Brand equity is a phrase used in
the marketing industry which describes the value of
having a well-known brand name, based on the idea
that the owner of a well-known brand name can
generate more money from products with that brand
name than from products with a less well known
name, as consumers believe that a product with a
well-known name is better than products with less
well known names.
A brand`s power derived from the goodwill and name
recognition that it has earned over time, which
translates into higher sales volume and higher profit
margins against competing brands.
Positive brand equity can help a company in a variety
of ways. The most common is the financial benefit
which enables a company to charge a price premium
for that brand. For example, the Tiffany’s brand has
enough equity that a price premium isn’t just
accepted, it’s expected.
Positive brand equity can also help to expand a
company through successful brand extensions and
expansions. And not only can brand equity help
increase sales and revenues, but it can also help
reduce costs. For example, there is little need for
awareness promotions for a brand that has deep,
positive equity. Marketing budgets can be more
strategically invested in initiatives that will drive
A company with strong brand equity is also positioned
for long-term success because consumers are more
likely to forgive bumps in the road when they have
deep emotional connections and loyalties to a brand.
Positive brand equity helps a company navigate
through macro-environmental challenges far more
easily than brands with little or negative brand equity
Brand equity is typically the result of brand loyalty, and with
brand loyalty comes increased market share. In fact, there
are 5 stages of brand experience that lead to positive brand
Brand awareness: Consumers are aware of the brand.
Brand recognition: Consumers recognize the brand and know what it
offers versus competitors.
Brand trial: Consumers have tried the brand.
Brand preference: Consumers like the brand and become repeat
purchasers. They begin to develop emotional connections to the
Brand loyalty: Consumers demand the brand and will travel distances
to find it. As loyalty increases so do emotional connections until there
is no adequate substitute for the brand in the consumer’s mind.
Once consumers reach the brand loyalty stage, your
work isn’t done. The challenge is not only building
brand equity to reach widespread loyalty, but also to
sustain that loyalty and positive brand equity for
years to come.
The purpose of brand equity metrics is to
measure the value of a brand. A brand
encompasses the name, logo, image, and
perceptions that identify a product, service, or
provider in the minds of customers.
It takes shape in advertising, packaging, and
other marketing communications, and becomes a
focus of the relationship with consumers.
In time, a brand comes to embody a promise
about the goods it identifies—a promise about
quality, performance, or other dimensions of
value, which can influence consumers' choices
among competing products.
are many ways to measure a brand.
Some measurements approaches are at the
firm level, some at the product level, and
still others are at the consumer level.
Firm Level: Firm level approaches measure
the brand as a financial asset. In short, a
calculation is made regarding how much the
brand is worth as an intangible asset. For
example, if you were to take the value of the
firm, as derived by its market capitalization—
and then subtract tangible assets and
"measurable" intangible assets—the residual
would be the brand equity.
Level: The classic product level
brand measurement example is to compare
the price of a no-name or private label
product to an "equivalent" branded product.
Level: This approach seeks to map
the mind of the consumer to find out what
associations with the brand the consumer
has. This approach seeks to measure the
awareness (recall and recognition) and brand
image (the overall associations that the
Questions to evaluate the product:
Who are you? (Identity)
How often and easy you chose specific product?
What are you? (Meaning)
Does this product reflect your needs?
Performance and Imagery
What about you? (Response)
What is your personal opinion about the product?
Judgment and feeling
What about you and me? (Relationships)
Do you think that you are related with the
1: Brand Identity – Who Are You?
In this first step, your goal is to create "brand
salience," or awareness – in other words, you
need to make sure that your brand stands
out, and that customers recognize it and are
aware of it.
You're not just creating brand identity and
awareness here; you're also trying to ensure
that brand perceptions are "correct" at key
stages of the buying process.
Step 2: Brand Meaning – What Are You?
Your goal in step two is to identify and
communicate what your brand means, and
what it stands for. The two building blocks in
this step are: "performance" and "imagery."
defines how well your product
meets your customers' needs. According to
the model, performance consists of five
categories: primary characteristics and
features; product reliability, durability, and
serviceability; service effectiveness,
efficiency, and empathy; style and design;
"Imagery" refers to how well your brand
meets your customers' needs on a social and
psychological level. Your brand can meet
these needs directly, from a customer's own
experiences with a product; or indirectly,
with targeted marketing, or with word of
Step 3: Brand Response – What Do I Think, or
Feel, About You?
Your customers' responses to your brand fall
into two categories: "judgments" and
"feelings." These are the two building blocks in
Your customers constantly make judgments
about your brand and these fall into four key
Quality: Customers judge a product or brand
based on its actual and perceived quality.
Credibility: Customers judge credibility using
three dimensions – expertise (which includes
innovation), trustworthiness, and likability.
Customers judge how relevant
your product is to their unique needs.
Superiority: Customers assess how superior
your brand is, compared with your
Step 4: Brand Resonance – How Much of a
Connection Would I Like to Have With You?
Brand "resonance" sits at the top of the brand
equity pyramid because it's the most difficult –
and the most desirable – level to reach. You
have achieved brand resonance when your
customers feel a deep, psychological bond with
Behavioral loyalty: This includes regular, repeat
Attitudinal attachment: Your customers love your
brand or your product, and they see it as a
Sense of community: Your customers feel a sense
of community with people associated with the
brand, including other consumers and company
Active engagement: This is the strongest
example of brand loyalty. Customers are actively
engaged with your brand, even when they are
not purchasing it or consuming it. This could
include joining a club related to the brand;
participating in online chats, marketing rallies,
or events; following your brand on social media;
or taking part in other, outside activities.