What is brand equity? Why is it important for any business? Learn everything you need to know with the 2 different brand equity models.
Explained simply brand equity is the commercial value of a brand derived from the customers’ perception. For example, big brands such as Coca-Cola or Apple have huge brand equity since many consumers are very loyal to these products (they would usually choose them over others regardless of considerations such as price). For example, if they were to lose their trademarked name for whatever reason and still produce and sell the same products, their profit would decrease significantly.
Brand awareness, therefore, is an integral part of brand equity: how much customers are aware of a brand will impact its overall value or equity. However, these terms are often used interchangeably.
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Building brand awareness (or equity) is a complex process, however, it is required in order to ensure the long-term success of any business.
In this article, we’ll look at different brand awareness models that will help you understand brand equity and build a stronger brand.
Keller’s brand equity model
Developed by Dartmouth professor Kevin Lane Keller, this model is also known as the Customer-Based Brand Equity (CBBE) Model, published in his 1997 textbook Strategic Brand Management.
In short, this model is based on the idea that in order to build a strong brand you must shape the way your customers think and feel about it. In other words, there’s no brand value without customer perception.
Keller’s model explains brand awareness as a pyramid, starting from brand identity (answering the question “Who are you?”) and ending with “resonance”, the stage where customers have a sufficiently positive brand experience that they are ready to advocate for it.
Let’s look at how each level of Keller’s pyramid can be explained.
At this stage, you have to answer one key question: “Who are you?”.
You need to understand why you’re doing what you are doing. Naturally, profit is a powerful incentive, but there has to be another reason, usually a desire to solve an existing problem.
Defining thighs like mission, vision and values are a necessary step in creating a brand identity. These things propose a more long-term vision of your brand and will help you create long-standing relationships with your customers, beyond a single purchase.
Once you know who you are, it’s time to answer the question of “what”? What exactly do you do and how?
In this stage you’ll also need to define your product performance, or how a particular product or service meets your customers’ needs. For example, Apple’s products are known to be high-quality, state-of-the-art products that offer customers very user-friendly and powerful software.
The second consideration is product imagery, which refers to an emotional experience customers have using your product. In the case of Apple, this translates to its superb design (signature minimalist style).
This level will require in-depth marketing research that will allow you to segment your target audience according to their needs and problems, and translate them into a suitable product.
Once the inner perception of your brand is formed, it’s time to start building brand relationships.
According to Keller, customer’s brand perceptions fall into two categories: judgements and feelings. Judgements refer to the assumptions customers make of your brand based on perceived quality, credibility, usefulness and superiority from your competitors.
Although these aren’t necessarily backed by thorough research or a well-defined logic (people will judge you with or without ample evidence), they usually have some sort of rational explanation: e.g. the website design is outdated so I don’t think this company is very professional.
However, brands also induce an emotional response, which can either be directed towards your product or inward, to the customers themselves. According to Keller, there are six positive brand feelings which are warmth, fun, excitement, security, social approval, and self-respect.
This stage, also called resonance, sits at the top of Keller’s pyramid and presents a final stage in building brand loyalty. According to Keller, this is the stage where customers start to identify themselves with your brand or become psychologically bonded with it.
This doesn’t mean just repeated purchases, but also advocacy of your brand with others. Once at this stage, you need to keep nurturing these relationships through loyalty programs, social media interaction, referrals and more.
Aaker’s brand equity model
The second most famous brand equity model was developed by David Aaker, a professor at UCLA. Aaker defines brand equity as a group of assets and liabilities associated with the brand.
Let’s explain these 5 key brand assets in more detail.
Awareness of a brand represents the extent to which a brand is known in the public/among its target audience.
Measuring brand awareness is done through several parameters:
- The strength of the brand name: how well are people familiar with it;
- Liking: are people’s associations with the brand mostly positive;
- Purchase consideration: does it instantly come to mind in a set of similar brands before purchase.
As the name suggests, this is the extent to which people are loyal to a brand (e.g. would choose it over another brand). To measure brand loyalty, Aaker proposes the following criteria:
- Reduced marketing costs: marketing to loyal customers is much cheaper than acquiring new ones;
- Ease of attracting new customers: loyal customers help with referrals;
- More time to respond to competitor threats: customers are less likely to make a switch to a competitor quickly, even if the offer is sometimes better;
- Steady income: a portion of income is stable with a loyal customer base.
While brand loyalty doesn’t necessarily have to correspond to perceived quality (sometimes people stay loyal to brands out of habit), these two are most commonly connected. This is how the perception of quality is measured:
- The actual quality of the product and the reasons people buy it: do they really need it, or is it just cheaper/more widely available than the rest;
- Level of differentiation: what does it offer that the competitors don’t;
- Availability in sales channels
This is a more qualitative aspect of brand awareness, and is measured by specific associations triggered by a brand.
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Unlike Keller, Aaker’s theory takes into account the more commercial aspect of brands, such as the number of patents, intellectual property and trademarks that a certain brand owns.
Aaker believes these things also have an impact on purchase decisions, as the customers will view brands with many assets as trustworthy, professional and high-quality.
Aaker vs Keller: what’s the difference and what can you learn?
Both of these theories overlap in many ways and can provide you with ample guidance for your branding and marketing strategies.
They both provide a holistic view on the topic of building a brand that includes both the inner understanding of what a brand is, as well as the customers’ perception of it.
Keller’s theory is more heavily on an emotional response created with the customer, whereas Aaker focuses on recognition, how well the brand is known and in what way.
It may be said that Keller’s model is more suitable for B2B, since this business model usually requires fewer customers, with strong relationships that extend beyond the single purchase. Aaker’s approach is more suitable for mass produced products, where it’s important to stand out from a large number of competitors. In this respect, the images associated with the brand are sometimes more important than a grand sense of mission as is the case with Keller.