written by
Prof. Ruedi Alexander Müller-Beyeler
Prof. Ruedi Alexander Müller-Beyeler
Marketing
2017-03-27

Why brand equity matters

Why brand equity matters

Building brand equity in a world where companies are focused on growth, attracting customers and satisfying investors is not easy. Professor Ruedi Alexander Müller-Beyeler, academic, author and CEO of Tatin Communications Management GmbH in Zurich comments on building brand equity in today’s business culture.

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rand equity goes way beyond your logo or corporate colours. Rather it involves building customer loyalty in and increasing the long-term value of your company. This article looks at why building brand equity goes far beyond a traditional marketing strategy, and should feature top of the to-do list for all companies.

Building brand equity is not marketing

Marketing is a defined concept, a campaign with defined actions and goals, mostly short term, directed specifically at selling. Building brand equity on the contrary aims to build long term customer loyalty and, with it, the value of the company.

For this very reason, modern companies are increasingly combining marketing and communications functions in their organisational plan. They put editorial structures and processes in place to remain in constant and meaningful dialogue with their customers. In the past only media titles worked in this way, but now many progressive companies are getting in on the act. Today’s company is continuously communicating stories about the company, about events in the company and about the people in the company across a variety of media platforms.

Red Bull is a trailblazer in this concept. The Red Bull media house has given the company, originally selling merely a caffeinated energy drink, the means to spread their brand across several different multimedia platforms. TV, print, online and mobile, they all exist to promote stories and content which reinforce the Red Bull brand: high-energy and fun loving.

The home advantage

In his famous Ted-Talk “Start with why”, Simon Sinek explains that we choose strong brands because they are who they are. Because we know why we are choosing them.

Some companies build their brand equity from association with an umbrella brand. Companies in Silicon Valley for instance enjoy the benefit from association with the concept “Silicon Valley” which conveys to the wider public their values of futurism and progress. Digital start-ups in Germany, for example, might consider which values they could enjoy from a similar beneficial association with the brand “Made in Germany”, for example the values of durability and precision.

Can brand equity be measured?

Brand equity is famously hard to measure, but companies are now starting to add their brand to their balance sheet in the realisation that this asset has monetary value. 

Of course the only truly reliable way to test the value of a brand on the open market is by selling it. But attempts have been made in recent times to create online tools to measure brand perception – thebrandticker.com offers one such tool which analyses the semantics of print, online and social media coverage of a brand and puts the results in context with the business goal: the creation of value.

The importance of stories

Of course there are always examples of brands which are built and kept alive purely via marketing-communication strategies. The question is, how loyal are customers really to these brands?

Stories are of vital importance when really connecting with customers and building their loyalty. For example, what comes to mind when we talk about Apple? Do we talk about their advertising or the powerful performances from Steve Jobs announcing a new innovation on stage? Do we talk about one of their marketing slogans or the queues of people camping overnight in Times Square just to be the first to get the new iPhone?

Uber is another example. Many people struggle to think of marketing or advertising campaigns from Uber. But we all know who they are and what their brand stands for. Uber is not valued so highly because the brand has become so well-known, but because investors believe that with their disruptive taxi business Uber is building the prototype for a future driverless car and that this business will one day pay off when Uber becomes the industry standard for driverless mobility. These hopes for the future and associations are bound up in just one word: Uber. A brand is a set of compressed communications. Strong brands stand for strong stories.

Focus internally, not just externally

Successful brands flourish these days because they concentrate on building and managing their brand equity not just externally but also internally. Rather than managing the brand, companies should lead their organisation with their brand at the forefront. The brand should give life to an otherwise complex corporate strategy. Companies who preach the principles of self-organisation need to offer their employees clear boundaries of movement within which they can move and act freely. Strong brands offer exactly these clear boundaries. They transmit a “we” feeling, not just externally but also internally.

Successful brands entrench their brand identity so deeply in the employee culture that even in times of weak management the company continues operating, and operating well.

One example of this is the process of outgoing communications. In today’s culture of widespread communications across multimedia platforms, it is no longer possible to control your brand image the way companies used to. Strong brands will implement a lose structure such as a social media policy, they will educate and train their employees on the policy and the brand. They will make a contingency if things don’t go to plan. These clear boundaries set by a strong brand will ensure employees can act effectively and on their own initiative.

In times of trouble

Of course, scandals and negative news befall all companies at one time or another, but if brand equity is strong enough, customers stay with it.

One current example is Travis Kalanick, CEO of Uber, who earlier this month was filmed spouting vitriol at one of his drivers.  What kind of effect will this scandal have on the Uber brand? If the brand is strong enough, its audience will integrate the abusive behaviour of the Uber CEO into the narrative of the brand. Kalanick instantly came out once the video of his outburst went viral and said “This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.” With Kalanick’s willingness to work on his leadership, it is highly likely the Uber brand will remain unaffected and may even emerge stronger as a result.

Brands as assets

Many companies are only just starting to realise the benefit of building their most powerful asset, their brand. Brand equity matters because it means increased customer loyalty and value for the company. Companies young and old ignore this at their peril.

Discover more about communications and brand management from Professor Müller Beyeler in his book “Das Unternehmen, die Marke und ich” (co-authored by Heiner Butz) available to order here.

Foto: copyright apple inc.

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