Brand Equity

What is Brand Equity?

The worth of a brand in the marketplace is known as brand equity. A high-equity brand, has a high worth in the market. American advertising professionals commonly began using the term “brand equity” in the early 1980s.

A brand with a strong brand value or equity can elicit a favourable differentiated response from consumers. This may imply that people may quickly recognise your brand when they see it in advertising or on a yard sign.

When a relevant prompt is given, brand equity can mean that your brand is one of the first ones to come to mind. It can imply that customers might be willing to spend more for the products or services offered by your company. It can imply that your company is the first to be recommended to others when someone asks for a referral.

These are all favourable responses to the brand: one that is clearly recognisable, one that is quickly and easily remembered when needed, one that people are prepared to pay more for, and one that is recommended to others. All of these traits describe a brand with great equity.

The main assets of a brand are brand name awareness, brand loyalty, perceived quality, and brand associations.assets-of-brand-equity

Brand Awareness

The strength of a brand’s presence in a consumer’s mind is referred to as awareness. Recognition is an indication of familiarity from prior encounters. It does not entail recalling the brand’s previous locations, the reasons why it stands out from competing companies, or the type of products it sells. It is merely recalling that there was a former exposure to the brand.

Perceived Quality

The assessment of the entire product quality is known as perceived quality. It serves as the primary indicator of the influence of brand identity. Without claims that are substantial and accurate, quality perceptions cannot be maintained.

The marketer must understand what quality means to each consumer category and what the enabling factors are to provide a high-quality product, and by extension, a high-quality perception.

The perceived quality of a product could differ from its technical or functional performance. Over time, perceived quality develops. If the product’s functional features meet what consumers believe they want, this perception of the product’s quality is strengthened.

Brand Loyalty

When determining the value of a brand that is to be purchased or sold, brand loyalty is an important factor to take into account because a customer base that is very loyal is likely to produce a stream of sales and profits that is highly predictable.

It is less expensive to keep existing clients than to gain new ones. Neglecting current consumers while luring in new ones is not right. Loyalty serves as a barrier to entry for rivals.

Strategic and tactical insights from loyalty segmentation can help establish powerful brands. Typically, a market can be classified into the following categories:

  • Non-customers
  • Price switchers
  • Passively loyal
  • Committed.

Brand Associations

Consumer associations with and around the brand are the key source of brand equity. The associations could be with characteristics, symbols, music, famous people, etc. The corporation wants its brands to stand for certain things in consumers’ perceptions, and this is known as the brand identity.

Brand Equity Measurement


  1. Price Premium: This measure shows how much a buyer is ready to pay for a brand over another one that has almost identical advantages.
  2. Customer Satisfaction/Brand Loyalty: Customer satisfaction is a clear indicator of consumers’ propensity for repeat business and brand loyalty.
  3. Perceived Quality: It is closely related to other elements, such as organisational ties and functional advantages.
  4. Popularity and Leadership Position: When determining a brand’s leadership, three key characteristics must be taken into account.
    1. Market share of consumers who purchase the brand,
    2. How well the brand align with consumer preferences and market dynamics
    3. Technical excellence
  5. Brand value: A brand’s emotional and practical benefits give consumers something to appreciate. Brands that provide consumers with high value will outperform the brands of rival companies in the marketplace.
  6. Brand Personality: Brand personality measurements account for the emotional and self-projective benefits of brands. This is a crucial metric, particularly for products with little difference and those that are used in social settings.
  7. Organisational Association: The connection between a brand and an organisation can be a potent differentiator.
  8. Brand awareness: It is a measure of a brand’s influence on consumers’ thinking. Brand awareness is largely a reflection of a brand’s market penetration. Both brand knowledge and brand salience are components of brand awareness.
  9. Market Share: The market share, in the end, is a reflection of a brand’s performance. Data on market share is more accurate and readily available to the company. The value of market share would be impacted by issues like defining the product class or served market, though.
  10. Market Price: A brand’s relative price is determined by dividing its current price by the average price of all the brands in the same product category.

Wrap Up

Above all, the commercial value stems from how consumers view a particular product or service’s brand name rather than from the actual good or service.

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