Brands and marketers are used to reading all sorts of studies saying one thing and the opposite. Every once in a while there is a new theory, method or tool that intends to turn the advertising world upside-down. However, there will always be facts, truths and tricks that have always been valid and it will keep being so. One of them is: your brand itself is very important. Have you ever heard about brand equity? Well, here is why identity still matters the most. Keep reading.

What is brand equity?

Good question. According to the Oxford Dictionary, brand equity is “the commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself“. Another definition? Here is Inc.’s one:  “the public’s valuation of a brand“.

Not very clear? Then let me rephrase. Brand equity is the value that consumers give to your brand. It is entirely a subjective thing. Probably no strange to economists, though. The subjective theory of value applies here too. The value of your brand is not determined by any inherent property of it, nor by the amount of labor dedicated to build it and make it succeed. It is determined by the importance that your brand has to your (potential) customers.

In other words: it does not matter that your products or services are great if your audience thinks that your brand is not important or valuable.

Your brand matters

Your brand matters and numbers keep confirming that fact over and over again. Over 70% of the population is more likely to buy products of services from a brand they now.

You might be thinking: ok, “a brand they know”. But that does not mean necessarily that the brand has more value.

Well, here is why you are wrong. Think about a brand you really love. Let’s say Nike, for instance. Yes, Nike’s shoes are amazing. That’s why you love them. Great, very rational. Now, here is my question: have you ever tried all Nike’s competitors’ shoes? In fact, how many other brands do you know able to compete with Nike? Surely you can think about two or three, but how many shoes brands are there in the world? Have you ever analyzed them all? And their products? No, you have not, right? (It would be crazy if you had!)

The point is simple: you don’t need to do so. You don’t even think about the alternatives because you have a favorite brand. Your favorite brand may or may not be the best. But it is your favorite because it is familiar to you. Because you know it. And you know it because the brand has been doing a very good job over time, right? And now it is visible and it has some features that everyone, consciously or unconsciously associates to it.

Brand identity is the basis of brand equity

According to Investopedia, brand identity is “the visible elements of a brand, such as color, design, and logo, that identify and distinguish the brand in consumers’ minds”. It is not just image, but also, all the attributes that are not necessarily visual.

As you know, not everything is rational. Colors, forms, words… they all trigger associations that influence our perception. Brand identity has more to do with the way people perceive a brand rather than with what the brand is. That’s why brand equity can’t exist without brand identity.

Also, defining the brand’s identity is the first step to work on brand image. Brand image, then, triggers brand association and it is the visual vehicle to create brand awareness. Once there is awareness, there is perception. Ultimately, if the perception is positive, there is loyalty too. When all these things are aligned and positive, the result is brand equity.

Still convinced that investing in branding is not worthwhile? More about it in our next article. Don’t miss it!

What is brand equity?

Brand equity is the value that customers give to a brand. It depends on the personal opinion of your consumers as it’s a subjective thing.

How can I build brand equity?

The best way to create a strong brand equity is by developing a robust brand identity first. That includes its logo, colors, messages… which contributes to the perception your brand has on its audience.