When I say I’m heading to 7-11 to grab a tube of Colgate, I actually mean I’m making a quick run to the convenience store for toothpaste.
Brands like 7-11 and Colgate have become practically synonymous with their products, so much so that their brand names have taken over the actual words for them.
Store-brand toothpaste probably costs less than Colgate, yet consumers still pick Colgate as their toothpaste of choice.
So what gives them that leverage?
Brands like 7-11 and Colgate have what we call positive brand equity.
This means they generate more value from their products, compared to generic competitors with similar offerings.
When a company has positive brand equity, customers are more willing to pay a high price for its products, even though a competitor may offer the same product or service for less.
So how do we measure brand equity, exactly? Here are three ways we can think of.
1. Brand Awareness
If you’re a football fan, you’ve probably seen the huge Chevrolet logo printed across Manchester United jerseys.
Chevrolet doesn’t expect fans to suddenly have the compelling urge to purchase an automobile when Rashford scores on the pitch.
Yet, they pay the English football club billions of dollars anyway, to create brand recall through association with the Premier League club.
Brand awareness measures how familiar consumers are with the brand’s products and services, which is why it’s an important measure of brand equity. When a brand has higher consumer recognition, it drives more sales.
When consumers are able to recognise your logo, products, and associate certain colours with your brand, you know you’ve accumulated some clout for your brand.
2. Consumer Preference
What makes people choose Coke over any random brand of cola?
There’s an inherent consumer preference for Coke — at bars, it’s always a whiskey coke and never a whiskey Pepsi.
Preference metrics examine a brand’s appeal compared to its direct competitors. This is based on factors such as brand relevance, accessibility, emotional connection and brand value.
Can’t picture it yet? Consider how Coca-Cola remains relevant to its audience and has been effective in communicating its message “open happiness” through its various campaigns over the years. Because Coke is able to engage their target audience on an emotional level, they’ve managed to retain loyal customers, and their brand has withstood the test of time.
3. Premium Pricing
A brand’s ability to charge higher prices is a strong indicator of how much brand equity they have.
Think about it – is your brand able to command a higher price for products offered by direct competitors?
A brand with positive brand equity is capable of commanding a higher price than their competitors, since consumers are willing to fork out the extra dollars. Ever struggled to justify why you spent close to a hundred dollars on a simple black t-shirt with an embroidered logo? I know I have (come on, it was Comme des Garçons).
In fact, luxury fashion brands like Prada and Louis Vuitton use their pricing strategy to make their products more ‘exclusive”. This doesn’t just benefit them financially, but also helps them position their products as highly-coveted items – they’ve been glorified, so to speak. Such products no longer serve as fashion accessories alone, but double up as status symbols.
Brands with positive brand equity are able to charge higher prices “for the logo” or “for the brand”. But let’s face it, we’d happily throw our hard-earned cash on a brand we really like just so we could bask in the same glory for a bit. TOC