Tweet

Brand equity vs value

Written by: Lisa Steingold

Article Overview: In light of recent major financial brands going 'belly up' in more ways than one, brand value is taking on a whole new light!

Brand equity vs value

Being in the marketing space I am extremely passionate about brands. So what exactly is a brand? Well if you’re reading this article and thinking it’s a name and logo then be grateful that we haven’t met. If one has to consult Wikipedia, the answer a brand is a collection of symbols, experiences and associations connected with a particular entity. Call me naive or somewhat biased but I believe that brands encapsulate an organisation. A brand is, or rather should be, the basis for an organisations offering.

So whilst I am passionate about brands I do have some ethical considerations surrounding many of today’s domineering brands. Such brands frequently command astronomical fortunes on the basis of “Brand Equity” in the sale of either their products or the business itself.

Brand equity is determined largely by how well a brand is recognised and subsequently favoured over its competitors. (I have to say I feel sorry for the poor bean counters whose job it is to try and calculate a figure for this seemingly intangible “asset”.)

Whilst brand equity is all well and good, surely as businesses begin to face the real challenges of the future, we need to be asking greater questions of brands? “Never mind brand equity, but what of brand value?”

Short supply of human capital, dwindling natural resources and tougher economic climates are just a few of the challenges facing businesses of the 21^st century. Over and above that, consumers are demanding, more than ever before, that brands deliver greater real value than merely additional dividends to shareholders. I fear that those brands not delivering real value will have no REAL presence in future markets.

Brands of the future will have to deliver fundamental value not only to their customers and shareholders but also to their employees, service providers and to the greater community. Well if that is the case then many well known brands i.e. those holding massive brand equity, are failing to deliver. Well certainly from a sustainability point of view but this isn’t necessarily a bad thing. It just means having to undergo a process of realigning and innovating.

Brands will not only need to relook at their promise but they will need to look at the processes that support the promise. For example let’s take a notorious example such as MacD’s. Is “I’m lovin’ it” really a promise? Well I know for a fact my thighs aren’t lovin’ it – neither are my arteries. I also don’t think that Mother Nature is particularly lovin’ the additional polystyrene, plastic or cardboard. So regardless of the fact that the brand is valued in billions of dollars, is there a place for MacD’s in the future? Well I have to say that I do feel slightly sorry for Ronald McDonald and his crowd considering the bad publicity they receive on a daily basis but perhaps this could possibly used as a catalyst for change. Ultimately it is for their executive team to decide not for me to say but I don’t feel that “I’m lovin’ it” is particularly delivering on any real promise.

So as I look to developing new brand strategies for my organisation and my clients in future, I’ll be thinking of the value exchange and in greater terms than Rands and Cents. It could mean the difference between being around in 2010 or not.

Just a thought

Happy Marketing

Lisa

Related Articles
  What is Brand Equity?
  The Power of a Brand Name and how to make your own brand powerful
  Establishing a Brand Scorecard
  Brand Aid: The Basics of Branding
  When Should You Seek a Home Equity Loan?

Article Tags: bean counters, brand equity, challenges, experiences, fortunes, job, marketing, nbsp, quot quot, rsquo, sans serif, span style, style font, wikipedia



Related Forum Posts
Equity for Business - I would use equity built up in my house as long as I can manage the following: 1. the monthly payments (including Spouses income) 2. take out no more than 75% of the available equity and meet criteria #1
Re: Require Info on CAD Fed/Prov Grants for Restaurant Start-up - Hi, I own a home that is paid off but would like to take out a loan to fund some home improvements as well as help my parents pay off their home equity loan. Given this scenario can I take out a mortgage since mortgage rates are lower or are I limited to a home equity loan. I'm not interested in HELOC's. What is the difference between a mortgage and a home equity loan? Thank you,
Equity in exchange for contribution – how? - I am working on starting up a web based business which is at idea/very initial stage now. I want to give someone an equity in the future business in exchange for a script that I need (which I will need to customize then for my niche). So here are some questions that I got: How can I do this technically? Are there any documents that I need to sign and hand over to him? Do I need a lawyer for this? How much does the legal part may cost if to hire a lawyer? Anything that I can read about this? How much equity should I give away? Thank you
Using your home for collateral is one thing, but... - Putting up your home for collateral is one thing, but utilizing the equity in it to finance a business is a whole other ball game and could be damaging in the long run. Do you know that if you completely finance your business with home equity instead of a busienss loan you will not be able to obtain a working capital loan later down the road? should you run into some financial troubles or wish to expand or remodel with working capital loan, you won't be able to get it if you finaced by personal means. It's always best to build a track record with a lender for future use and it's always better to be in business debt rather than personal debt. I always say: "You wouldn't hire a Plumber to do the Electrical in your home, so why would you finance a business using your home equity? Equity loans are for your home, business loans are for your business. You may however, utilize some of the equity in your home for loan down payment (depending upon your qualifications) and we can help determine whether that would be more helpful or damaging to your loan by pre-qualifying you for free. when using your home for collateral, it doesn't necessarily mean you will lose your home (in the event you cannot pay your loan payments). Lenders are always willing to work with you once you have a loan with them and they have already taken on the risk. they typically only utilize what they lien if nothing else can be resoloved (so it's basically a last resort) to go after what they lien.
Investing Strategy, Using equity - After many years of pretty good personal money management on the budget side of the issue, I find myself wondering how to take another step forward in investing for retirement. I am behind in that I am now 48 and don't have much in a Roth, second home - property, etc. Where I do have some leverage is in the equity of my personal home. How can I determine whether or not using some of that equity to invest now will put me further ahead in say 10 years than simply continuing to pay down my mortgage at an aggressive pace. What factors do I need to know? How do I calculate the projected outcomes of those two strategies?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

10 Reasons Your SBA Loan May Be Declined

Emotional Intelligence in Business

Resistance to Change and How to Deal With It

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.