How brand equity analysis helps build consumer trust
The modern marketplace features oversupply. This, in turn, increases competition and forces companies to fight for every customer. Thoughtful branding can be the solution that helps you stand out from the crowd. However, the promotional strategy should take into account not only the image aspects but also the return on investment. The first step in this process is to analyse brand equity.
Brand equity includes several components. It reflects how current and potential customers perceive the company. It also considers the associations that come to mind when the company is mentioned. Reputation is directly related to equity. The higher it is, the easier it is for the company to make changes, raise prices or enter new markets.
It should not be confused with brand equity. Reputation is based on intangibles such as perceptions, loyalty and associations. Brand equity reflects the financial component. Capital analysis is important to determine the importance of the company name and logo and their impact on sales. The value is used to value the business portfolio as an asset.
Components
Brand equity has four main components:
- Awareness measures the degree to which the target audience is aware of the company. The indicator takes into account how quickly consumers can recall the brand name or its product from various elements.
- Association refers to the mental or emotional connection that consumers have with the company. The higher it is, the greater the level of trust in a particular company.
- Perceived quality describes how the public perceives the quality of the product or service and the company’s position in the market. Quality differentiates a company from its competitors.
- Brand loyalty reflects the confidence customers have in the company in terms of the likelihood of making repeat purchases. Loyalty works in the long term and helps to retain customers.
PR closely links to brand equity. A well-thought-out strategy builds credibility, manages crises, and overcomes challenges. The higher the brand equity, the more effective the PR tools.
How to measure
Analysts evaluate brand equity using several key parameters. Share of voice (SOV) is one of these. It reflects how often the brand is mentioned in the network. To assess this indicator, experts use organic mentions of the company name in social networks, media, blogs and websites.
Marketers measure loyalty and engagement through a variety of KPIs. These include:
- customer retention rate;
- net promoter score (NPS);
- customer satisfaction (CSAT);
- average order value and others.
Customer loyalty is an important characteristic that contributes significantly to overall equity. This indicator is also related to the price premium. It measures how much more customers are willing to pay for the company’s products compared to similar products offered by competitors.
A comprehensive analysis of brand equity provides an objective assessment of its perception by the target audience and its market share. It is a reliable tool for determining a company’s market position.
