Brand Equity

In simple terms, “brand equity” is a construct that is designed to reflect the real value that a brand name holds for the products and services that it accompanies.  Brand equity is considered important because brands are believed to be strong influencers of critical business outcomes, such as sales and market share.

What is Brand Equity? In lay terms, brand equity is the value that a consumer attaches to a certain brand. Although brand equity can be measured tangibly by way of certain indicators, a large component of the concept is intangible, i.e. what perceptions and associations people have of a certain brand, and the familiarity of those brands in the mind of the co

The model takes care of two aspects: Brand Loyalty and Price premium.

The 3 primary metrics that is used to measure or quantify brand equity are i) Loyalty towards the brand, ii) Ability of the brand to charge a premium and iii) Ability of the brand to leverage its brand name through brand extensions.

Brand equity is then measured in terms of a customer’s frequency of purchase and the price premium paid. Improvements in brand equity lead to higher rates of product trial and repeat purchasing due to buyers' awareness of your brand, approval of its image/reputation and trust in its quality.

Brand equity is considered as combination of –

  • Brand value – comparative mapping of price vs. quality
  • Brand loyalty
  • Brand description – association of brand with various attributes

Brand loyalty is measured from -

  •   Behavioural measures--focus on consumers' behaviour.
  •   Attitudinal measures--focus on general evaluative measures such as 'liking' or 'disliking.'  Awareness measures--focus on identifying a brand as being associated with a product category. 

Brand equity can be derived as combination of brand equity score and net value score.

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