Brand equity is a marketing concept that refers to the value a brand adds to a product or service over and above its functional characteristics. This value can manifest itself in different ways, such as brand recognition, customer loyalty, perceived quality, and the association of the brand with positive emotions or values.
Brand Equity components :
- Brand recognition: This is the extent to which consumers can identify a brand as such. A brand with strong recognition is often the first to come to mind when a consumer thinks of a specific product category.
- Brand association: This concerns the perceptions, emotions and values that consumers associate with a brand. For example, some brands are associated with quality, luxury, reliability or innovation.
- Perceived quality: This refers to consumers’ perception of the quality of a product or service in relation to others on the market. Even if two products are identical, the brand that is perceived as offering better quality will often enjoy greater value.
- Brand loyalty: This is the degree to which consumers are attached to a specific brand and are willing to continue buying its products or services despite the alternatives available. Strong brand loyalty contributes directly to brand equity.
- Brand benefits: These are the emotional or functional benefits that consumers associate with a brand, over and above the product’s basic characteristics.
Why is Brand Equity important?
- Premium pricing: A brand with strong Brand Equity can generally charge a higher price for its products or services, as consumers are willing to pay more for what they perceive to be higher quality or more reliable.
- Increased loyalty: Brands with strong brand equity are more likely to retain their customers over the long term, even in the face of competitive offers.
- Competitive advantage: High Brand Equity gives an edge over competitors, differentiating products in the market and making it more difficult for new brands to enter.
- Brand extension: Companies with strong Brand Equity can more easily launch new products under the same brand, as consumers are more likely to trust the brand and try out new products.
An example: BlackRock
- Brand recognition: BlackRock is the world’s largest asset manager, with more than $9 trillion in assets under management. The BlackRock name is synonymous with power, influence and leadership in the world’s financial markets. The brand is known not only to institutional investors, but also to the general public, due to its scale and global presence.
- Brand association: BlackRock is closely associated with financial innovation, notably through its pioneering role in exchange-traded funds (ETFs) with its subsidiary iShares. The brand is also perceived as a leader in risk management, thanks in large part to its Aladdin technology platform, which is used not only internally but also by other financial institutions.
- Perceived quality: BlackRock’s products and services are perceived as being of high quality, offering investors diversified and robust investment solutions. The company is recognized for its portfolio management expertise, rigorous approach to risk, and ability to deliver competitive returns.
- Brand loyalty: BlackRock’s size and reach have created an extremely loyal customer base, particularly among institutional investors, governments and multinational corporations. These clients continue to entrust their assets to BlackRock because of its reputation for reliability and efficiency.
- Competitive advantage: BlackRock’s Brand Equity gives it a considerable competitive edge, enabling it to attract new customers and retain existing ones, even in a saturated market. Its leadership in ETFs with iShares, for example, has positioned BlackRock as the benchmark manager in this category of investment products.
Impact of Brand Equity on BlackRock
Resilience and customer confidence: In times of economic turbulence, BlackRock’s Brand Equity helps maintain customer confidence. Institutional and individual investors continue to regard BlackRock as a safe haven because of its size, expertise and reputation as a prudent and successful manager.
Dominance in ETFs: BlackRock’s iShares subsidiary is the world’s largest provider of ETFs. The Brand Equity associated with BlackRock has been a key factor in dominating this market, as investors trust the brand to offer transparent, liquid and cost-efficient products.
Technology expansion and adoption: BlackRock has leveraged its Brand Equity to promote and sell its Aladdin technology platform, which has become an essential tool for risk and portfolio management, not only for BlackRock but also for other financial institutions around the world.
Leadership in sustainable finance: Thanks to its strong Brand Equity, BlackRock has been able to position itself as a leader in sustainable finance, promoting responsible investment and integrating environmental, social and governance (ESG) criteria into its investment strategies. This has strengthened its brand with investors concerned about social and environmental impact.
