What brand equity is made of
- Awareness: how well people know the brand.
- Associations: what they connect it with, such as quality, price or values.
- Perceived quality: how good they believe it is.
- Loyalty: how likely they are to keep choosing it.
This model is based on the work of David Aaker, one of the best-known brand strategists.
Positive and negative brand equity
Strong brand equity lets a company charge higher prices, launch new products more easily and win more customers with the same marketing. Negative brand equity, from poor experiences or scandals, makes customers avoid a brand even when its product is fine.
How to measure it
Common measures include brand awareness surveys, price premiums compared with competitors, customer loyalty and lifetime value, and branded search volume. In company valuations, brand value can also be estimated financially.
Brand equity example
Two water bottles are made in the same factory with the same materials. One carries a well-known outdoor brand and sells for twice the price, and customers recommend it to friends. The price difference, the repeat purchases and the recommendations are the brand equity. If the brand made a serious safety error, that value could shrink quickly.
How to measure brand equity
- Price premium: how much more people pay than for a similar unbranded product.
- Awareness and consideration: from surveys of your target market.
- Loyalty: repeat purchases and retention.
- Net promoter score: how many customers would recommend you.
- Branded search: how often people search for your name.
How to build brand equity
- Deliver a consistent product and service experience.
- Tell a clear story that explains why the brand exists.
- Keep the look and tone steady across every channel.
- Respond openly when something goes wrong.
Brand equity FAQs
Can brand equity be negative?
Yes. A poor reputation can make customers choose a competitor even at a lower price.
How is it related to brand image?
Brand image is how people see the brand. Equity is the value that perception creates. See brand loyalty and brand awareness.