• Vincent Bissette


Why do people pay more for some brands than others? The secret is brand equity...


Three elements are needed to create brand equity: customer perception, positive or negative impacts and the ensuing financial worth.


It is important to understand the role of the customer’s perception of a brand, which evolves from his or her familiarity with a brand and its services or products. In assessing a brand’s equity, only the customer’s perception really matters, not the brand owner’s: in our experience, the two perceptions can differ dramatically.


A market sector’s perception of a brand produces impacts and effects that are positive or negative. These are observable and quantifiable. When the positive effects outweigh the negatives the brand equity is positive and there are benefits for the company, its goods or services and its bottom line. When the brand equity shows a negative balance, well, you have work to do on your brand because you are not maximising its worth.


Ultimately the impacts and effects create value that is physical or non-physical. With positive effects, the physical value upturns in profits or revenue; the non-physical value is increased awareness of the brand and more favourable attitudes towards it. When impacts are negative, the physical or non-physical worth is negative too. Put it this way – if customers are prepared to pay more for a standard product than for a product that is branded, then the brand is deemed to have negative brand equity. Brands can be negatively affected by various scenarios such as product recalls or high-profile failures to fulfil promises, or through unexpected external events beyond the brand’s control – brand-sponsored celebrities becoming embroiled in a private scandal is an example of this.


Many marketing research studies have confirmed that brands are among the most valuable business assets. But how do you assess a brand’s value? One feature that can heighten the financial worth of a brand – not to mention the company or individuals that own it – is its brand equity. The value of brand equity can be derived from such diverse elements as margins of profit, market share, how recognisable their brand logos are, whether the brand features significantly in consumer conversation, and perceived quality. They are elusive and amorphous things, brand values, but they do exist, as the next paragraph explains.


Consistent, strategic branding leads to a strong brand value, which can be defined as the total amount extra that people will pay for your brand versus another, identical product or service. In the car industry, it is estimated that a strong brand is worth up to 10% more than a not-so-strong brand, simply because it is viewed as better, and not because of any functional differences.


About the author: Vincent Bissette is the Creative & Managing Director of Propel Marketing & Design, as well as acting as a Brand Advisor at various client companies. For over 30 years Vincent has been helping local and national companies across the UK achieve greater commercial success while minimising the cost of doing it. Vincent has been at the heart of design and marketing in Glasgow for 30 years and. Throughout that time, there’s not much he hasn't done or many industries he hasn't worked in. Now based in Hamilton, South Lanarkshire with Propel Marketing and Design he looks to continue to transform the fortunes of businesses through effective targetted marketing.

Get in touch with him on Linkedin here

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