has heard of them. First of all, it’s important that customers can find the brand.  Second, people are much more likely to value and trust a brand they have already know.

Heightened Perceived Value

Perceived value is the values and attributes that customers attribute to the brand. Perhaps they think it is reliable or the best made product on the market. A person can form an opinion about a brand through marketing, talking with their friends or their own experiences. Of course, perceived value heavily influences what brands people buy and how much they are willing to pay for them.

For example, most people would pay a lot more for an Apple laptop than that of an unknown brand that claims similar features and specs. Similarly, a silver Tiffany ring will command a lot more money than a ring someone finds wandering through the mall even if they look very much alike.

Positive Brand Associations

Brand association refers to the emotional pull your brand has on people. You want your client’s audience to think positively about the brand.  Does your client’s brand make them feel nostalgic? Does your client’s brand engender feelings of trust? Maybe your client’s brand makes their customers feel like they are trend setters. Your marketing should carefully cultivate the kinds of feelings you want people to associate with your client’s brand.

Brand Loyalty Through Thick and Thin

Brand loyalty of course refers to how much a person is true to a brand. If a person usually chooses a particular brand, that’s brand loyalty. Remember, I t’s much easier and cheaper to sell to an existing customer than convince a new customer to buy from your client. If your client has a base of loyal customers, they can spend less on marketing than their competition which is less well-known.

When you cultivate relationships with your client’s customers, your efforts go straight to the bottom line. People are loyal to brands they know, respect and value. And they are willing to pay more for that.

Better Return on Investment (ROI)

What it all comes down to is that if your client has high brand equity, they will see a much better ROI. Here are some of the reasons:

  • More money spent per item: People are willing to pay for a brand they respect. Vera Wang wedding dresses are going to go for a whole lot more than fashions from an unknown designer. People are willing to spend much more on Versace sunglasses than a generic brand with a similar look.
  • More sales:  When your client has strong brand equity, not only are people willing to pay more per item, but they are also likely to buy more. You need to define your client’s messaging, whether it’s to tout them as the most reliable the fastest, the most luxurious or whatever the niche is. If you market it right and build strong brand equity, your client will have a loyal following who wants the best.
  • Reduced marketing budget: Once your client has positive brand equity, they don’t need to spend as much money getting the word out about their products. If the brand equity is strong, even the news channels will cover product launches. And your client’s fans will spread the word on social media, particularly when you help them along with contests, surveys and other social media marketing strategies.
  • Better customer retention: We’ve already covered how it costs significantly less to sell to existing customers than to new ones. What we didn’t mention is that we are talking six to seven times less on average.

Partner with Umbrella to Build Your Client’s Brand Equity

When you build brand equity for your client, you are working smart. Strong brand equity will leapfrog your client to the next level no matter what the business, from software to law firms to restaurants and every other business.

You don’t have to go it alone. Contact Umbrella for a free consultation about marketing strategies and white label services to help you help your clients. Call us now at (866) 760-2638.


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