Why Brand Equity Matters in B2B

All of that is brand equity.

“But those are all B2C examples,” you say. Fair enough, here are some B2B examples of brand equity to whet your whistle.

• Given two minutes to pick a project management system, I would choose Wrike, hands down. I even follow their niche @wrike.design Instagram account.
• When I need a great printer, my first stop is with a local Wisconsin business that I worked closely with in a former professional life.
• A brand needs new merch, so I immediately head over to Threadbird’s website for soft-printed t-shirts without that horrible heavy plastic. I name-drop them in a blog post and will continue ordering from them in the future.

Brand equity isn’t only for the B2C marketers—B2B marketers have unique opportunities with their audience that make building brand equity easier and more accessible than in B2C. But first, let’s cover the basics of brand equity.

Defining Brand Equity

The definition of brand equity is harder to remember than it is to recognize from our own experience, but here are some flavors of definitions I’ve used:

Brand equity is a measure of overall consumer perceptions of any brand.

Brand equity is a measurement of the value of a brand as determined by things like loyalty, awareness, associations, and perceived quality.

Brand equity is a set of brand assets and liabilities linked to a brand name and symbol, which add to or subtract from the value provided by a product or service.

From a financial perspective, a brand can be valuable and seen as a worthwhile investment. That is part of brand equity, but not all of it. Notice that customer opinions, perceptions, and actions also influence a brand’s equity.

Here’s an easier-to-digest description from Alina Wheeler’s Designing Brand Identity. She lists three reasons to invest in branding and design:

1. Make it easy for the customer to buy
2. Make it easy for the sales force to sell
3. Make it easy to build brand equity.“The goal of all public companies is to increase shareholder value. A brand, or a company’s reputation, is considered to be one of the most valuable company assets. Small companies and nonprofits also need to build brand equity. Their future success is dependent on building public awareness, preserving their reputations, and upholding their value. Brand equity is built through increased recognition, awareness, and customer loyalty, which in turns helps make a company more successful. Managers who seize every opportunity to communicate their company’s brand value and what the brand stands for sleep better at night. They are building a precious asset.”

Factors That Affect Brand Equity

No surprise, there are differing opinions (and some controversy) about which factors build brand equity. Let’s keep this simple by focusing on two — Awareness and Loyalty.

Awareness
The extent to which consumers are familiar with a brand and its products. Measured by Recognition and Recall.

• Recognition Consumers can correctly distinguish a brand when prompted by a visual or verbal cue.
  Recall Consumers can correctly retrieve the brand from memory, without cues.

When people don’t know about you, it’s difficult (or impossible) to make that sale. Obvious, right? Brand awareness requires significant room in your marketing budget and yet it’s most often cut because it “doesn’t lead to sales.” It’s true that brand awareness efforts won’t bring overnight results, but it does affect your bottom line over the long term. Investing in brand awareness means you’re investing in your future.

Unfortunately, cutting brand awareness from the budget not only means lost sales in the future, it also means you’re leaving associations and perceived quality up to two entities—your audience and your competition. Associations and perceptions, while not entirely under your control, are greatly influenced by the actions you take and don’t take. Brand awareness initiatives, or reputation initiatives, are your greatest tool in shaping the narrative of your brand.

Let’s look at Liquid Death, the current darling of the brand and marketing world.
A distinct brand in its whole identity, Liquid Death is entirely its own. From product label design to marketing tactics, from a memorable name to badass branding, they are doing a great job of shaping the narrative of their brand in the marketplace. So much so, in fact, that you almost forget that they’ve actually been around since 2017 (that’s 7 years of investing in brand awareness to bring them to their current fame) and there are better tasting sparkling waters out there. Their brand awareness efforts are so on point that it almost makes you purchase their tallboy of just-ok product that will be flat within 40 minutes.

Moral of the story: You don’t have to have the best product or service available on the market. In fact, we hear this often at CID, “We can’t really market ourselves like that because there are better options out there.” Blatantly false claims aside, how can you build brand equity if you don’t present your brand with confidence and create a truly unique universe for your customer to enter? That’s a rhetorical question, but we’ll answer it anyway: you can’t.

Loyalty Dedication to a brand indicated by a positive attitude or repeated purchases.

Loyalty, ahhh, the sweet nirvana of brand! You may think of loyalty as stubbornly buying Dawn Platinum dish soap and none other, but it can be nurtured in clever ways.

