Branding 101: What is Brand Equity?

With the world becoming an increasingly competitive marketplace, brands are now presented with the challenge of capturing and sustaining market share and keeping their customers loyal to their brand. 

Branding elements have become more and more crucial in the marketing space. Brands are increasingly moving their focus from the product to the consumer, which makes the general perception of a brand is more important than ever. Let’s delve deeper to brand equity and know more about why it’s important and how you can make use of brand equity for your company.

What is Brand Equity?

Brand equity is the level of influence a brand name has in the minds of consumers.

Organizations establish brand equity by creating positive experiences that influence consumers to continue purchasing from them rather than their competitors who make similar products. This is done by generating awareness through campaigns that relate to consumer values, delivering on promises and qualifications when consumers use the product, and retention efforts. 

The three components of brand equity:

  1. Brand perception: Brand perception is what customers believe a product or service represents, not what the company owning the brand says it does. 
  2. Positive or negative effects: When consumers react positively to a brand, the company’s reputation, products, and bottom line will benefit, whereas a negative consumer reaction will have the opposite effect. 
  3. Value: Positive effects return tangible and intangible value – tangibles include profit or revenue increase; intangibles are brand awareness and goodwill. Negative effects can diminish both tangibles and intangibles. 

Why is Brand Equity Important?

A key benefit of establishing positive brand equity is the benefits it can have on your return on investment. Organizations that leverage the power of branding often earn more money than competitors, while spending less. 

For a brand strategy example, positive brand equity allows brands to charge price premiums. When consumers believe in the values of a brand and the quality of their products, they will pay higher prices to purchase from that brand. 

Managing brand equity over time is essential in achieving several competitive benefits, such as:

Price Premiums

Brands with strong brand equity can charge premiums, which, aside from the product-related benefits, are accredited to the value of attaching the brand’s name to that product. Such products will also enjoy a low-price elasticity, which means that consumers will be less likely to switch to competitors even if they have lower prices.

Product Offering Extensions

Brands with high brand equity are exposed to significantly less risk when introducing new products since the brand name alone carries trust and value. 

Increased Market Share

Brand equity improves confidence in the purchase decision. Therefore, a company with high brand equity can attract and retain a large portion of the market share by acquiring a loyal customer base and can withstand pressures from competitors.

How to Build Brand Equity?

Building strong brand equity is the foundation for a company’s long-term success. Marketers can reinforce brand equity by actively investing in the components of brand equity.

Building Brand Awareness

This can be done by creating positive, strong, and unique brand attributes which consumers will retain in their minds like advertising your brand on different media, engaging with various communities on social media, or creating viral content.

Building Brand Position

A brand’s overall culture, including its core values and differentiators, should remain consistent. A brand that shows consistency throughout time is a brand that can easily be recalled and has a stronger brand association. This doesn’t mean that companies can’t make strategic changes, such as introducing new packaging or rewriting their slogans. If changes are necessary to re-align with changing consumer needs, or external economic and social factors, then change might be good for your overall brand equity in the long run. 

Emphasizing Positive Brand Associations

Strong brand associations are crucial to building loyalty towards your brand, like using innovative means of advertising, highlighting the core benefits of your product, taking charge of social responsibility, and establishing ethical business practices, or celebrity endorsement.

Focusing on Building Relationships

It is the consumers who determine the strength and vitality of your brand’s equity. Therefore, it’s important to build and maintain positive relationships with your target audience by staying in touch with customers via multiple channels of social media, providing excellent customer service at all times (online and physical), and tracking any negative feedback then listening and responding to those feedbacks.

How Do You Measure Brand Equity?

Perhaps the most challenging aspect of brand equity is how to measure it because there is no standard metric or rubric that brands can use to measure consumers’ subjective emotions and responses. 

Nevertheless, it’s still important to try and measure brand equity since losing sight of the strength of your brand equity can impact your bottom line and your ability to compete with the ever-growing market.

There are two ways to measure your company’s brand equity. Quantitative measurements, and qualitative measurements.

Quantitative measurements

This involves measuring brand equity by looking at financial metrics, which reflect the requisite strength of the brand such as:

  • Profitability
  • Price elasticity
  • Growth rate
  • Market share percentage
  • Purchasing frequency

Qualitative Measurements

These measurements cannot measure brand equity tangibly but are essential in gathering insight. Brand equity can be qualitatively measured by:

    • Monitoring social media reactions towards your brand to assess the level of engagement your brand creates
    • Conducting surveys to evaluate consumers’ emotions and feelings towards your brand
  • Conducting focus groups to assess consumers’ knowledge of various brands within a market


Brand equity represents the value of a brand and comprises a consumer’s awareness of a brand, the associations they make with the brand, the way they perceive the quality of its products, and the extent to which consumers show loyalty towards it. 

Brand equity is a significant component of a company’s branding elements and marketing strategies because of its significant impact on a brand’s ability to sustain a competitive advantage. Brands must consistently monitor their brand equity by using quantitative or qualitative measurements so that their brand strategy can adapt to the ever-growing and ever-changing social and economic trends.


I’m Joseph, and I started this blog as a way to share ideas with others. I wanted to create a space where people could share their thoughts and feelings, and where we could all have a good laugh. Since then, the blog has grown into something much larger than I ever imagined. We have posts on everything from humorous essays to comics to interviews. And our weekly columns cover sports, video games, college life, and software.
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