On a basic level, brand equity can be defined as thus:
‘The relative power of a brand to influence people’s decisions to buy or not buy its product above others.’
Or, to put it more specifically:
“The tangible and intangible value that a brand provides positively or negatively to an organization, its products, its services, and its bottom-line derived from consumer knowledge, perceptions, and experiences with the brand.” — Susan Gunelius
Always On Your Mind
There is a particularly fascinating feature of some of the very top brands. It’s what the people who give such things names call ‘Top of Mind Status’. Or what I like to call ‘Brand-led Product Mindspace Monopoly’. Catchy isn’t it.
Say you want a cola drink. You don’t say “I really fancy a Cola Drink right now”. You say “I’d like a Coke”. Massive Brand Equity. In fact, how many times have you heard back the phrase “Is Pepsi OK?” in your life? There you go. Exactly my point.
Transport back to 1988. Are you listening to the Dirty Dancing soundtrack on your portable stereo cassette player, or you having the time of your life with your ‘Walkman’? Huge 80’s Brand Equity!
What’s that you say? You want to create some duplicates of your latest typed masterpiece? “I’m just heading over to the Xerographic Office Photocopier…”
Consider “Arm & Hammer” baking soda, “Scotch” cellophane tape, “Jell-O” gelatin, and “Morton” salt. OK, you get the general idea. The list goes on.
Having such a dominant brand that it eclipses any other in general conversation and becomes synonymous with that particular product provides the strongest possible competitive advantage, and is the holy grail of brand equity. No other brand will be considered in the vast majority of purchase situations.
In fact, by that point, it’s not just about the product any more. It’s about stories, memories, associations, and human connections (although of course, these connections would have been very carefully and deliberately engineered by talented marketers over many years and countless board meetings).
This is something that Coca-Cola have been the masters of for over 100 years.
Even if you duplicated the entire Coca-Cola production process and produced a drink that tastes identical, (or better for that matter!), you could not duplicate the memories people have of the brand, and therefore their connection to it.
The secret recipe of Coca-Cola may no longer be secret. It may not even be unique any more. But the memories associated with the brand are, and that is what makes the brand so much more valuable than other colas. Tangible and intangible assets combine to create financial brand equity.
This equity is derived from people’s willingness to pay a premium for the brand and an unwillingness to accept substitutes. So in this case, if the Coca-cola is expensive than Pepsi or other brand colas, would you still buy Coca-Cola?