Brand Equity

Brand Equity is an important concept for startups, as it is a measure of the perceived value of a company's reputation and name. When it comes to products and services associated with a particular company, Brand Equity can help a startup get a higher price or gain an advantage in competitive markets as customers become more loyal to the brand.

Brand equity is essentially the value added by having a recognized name or logo. It represents the positive perception that customers have about a brand based on various factors such as historic performance, market share, customer loyalty, and awareness.

As a result, a company’s brand equity can be used to calculate an estimated value for a line of business or an entire business based on the level of recognition it has in the market. Higher brand equity can, therefore, lead to higher customer loyalty, increased prices, stronger competitiveness, and more sustainable profitability.

Brand equity is often characterised by four components: identity, performance, imagery and relationships. Brand identity is what customers associate with a company in terms of their image, products services and reputation. Brand performance refers to the quality of customer experience, customer satisfaction and the ability to meet customers’ expectations. Brand imagery is associated with the value, benefit and emotions that customers attach to a brand, and relationships are associated with trust, advocacy and loyalty.

For example, a market leader in the cell phone industry, such as Apple, enjoys a higher level of brand equity than a lesser-known competitor. An Apple customer is willing to pay a premium for their products because they know what they are getting and they know that the product will be high quality. They also have a loyalty to the brand and are likely to be brand advocates. On the other hand, a customer may not know what they are getting from a lesser-known competitor's product and may be more likely to pass on the product even if the price is lower. This is the advantage of having high brand equity.