What is Brand Equity?

In marketing parlance, brand equity is a measure of the value of the brand determined by consumers’ perception of it. Brand equity is positive if the consumers think highly about a brand. On the other hand, if the consumers think lowly about a brand, it suffers negative brand equity. Simply put the answer to the question, ‘What is brand equity?’ is the reputation of the brand. 

Importance of brand equity 

If the brand enjoys a good reputation, loyal customers would buy anything that the brand makes and sells, no matter what the price or quality is! This is the power that high brand equity enjoys in the market. Let us see what the obvious advantages are: 

  • Companies can charge a premium price for their products (e.g., premium designer stuff)

  • Positive brand equity can be easily turned into a new line of products, and this surely increase the revenues

  • Positive brand equity serves to increase the market share of the brand 

Examples of Brand Equity 

Some companies and their products enjoy high brand equity in the market. A perfect example of a brand that enjoys high brand equity is Apple. Though their products have similar features, the loyalty that the company’s products enjoy in the market is unparalleled. The brand equity of the value is purportedly over USD 250 billion. 

Another fine example is that of Coca Cola. How much do you think is the brand equity value of Coca Cola? Last year the brand was valued at close to USD 87.6 billion. 

Other global brands worth a mention would be Starbucks, Tylenol, etc., among many others. 

Components of Brand Equity 

The next question you may have in your mind is what makes brand equity high? What are the different components of brand equity? There is no universal definition or list that can be used to calculate brand equity. Let us briefly examine the main components of brand equity. 

Brand Perception

What customers believe that a product or service represents is the general definition of brand perception. This is not given value by what the owner of the brand says it does. It is not the company that owns the brand perception, but the customer. 

Positive or negative effects 

Positive reactions to a brand by the consumers send the brand’s reputation up. Consequently, the bottom line and the revenues also improve. A negative consumer reaction will have just the opposite effect. 

Brand Value 

Positive effects from the brand’s side will return both tangible and intangible value. The tangibles include an increase in profit or revenue. Intangibles will translate into increased brand awareness and goodwill. Similarly, negative effects will diminish both tangibles and intangible value. 

Uber is an example of a brand that was trending positively until late 2016. Nevertheless, a series of scandals that implicated the company for its sexist policies and spying drove its brand value negatively. The bottom line and brand equity also plummeted in effect. 

Steps to Build Brand Equity 

Given below are four steps that you can use to build brand equity in the market. 

1: Build more awareness of your brand 

More customers should recognize your brand, and you have to make sure of that if you want to build brand equity. When customers are on the lookout for a product or a service, you want them to look at your product/service. They should perceive it in the way that you intend them to. There are many ways in which you can get this to happen. 

  • Use the same logo/image to ensure consistent branding

  • Provide more than exceptional customer service

  • Render a heart-warming story that supports the brand

  • Keep the brand in front of the intended market

  • Provide on-going value

  • Keep in touch with prospective clients via email/newsletters

  • Tap into social media accounts of prospective customers and share – blogs/tweets/Facebook posts /Instagram photos 

2: Try to consistently communicate the meaning of your brand to your audience 

Keep in mind to be constantly aware of how well your product meets your prospective customers’ needs and also the social/psychological aspects. A company producing a useful product along with due social and environmental responsibility will attract customers/employees who share similar values. Such individuals will remain connected to your product and may turn out to be positive advocates. IKEA has principally invested in sustainable wood and cotton sources right from the very start and continues to do so. Even their stores are powered with the help of solar panels. Now, you know why IKEA is such a popular brand! 

3: Attempt to foster positive feelings and judgments in the customer

If customers develop positive feelings towards your product, then it is hard for them to let go. Moreover, only such customers are likely to turn into die-hard advocates of your brand. Judgments are made around different facets of a brand: credibility, quality, capability, relevance to need, superiority over competition, etc. Therefore, it is important to maintain integrity in all directions to keep your brand at the forefront of your customers’ thoughts. Positive feelings that they develop for your product/service can be any one of these: fun, excitement, peer approval, trust, security, and self-respect, among others. Any brand that builds positive feelings has a good chance of building high brand equity over time. 

4: Building loyal customers goes a long way

It is perhaps the most difficult challenge to build loyal customers for your brand. This may sometimes be easy to attain; however, it is pretty difficult to maintain. Customers form a psychological bond with your brand and this causes them to make repeat purchases. They feel part of a distinguished community and will continue to act as your brand ambassadors. They may promote your brand via social media chats on Facebook, Twitter, Instagram, and other online forums. This is a valuable asset for a business. 


Ultimately, brand equity rests majorly on emotional feelings and judgments. It may be easy to comment on brand equity, but it is not so easy to build brand equity. Even more difficult is how to maintain brand equity in the market and positively alter your audience's perceptions every single time they look at your product/service.