Think of Apple or Amazon. Just the names of these two major companies can bring to mind their logo, what they offer, your own experiences with them, and more. That’s a simple way to think of brand equity. When a brand stands for trust, deep research, and expertise (McKinsey for example), you might feel that any event they sponsor has more credibility. You also feel more confident in your purchases from a \u201cname brand\u201d and the service you expect to receive.<\/p>\n
All of that is the value of brand equity on a broad scope. Some people are surprised when they realize how important it is. We already talked about how brand equity can help (or ruin) your diversity, equity, and inclusion (DEI) initiatives<\/a>, but what are other ways that it can effect your business? Let\u2019s get into that, shall we.<\/p>\n <\/p>\n One great sign of a brand\u2019s strength can be found in their price premium. Customers are willing to pay more with higher-priced brands than others, despite the higher cost. In this case, the brand\u2014or brand equity\u2014determined the price, not the product or service itself.<\/p>\n Why is this the case? Because of an important piece called perceived value. Even if your competitors have similar offerings, or the market is more homogenous than differentiated, the perceived value can create a very different attraction for customers. This perception you create of your business for customers cements you as worthwhile in their minds for the higher price point.<\/p>\n They know they\u2019re going to get a better experience with your brand than anywhere else. If you want a great example of this, look no further than versus Pepsi. Both companies created high-quality assets, and we have all heard consumer\u2019s voice preferences for one over the other at restaurants or in grocery stores, even though the taste is not markedly different when blind to brand. So why are they so successful, and why do they have such power despite similar products down their lines?<\/p>\n High-quality assets leveraging brand equity.<\/p>\n How to leverage: <\/em>Keep it consistent, create higher perceived value, and make high-quality assets that regularly differentiate you from competitors. When combined with experience differentiation in brand identity and customer care<\/a>, you\u2019ve got a winning mixture.<\/p>\n Brand extension is where an established brand uses their name for new product or service categories. It\u2019s when a clothing brand extends into shoes or accessories. A grocery brand extends into electronics and clothing offerings for their customers. It\u2019s extending their brand to be relevant into other areas they would normally not be found in.<\/p>\n I love using Sony in this example, because they\u2019ve created powerful brand equity in the sound entertainment industry. That\u2019s right, anything that is based in sound technology is an area that they can expand into. Be it radios, game consoles, televisions, surround sound systems, or other electronics. Historically, this wasn\u2019t the base of their brand, but they moved into other categories seamlessly by strengthening their brand equity to create the perceived value of being the best in all things sound and entertainment.<\/p>\n How to leverage:<\/em> Strengthen overall brand equity through parent branding on product lines and presenting as a solution to customer problems. It\u2019s setting your brand up as the one place to get exactly what the consumer needs.<\/p>\n Here\u2019s where it gets a bit tricky to understand the difference when it comes to leveraging brand equity. If brand extension is the brand entering into new markets, then line extension is when an established line of products stretches to new variants within their category. This can be as simple as new product sizes, or more involved, like new formulation options and flavors.<\/p>\n We can use Coca Cola as an example (and yes, I\u2019m a Coca Cola fan for all carbonated beverages!). Coke is a dark soda with a distinct flavor that\u2019s branded with red and white logos. This is the beverages category the company began with. It\u2019s now extended to drinks like Dasani, Aquarius, and Ciel water, Barq\u2019s Root Beer, Fanta, and Minute Maid juice, just to name a few. This is an extension of their brand into other beverage categories like juice, water, soft drinks, coffee, and teas.<\/p>\n How to leverage:<\/em> Enjoy new designs, variants, sub-brands, and subsets to encourage creativity for the organization while also extending greater value to customers while giving them more choices. It\u2019s perceived product differentiation here.<\/p>\n No one wants their brand diluted. It occurs when a company doesn\u2019t have strong enough brand equity or recognition to carry them when they extend into new categories. It can occur when the company extends into an area their consumers don\u2019t want to follow them, be it because of lack of quality, unreasonable prices, lack of consistency, or lower offerings. Lack of vision, connection to parent brand, or lack of innovation can be a problem here, too. The best way to save a company from brand dilution is to focus on strengthening brand equity and extending into areas that make sense for the company to go in.<\/p>\n How to leverage:<\/em> Fortification and elaboration of the brand to concentrate efforts\u2014as explained in the next section\u2014to get a deeper understanding of brand identity<\/a>.<\/p>\n First, let\u2019s define the difference between the two concepts:<\/p>\n When a company is fortifying their brand, they establish themselves as a leader by associating with other top performing brands and connecting their products\/services to a central meaning that\u2019s broad enough to encompass expansion later. To use our earlier example, Coca-Cola is a beverage company, so they have the ability to move into several categories in that arena, but can expand into others when they can because of the work they\u2019ve put in to fortifying the brand name.<\/p>\n When a company is elaborating on their brand, they want to explain or establish clearly what the brand stands for through campaigns, products\/services, and associations. Nike, for example, is synonymous with \u201cathlete\u201d for many consumers. They did this by offering several sport-connected shoes, drinks geared to support athletic or fit movement, and branding connected to sports around the world.<\/p>\n![\"\"](\"https:\/\/www.sogolytics.com\/blog\/wp-content\/uploads\/2021\/03\/brand2-1024x683.jpg\")
<\/a><\/p>\nPrice Premium<\/h2>\n
Brand Extension<\/h2>\n
Line Extension<\/h2>\n
Saving Your Organization from Brand Dilution<\/h2>\n
Fortification and Elaboration<\/h2>\n
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