What Is Brand Equity?
Brand equity refers to the strength and durability of a brand based on the favorability of an organization's outward image or company culture. It reflects the perception of customers that a particular company is more reliable or prestigious than others in the marketplace.
Customers of high equity brands often develop emotional attachments when they believe the values and lifestyle representation aligns with their own. The image of a brand is not only important to the consumer but the brand itself as these positive perceptions develop loyalty, and result in faster growth, reduced churn and higher LTV.
Brand equity is the difference between being well liked and being iconic.
When you hear someone say "I love Nike," you know they're talking about more than a pair of Jordans. Fans of the brand are committed to the image the brand represents. Nike has created an entire culture of athletics being cool,casual and fashionable. Many identify with this image and its why Nike has remained MVP for decades in the field of sporting goods, technical athletic wear, and streetwear fashion.
Brand equity is also the difference between the price of a product and its perceived value.
It's about trust, loyalty, and familiarity with a company or product. An example of this would be, going to the drug store and buying Advil over unbranded ibuprofen. While the products are identical in efficacy, time and time again consumers choose the branded product based on recognition and the associated satisfaction. This assumed quality is the result of high brand equity and is essential to the long-term success of a company.
Social media outreach, customer service responsiveness and compelling advertising campaigns are proven strategies used by marketers to develop emotional connections with customers.
Your brand needs to be associated with quality and reliability to grow.
Imagine if consumers didn’t need to have had past experiences with your company to determine your brand was trustworthy and preferable over competitors. Thanks brand equity.
If you're looking for ways to develop brand equity, this article will look at fool-proof ways to ensure your company is putting it’s best face forward and winning the favorability of the marketplace.
What Is The Difference Between Brand Equity And Brand Affinity?
Brand equity is a general idea about how much a brand is worth. Brand affinity is an individual's preference for that brand. Both begin with brand awareness, but they refer to different stages of a brand's development.
Brand affinity refers to the perception of a single individual while brand equity refers to the overall reputation of a brand's culture and identity.
Both concepts begin and end with brand awareness, after all you need your name in the game before popular opinions can form. But, the willingness of customers of equity brands to advocate for their product of preference increases brand awareness, perpetuating the growth cycle.

Why Is Building Brand Equity Important?
A strong company image equates to loyal customers who want nothing more than to keep spending their hard-earned money with you. Brand equity is like a human relationship. When you're building your brand, you need to carefully consider what you’re communicating to stay in good standing. Think about your branding and its projection: What impact does it have on the customer's perception of the company?
Network Building
Make friends in the right places.
Being associated with a product that has an established reputation for quality will help to develop positive opinions about your company. While that may sound like a coat tail ride, oh wait ….it is.
Networking with high equity companies can give you an advantage, and it may be the only time being guilty by association has such a positive outcome. However, keeping your competition close and building a network of professionals that share your values and interests can have addiction effects on the growth of your company.
Shared goals and business models are often faced with similar hurdles. Having a community of individuals with experience managing situations unique to your field can cut out trial and error time spent resolving issues. Observing and communicating with others in your industry will give you insight on successful strategies and more importantly, how to avoid potential missteps.
Pro tip: If you are building your brand on Amazon, check out this guide.
Increase Your Market Share
Brand equity is an important driver for growth.
This is because it influences business fundamentals such as market share, profitability and return on investment. People will pay more for a product that has been branded well. When people see the brand and can associate it with good quality, they are willing to purchase products from brands simply because of their prestige value.
Companies with high brand equity are often more visible in the marketplace whether it’s through advertising campaigns or word-of-mouth, and the more exposure your company receives, the easier it is to edge out competitors.
Cushion the Blow of Increased Prices
Brand equity is the value of a “brand name.”
It can be measured by how much people are willing to pay for it. If your brand equity is strong, your product has become a fixture in the lives of your consumers.
Maybe your product is a simple solution to an age-old problem, or perhaps it's completely innovative and addictive. Either way, customers that are unwilling to live without your product will be more adaptable to necessary price increases. Often these customers have adopted the mindset of “you get what you pay for” and are willing to shell out more cash for a product they assume to be higher value.
This is especially true with SaaS companies increasing their monthly rates. Users who have found value are unlikely to churn when you raise prices.
Reduce Churn and Increase LTV
In one word: Loyalty.
Again, when your company has brand equity your consumers have already decided your product is of higher value than your competitors.
That's right, loyal customers see your competitors' products as a substitute for the real deal, even when the two products are identical. Committed customers aren't easily swayed with offers or products from other brands, they presume other companies aren’t as reputable. Being favorable results in higher LTV and less churn.
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Components of Brand Equity
Brand Perception
"You are what your customers believe you to be."
Brand perception can be defined as value assigned to different brands by consumers.
A brand's success is dependent not only on its inherent product, service features or functionality, but also on the perceptions and assumptions consumers hold about it in their mind about a particular brand. This can also have a cultural impact, if a customer believes a brand’s image represents who they relate to, their values or an area of interest they will develop a preference for your brand.
It’s the reason there is such a high demand for imitation handbags, whether the handbag came from a french boutique or a night market, the brand represents a level of value and prestige associated with a lifestyle the consumer favors.
