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  • Darren Gurr

Brand Equity, The Holy Grail

How critical is brand equity, and what is your strategy to create this intangible but extremely powerful asset?


To answer the first part of this question we need to know what brand equity is. My favourite definition is from one of the most insightful voices in modern-day branding, Seth Godin.


“Brand equity refers to a value premium that a company generates from a product with a recognizable name when compared to a generic equivalent. ... When a company has positive brand equity, customers willingly pay a high price for its products, even though they could get the same thing from a competitor for less.”


Isn’t that what we all want for our product or service? To say that brand equity is important is an understatement. Just ask Phil Knight, Elon Musk, or Howard Shultz. You can definitely get a better cup of coffee at a lower price and stand in a shorter line. But you won’t have the coveted Starbucks cup in your hand. Proof that emotional benefits are stronger than the functional benefits of a product or service. Brand equity means we not only own a piece of the customer's mind but also a piece of their heart.


Companies who have built strong brand equity rarely if ever, need to discount. Which is almost every business leader's dream. If you are competing on the price it means demand is low for your version of a specific product or service and you definitely don’t enjoy the benefit of loyal customers. Your customers will always be busy looking for the lowest price and place no value on what it is you provide. They will quickly go to the competition the minute they get a discount.


The second part of our question asks if you have a strategy to build brand equity. To answer this requires the necessary commitment and resources in terms of talent, time, and sometimes financial resources but not always. A business plan can either be an effective one-pager or an inch thick and they are often focused on accomplishing many important objectives for the organization. Almost all of these objectives will be something that is a line item on an income statement or balance sheet. But for a small and medium-size company, it is highly unlikely that your brand equity will be listed as an asset on your balance sheet like they are for large brands such as Apple.


Its value will show up in your margins, your bottom line, the ability to be pro-active in your industry, and maybe most importantly in the multiple someone is willing to pay for your company when a buyer comes knocking. Which they definitely will when you have created brand equity in the marketplace.


Building brand equity needs to be part of your company's DNA. This means it is not only a strategic part of your business plan but also an important part of your culture and an outcome of your leadership philosophy.


Many years ago I had a mentor say something to me that drastically changed how I go about business. He looked at a business plan for the project I was working on at the time. It was very comprehensive and I thought it was impressive. After a scan, he closed it, looked at me, and said “None of this matters if you can’t build brand equity.” Customers need to be in love with what it is you do and how you do it. He went on to explain how everything else in the business can be figured out once your brand has the demand that comes from true equity. Because revenue is the greatest of all problem solvers.


Creating the DNA in your organization is the path to ensuring that everything you do speaks to your brand promise and the essence of what you are as a brand. It will give your customers and potential customers the confidence that your product or service is the best decision for whatever problem they need to be solved.



Want to learn more about how we can help you develop your brand? Contact Darren Gurr today.