Brand Equity


  • Brand Equity is the value and strength of the Brand that decides its worth. Brand equity is the value assigned to the intangible value of an established brand.
  • In terms of value brand equity is the premium that a company gains from a product with a recognizable name as compared to its generic equivalent.
  • In terms of strength, Brand Equity exists as a function of consumer choice in the market place.

The concept of Brand Equity comes into existence when consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favorable positive, strong and distinctive brand associations in the memory.

Brand Equity can be determined by measuring:

  • The price premium charged by the brand over non-branded products.
  • Evaluating the Brand Image for various parameters that are considered significant.
  • Evaluating the Brand’s earning potential in long run.
  • Evaluating the increased volume of sales created by the brand compared to other brands in the same class.
  • Returns to the Share-Holders.
  • Share prices in the market.

Factors contributing to Brand Equity

  • Brand Awareness – It is the probability that consumers are familiar about the life and availability of the product. It is also the degree to which consumers precisely associate the brand with the specific product. Brand awareness includes both brand recognition as well as brand recall.
  • Brand recognition – It is the ability of consumer to recognize prior knowledge of brand when they are asked questions about that brand or when they are shown that specific brand.
  • Brand recall – It refers that consumers should correctly recover brand from the memory when given a clue or he can recall the specific brand when the product category is mentioned.
  • Brand Associations – Brand association is anything which is deep seated in customer’s mind about the brand. For example- The Nike Swoosh. Brand Associations are not benefits, but are images and symbols associated with a brand or a brand benefit.
  • Brand Loyalty – It is the extent to which a consumer constantly buys the same brand within a product category.  Brand loyalty exists when the consumer feels that the brand consists of right product characteristics and quality at right price. It is measured through methods like word of mouth publicity, repetitive buying, price sensitivity, commitment, brand trust, customer satisfaction, etc.

Brand Elements to build Brand Equity

  • Brand equity is the result of a process which leads to a creation of a unique and distinct brand identity.
  • Brand identification can be done through various brand elements also known as brand identifiers; for example, Unique Selling Proposition (USP), Logo, Style, Brand Ambassador, Etc.  The idea is to develop brand elements, which can properly communicate about brand and its point of difference from competing brands.
  • These brand identifiers facilitate the process of consumer brain mapping and play a key role in building brand equity. Over period of time consumers are able to identify the brand through brand elements.

Characteristics of Brand Elements:

  • Brand element should be such that it can be easily recalled. For example, half eaten apple, steadily identifies with brand Apple.
  • Brand element should convey either significance or, application to the consumers. Significance here means that brand element should be suitable for that given product category. Consumer should not be left guessing about brand by looking at the element. Similarly application of brand element is important. For example, Virgin, brand is applicable to airlines as much as to financial services. However, Toys r us, brand can only be valid to sell toys, games, etc.
  • Another factor for a good brand element is design and appearance. For example, Swastika symbol is associated with Nazi’s movement but in India it means luck. In this globalize world it is very important to respect diversity and culture.

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