Brand Awareness Explained: Definition, Benefits, and Proven Strategies

What Is Brand Awareness?

Brand awareness is a marketing term for the degree to which consumers recognize a product by its name. Ideally, brand awareness means consumers recognize and view the product positively compared to competitors.

SStudies show consumers pay more attention to products they recognize, helping them remember these brands. Entrepreneurs can build brand awareness by creating thought leadership content, volunteering, and building a strong network.

Understanding the Mechanics of Brand Awareness

Brands with high awareness are likely to generate more sales. When faced with choices, consumers are simply more likely to buy a name-brand product than an unfamiliar one.

Building brand awareness starts by connecting your product or service to a clear and compelling value proposition. For example, Verizon's "Can you hear me now?" campaign effectively captured the attention of its target audience and highlighted its expanded service coverage, resulting in a 10% increase in net customers to 32.5 million in the first year. Key strategies include building a strong online presence, using appealing designs, and engaging with audiences on social media and email.

Another example of successful brand awareness is the soft drink industry. Without their packaging, many soft drinks are indistinguishable, and sugary beverages are known to contribute to chronic diseases like diabetes. However, industry giants like Coca-Cola and Pepsi rely on strong brand awareness to ensure consumers choose their products despite these health risks and competition from alternatives. Over the years, their effective advertising and marketing strategies have significantly increased brand recognition, leading to higher sales.

This higher brand awareness rate for dominant brands in a category can serve as an economic moat, preventing competitors from gaining additional market share. For example, Warren Buffett is an investor in Coca-Cola partly because it's one of the most recognizable global brands with intense customer loyalty, providing it with a wide economic moat.

Important Factors in Building Brand Awareness

As of 2024, internet users spent just over two hours daily on social media, compared to an hour and a half back in 2012.

Companies focus on promoting brand awareness on Instagram and Facebook, especially targeting Millennials and Gen Z. This has led to new forms of promotion in which consumers generate discussions about products and services they like and use. Facebook continues to be the most used platform, while Instagram and TikTok dominate among younger users. Brands must stay updated with these trends to effectively reach their target audiences and maximize their marketing impact.

Inevitably, consumers also share unfavorable experiences, and marketers are adapting to that reality. It has become crucial for a company to respond to negative reviews and offer a solution to the customer's problem in real-time.

Brand awareness increases as consumers engage with social media posts and updates. For brand awareness to be most productive, consumers should be able to connect to the company's website seamlessly from the social media platform. It's also a good idea to use data-driven insights to tailor content for each platform, ensuring it resonates with the specific demographics active there.

Alternative Strategies for Boosting Brand Awareness

While print media has declined, consumers still read newspapers and magazines. Strategically placed advertisements, such as those in targeted sections of newspapers or specialized publications, can capture viewer attention and boost brand awareness.

For example, a new forex (FX) trading company might advertise in a magazine focusing on global trade and currencies to create brand awareness among investors.

Advertising in physical locations, such as inside stores, is also used to create brand awareness. Impulse purchase products are well-suited for in-store distribution and advertising. For example, a company marketing a new candy bar may distribute the product at a point-of-sale (POS) location to create brand awareness.

Event sponsorship may effectively build brand awareness, offering visibility at charitable events, sporting events, and fundraisers. For example, the PGA Tour’s Valspar Championship significantly boosted Valspar's brand recognition by using paint buckets as tee markers, dressing caddies in branded gear, and featuring a chameleon sand sculpture. These creative efforts led to a 10-point increase in brand recognition, prompting Valspar to renew its sponsorship contract early.

Another example is a health insurance company that may distribute complimentary company-branded health packs at a charity marathon. This associates the brand with an act of goodwill and community feeling, increasing awareness of the brand and burnishing its image.

The Bottom Line

Brand awareness is a pivotal element in influencing consumer purchasing decisions and nurturing brand loyalty, particularly for consumer-focused businesses. Leading brands like Coca-Cola and Nike exemplify how strong brand awareness can drive a lasting impact on consumer preferences. Key strategies to enhance brand awareness involve connecting products or services to a clear value proposition, crafting engaging marketing campaigns, and maintaining an active presence across various platforms, including social media. Utilizing data-driven insights and staying current with trends ensures that brand messaging resonates effectively with target audiences, leading to increased sales and market share.