Let’s look at private labeling.
Alina Wheeler says, “For many retailers, private labeling is a powerful marketing strategy to build brand equity that gives customers more reasons to shop at their stores. Retailers are leveraging better-designed packaging to attract upscale customers and increase profit margins.”

Gone are the days of poorly designed store-brand products! And this is on purpose. They are designed to build loyalty and keep you coming back for more.

Moral of the story: Look for places in your offerings to up your game and create more value for your customers—can the experience be more enjoyable? Can it be nicer to look at? Can you expand a component of your offering?

What the research says

In 2022, a study was conducted by Bhumiphat Gilitwala and Amit Kumar Nag on Disney at the Disney Shop which sought to understand the factors that affect brand equity. The researchers looked at five factors, listed below with a summary of their definition for each:

• Brand awareness: customers are able to recognize and remember when they see products, encouraging them to make a decision to purchase
• Brand image: the way a customer perceives a brand; created by a set of unique features of an extraordinary nature which cause its differentiation while simultaneously ensuring the desired market recognition
• Perceived quality: related to the reputation of the product, the quality of which is dependent on customers’ judgment
• Brand association: positive or negative attitudes that provide the customer with a reason to buy or not buy the brand
• Brand loyalty: no matter the price, loyal customers repeatedly accept the product without any conditions

The study determined that the effect of brand image on brand equity at the Disney Shop was the strongest, with brand loyalty coming in second. Perceived quality and brand association had a low or insignificant effect, while brand awareness actually had a negative effect on brand equity with a regression weight of -0.086.

“But wait,” you say, “You just said brand awareness is an important factor in brand equity!”

Good catch! It is, but context is key. Here’s our hypothesis for why brand awareness had a negative effect on brand equity at the Disney Shop: Think about something or someone you are a huge fan of. Have you noticed that when you repeatedly see the same product or merch item, and it comes time for your turn to buy, you look for something unique, something new? You want a keepsake that feels special to you and your experience. Not to mention that while humans are wired to trust the familiar, we are also delighted and dazzled by the novel. That is what we believe may be happening in this study.

Secondary research, like this study on Disney, is a powerful tool as you develop your brand and its equity. It opens your mind to thinking of things in a new way and may even give you ideas to try. However, the most valuable research is the research conducted on your own brand and context. That is the best way to learn about your unique customers and make adjustments specific to them and your brand.

Why You Need to Invest In Building Your B2B Company’s Brand Equity

You may think it’s harder or entirely unnecessary for your B2B company to build its brand equity.

Think about the last time you conducted a SWOT analysis and the weaknesses and threats you listed. What if we told you that a strong brand equity has the power to insulate your company from serious challenges and catastrophe? Challenges like…

Your own mistakes
At some point, someone in your organization is going to make a mistake. Think of strong brand equity as insurance. You’ll feel the hit initially, but it won’t be disastrous and you’ll be in a better position to rebuild.

Quick Example: Remember when Volkswagen was found to be lying about their emissions numbers? Their brand took a temporary hit but now, less than 10 years later, they are second only to Toyota in global automotive sales.

Another Quick Example: Or perhaps you remember the disastrous “Women belong in the kitchen” tweet from Burger King. An attempt to use a sexist trope to highlight their scholarship to help women pursue a culinary career crashed and burned, but the company and brand certainly didn’t.

The economy
The economy is an up-and-down game, but a poor economy does not have to automatically mean lay-offs and closing your doors. In fact, a strong brand equity means you have a customer base to weather the storm with you. Your purse strings may tighten, but customers who see you as a must-have are more likely to continually purchase from you as they find ways in their own budget to make it work.

Your competition
When the competition inevitably launches a new, innovative product or service that puts yours to shame, a strong brand equity buys you time. Customers who are wholly bought into your brand will wait for you to catch up or release something even better. They won’t wait forever, but they certainly won’t immediately jump ship.

Quick Example: Apple hasn’t launched an innovative product in years. And yet Apple users are extremely hesitant—nay, completely opposed—to switching their device ecosystem.

And you want to know the best part of this?
As a B2B company, you are in a better position to build brand equity than B2C because you have the ability to develop a real, face-to-face relationship with your customer. You have trade shows, sales calls, lunches and dinners, account managers, customer service, and marketing-led cultivation tactics across the entire journey of your customer. The customer touchpoints under your control are something a B2C marketer could only dream of.