Let’s have a look at Nike – the most valuable apparel brand. Nike has been the world’s most valuable apparel brand in the Brand Finance report for 7years in a row. But how is this possible. Even after losing value in 2021, Nike is still more than 2 times valuable than second-place Gucci. But why are consumers willing to pay more for Nike and stay loyal to the brand?
The example given is relevant to today’s marketing world. Brand equity is based on the consumer’s perception of the brand rather than the product. Nike is valuable because of how loyal their customer base is to Nike products. Not only do they buy the products but they show loyalty by telling friends about your product.
The endorsements by professional athletes have greatly influenced the company’s success. Had it not been for this, Nike would have followed the same path as many other failed companies when they overpriced their products at Target by twenty-five percent due to poor decision-making by one employee, forgetting about the consumers’ loyalty to the brand.
If you want to gain brand equity, you need to make sure your company produces quality. The more quality experience your consumers will have with your company, the higher the price they will be willing to pay for your product.
Arguably, Google and Apple have the most brand equity and this is because their products are very high quality. As a result, they can charge more for their products than other companies can for competing products.
Based on the Nike example, it’s clear how important brand equity is. Product quality is only one part of the equation. By creating a strong brand and value connection with their customers, Nike can charge more for their product.
Still, they sell more than they would be providing a lower quality product at a discounted price. Let’s break it down: What is brand equity and how do companies like Nike manage to build it.
What is Brand Equity?
In simple terms, brand equity is the consumer value that a company builds in the minds of consumers. This value goes above and beyond its core products or services.
Much in the same way a home has a market value that goes higher than the building materials used to construct it, a brand with equity may have a pre-tax profit margin significantly higher than another brand without equity.
This is because consumers are willing to pay up for brands they trust. In addition, strong brands enjoy more control over pricing as consumers will accept a higher price from these brands for an equal product from a lesser-known brand.
Therefore, companies with strong brands enjoy higher margins and greater market share. Consequently, brands without strong equity must slash prices to stay competitive. The lesson here is about how consumers relate to brands, not products.
If a consumer has a strong belief in your brand, they can be willing to pay more for your product. You can create this brand loyalty by giving your audience a meaningful brand experience.
So instead of allowing someone else to define what you are, you can decide what you want people to think about your brand. The ongoing challenge for any new company is getting the customer to adopt the new brand image.
If you treat your company like a start-up it will never reach its growth potential. Growing companies change their image with consumers by introducing new products and services they feel the consumer wants, not because they feel it’s what they should sell.
Why is Brand Equity Important?
Strong brand equity reduces your average customer acquisition cost. Establishing positive brand equity has a positive impact on return on investment (ROI).
A Greater Market Share
With strong brand equity, you will have a competitive edge in the market. In an era where interest is taking over business marketing activities, your brand needs to stand out to attract customers. There is a lot of people offering solutions to your potential customers.
A premium price is a percentage that a product’s selling price exceeds or falls short of the market average price for a product. Strong brand equity gives you the option to charge more for your product or services. Premium prices increase ROI over time.
It’s easier to create product extensions when you have a strong brand. Instead of starting from scratch with brand awareness, you can use the existing customer base to distribute a product that’s related to what they have already bout into. It becomes easier because they already trust your brand.
Great Brand Impact
Your revenue and dominance of the market give you known partnerships. Additionally, you will get better rates from suppliers and other large brands that want to work with you.
How to Build Brand Equity
Brand Equity is built as your customer becomes increasingly aware of your product and develops a personal appreciation of your brand. It takes seconds for a customer to form an impression of your brand. Once the customer forms a perception, they will associate value to your brand subconsciously.
To build brand equity, you need to build a strong brand strategy that will drive your audiences’ perception of your brand. When you have a strong branding strategy you can help consumers understand what your brand is about.
Build Brand Awareness
Drive brand awareness by using the right strategies. The right Brand strategies should help you communicate with your customer at the right places and times. When customers are aware of your brand story, you can form a valuable relationship with them.
Keep your customers engaged, provide them with value in the solutions you offer. Positive customer experiences result in word-of-mouth advertising. This reduces your customer acquisition cost over time and builds trust.
Brand recognition is important when it comes to building brand awareness. You need to ensure consistency in everything you communicate with your customers.
The visibility of a brand has an impact on our opinions of it. Take Google, for example, we see their logo every single day on our Android phones, and on the google search engine. Google search handles over 100 billion visits per month.
Build Lasting Relationships
To build a strong relationship with your customer, they need to know what your brand stands for. Make sure your brand messaging is clear for customers to understand and relate to. Understand your customer, do research on what needs your product meets for the customer.
Craft Positive Customer Experiences
Customer experiences are everything. When your customer has had a good experience with your brand, they will spread the word about it. Nike has managed to keep a positive customer experience for its customers for many years, this is the reason behind them being the most valuable.
Tips and Reminders
The key to having strong brand equity is to maintain a consistent and identifiable image. Strong brand identity includes the company’s signature, colors, and logo. These serve as a visual aid for customers to associate with your brand. If you adhere to maintaining a strong and consistent image in your branding, customers will see you as a high-quality producer of products.
Your brand is your most important asset. The better you know the equity of your brand, the more likely it is that you’ll leverage it and protect it.
Get your customers to tell you what they like and get them to identify with the brand. Instead of hearing it from you, or reading an article online, that explains why your brand is great, the customer will experience the greatness of your brand for themselves.