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Brand AwarenessSeptember 19, 2019

Brand Awareness vs. Brand Equity: Everything You Need to Know

September 19, 2019
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Lavender Nguyen
Marketing Content Creator

Marketing jargon — it's a love-hate relationship. Until you're so deeply entrenched that something like "Get me the top KPIs for Q3 so that we can show ROI improvement to the CMO. We need to A/B test to ensure our SEO is up-to-par" makes sense... learning to decode can be frustrating, to say the least.

With so many acronyms and hybrid words thrown around, we have to remember that not all entrepreneurs, business owners, and brand managers possess the same brand management knowledge levels. For some people, brand awareness and brand equity fall into this category.

Brand awareness and brand equity don’t mean the same thing, yet we often hear these terms used interchangeably. However, each has its own meaning and role in a well-developed brand strategy.

In this article, we’ll explain the differences between brand awareness and brand equity, plus take a look at some ways you can build and measure both.

What is Brand Awareness?

According to Kevin Lane Keller, author of the best-selling book Strategic Brand Management, brand awareness refers to “whether consumers can recall or recognize a brand.”

Essentially, have you ever heard of this brand?

Why Is Brand Awareness Important?

In many cases, consumers can be overly attached to tradition or affected by neophobia (ake the fear of trying new things).

These issues can make it difficult for brands to get consumers to take notice of their new products — even when they’re already spending a lot of money advertising.

Studies have shown that consumers trust recognized brands to produce better and safer products than unrecognized ones. “People prefer a brand they know over one they don’t — even when the familiar one is dangerous,” said Daniel G. Goldstein, Principal Researcher at Microsoft Research.

Achieving high brand awareness means consumers know your brand exists and recognize your products within your industry. The more consumers are familiar with your brand, the more likely you are to earn “top-of-mind” real estate in consumers’ minds — the first step towards brand loyalty increased sales.

Brand awareness levels are directly linked to market performance — as awareness affects consumers’ purchasing decisions. A known brand has a much better chance of being chosen by consumers over an unknown brand, making it likely to perform better in the marketplace.

Brand awareness also affects consumers’ decision-making abilities — despite differences in quality and price. A study found that consumers will choose a well-known brand, even when — relative to competing brands — its price is high.

The power that brand awareness holds is impressive — and we see that the effect of awareness is stronger than that of price.

What is Brand Equity?

Brand equity describes a brand’s value — which is determined by how consumers think and feel about a brand. Brand equity is one of the main reasons why marketing efforts of branded and nonbranded products perform so differently.

The concept of brand equity arose in the 1980s, and, until now, has been defined as consumer-based, sales-based, financial-based, firm-based, or employee-based. However, of all listed, consumer-based brand equity (CBBE) is the most widely used brand equity model.

According to Keller, CBBE is “defined as the differential effect of brand knowledge on consumer response to the marketing of the brand.” Now, that definition is filled with words and phrases that many might not know. So, let go over some new definitions:

  • Differential effect: Comparing consumer response to a well-known brand’s marketing efforts with that of an unnamed brand (that puts forth the same marketing efforts.)

  • Brand knowledge: This is consumers’ level of knowledge of information such as brand images, logos, slogans, and identity.

  • Consumer response to marketing: Consumer perceptions, preferences, and behaviors which arise from marketing activities.

Consumers can react more or less favorably to a product, price, promotion, or distribution of a brand when compared to another brand. Hence, brand equity can be either positive or negative.

Strong, positive brand equity stands for something important for target audiences. It captures and communicates what a brand wants to be known for. Think about Amazon — the world’s largest online marketplace and an ecosystem of products and services.

According to Graham Staplehurst, BrandZ’s global strategy director: “It has successfully connected the values and positive brand associations from one business – ease of use, speed, reliability – to other areas.”

In contrast, brands with negative brand equity have an unfavorable position in certain customers’ minds. It’s crucial to understand that while these unliked brands may gain popularity and recognition, it’s not the good kind. With negative brand equity, consumers can develop negative feelings, share negative word-of-mouth, or even give their loyalty to another brand.

Take Facebook as an example. Despite having over 2.7 billion active users, Facebook has experienced a perceived decline in popularity, increased criticism, and a boycott for the past few years.

Why Is Brand Equity Important?

Brand equity matters for both consumers and brands. It creates value by helping consumers interpret, process, and store vast quantities of information about products and brands.

Think about it this way: Why do you pick an iPhone over an LG smartphone? Probably because the name “iPhone” holds a great deal of brand equity in the cellphone category.

Additionally, strong brand equity helps increase customers’ satisfaction. Knowing that a bag comes from Louis Vuitton can actually enhance the experience of wearing it: Customers feel different.

Brands with strong equity consistently increase in popularity and gain advantages in customer acquisition, retention, and profitability. This makes it easy to then introduce premium pricing, attract new customers, or recapture old ones.

