Brand equity = demand

A simple way to look at brand equity is difference between the price you could charge for your product or service and the price you could charge if your brand didn’t exist. I will pay $X for this MP3 player, but I will pay $XXX for an Apple iPod. The $X difference is Apple’s brand equity.

But it’s not quite that simple because that reduces the impact of the brand to a price point and that’s not only inaccurate, it’s dangerous.

At the Churchill Club this past week, we had a panel discussing luxury brands, and perhaps the idea of brand equity is most critical for those at the top end of the marketplace. Brand equity is pretty much the whole game for them. Without it Porsche is transportation, Tiffany & Co is decoration and Chivas Regal is something to drink on a cold night.

But when it comes right down to it, the principle that makes a luxury brand is the same as the ones that make your brand.

If you want people to pay a premium for your brand you have to have something they WANT to pay a premium for. That something can be embedded in the products, a part of the service. It can be a unique or just a little bit different. It can be based on history (as with most luxury brands), or built around delivery.

So aside from the basic price point test, here are some other ways to look at brand equity. You have it going on if…

• A client will wait for you to become available so you can work on their project.
• Someone will happily go on a waiting list to get your product.
• Your brand has people talking about it (and not because of PR hype).
• People go to the trouble of tracking you or what you are selling down because they heard it was great.
• Employees decide to stay put even though they could earn more money elsewhere.
• You have a backlog of applications from people who want to work for you.
• Other companies approach you and want to partner with you.

Start to see the picture that is emerging. Brand equity is not really about price point difference, it is about demand. If there is demand, there is equity. And in reality you build demand by doing all the things I talked about in my blog a couple of weeks ago.

So perhaps the question is not – what is my brand equity? But instead – is my brand in demand?

See you next week.

Michel Hogan is a Brand Advocate. Through her work with Brandology here in Australia and in the United States, she helps organisations recognise who they are and align that with what they do and say, to build more authentic and sustainable brands. She also publishes the Brand thought leadership blog – Brand Alignment.