Why Branding Is Important – A Primer on Brand Equity

On July 15, 2009, in Personal Branding, Social Media Marketing, by Mike D. Merrill (@mikedmerrill)
Why Branding is Important

Why Branding is Important

With all the discussions taking place about how social media can help companies drive awareness of their brand, I thought I would revisit some background on branding and why it’s so critical. Not only is social media marketing valuable for awareness, but the fact that you are participating in this medium also says something about your brand as well. Additionally, this post relates to personal branding when trying to create a perception about your strengths, value, and unique personality in the market.

When we think of consumer brands such as Apple, Nike, or Starbucks we can all relate to a personal experience or a branding campaign that had an impact on our perception of the company.

Branding: Use of a name (Kleenex), symbol (Nike), term (“Google It”) or design (Absolut) that identifies a product.

BusinessWeek wrote “A Practical Guide to Branding” last year that features this paragraph regarding the complexity surrounding creating a lasting brand.

Rob Frankel, a branding expert and author in Los Angeles, calls branding the most misunderstood concept in all of marketing, even among professionals. Branding, he says, “is not advertising and it’s not marketing or PR. Branding happens before all of those: First you create the brand, then you raise awareness of it.”

Brand Equity

Brand equity is the value of a brands’ overall strength in the market and is often the most valuable component of a brand or service. It is determined by:

  • Brand Awareness
  • Customer Loyalty
  • Price Premium

More importantly, brand equity communicates a variety of information that is valuable to a consumer when making a decision thereby, reducing risks to the consumer. This is why word of mouth marketing is so critical for brands. In fact, a recent Nielson study finds that 70% of people trust online recommendations from unknown users. Brand equity is critical for companies in commodities such as Dole Pineapples, Butterball Turkeys, Crayola Crayons or Kleenex.

Brand Equity is Valuable in 3 Ways

  1. Memory – The consumer can remember the brand itself. In this case, the brand name itself provides information to the consumer beyond the label itself.
  2. Evaluation – Branded products reduce shopper’s time and effort to choose a product. The brand information, if conveyed properly, builds trust, therefore improving the consumers’ impression and evaluation of the product.
  3. Extensions – Strong brand equity makes it easier to launch new products by leveraging the value of the existing brands. Examples here include the Nike Skate product line or Starbucks ice cream. The challenge for many companies is making sure the extension does not dilute or damage primary brand

5 Levels of Brand Familiarity

  1. Brand Insistence – The goal of all targeted marketing plans is consumers will actually search for the item. For example, remember all the numerous Viagra ads encouraging consumers to ask for it by name when visiting their Doctor. The Branding Blog over at The Blake Project features a great blog post on Brand Insistence Drivers.
  2. Brand Preference – In this case, when consumers are offered a choice among products, consumers usually choose the product.
  3. Brand Recognition – Customer actually remember the brand when they see it.
  4. Brand Non-Recognition – Fairly straight forward. A company has not done enough to help consumers recognize the brand
  5. Brand Rejection – In this case, consumers won’t buy the brand unless the image is changed.

Social media is not the end of advertising or interruption marketing but definitely has to be used differently to attract consumers to your business. Many who do it well share value first. Whole Foods is a great example of this and applaud their social media efforts and commitment. They have figured out a winning strategy.

For blogs specifically focused on branding, check out the latest Alltop listing here.

Have more to add to this post? Please comment.

  • http://www.NoDebtUniversity.com/ Greg Finch

    Great information Mike!
    It is funny…I never really think about how we call something the actual product name “Kleenex” and not the actual term like “tissue” but we do every time!
    Great stuff that I will work for my brand recognition.

    Thanks!

    Greg

  • http://www.NoDebtUniversity.com Greg Finch

    Great information Mike!
    It is funny…I never really think about how we call something the actual product name “Kleenex” and not the actual term like “tissue” but we do every time!
    Great stuff that I will work for my brand recognition.

    Thanks!

    Greg

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