Many marketing researchers have concluded that brands are one of the most valuable assets a company owns. In fact, I just saw the list of top 25 Graphic Design Firms in the Phoenix Business Journal and almost all of them listed some form of branding service – which was not the case last year. Why is branding so important? The answer is simple. In our new digital world of information overload and mass competition, a strong brand is the only way you can stand out and magnetize your target audience. When branding is done right, a strong brand can add significant equity when it is well recognized and carries positive associations in the minds of consumers.
Brand equity is strategically crucial, but famously difficult to quantify. Let’s look at just some of the elements included in the valuation of brand equity according to Wikipedia:
1) Market share
2) Profit margins
3) Consumer recognition
4) Brand language associations made by consumers
5) Consumers’ perceptions of quality and other relevant brand values
Bottom line: How understandable, compelling and repeatable your brand messaging is.
You can create brand equity for your products or services by making them memorable, easily recognizable and superior in quality and value. When you spend your time and money formulating your brand communications, you are investing in future brand equity.
Think of brand equity like a bank account:
1) Each time you promise and deliver on your customers expectations, make a deposit
2) Each time you create value for someone, make a deposit
3) Each time someone speaks favorably of you, make a deposit
Of course, if the opposite occurs, make a withdrawal and spend your time having to find a new customer. Don’t forget the overdraft fees or compounding interest!
Everyone should be familiar with the power of word of mouth advertising. Think of brand equity as having a team of brand ambassadors that are not on your payroll. This is why it is so important to have strong, consistent, and cohesive branding in place before you launch into the media spotlight. If you have any gaps or points of disconnect, you have wasted your resources and opened yourself up to negative brand equity.