For example, a promotion that incentivizes trying a new ice cream flavor will be more effective if the brand is already a familiar one — you don’t have to worry about combating consumers’ skepticism of brand quality.

Studies show that strong equity helps brands achieve brand forgiveness, meaning loyal consumers are more likely to forgive their transgressions and service failures. In 2009, Toyota recalled 3.8 million vehicles because of floor mats that trapped accelerator pedals.

But did customers turn their back on the brand? They did for a bit, but it wasn’t long-lived. Consumers’ relationship with Toyota was so strong that they forgave the brand almost immediately after it showed commitment to fixing the problem.

The Relationship Between Brand Awareness and Brand Equity

Brand equity includes several dimensions — brand awareness is just one of them. The role of brand awareness in building brand equity depends on the strength of the brand’s presence in consumers’ minds. Research has shown that a high level of brand awareness helps increase brand choice, produce greater consumer loyalty, and, therefore, improve brand equity.

Brand awareness is often considered a critical first step in building brand equity and the basis for a strong marketing strategy. Repeated exposure to brand messaging creates familiarity, increases customer trust and willingness to purchase, as consumers don’t believe in the quality of unfamiliar brands.

How to Build and Measure Brand Awareness

Building Brand Awareness

Brand awareness should be a top priority, but that doesn’t mean you need to spend huge amounts of money to be successful. There are methods to build brand awareness that require little or no cost.

  1. Referral programs

A referral program is a word-of-mouth marketing tactic that motivates satisfied customers to share their experiences with your brand, turning them into brand advocates.

When a customer tells someone about your product, they’re proactively sharing a real experience with others — which is far more valuable than paid advertizing. A 2014 study found that advertizing doesn’t predict brand awareness and increasing your budget doesn’t always improve it either.

The reason? Consumers hate ads, and they often don’t respond to an ad unless it shows something new.

A referral program helps brands generate positive social proof for future customers. To start with, the more potential customers who see people referring your brand, the more familiar your products and services become. If a referral comes from someone already within their social group, the power of the social proof increases.

Additionally, existing customers’ testimonies can help create awareness surrounding the legitimacy and worth of your brand — helping reduce risk perceptions and build trust with new customers.

This also makes your product stand out from the competition, especially if they have few or no referrals. In fact, Nielsen reported that 92% of consumers trust their friends’ and families’ suggestions more than advertizing when choosing a brand.

2. Guest posting

Another great way to increase your brand awareness is to share valuable content on other blogs, also known as guest posting.

Done right, guest posts can drive organic search and referral traffic, which can potentially lead to qualified prospects. Potential customers who read an article with a byline from your brand become aware of you. If they’re curious about what you offer, they’ll click through to read more on your site and potentially enter your funnel.

Case in point:

3. Freebies

Many brands offer “freebies”, or free samples of their product, to raise awareness and collect customer feedback.

Consider the free gift promotion offered by Feed Me Vegan: a bundle of its new products, including assorted desserts like key lime pie and tiramisu. To receive this freebie, the brand only asks followers to follow its Instagram account and tag a friend in the post. These days, such promotions are commonplace.

To increase the performance of a promotion, you can partner with a more recognized brand, like Feed Me Vegan did when they teamed up with Vegan Food. Then, you can run giveaway contests on social media.

Alternatively, you can find influencers in your niche and ask them to share your freebies with their followers. Fenty Beauty by Rihanna is a great example of the power of influencer marketing. At Fenty Beauty’s launch party, the singer encouraged invitees to try out product samples and take them home — which created a lot of buzz around the brand.

4. Paid advertising

Paid advertising is an effective — if expensive — way to increase brand awareness.

As an example, consider Facebook ads. They allow you to reach millions of users, with the ability to narrow down by demographic to target the audience most attractive to your brand. Facebook also has the added bonus of social sharing.

Whether through social media or search ads, (

The Canadian grocery retailer Sobeys saw this after running a brand awareness campaign on Facebook to reach more customers. The ad helped the store acquire 8% higher in-store sales on promoted categories.

The bottom line? With targeted keywords and a focused segment, you can get your brand in front of thousands of people. Even if they don’t end up clicking through to your website, seeing your name at the top of search results or their social media feeds makes an impression.

Remember, every piece of familiarity counts when a prospect is finally ready to make a purchase.

Measuring Brand Awareness

Tracking brand awareness can help you understand what works and what doesn’t. You can consider the following methods:

  • Use Social Listening Tools: These help reveal what people are saying about your brand and competitors across social channels. The insights will provide you with a bigger picture of your brand. However, you should note that these tools may provide inaccurate data, as they can only discover the perception of a tiny percentage of the general population.

  • Use Brand Tracking Software: Brand tracking can help you monitor overall brand health — including brand awareness, brand usage, brand consideration, brand perception, and brand associations.

