Marketing Terminologies crash course: What is Brand Equity?

Marketing Terminologies crash course What is Brand Equity

In April of 2013, a crime fiction novel entitled The Cuckoo’s Calling was published in the UK and eventually went its way to the US. The author’s name is Robert Galbraith.

Critics were quickly impressed by the novel, saying it was very compelling and well-written. Most of them couldn’t even believe that Galbraith is just a rookie writer. Everyone was excited about the “new kid” with a keen eye for detective stories. But despite its critical acclaim, the book only generated humble sales.

Three months after its release, the literary world was suddenly rocked by surprise. The Sunday Times revealed that the real author hiding behind the pseudonym Robert Galbraith was actually a world-renowned contemporary novelist – definitely not a rookie.

The real author’s name was J.K. Rowling.

And in just a couple of days after the revelation, the book surged from the 4,709th spot to the 1st best-selling novel on Amazon, increasing sales by a whopping 500,000%. Even Harry Potter himself couldn’t conjure something that big.

That, ladies and gentlemen, is the power of brand equity.

Brand equity is the privilege of having a popular brand name, and, along with it, the notion that its products can generate more sales compared to lesser-known brands.

People remember brands, logos and the prestige that they carry. It’s the reason why, despite of a clear advantage in terms of specs, iPhones still outsell Samsung devices. Consumers recognize “Apple” as a more esteemed brand, and they would support anything that it launches.

Before The Cuckoo’s Calling, Rowling released a novel entitled The Casual Vacancy. This book was published under her real name, and even though it was not favorable to critics (some even evaluated it as amateurish), it was a commercial success, reaching the #1 spot in just a few hours. All because Rowling’s name is on the cover.

What does this tell us?

Taking care of a company’s brand is the same thing as taking care of the company itself. Having a certain reputation comes with a great deal of obligation to maintain, if not to enhance, the value of the brand. The competitive advantage and the perks of having brand equity make it a valuable, intangible asset.

Although this respect for certain brands usually develop over long periods of time, it could be extinguished just as quickly by misuse and poor business decisions. The burden lies on marketers – they should protect the balance between gaining attention and preserving the value of their brand as they put it out on the market.