A Breakdown of Brand Equity: What is my Brand Worth?

Do you remember the popular “Pepsi Challenge”? In this test, Pepsi pitted its own brown, carbonated liquid against Coca-Cola’s equally brown and carbonated liquid to see which one consumers preferred. The beverages were poured into unmarked glasses, and participants were asked to choose their favorite based on taste alone.

This shouldn’t call for a spoiler alert: most people chose Pepsi. Otherwise, that would have made a terrible advertising campaign for the company.

Pepsi’s slogan at the time was “People who let their taste decide pick Pepsi.” If that’s true, then wouldn’t most all consumers want to buy the better tasting drink?  How is Coca-Cola still the best selling and most recognizable soft drink on the market?

This has a lot to do with Coke’s brand equity. Much like cash, inventory, equipment, or a secret recipe, brand equity is actually a valuable asset for your company. This brand equity is dependent upon several factors, including the following:

  • Brand promise
  • The company’s reputation
  • The quality of products/services provided
  • Personality of the brand
  • Brand positioning in the minds of consumers (as compared to other industry brands)

To consumers, your brand will eventually become a mental representation of these elements. They’ll hear your brand name or see your logo and automatically associate that with a certain standard. This perceived standard will most definitely affect the consumers’ decision to either buy or not buy your products/services.

Coca-Cola’s brand equity has been achieved through a variety of means. While Coke’s marketing tactics have often leaned toward the more traditional route, the business has recently begun to place a strong emphasis on inbound marketing.

Coke sees the significance of staying current in an ever-changing world and connecting with an audience on its terms.  This lesson is especially important for smaller companies with fewer marketing dollars and less brand equity. Inbound marketing often allows businesses to generate a greater return on investment (or get more bang for their buck, so to speak).