Understand the Stacking Effect of Brand Values, Brand Equity, and Brand Value

Marketers and brand managers face tons of pressure to be “boardroom-ready” — to look smart and think on their feet in front of the C-suite. That’s created a sort of buzzword stew, where business terms get used interchangeably.

I’m thinking of terms like value and equity. People think they know what the lingo means, but they don’t quite.

Brand value, brand values, and brand equity are all distinct concepts. But they’re interdependent, which is part of the reason the language gets so blurry. It’s important to understand their meaning because their sum total influences a brand’s bottom line.

So let’s break it down.

The Difference Between Equity and Value

Brand Equity = The images that come to an individual’s mind and the feeling they get when they see or interact with a brand’s presence or products.

Brand Value = The financial performance of a brand in dollars, market share, or whatever business metric you care to use.

I’ll add a third term to the mix because it influences the other two:

Brand Values = The way in which you conduct business, treat your employees, build culture, manufacture your products, and create and serve communities.

A brand’s values generate equity, or positive response from consumers. That glowing reputation makes consumers more loyal and willing to pay a premium, which leads to financial performance. Let’s see how value, equity, and values stack on top of each other.

1. Brand Values

The discipline of brand strategy helps define the brand’s promise and the way it behaves in the world. It’s why the brand exists, the need it meets, the problem it solves.

A brand’s values create internal alignment — a north star that guides all kinds of decisions, from what products to make, what ingredients to source, what people to hire, to what language to use in communication.

Different companies can adopt similar brand promises. But the way in which they keep those promises is the differentiation. For example, both REI and Dick’s Sporting Goods promise quality outdoor gear. But REI helps people pursue an active outdoor lifestyle with the encouragement, expertise, and training you need. People belong to REI (literally, if they’re co-op members). The brand has created a badge-worthy reputation among a community of fans willing to pay a little more for the privilege of shopping there.

Brand values drive human emotion and connection. It’s where the love happens. Consumers and employees get to be their whole selves when they’re with you. Brand values create differentiation, which leads to …

2. Brand Equity

Equity is the premium consumers are willing to pay for a product from a brand they respect vs. a generic product. Brand equity stems from the marketing discipline of positioning. And positioning arises from values. (See where I’m going here?)

Positioning is the result of strategic decisions about what the brand stands for. It drives creative tactics like logo design, packaging, voice, messaging, campaigns. It creates separation from competitors and creates a halo around the brand. Positioning is the “Bat Signal” the brand shines into the sky to attract fans.

Positioning is squishy; there’s no data on a dashboard to measure it. It’s the human, deep, spiritual work on the brand, like the behind the scenes practice of yoga that you do before you do it on the lawn in front of everyone else at Expo West. Marketers and creatives have to make gut decisions about how to communicate the brand’s values in a way that builds equity. And that glowing reputation that prompts fans to pay more for your product leads to …

3. Brand Value

Values + equity = higher brand value. This is our formula for building brand relevance.

Equity translates directly to revenue. Let’s say the typical price of a product in your competitive set is $1. But your brand values mean something to people and you can charge $1.50. The consumer is out there walking around with your brand badge and other people see it, and that perpetuates the perception that the product is worth more than what they paid for it.

Equity also allows you to have more collaborative relationships with your retail partners. Instead of simply paying for placement and agreeing to their pricing demands, your sales team can lead the conversation about mutual benefit and growth. It opens the door to new channels and dissuades retailers from offering competing house-branded products.

Values/Equity/Values in Action

This values/equity/value trifecta is so essential to what we do that it shows up in every engagement we’ve taken on. I’ll share our work with Essentia as just one example. For this enhanced water product struggling to differentiate in a crowded category, we opened up a universe of possibility. We leveraged their brand values so that consumers wanted to be a part of the team. This helped their internal team chart a channel strategy that allowed Essentia to dictate placement and pricing and go into big box retail without sacrificing their premium position. In a competitive market, Essentia remains a category of one.

The terms brand value, brand values, and brand equity are interchanged at the speed of a teenage boy plowing through a bag of chips. When marketers and brand managers understand how they differ and relate, they’ll gain the confidence of company leaders and make smart decisions for the brand’s success.

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Founder, President, & Chief Strategist
David was two decades into a design career with a wall full of shiny awards and a portfolio of clients including Nordstrom, Starbucks, Nintendo, and REI. His rocket trajectory veered when his oldest child faced a health challenge of indeterminate origin. Hundreds of research hours later, David identified food allergy as the issue and convinced skeptical medical professionals caring for his child. Since that experience, David and Retail Voodoo have been on a mission to create a cleaner, healthier, more sustainable food system for all.

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