Brand Awareness and Perception

Awareness and Perception are the two key metrics that any company would use to measure their brand strength.

Awareness in simple terms – how many people know my brand? Usually, awareness is measured through surveys that asks participants a series of questions like “What brand comes to your mind if you want to buy shoes? In general, companies measure unaided awareness- what % of survey participants mentioned the brand without any kind of hint.  For top brands like Coke, McDonalds the awareness will be close to 100%.

Perception is the values consumers attach to a brand.  For example, perception for Volvo will be safety.  To measure perception of a car company, survey will have questions like “How do you rank car brands in terms of safety? And various questions will be asked on quality, performance, or green. Outcome of the survey reveal the brand perception. List of questions depends on what is goal for the brand and how you want customers to think of your brand.

Studies have shown that awareness and perception plays a big role in the market share of a product. What is important? Awareness or perception?  For a growing company (trend) like Twitter, awareness would be the prime driver to grow the product usage. As more people are aware of micro blogging and Twitter, more people would use Twitter. Hence % of awareness level would decide Twitter’s growth and penetration among online population. On the other hand, for a mature business segment like ’cars’, awareness may not be the major driver of market share. Close to 100% of people might be aware of Pontiac but many would not buy Pontiac cars. Hence perception matters the most for Pontiac. Not only the stage of company and industry, other factors such as type of product, level of competition, switching cost, risk of switching also drive the importance of awareness vs. perception.

Generally, it takes at least frequency of 5-6 ads through various mass media to gain 1% increase in awareness among population. Cost for such a campaign will be close to $100M. Since consumers are constantly bombarded with huge number of ads, new products and brands, cost for gaining awareness is constantly going up. Given the high cost involved in conventional mass media, small startups leverage non conventional and inexpensive media like Twitter, Facebook, Blogs, and Youtube to generate brand awareness and perception. Most importantly, companies leverage current user base to generate awareness and perception. Facebook and Twitter effectively used their user base to increase awareness. Services like Facebook  are useful to consumers only when more people use the service. Hence users inherently have an incentive to popularize the service. For any company to be successful in the future, its product or service should have some way to provide an incentive for the users to recommend the product to others.

Couple of decades ago, building a brand like Twitter or Facebook would have required multibillion dollar investments. However, these brands were built with faction of the cost by aligning user incentive correctly and leveraging the users.

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