Brand Equity and Positioning in Digital Era

Brand Equity.

Evasive, intangible, and prone to flux.

It is a concept that tries to effortlessly merge statistics and sociology into one comprehensible package. And not always in the most clearly defined way.

But to understand what we mean by Brand Equity, we first need to understand what we mean by brand.

1. What Is a Brand?

In uncomplicated terms, a brand is simply the recall of a product by a name given by a business instead of the actual product or service.

We think of Coca-Cola or Coke instead of a liquorice-coloured carbonated drink. We think of Lays as being equivalent to potato chips, whereas Coca-Cola and Lays are simply brands and not the products themselves.

What we need to ask ourselves is why we think of Coca-Cola or Lays when we mean a carbonated drink or potato chips.

This is where Brand Equity comes into the picture.

2. What Is Brand Equity?

Brand equity is the value a brand has in the market.

The more you’re willing to pay for a certain brand, the higher its brand equity.

The real question, though, is why people are willing to pay more for certain brands compared to others.

Positioning and perception are the precarious scales that need to be perfectly balanced to help create strong brand equity.

What we need to understand is that equity is not a game played purely with tangible market values. Equity is a carefully crafted image present in the minds of consumers.

3. The Role of Positioning and Perception

Think of it this way: there are a few quantifiable variables that affect the way consumers purchase goods.

Quality, quantity, and price are the most fundamental aspects.

A product that is of visibly better quality will get picked up more often by consumers than a product that is inferior. Similarly, quantity and price point are other factors that influence consumers while choosing what to buy.

In a marketplace where there is more than one brand selling the same product, positioning a product becomes more about perception than tangible variables.

In a consumer-driven economy, businesses face stiff competition while fighting to acquire particular market groups.

Most consumers come with pre-set opinions about the brands they prefer and are rarely prompted to try a new brand.

But in this highly competitive world, where chunks of markets are fiercely influenced by brand preferences, we need to take a closer look at what makes people prefer one brand selling the same product over another.

4. Key Factors That Affect Brand Positioning

Here are some of the key factors that affect the positioning of a product in the market:

1. Popular Choice

Ask ten people what their favourite brand of running shoes is. Five might say Brand X, three might say Brand Y, and two might say Brand Z.

Hence, Brand X becomes the popular choice for consumers when picking running shoes.

But what makes Brand X so popular compared to other brands that also sell similar running shoes?

Based on social factors such as culture, subculture, and social class, consumer preferences can shift towards certain brands over others.

Popular culture and advertising play a major role in how brands are perceived by people, therefore contributing to popular choice and the mass market.

2. Prestige Goods and Price

Prestige is an interesting concept to work with while positioning a brand.

What we mean by prestige is very simple: how much is a consumer willing to pay to get your product?

The higher the prestige price, the greater the perceived worth of the product in the mind of the consumer.

From clothing companies to hotels and electronic goods, manufacturers rely on the prestige value of their brand to generate higher profits.

3. Exclusivity

Along with prestige pricing, we encounter the concept of exclusivity.

Exclusivity is simply a brand’s ability to manipulate the supply of a product so that it falls below demand for the product.

As the supply of a product becomes limited, the price goes up, thereby increasing the prestige value of the brand.

4. Affordability

What about consumers who do not care much for prestige goods or products that are exclusive?

What if the primary factor influencing their choice between brands is simply price?

Affordability is the great equaliser of brand positioning.

Amid all the psychological manipulation of consumer needs, many brands forget one of the criteria placed upon them by their consumers: affordable products.

5. Pricing and Value Perception

Understanding how to price a product is critical for any brand.

Price it too high and buyers might not see sufficient value in the proposition. Price it too low and the product might be perceived as being of inferior quality.

Between all the highs and lows of price positioning, a business also needs to understand:

How to portray itself
How to package its products
Where to sell them
How to advertise itself

Final Thought

There is a lot to consider, and it cannot always be handled by one person or understood within a small amount of time.

But acquiring a firm understanding of positioning and brand equity is incredibly important for anybody dealing with the practical realities of business.

Brand Equity.

Evasive, intangible, and prone to flux.

It is a concept that tries to effortlessly merge statistics and sociology into one comprehensible package. And not always in the most clearly defined way.

But to understand what we mean by Brand Equity, we first need to understand what we mean by brand.

1. What Is a Brand?

In uncomplicated terms, a brand is simply the recall of a product by a name given by a business instead of the actual product or service.

What we need to ask ourselves is why we think of Coca-Cola or Lays when we mean a carbonated drink or potato chips.

This is where Brand Equity comes into the picture.

2. What Is Brand Equity?

Brand equity is the value a brand has in the market.

The more you’re willing to pay for a certain brand, the higher its brand equity.

The real question, though, is why people are willing to pay more for certain brands compared to others.

Positioning and perception are the precarious scales that need to be perfectly balanced to help create strong brand equity.

What we need to understand is that equity is not a game played purely with tangible market values. Equity is a carefully crafted image present in the minds of consumers.

3. The Role of Positioning and Perception

Think of it this way: there are a few quantifiable variables that affect the way consumers purchase goods.

Quality, quantity, and price are the most fundamental aspects.

In a marketplace where there is more than one brand selling the same product, positioning a product becomes more about perception than tangible variables.

In a consumer-driven economy, businesses face stiff competition while fighting to acquire particular market groups.

Most consumers come with pre-set opinions about the brands they prefer and are rarely prompted to try a new brand.

4. Key Factors That Affect Brand Positioning

Here are some of the key factors that affect the positioning of a product in the market:

1. Popular Choice

Ask ten people what their favourite brand of running shoes is. Five might say Brand X, three might say Brand Y, and two might say Brand Z.

Hence, Brand X becomes the popular choice for consumers when picking running shoes.

But what makes Brand X so popular compared to other brands that also sell similar running shoes?

Based on social factors such as culture, subculture, and social class, consumer preferences can shift towards certain brands over others.

Popular culture and advertising play a major role in how brands are perceived by people, therefore contributing to popular choice and the mass market.

2. Prestige Goods and Price

Prestige is an interesting concept to work with while positioning a brand.

What we mean by prestige is very simple: how much is a consumer willing to pay to get your product?

The higher the prestige price, the greater the perceived worth of the product in the mind of the consumer.

From clothing companies to hotels and electronic goods, manufacturers rely on the prestige value of their brand to generate higher profits.

3. Exclusivity

Along with prestige pricing, we encounter the concept of exclusivity.

Exclusivity is simply a brand’s ability to manipulate the supply of a product so that it falls below demand for the product.

As the supply of a product becomes limited, the price goes up, thereby increasing the prestige value of the brand.

4. Affordability

What about consumers who do not care much for prestige goods or products that are exclusive?

What if the primary factor influencing their choice between brands is simply price?

Affordability is the great equaliser of brand positioning.

Amid all the psychological manipulation of consumer needs, many brands forget one of the criteria placed upon them by their consumers: affordable products.

5. Pricing and Value Perception

Understanding how to price a product is critical for any brand.

Price it too high and buyers might not see sufficient value in the proposition. Price it too low and the product might be perceived as being of inferior quality.

Between all the highs and lows of price positioning, a business also needs to understand:

How to portray itself
How to package its products
Where to sell them
How to advertise itself

Final Thought

There is a lot to consider, and it cannot always be handled by one person or understood within a small amount of time.

But acquiring a firm understanding of positioning and brand equity is incredibly important for anybody dealing with the practical realities of business.