Brand and brand equity go hand-in-hand in the marketing arena. Here, we will discuss how a brand develops and how that leads to increased brand equity.
What Is a Brand?
Examples of highly recognizable brands
Lexus, Coke, McDonalds, Nike - what do all these companies have in common? They all have very strong brands where the mere mention of their name or the sight of their logo enables you to identify with their product, quality and overall message. If someone sees the Nike swoosh, they immediately know it is Nike and know the quality behind that logo or image.
You see, a brand is the name, term, design, symbol or any other feature that identifies your product, goods or service as different from those of other products or companies in the market. As a brand begins to build or become more recognizable by more and more people, we begin to build brand equity - that is to say, value in the brand. So you see, branding and brand equity are a huge part of the long-term marketing strategy of a company.
Many people get confused about the differences between brand, brand message and brand equity. So, let's make sure we discuss the specific definitions of each of these before we move on.
- Brand is the name, term, design, symbol or any other feature that identifies your products, goods or service as different from those of other products or companies in the market. The word 'brand' is all-encompassing when used in marketing terms.
- Brand message provides the words or terms that help customers and prospects understand why they should use the product and the company values, or what the company believes in. So, brand messaging is the terminology used in marketing to help customers understand use and values.
- Brand equity is the commercial value that can be put on a brand. As we talked about earlier, this increases as a company gains more recognition. How much do you think a company would pay for the Lexus brand?
Where Branding Starts
In order for any company to develop a brand, there are several steps they must go through. The steps are focused on helping you think about your company, its value to the customer and the image it wants to represent. For example, McDonalds is not trying to portray an image of a high-end steakhouse. Rather, their image is designed to be an affordable, quick and inexpensive place to eat, and their brand (and brand message) supports that. It is easy to see how they thought about what their company was and what they wanted it to be, and that shaped their brand and brand message.
So, before a brand can indeed become a brand, there are steps you will need to take:
- Assemble items like advertising you've done, magazine articles you might have been featured in, your mission statement and even your strategic plan. In marketing, we call these 'who we are' documents. These documents will help you to gather information on who you are now and what, if any, advertising you've been doing.
- Answer any key questions that you believe these documents missed or did not address.
- Find out what stakeholders think about you. Stakeholders are people that have an interest in the company being successful and can include employees, creditors, vendors and even customers. For this step, do not be afraid to ask hard questions about what these stakeholders think you are as a company.
- Know where you stand in comparison to your competitors. If you know where they stand and how they present themselves to their customers, you can begin to understand how they position themselves and how you should position yourself, which is called 'thought branding.'
- Brainstorm and open up your mind. Challenge individuals to think about words, colors, shapes and anything else that could represent your company.
- All the work you've done so far is so you can develop an identifying logo and potential slogan for your company. You cannot take this step until you know who you are (or who you think you are), since the logo and slogan (also called a tagline) need to support the work you have done and what your company is.
- Develop a brand strategy. This will include guidelines for what you will and will not do in relation to your brand and how the specific mark is represented.
- Identify with and do not stray from your brand strategy in everything you do. When having a corporate function, recruiting or anything else the company does, the brand has to be upheld because it represents the image of the company.
What Builds Brand Equity
All the work you did to develop your brand will also help build its equity. You see, the brand really is what the company is all about, and if you support that brand in everything you do, and the brand becomes more recognizable, you're building equity.
The accepted definition for brand equity is the value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognizable and superior in quality and reliability. In this case, the value premium is the amount we will pay for the product or the service.
So, how does a brand get recognizable, and how do you know what your equity is? As far as making it recognizable, that is where marketing comes in. Where you market and how you market will drive brand equity.
For example, the Geico gecko is part of the brand for Geico, and the commercials he is in help build brand equity as people recognize and associate that little lizard with Geico. Additionally, his attitude (how he conducts himself in the commercials) is also part of the brand. All of this helps drive the brand and build brand equity.
As far as what your equity is, the simple answer is you never really know hard numbers, but you can make a guess as to what it's worth. If Lexus was worth $100 billion just counting its factories, machinery, plants, etc., how much more could they ask for their brand? Would someone pay an additional $100 million for the Lexus brand? Issues like that are open to personal perspective, but it's safe to say that buying all the Lexus products and not buying their logo (in effect, not buying their brand) would not make sense. Thus, they can ask for more money because the brand is worth more on top of their physical assets. The brand is equity.
Please do not think too hard about the differences between:
- Brand: the name, term, design, symbol or any other feature that identifies your product, goods or service as different from those of other products or companies in the market.
- Brand message: provides the words or terms that help customers and prospects understand why they should use the product and the company's values, or what the company believes in.
- Brand equity: the commercial value that you can put on a brand.
One thing is for sure, though - you cannot have a brand without a brand message, and that message helps build brand equity.
After this video lesson, you will have the ability to:
- Differentiate between brand, brand message and brand equity
- Identify steps a company should take before developing a brand
- Explain the importance of building brand equity