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Precise Digital Marketing

Brand Equity and Positioning

26 Sep 2017 / Branding

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.

So, what is brand? In uncomplicated terms, 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 being equivalent to potato chips, whereas Coca-Cola and Lays are just brands and not a product.

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.

Brand equity is the value a brand has in the market. The more you’re willing to pay for a certain brand, the higher the brand equity. The real question though is asking why people are willing to pay more for certain brands as compared to others.

Positioning and Perception are the precarious scales that need to be perfectly balanced to help create flawless brand equity.What we need to understand by this is that equity is not a game that is played with tangible market values; equity is a carefully crafted image present in the minds of consumers.

Think of it this way, there are 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 of an inferior kind; similarly, quantity and price point are other factors that influence consumers while choosing their buy. In a marketplace where there is more than one kind of brand selling the same product, the game of positioning a product becomes more about perception than tangible variants.

In an economy that is consumer driven, we find that businesses face stiff competition while they fight to acquire a certain 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 dog-eat-dog world, where chunks of markets are fiercely torn apart by brand preferences, we need to take a closer look at what makes people prefer one brand of the same product over the other.

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

    • Popular choice: Ask ten people what their favourite brand of running shoes are, five of them say brand X, three say brand Y, and two say brand Z. Hence, making Brand X the popular choice for consumers while picking out running shoes. Pretty self-explanatory.But what makes Brand X so popular as compared to other brands that also sell similar running shoes? Based on social factors such as culture, sub-culture, and social class of the consumers, their preferences shift towards certain brands over the others. Popular culture and advertising play a great role in the way brands are perceived by people, and therefore contributing to popular choice or mass market.
    • Prestige goods/price: Prestige is an interesting concept to play 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 worth of the product in the minds of the consumer. Right from clothing companies to hotels to electronic goods, manufacturers are reliant on the prestige value of their brand to rake in higher profits.

 

  • Exclusivity: Along with prestige price we acquire the concept of exclusivity. Exclusivity is simply a brand’s ability to manipulate the supply of a product to fall below the demand for the product. And as the supply of a product is limited, the price goes up, thus bumping up the prestige value of the brand.
  • Affordability: What about the consumers who do not care much for prestige goods, or a product that is exclusive? What if the primary factor for them choosing one brand over the other is simply price? Affordability is the great equalizer of brand positioning. In between all the psychological manipulations of consumer needs, most brands forget the criteria placed upon them by their consumers – affordable products.
  • Understanding how to price a product is critical for any brand. Price it too high and your buyers might not see any value proposition, price it too low and the product might be perceived as being of inferior quality. And in between all the highs and lows of price positioning, a business also needs to understand how to portray themselves, how to package their products, where to sell them, and how to advertise about themselves.

It’s a lot to do by any one person or over any small amount of time. But, acquiring a firm understanding of positioning and brand equity is incredibly important for anybody who deals the practicality of business.

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