What Are the Different Ways to Build Brand Equity?

Daniel Liden
Daniel Liden
Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Brand equity is a term used to describe the various characteristics, such as a higher price, that a product with a well-known brand has compared to an identical product without a well-known brand name. The most visible result of brand equity is the fact that well-known brands are able to charge substantially more for their products than generic-brand equivalents. Businesses employ a variety of different techniques to build brand equity. One of the best ways to do this is to make a clearly superior product, but this is not always possible when equally effective alternatives exist. Other methods used to build brand equity usually involve the use of advertising and marketing techniques to build a strong, memorable, and recognizable brand identity.

People tend to prefer high-quality products that serve their purposes well, so the best way to build brand equity is to make superior products and to ensure people are aware of the superiority of those products. Many people are willing to pay more money for a product that works better or is of higher quality. If a business consistently offers high-quality products, the entire brand associated with that business will likely gain brand equity. Conversely, consistently developing products of low quality is likely to produce "negative brand equity," meaning that customers would be willing to pay more for a comparable product without a well-known brand name.

In some cases, products actually do not differ at all, or the differences are matters of preference, not quality. This is common with different brands of common drugs, food items, and drinks. In such situations, the businesses involved must build brand equity through marketing and advertising with the intent of creating a memorable and recognizable brand identity. Customers may come to primarily associate a certain type of product with whichever business markets that product more effectively. If a business is able to successfully build brand equity, customers will pay more for the brand-name product in spite of the availability of a cheaper, generic alternative of comparable quality.

Some brands already have a great deal of brand equity. People know the brands well and are consistently willing to pay extra in spite of the availability of generic alternatives. It is not strictly necessary for businesses that own these brands to build brand equity, but it may be necessary for them to sustain their brand identities. Continued marketing aimed at keeping the brand in people's minds and maintaining any associations that people have with the brand serves to fortify it and to strengthen or build brand equity.

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