In this post, we demystify the idea of brand equity and encourage brands to stretch their boundaries and challenge their assumptions in listening to the ever-changing - and sometimes entirely new - needs of their customers.
What is Brand Equity?
Brand equity, quite simply, is the social value of a brand's recognition. How memorable, sticky, or coveted, is it? From a marketing perspective, brand equity is generally based on how customers perceive a company’s products relative to the competition. It‘s especially noticeable when comparing a branded product to a generic product. Still, differences can often also be seen between brands in the same competitive set, with one generating higher brand equity scores than another – and a corresponding direct line to brand loyalty.
Although brand equity comes to mind concerning premium brands most readily (i.e., high-end luxury apparel brands, expensive audio brands, anti-aging skincare brands), it is essential across many categories.
Where market research intersects with brand equity, we’re usually talking about the things that people most immediately associate with a brand.
Can a Fixed “Brand Equity” Actually Impede Growth?
Driving a company's brand is hard work: product, marketing, brand, and insights teams work together to deliver a cohesive message around a brand name and image. With all the moving parts and pieces that go into brand management and growth, it's easier than you would think to develop blind spots when it comes to the core value proposition and equity that's driven the business for years. More critically, failing to address blind spots and regularly check your brand equity assumptions through user-centered brand research can lead to missed opportunities and impeded growth.
Here are some critical roadblocks we often see:
When Top-of-Mind is Not the Most Meaningful Measurement - If consumers were asked to describe the value of a brand or product in the simplest form, how would they do it? What would they lead with? Brand equity is often measured quantitatively, and it’s easy to fall into the trap of focusing solely on the theme in the number one position. Some teams take the top-ranked brand pillar at face value and forget to keep digging. In reality, that top-performing brand association is usually just the tip of the iceberg. There are many other drivers of brand equity beyond just the one that needs to be understood.
Looking at Equity Drivers in Isolation - As alluded to above, drivers co-exist. Some may complement one another, while others compete, creating tensions that must be deeply understood. For example, there may be two strong co-existing brand equity drivers that are actually quite different – possibly even opposing. Take the pest control space, for example. Here, both efficacy and safety are significant for people. The brand must find a way to ride this fine line of how much you communicate one or the other. If it is super safe, then maybe it's perceived as being less effective. On the other hand, it could be perceived as perhaps not being very safe if it's super effective.
Not Letting Go of Legacy - In other cases, a brand may have a substantial legacy brand equity that has become dated. Moving beyond nostalgia and legacy is a hard transition to navigate successfully. But sometimes, the brand equity drivers that have worked well for many years may not be speaking to today’s consumers as they used to, instead, falling on deaf ears. Asking yourself, “is this still relevant” is an important first step and next understanding how consumers’ expectations, and the category, might have shifted, leaving legacy equities behind with those changes.
Brand Blinders - Perhaps our favorite blunder because it is so obvious: holding on to a fundamental belief that your brand actually matters in the context of an average user’s life. This is usually a hard one to hear because we are living and breathing the brand in all of our work in our world. The reality is that assuming that people care and lead with your brand might actually be causing you to miss what matters. Truth bomb: they may not know your brand name at all, or even correctly, and you can still have a lot of interesting brand equity. In user research, it is not uncommon to see brand names get flubbed or failed to be recognizable by name, yet somehow they are memorable in other ways. Sometimes instead of leading with a brand, consumers are driven by category thinking or may even lead with a problem, motivation, aspiration, mood, emotion, or need state over the brand. In these moments, putting your brand on a pedestal means you might miss important behavioral or competitive context that determines the social value and set critical expectations that dictate whether or not something can be sticky or memorable in the first place.
Forgetting to Stretch - We have lost count of how many times we have seen brilliant ideas or big business opportunities flop or lose traction just because of concern of “existing brand fit”. The revolutionary cleaning system, Swiffer, was shopped to another major CPG company first, and they declined, feeling the risk of failure was too high based on their existing brand equity assumptions surrounding efficacy. Ultimately they missed out on a multi-million-dollar opportunity, passing it up to P&G. This was a prime example of holding your leading equity in much too firm of regard and an important lesson as to why you should not immediately dismiss those smaller second and third-tier brand equity levers: those are the ones that can be transformed into permission to stretch the brand into new directions.
Next Time You're Tasked with Understanding Brand Equity
- Instead of looking at what rises to the top, look at the whole equity picture.
- Understand the why - what is driving the brand equity levers?
- Instead of asking just about the brand, ask about category expectations to get a more of a forward-looking point of view of what they think a brand to do for them, which might be different than the legacy.
- Equity can't be investigated in a vacuum. It has to be explored in the context of people's real lives.
One thing is for sure: Managing brand equity is a marathon as opposed to a short sprint. The brand promise must be maintained among existing customers while keeping that brand promise relevant and engaging for NEW customers and customers whose needs are changing.