By M. Isi Eromosele

Brands are names that identify the source of products. In developing a new product, the branding decision is a very important one. The brand can add significant value when it gains strong recognition and develops positive perceptions in the minds of consumers. This impression is known as brand equity.

Brand Equity

Brand equity is an intangible asset that wholesomely depends on perceptions made by consumers. As such, there are three perspectives from which to view brand equity:

• Financial - Brand equity can be determined by the price premium a brand commands over its competition. When consumers are willing to pay considerably more for a branded product over another branded one, this premium provides an important indication about the value of that particular brand. One has to consider promotional costs when using this method to measure brand equity.
• Brand extensions - A successful brand can be used as a platform from which to launch related products. This enables the leveraging of established brand awareness to the benefit of the new products. Additionally, this helps to reduce advertising expenditures as well as engender lower risks in terms of customer perception. Interestingly, appropriate brand extensions can enhance core brands too. It is to be noted that the value of brand extensions are a little more difficult to ascertain than straight financial measures of brand equity.
• Consumer-based - A strong brand enhances consumers’ stance toward products associated with the brand. Experiences with a product build customer approach toward that product. The consumers’ awareness and connection with the brand inevitably lead to perceived quality, incidental characteristics and finally, brand loyalty.

The benefits of strong brand equity include:

• A more predictable income stream
• Increased cash flow through larger market share
• Brand equity is an asset that increases the company’s book value

Conversely, brand equity is not always positive in value. In acquiring a bad reputation, some brands suffer negative brand equity. When a company has to resort to discounting to induce customers to buy a previously well selling product, that product has negative brand equity.

A company has to implement three phases in order to establish a strong brand in its marketplace:

• Introduction - Introduce a superior quality product with a built-in preconceived strategy to use that brand as a platform from which to launch other products in the future. To successfully implement this phase, acquire a positive evaluation from consumers beforehand through social media discussions and sample tests.
• Elaboration - Choose a name that makes the brand easy to remember and encourage repeat usage by your target audience. Help the customers develop and maintain their positive initial assessment of the brand.
• Fortification - Maintain brand consistency by keeping the same product image for the long term. This helps to reinforce its place in consumers’ minds, developing special relationship with those consumers.

Any given marketing mix should focus on building and protecting brand equity. For example, a superior quality brand should be consistent with what is expected of a quality brand and the promotional campaign should be coherent and build reliable associations.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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