What is Customer Based Brand Equity

What makes a difference between a brand and brand equity? Imagine you’re at a supermarket, looking for some salt. There are many brands on the shelf, but you already know which brand you’re going to choose, right? In fact, you probably don’t even look at other brands. You’ve been using the same one for ages, what’s the point of switching brands now? That means you are familiar with the identity of that brand. Furthermore, it also implies that the marketing efforts of that company were well invested. However, what is brand equity?

While buying salt, you, the consumer, already have a brand in mind that you associate with the product. The marketing strategy managed to create a favourable impression with you, which results in decisive action. That’s positive brand equity. However, do you also have in mind a brand that you absolutely wouldn’t buy? That’s negative brand equity. Brand equity results in favourable or unfavourable actions from consumers. Therefore, that’s why it’s called customer based brand equity.


Brand Equity as a Measuring Unit

To understand past and future actions of your target audience, you can take brand equity as an excellent measurement unit. Marketers spend a significant amount of money, endless time, and effort on creating sophisticated strategies. If your brand has positive brand equity in the present, that means that your marketing team invested their energy well. However, negative brand equity suggests the opposite. Present brand equity can also help you plan your future marketing efforts.


Larry Percy’s Experiment

To achieve strong brand equity, you have to work on the critical factor — brand knowledge. Larry Percy conducted a grand experiment to highlight the value and importance of brand knowledge. His product of choice was beer, and he had two different set-ups in his analysis.

To see how brand knowledge and awareness influence the customer’s opinion of the product, he gave brand-name beers to consumers, and in the first set-up he disclosed the brand names, while in the second he didn’t. The results clearly show the importance of brand knowledge — the consumers were much more critical when they weren’t aware of the brand. Contrary to that, when Larry Percy disclosed the brand names, the consumers had more favourable reactions and comments.

This experiment proves that you should always consider brand knowledge as a crucial factor when it comes to customer based brand equity.

Brand awareness, or the ability of the consumers to recall a particular brand, and brand image, the visuals that the brand is associated with, make up brand knowledge. Strong customer based brand equity depends on the high levels of brand awareness and brand image. But how do you achieve that?


Achieving Strong Customer Based Brand Equity

Brand equity is customer based. It solely depends upon and resides in the mind of the consumer. What’s more, it depends on the customer’s convictions. Therefore, marketers have the difficult job of inserting the pleasant thoughts about their brands into the minds of their customers.

This is no easy task, and it usually involves several steps. Each step is another marketing objective that has a goal of strengthening the brand and creating vast, positive brand equity.

Step One

The first step is to create a relationship with the customer. There has to be a connection between the consumer and the product your brand is offering. That means creating an image that your product is the best choice for that particular consumer. Brand awareness and brand image play essential roles in this step.

Step Two

The second step is building a connection. A connection makes a long-lasting impression in the mind of the customer. Quality control and reorganisation of products, so they are reliable and anticipated, is crucial here. Furthermore, the impression can be further consolidated with eye-catching visuals like logos and packaging, as well as appealing warranties and helpful customer service, for example.

Step Three

The third step is creating an emotional connection. Brand image and your offers can result in a favourable action from the customer. Emotional connections create loyal customers and strong, sustainable customer brand relationships which aid long term brand success.


How Industry Leaders Do It

Let’s take industry giants for example. Google and Apple are not just brands anymore — they are entities. People entirely identify them with their respective products. After achieving that and placing a specific image in the consumers’ minds, Google and Apple can count on the loyalty of their customers — no matter what. The changes in price or quality can’t diminish the commitment so much that they dethrone one of these companies.

What’s more, the benefits don’t stop there. Loyal customers that are unwavering in their loyalty later become brand ambassadors. In other words, they create consumer-based brand equity.

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Strategic Brand Management Knowhow – learn more about strategic brand management with our collection of informative educational articles.

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