What is Brand Equity

Meaning and Measuring of Brand Equity

When we want to see how valuable a brand is, we consider its brand equity. Brand equity is a concept that becomes apparent once a customer chooses a certain product or service. In essence, it shows how knowledge of a brand can make all the difference regarding brand marketing and consumers’ responses.

If the consumer associates a brand with positive things, then brand equity will play a crucial role when they are deciding to choose that brand instead of some other.

 

How can we determine brand equity?

We can measure certain aspects of the brand in order to calculate brand equity. For example, one can examine the shareholders’ returns and evaluate the brand image according to a few essential parameters.

We can also determine the brand’s long-term earning potential and its increased sales volume. Of course, we would have to compare the brand to others in the same class to get an accurate evaluation.

We can also determine it by measuring the price premium. Moreover, the organisation’s market share price also plays a role in defining the brand equity. Via that price, we can find out if the consumers can link the performances of the individual brands to a larger organisation and its financial performance.

Lastly, we can even use all of these methods together.

 

Which factors contribute to the creation of brand equity?

Five factors can lead to the development of brand equity:

  1. Brand loyalty
  2. Brand associations
  3. Brand awareness
  4. Perceived quality – to determine brand quality, the customer takes into account a variety of factors, including the brand’s performance. However, since customers evaluate other brands as well, that analysis varies a lot. Still, high perceived quality is fantastic if the brand wants to position itself well on the market. This sort of quality can also affect the way organisations create their pricing plans. After all, products of superior quality can have a premium price. Also, when consumers consider a brand’s perceived quality, they have yet another reason to buy something from that brand. Thus, this sort of quality is also a point of interest for most.
  5. Other proprietary brand assets — brand equity is also influenced by trademarks, patents, and interrelations within various channels. These are assets that may prevent a competitor from coming after a company. Moreover, they can preserve customer loyalty and the edge the company has over its competition.

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    Brand Management Knowhow – learn more about branding with our collection of educational articles.


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