Brand Value vs Brand Equity

Brand Value vs Brand Equity

In this day and age, the business world is saturated with countless terms explaining every little phenomenon. It becomes easier to confuse them when they sound similar too. Two terms that are some of the easiest to mix up are brand value vs brand equity. They are very similar, but definitely not the same. In reality, brand value is dependent on brand equity. How? Read this article to find out all about each term, their differences, how they work together, plus tips for building them up at the end.

What is brand equity?

Before getting to the differences between brand value vs brand equity, let’s learn about each of them separately. So, what is brand equity? It is the esteem of a brand according to the perception of customers. This assessment may be the driving force in getting you sales instead of your actual product.

Although brand equity is invisible, intangible, and difficult to measure, it can be witnessed in the behavior of customers. Having higher brand awareness, more loyal customers, and associations with your brand will lead your brand equity to be higher. This significance of a brand is developed over time through satisfying customers and surpassing their expectations. Ultimately, your customers are the only major influencers behind your brand equity.

Brand equity can be both negative and positive. What is the difference?

What is positive brand equity?

When a potential customer walks around the supermarket and has to choose between brands of, let’s say toilet paper, they are going to choose the one they recognize most. So when your product is easy to recognize and has a positive association, you will have positive brand equity. This will lead to better brand visibility in the market, ultimately leading to a growth in sales. Plus, with a good brand name, your customers will be willing to pay a premium to purchase your product. So, your profit margin will benefit from it too.

What is negative brand equity?

If the brand has a negative image or makes the customers feel negative emotions, they have negative brand equity. This means that customers would rather buy something with no name whatsoever than be a consumer of your product. In other words, negative associations with your brand may end in a huge decline of sales.

What is brand value?

Now that you know what the brand’s equity stands for, let’s answer the question of what is brand value? Brand value is the valuation of a brand in monetary terms. It’s more straightforward for understanding and measuring. Ultimately, it depicts how much it would cost to buy a certain brand. It depends on the market forces, product quality, your accessibility, pricing, performance, advertising, and most importantly, brand equity. There are many ways of putting a number on a brand, including but not limited to future cash flows.

What sets brand equity & brand value apart

Now that you’ve learned what each of the terms means, let’s go deeper and talk about what sets them apart. We’ve divided it into 5 categories to show the main differences.

Monetary vs intangible

The most basic differentiator between brand value vs brand equity is their measurement scale. Brand value is measured in monetary terms, and you can actually put a number on it. On the contrary, brand equity is intangible. You can’t count it on your fingers or assign a numeric value to it. It is subjective, and only apparent in customer perceptions.

Market-made vs customer-made

The second factor setting them apart is how they are calculated. You can measure brand value only through the market, meanwhile, brand equity can be measured by the customers and their perceptions.

Performance vs recall value

Brand value can become apparent in a brand’s achievements and quality of products. In contrast, having positive brand equity can be seen in how fast customers can remember and recognize your brand.

Valuable vs emotional

Companies build up their brand value by creating valuable products for their customers. As for brand equity, it is developed by conveying emotions and awakening feelings in the customers’ minds.

Financial status vs market position

Here is another main contrast between brand value vs brand equity. On one hand, brand equity evaluated how successfully you’ve established your market position, meanwhile, brand value shows how well you managed to take advantage of your brand equity and generate profits from it.

Is brand equity connected to brand value?

Brand equity and brand value are separate terms, however, they do work together. In reality, the brand value depends on your brand equity. When a product has positive brand associations, the consumers’ willingness to pay goes up. This means that you can have a higher profit margin, thus increasing your bottom line, and ultimately growing your brand value. Brand visibility also indirectly increases your sales, again leading to a higher brand value.

Tips for building each of them

Now that you’re able to differentiate brand value vs brand equity, it’s time to put it to good use. After all, why did we learn each of their meanings? To achieve stable growth for your company, developing your brand value and brand equity is a must. Read on to discover some ways that you can grow your brand worth and image.

Tips for building brand equity

Since brand equity is an intangible phenomenon, it’s difficult to pinpoint certain actions that will directly build it up. Nevertheless, we’ve put together a list of top actions that will benefit your brand visibility.

  1. Create assets for brand association

In helping your customers remember and identify products of your brand easier, you must have some essential assets, including:

Memorable branding visuals: You need to have a distinct color palette, fonts, images, designs, etc. Take Coca-Cola as an example; wherever you see that red color and wave shape, you know it’s Coke. You will also definitely notice an Apple ad if you see one.

Consistent messaging and tone: Wherever your brand appears, it needs to appear with the same messaging, tone of voice, and mission.

  1. Acquire long-term customers through loyalty programs

Having loyal customers is a sure-fire way to grow your brand equity. Essentially, these are the customers who create your brand equity altogether. They are the ones who create positive brand perceptions, thus driving your equity up. So, how can generate loyal customers?

Have an unforgettable customer experience: To turn your customers loyal, you must make sure they leave not only satisfied with your product but delighted and impressed.

Use reward programs: Aside from having a fantastic customer experience, one of the ways to keep your customers coming back is through a reward or loyalty program.

  1. Promote through influencers

In this digital era, influencers hold a huge power. They can create long-lasting impressions about brands, as well as influence purchasing decisions. So, working with influencers to develop your brand’s image or brand equity is simply a no-brainer.

A famous tactic brands use is hiring brand ambassadors who continuously promote their products and keep up great brand associations. When your brand is represented by tastemakers, it will showcase its high quality and ultimately grow the brand equity.

Tips for growing brand value

Developing your brand’s financial worth requires different but just as deeply rooted tactics. Positive brand equity will drive you towards generating profits, but that’s only one of the channels. Luckily, there are so many more that you can take advantage of. Here’s a couple of essentials for building your brand value:

  1. Innovate

Innovating should be a core process in any company, but if you want to ensure your long-term growth and success, you need to innovate. Not only do you have to keep up with the developments in the modern world, but you have to look a couple of steps ahead and create products with the future in mind. This culture will make you successful, and of course, increase your brand value.

  1. Differentiate yourself

Whatever market you are in, you definitely have competitors. When competing against other brands, you have to have something special to drive your sales. It can be the price, look, quality, taste, or something innovative, but you must have a super-strong selling point to get ahead of the pack.

  1. Keep learning

Continuously grow your knowledge in your field, and one day you will become a thought leader in the industry. Customers will start trusting you more, and your brand value will keep growing.

  1. Stay consistent

Your brand image is fragile. Any mishap will deal lots of damage to both your brand equity and brand value. So, you have to put in the time and effort to make sure you keep up the good work. Keep your messaging clear, don’t slack off on the quality, and always focus on the customers.

Final thoughts

Brand equity and brand value are similar yet very different. Although it might be easy to confuse them, this article can guide and help you navigate through the terms. What is brand equity? What is brand value? How can you grow them? This article will answer all your questions and much more.