In a crowded market, the relevance of branding can hardly be overstated.
Essentially, branding refers to a distinct set of features that you develop and consumers associate with your products or services.
Yet, why is it important? Simply put, it helps you stand out in a crowded market. Branding allows consumers to gain a favorable impression of the brand and lets customers know what to expect from the company.
In fact, your brand is arguably one of your organization’s biggest assets, and multiple studies can attest to this. According to Invesp’s infographic, 59% of shoppers buy from brands they know and 21% buy a product because they like the brand. Proper branding strengthens the consumers’ notions about the company’s expertise, and this, in turn, enhances trust and loyalty.
But how is one to quantify the value of a brand as a separate entity, a standalone asset?
The importance of brand equity
Brand equity can be defined as the total value of the brand as a separate asset.
Beyond the quick definition above, brand equity is an intangible asset which is the aggregate of the assets and liabilities attached to the brand name and symbols, which in turn defines the relationship consumers have with the company.
Not only is the impact of brand equity often seen in the manner in which customers perceive, feel, and act towards the brand but its effects are also visible in the financial books of the organization. That is to say, brand equity impacts a company’s market share, prices, demand, and, ultimately, profitability.
Some of the key benefits of brand equity include:
- greater brand loyalty
- less vulnerability to competitive marketing and marketing crises
- better margins
- higher effectiveness of marketing communications
It allows for higher profit margins by permitting premium pricing and reduced reliance on promotions. It can provide leverage in distribution channels and can nurture growth via brand extensions.
The exceptional brand equity of companies like Apple and McDonalds allows them to dominate their market segment. The brand value of Apple is estimated to be around 30% of its net worth, which is an indicator of its strong equity.
Even with its competitor Samsung capturing a greater share of products sold globally in the smartphone segment, Apple’s profitability was reported to be 4 times that of Samsung. Apple also managed to acquire half of the global revenue generated in its market segment.
Positive consumer perception and immense brand loyalty derived from this brand equity allow Apple to enjoy this advantage and shows us how beneficial brand equity is to a company.
What makes up brand equity?
Following research across 51 countries and 800,000 consumers, Young & Rubicam advertising agency developed what is known as the BrandAsset Valuator (BAV) model. This survey asked respondents to evaluate brands in a category-agnostic context, thus providing a framework devoid of product category.
According to the BAV model, there are four pillars that brand equity is composed of, which are brand differentiation, brand relevance, brand esteem, and brand knowledge.
Together, these four parameters can trace the progression of a brand’s development effectively. Examining the relationship between these pillars is a good indicator of the brand’s current and future statuses.
An effective marketing strategy is essential for achieving market dominance. Let us look at how companies have used videos effectively to improve their standing in each of these parameters.
Brand differentiation is a metric that measures the degree to which a brand is seen as different from others and captures the brand’s direction and momentum. This is a necessary condition for profitable brand building. It relates to pricing power and is often the key brand pillar in explaining valuation multiples like market value to sales.
Here, we see a company branding video that has been used effectively for product differentiation.
Tesla decided to break into the electric vehicle (EV) marketplace with a luxury sports model. At this time, the electric vehicle market valued economy over form and function. Tesla decided not to compete with the Chevy Volt or Toyota hybrids and instead go after the high-end market.
Here is an example of a company story video that has been used as a differentiation tool. This video from HubSpot has the founders of the company talking about why and how they created HubSpot, their mission and their journey so far.
Brand relevance measures the appropriateness of the brand to consumers and the overall size of a brand’s potential franchise or penetration.
Bellow is an innovative product demo video from Volvo which reaches out to its target audience effectively. This 77-second video offers its audience a neat demo of the incredible precision of driving Volvo trucks.
Another interesting example comes from Slack. They have put together an explainer video demonstrating how the app works on the example of a fictitious company. The video showcases all the main Slack features with a fair dose of humor — which helps present Slack as a fun application to use and paints a specific brand image.
Together, these first two metrics make up Brand Strength which serves as an indicator of future growth value.
A higher brand differentiation than relevance means that the brand is gaining popularity in the marketplace. Higher relevance means that the brand is commoditized, i.e the brand serves the needs of the customers, but it is interchangeable with other brands.
Market leaders have high differentiation as well as relevance, resulting in consumer passion as well as market penetration.
Video can boost brand strength by increasing differentiation through visual elements that have a quick uptake and also by improving brand relevance which can be showcased effectively using multimedia marketing.
Brand esteem measures perceptions of quality and loyalty, or how well the brand is regarded and respected – in short, how well it’s liked. Esteem is related to loyalty.
Company culture videos are highly suited to build and showcase brand esteem to your audience.
Here, Google does a stellar job of it with brief clips of interns experiencing life at the company. These serve as small slivers of the Google experience but very powerful ones as videos are as close to a real-life human encounter as it gets.
People are passionate about making a difference in the world. This idea can be leveraged in effective ways by companies looking to lead efforts to make a difference and carry their employees along with them on their CSR (Corporate Social Responsibility) journey.
Personal efficacy is a reason for pride – in one’s own power to create change and that of the company one’s affiliated with. This pride, in other words, is precisely the brand esteem organizations are trying to build and CSR videos are a great way to showcase this.
Brand knowledge measures how intimately familiar consumers are with a brand and is related to the saliency of the brand, i.e, the depth and breadth of brand awareness. Interestingly, high knowledge is inversely related to a brand’s potential.
User-generated content, for reasons of authenticity, gets far more views than company-generated content.
Through their diverse range of cameras, GoPro has enabled everyday users to create compelling content, and share their experiences with their network – from live video to 360 photos. GoPro has capitalized on this content by building a strong community and has effectively incorporated user-generated content to keep engagement high and participation strong. This, accompanied by social media outreach, has added to their brand knowledge ratings effectively.
Video testimonials are a great way to help prospects understand what your company stands for and what its strengths are. The customer testimonial bellow (from Salesforce) is a great example of how they can prove vital to building brand knowledge in your market.
Together, these last two metrics make up Brand Stature which serves as an indicator of current operating value.
If a brand’s esteem is greater than its brand knowledge, it suggests that consumers like the brand and would want to know more. Greater brand knowledge acts as an impediment to curiosity, and they must work around it to attract more customers.
Video can prove to be an excellent means of improving brand stature through the exclusive use of high-quality elements, such as good copy, the right music, and relevant footage, all of which result in improved brand esteem, as well as a vehicle for increasing brand knowledge through the medium of visuals which aids high retention.
Brand equity can not be overlooked in any marketplace. Moreover, given the complex and highly competitive nature of today’s global marketplace, a more granular treatment that uses the right metrics for the breakdown and measurement of brand equity alone can lead to exponential growth for your brand.
Incorporating these pointers in your brand strategy will work wonders. Choose to take a closer look at brand equity, choose to seize the day! Carpe diem to you!
Koushik Marka is the founder and CEO of an explainer video production company titled Studiotale. With a strong entrepreneurship and professional skills, his qualities do not end there. With expertise in Vector Illustration, 2D Animation, Motion Graphics, and Digital Marketing, he loves what he does. Apart from being a work enthusiast, his off-work preferences are playing video games and traveling.