Brand Equity kills or breathes life to a business

So you want to start selling a product or service for your side hustle or main hustle. You say to yourself I love cars so I will start selling cars, or I am a shoe expert so will start selling shoes. My friends always compliment my outfits so I will start selling clothes or make up. Majority of people starting a business will make a decision based on what they like to do which is the wrong way to go about it but that is a discussion for another day..

Whatever you decide to do or how you end up starting it, brand equity is what will make or break your business.

what is Brand Equity?

Brand equity is a set of brand assets(read good things) and liabilities(read bad things) limited to a brand,its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firms customers. For example a customer coming to your business having a read a bad review will carry a liability for your brand and so forth. The assets and liabilities can be grouped into five categories:

1. Brand loyalty
2. Name Awareness
3. Perceived quality
4. Brand associations
5. Other proprietary brand assets:-patents,trademarks,channel relationships etc.

How does Brand Equity create value for the customer?

Brand equity can create or subtract value from customers. it can do so by:

1. Help the customers interpret,process and store huge quantities of information about products and brands. e.g can you imagine customers storing coke in their minds as a brown liquid that is sweet? instead of coke? which subconciously evokes the feelings of socialising and happiness of being together with people you care about. A party without coke or its other brands like fanta and sprite does not feel like a party. It does not feel festive
2. Affect the customers confidence in the purchase decision (due to either past use experience, what they have heard about it or in general familiarity with the brand and its characteristics.
3. Both perceived quality and brand associations can enhance consumer satisfaction with the use experience. Knowing that the car you are driving is a mercedes can affect the experience of the person driving it or the hand bag you are carrying is a Louis Vuitton.The user can actually feel different

How does Brand Equity create value for the business?

1. it can enhance programs to attract new customers and recapture old ones.E.g A promotion providing incentive to try a new flavour will be more effective if the brand is familiar
2. It will allow higher margins through permitting both premium pricing and reduced reliance on promotions
3. Provide a platform for growth through brand extensions
4. Provide leverage in the distribution channel. Traders have less uncertainity dealing with a known brand name rather than one that is not known
5. A strong perceived quality position would be hard to be beaten by a competitor since human beings who already believe that the brand that they are using works well for them will hardly change it to buy the competing brand.