Let’s Build Some Brand Equity for Local Businesses

Let’s play a matching game!

I say, The car in ‘Back to the Future.’ You say…

Delorean, of course. Were there other cars in that movie? Of course, but the time-travelling Delorean probably comes to mind for you thanks to its sleek futuristic look and the fact that it featured prominently on the movie’s promotional materials.

That’s what you call effective product placement: when a product is featured “natively” within an existing media franchise (such as a movie, television show, or even in social media videos or podcasts).

But this post isn’t about product placement: it’s about Brand Equity. But what exactly is Brand Equity, and why should small business owners like you care?

What is Brand Equity?

According to the financial nerds at Investopedia:

Brand equity is the value premium that a company generates from a product with a recognizable name, when compared to a generic equivalent.

According to that same article, a company with positive brand equity experiences increased revenue (a tangible benefit) and brand awareness and goodwill (intangible values).

To put it another way, Brand Equity is the point where your customers’ level of satisfaction and your marketing promises align. And it doesn’t have to be positive Brand Equity. For example, perfect marketing and poor delivery creates negative Brand Equity. But let’s keep this positive: you promised your customers something great in your marketing, and then you delivered on that promise. Now you have positive Brand Equity.

Brand Equity is the value that a brand brings to a business beyond its physical assets. It’s the emotional connection, trust, and recognition that your brand builds with your customers. Think of it as the secret sauce that makes your business memorable and desirable.

With positive Brand Equity, a company can expect loyal customers who often are willing to tolerate higher prices (brand loyalty).

But just raising prices doesn’t produce Brand Equity. No, sir. Brand Equity is earned.

Brand Equity Takes the Cake

Building Brand Equity is like baking a cake. The ingredients for the “cake”—your product, service, and customer experience—are the essentials, like flour, eggs, and baking powder. But the icing, decorations, and that little “Happy Birthday” candle topper? That’s what makes people smile, take pictures, and remember the moment. Your brand is the icing that elevates the cake from ordinary to extraordinary.

Why Brand Equity Matters

1. It Increases Business Value & Drives Sales

A strong brand can significantly boost your business’s valuation and increase sales. Think of companies like Apple or Nike. Their physical products are impressive, sure, but their true value lies in the trust, loyalty, and emotional connection they’ve built with customers.

Long story short: Want to profitably sell your business at some point? Build your Brand Equity, not just your inventory.

2. It Allows for Price Tolerance

Customers are willing to pay more for brands they trust. For example, Starbucks charges a premium for coffee because their brand promises consistency, quality, and a little slice of luxury. When a person walks into a business meeting with their skinny chai latte in a Starbucks cup, well, they’re demonstrating something about what they think of themselves. (As does the person who brought their coffee to work in a thermos.)

3. It Builds Customer Loyalty

Strong Brand Equity means customers will stick with you, even when competitors try to lure them away.

If you’ve ever watched the show Mad Men, you’ll know how important it was to get cigarette smokers hooked—not just on cigarettes, but specifically on Lucky Strikes. The main character, Don Draper, was a “Lucky Strike man from way back,” because he’d always associated the brand with a comfort from home when he was deployed in World War II. Therefore, he wasn’t going to switch brands anytime soon.

But how could Lucky Strikes attract new smokers in a world in which the U.S. Surgeon General was raising awareness about the health risks associated with cigarettes? Here’s a moment when the genius of Don Draper gives them a golden idea.