  • Track Brand Mentions: A brand mention is a reference to a brand on the internet and describes anytime someone uses your brand name. By tracking brand mentions, you can figure out how many people are talking about your brand or sharing your posts on a specific channel.

  • Use Google Analytics: Using this tool, you can track website traffic, traffic source, keywords driving traffic, search volume, user demographics, and how engaged your audience is with your brand.

  • Collect feedback: You can display a survey form on your website or run a poll on social media asking how your audience found out about your brand. The insights gathered will tell you where you’ve succeeded in your marketing efforts. Review sites are also a good source to track conversations.

How to Build and Measure Brand Equity

How to Build Brand Equity

Developing brand equity requires establishing brand awareness early on. But it also involves the initial choice of your brand identity — such as your brand name, logo, or slogan.

Research suggests that a brand name should be simple, familiar, and distinctive. It should also be easy to understand, pronounce, and spell. Similar criteria also apply to brand logos and symbols.

Supporting marketing activities are another vital part of building brand equity. These activities help increase exposure to a brand, develop customer perception, and increase the desire to try out products. It’s important to note that consumer expectations are always changing. Hence, brands need to adapt to meet those expectations and strengthen relationships with consumers.

Consider the following tips for building brand equity:

  • Shape your brand personality by choosing a logo, slogan, color palette, font, social media presence, and product packaging the fits with your brand identity.

  • Use storytelling techniques to create a story around your brand to trigger emotional responses from your target audience. Maintain your story’s authenticity and consistency across channels.

  • Communicate and build relationships with your customers through email marketing, social media platforms, and your customer support team.

How to Measure Brand Equity

To measure brand equity, brands should keep the following metrics in mind.

The first six metrics represent a brand’s customer perceptions along the four dimensions of brand equity — loyalty, perceived quality, associations, and awareness. The last one, financial metrics, involves behavioral measures that represent information obtained from the market rather than directly from customers.

By measuring brand equity from customer and market perspectives, brands can get an accurate and comprehensive view of their brand values.

  • Loyalty: Brand loyalty is a core dimension of brand equity. A loyal customer base means consistent sales, a basis for a price premium, and other advantages. A basic indicator of loyalty is the amount a customer will pay for your brand in comparison to other brands offering similar benefits.

  • Customer satisfaction: Customer satisfaction (CSAT) surveys can help you understand if your customers are satisfied, delighted, or dissatisfied with your products or services. CSAT is a useful measure for service-focused brands like rental firms or hotels, where loyalty is often the cumulative result of the customer experience.

  • Perceived quality: Using surveys or focus groups, you can evaluate what customers think about your product quality. For example, is your product the best or one of the best? Is it the worst or one of the worst? Does your product have consistent or inconsistent quality?

  • Awareness: Brand monitoring is a great way to discover if customers recall your brand when they are in need of a specific product. The data it provides can help you paint a picture of the mental real estate your brand owns and how it stacks up against the competition.

  • Value: Brand value can be measured by whether a brand provides good value for the money or whether customers buy its products over competitors’ for other reasons.

  • Brand personality: Brand personality can help forge an emotional connection with customers. For example, Nike offers a sense of confidence and a spirit of athleticism, while Coca-Cola associates itself with happiness and excitement. You can measure brand personality by applying the Big Five personality test, which has five dimensions: Sincerity, Excitement, Competence, Sophistication, and Ruggedness.

  • Financial metrics: Look at your market share, sales revenue, the percentage of stores carrying your brand, and the percentage of people who have access to it to better understand your brand equity.

Grow with Brand Awareness and Brand Equity

As you can see, brand awareness and brand equity are quite different concepts, but they are deeply connected to each other.

Brand awareness plays a vital role in consumer decision-making, market performance, and the overall marketing mix. It’s also one of brand equity’s core dimensions, meaning you need to create brand awareness in order to build brand equity.

What are some key takeaways to build and measure brand awareness?

  • Building brand awareness doesn’t always require a large investment. You can try referral programs, guest posting, freebies, or paid advertising, depending on your brand strategy and budget.

  • Consider investing in a brand tracker, as it will provide you with valuable insights into your brand awareness, target audience, and customer perception — helping you make better branding decisions.

What are some key takeaways to build and measure to build and measure brand equity?

  • To build brand equity, focus on creating brand awareness, a brand story, and brand personality. Also, create and maintain emotional connections with customers across channels.

  • To measure brand equity, pay attention to metrics such as brand awareness, customer loyalty, customer satisfaction, perceived quality, brand value, brand personality, and financial performance.

Developing strong brand equity has become a priority for brands, regardless of size, industry, or market. After all, high brand value opens the doors to gaining loyal customers, obtaining more business opportunities, and achieving greater profits.

The rewards of creating strong brand equity are clear. So when do you start?

Brand Awareness

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