Positive or Negative Effects
The way a customer receives a brand's image will directly impact their intent.
How well a brand image is received hinges on perceived quality, value alignment and customer experiences. If the result is positive, customers are inclined to recommend the brand or share the company on social media, leading to an increase in interest rooted in reputation.
When a brand is received negatively, the customer’s reaction may be to avoid engagement with the company, or publicly review the product poorly, which could be damaging to the overall image of a brand.
Resulting Positive or Negative Value
Brand perception falls into two categories: tangible or intangible value.
Tangible value is a result that can be easily measured, and often has to do with physical goods. An example of this would be increased revenue due to greater sales volumes. On the other hand, an example of negative tangible value could be decreases in company stock price as a result of there being less confidence in how well their product sells or will sell-off altogether.
Brand equity for the most part falls under the category of intangible value. Positive value refers to a widely recognized reputation of positive experiences from customers that result in increased brand awareness and loyalty. Alternatively, if the intangible is in the negative and perceptions about a company are poor or waning, people could become sceptical towards the brand and choose a competitor, discontinue service or review the company unfavorably.
4 Ways Startups Can Build Brand Equity
Offer Excellent Customer Support
Brands with excellent customer outreach have an edge over their competitors. Netflix, Amazon and Dove for example rank highly among consumers because they listen to user feedback and provide incomparable care at every touchpoint. Building a solid rapport with consumers and developing a history of positive interactions will ensure a brand stays favorable.
If you don't want to spend millions on advertising campaigns, simply focus on communication; listen to customers' needs in order to give them better service, no matter where they are in their buyer journey. If customer support is excellent, both sides get value out of every interaction, which will ultimately lead towards greater success!
Social Media Marketing
Social media platforms have made advertising easier, period. Facebook, LinkedIn and Twitter are free to use but it's important that they're used strategically with the right content in order to encourage people who would be interested in your product. This is how we've seen some of these social networks grow exponentially. The best part about using a social network as an advertisement tool is being able to reach specific audiences rather than broadcasting messages to an undefined market with traditional ads on TV or in print. You'll find that your organization is better connected to diverse audiences, while maintaining the ability to target specific audiences once they have been properly identified.
Employee Advocacy
Who knows your product better than your team? Employee advocacy means employees are encouraged and incentivized to share the brand. On average, an individual has 1000 social contacts, so the size of your company will determine the reach of an employee advocacy program. But, it has been proven to make an impact on brand equity when employees of the company are proud to share the brand with their social circle.
Conversational Content
Your company's branded social media is important for growing your business and increasing brand equity. Creating content that has a personal touch will go a long way. Customers don't want content that feels overly automated or generic. Using humanized social content delivered in a conversational tone will aid in connecting consumers to your brand and keep them engaged. If the content being produced feels more like social media spam than valuable interesting content it will likely be overlooked, or worse, rejected.
High Brand Equity Examples
Uber
It’s no secret Uber has ruffled the feathers of taxi drivers all over the world.
When it comes to hailing a ride, let’s face it, opting for a rideshare program is most often the safest, more convenient and economical option. Uber was the first ride share company to make a marked impact in a space that for decades was exclusively occupied by taxi cab drivers and companies.
Now, Uber shares the market with a few companies offering similar services, but their history of reliability and driver standards have kept them ahead of the rest, 61% percent of rideshare users only ride with Uber, while the remaining portion prefers a competitor, like Lyft or use a combination of services available to them.
Netflix
Prime video and chill just doesn’t have the same ring to it.
Video streaming giant Netflix has 204 million paid worldwide subscribers, for a long time they were the only serious name in the business. With new streaming services from Disney, Amazon and HBO joining the race, Netflix market shares are down, but they still claim over 34% of the video streaming audience. Being veterans in their field Netflix is a household name and has changed how people consume television on a missive scale, with many people cancelling traditional cable packages.
While being first to market can have an impact on brand equity and how it relates to your overall market share, it's not always a deciding factor. Netflix has stayed ahead of the game by customizing and developing their own content, where others offer not much more than a video library, often available on multiple platforms.
Airbnb
They weren't the first in their field but AirBnb’s vacation rental platform was accessible to a larger demographic than competitors like VRBO.
Airbnb began as an alternative to hotels, mainly aimed at students, they saw their market share skyrocket well above that of their competitor targeting the high-end of the spectrum; short term leasing opportunities for retirees not occupying their vacation homes. Airbnb now offers something for everyone, from luxury villas to shared space accommodation. The range of options made available by Airbnb and the ease and flexibility of booking have allowed Airbnb to take a bite out of the hospitality market overall, and even impacted the rental market in some areas.

Key Takeaways
Building brand equity over the years can be difficult, but it is worth every investment and effort. The long-lasting benefits of this action will positively impact your company’s growth for decades to come.
Here are a few key components to focus on:
- Build a glowing rapport with your consumers through excellent customer experiences.
- Align the values of your company with those of your target demographic.
- Make sure your social media strategy reflects the overall image and culture your brand represents.
- Turn your employees into brand advocates by developing a product and environment they are happy to share with their friends and family.
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