What is Brand Equity?

Brand equity is a measurement of how much influence a brand name has on its current or potential consumers. Over the years, the marketplace has become more competitive. This means it is important for brands to understand how to keep their current consumer base as well as add to it. This article will define brand equity and give insight how to measure it in order to boost your business to its fullest potential.

Defining Brand Equity

The definition of a brand’s equity, told by marketing theorist Professor David Aacker is “A set of assets of liabilities in the form of brand visibility, brand associations, and customer loyalty that add or subtract from the value of a current or potential product or service driven by the brand.” Brand equity is a complex concept, but the understanding of this concept is for a brand to fulfill its potential. In simple terms, it is the value of a brand. It is the difference between a branded product’s value and the value of the same product without the brand’s name attached to it.


What Drives Brand Equity?

Now that you have a clear understanding of what brand equity is, you need to learn how to build your own brand’s equity. Professor David Aacker created a simple framework to show the parts that make up a brand’s equity: brand awareness, brand association, perceived quality, brand loyalty, and other proprietary assets. Brand loyalty is extremely important to long-term, sustainable success. The ability to count on loyal customers to keep buying your branded products directly corresponds to your brand’s equity.

Moving Parts

Brand awareness is how recognizable a brand is to consumers. A brand with high brand awareness will come to mind first when a consumer is looking for a specific product. For example, if a consumer is looking for sneakers, a few brands that may come to mind will be Nike, Adidas, and Reebok. All three of these brands hold a distinguished position in the sneaker market; Therefore, they have high brand awareness, which correlates directly to their brand equity.

Perceived Quality

Perceived quality is an element that is centered on a brand’s reputation for their high-quality products and customer experience. Consumers are often more willing to pay a higher price tag for high quality products in one brand instead of another brand whose price is lower, but the quality of the product isn’t at the same level.

Brand Association

Brand association is anything that is related to the brand which can invoke either positive or negative attitudes towards the brand. The most prominent example of this is a brand’s social or emotional benefits. This relates the brand’s overall image and what any given consumer will associate with that image. If a brand has primarily positive attributes with the brand, then the brand will possess high equity.

branding materials


Proprietary assets include trademarks, partnerships, patents, and trading or channel partner relationships. These assets are vital to the brand’s assurance that other brands are unable to compete under the same name or using similar packaging. This may confuse consumers and take away from a brand’s loyal customer base.

Measuring your Brand’s Equity

Having a clear understanding of the different components that drive brand equity is extremely important. Being able to measure your brand’s equity will ensure that your brand can grow. According to Branding Strategy Insider, measuring brand equity requires you to think about three metrics: Knowledge, Preference, and Financial.


Knowledge metrics, in simple terms, is a measurement of the popularity of your brand. According to an article published in the Asian Journal of Business Management, knowledge metrics are an assessment of the consumer’s awareness and association with a brand. These assessments are made from testing through aided, unaided, and recognition and recall.


Preference metrics deal with the way your consumers distinguish your brand from others, and these metrics are measured objectively in relation to your brand’s position within your industry. Through the use of focus groups, sales data, and surveys, your brand will be able to identify which aspects are the most appealing. These include: brand relevance, accessibility, emotional connection, and brand value.


Financial metrics is for those who are looking to assign a value through numbers to their brand. This can include many things, but the three most prominent things to view are: company value, market share, and revenue potential. In order to measure brand equity, think of the brand as an asset, subtract the tangible assets from the overall value of the brand, and you are left with the brand equity. If your brand has a high market share, there’s a good chance you will also have a high brand equity. Think about the revenue potential for your product and comparing it to your brand’s current revenue. This will allow you to think of new ways to grow through your products.

brand equity


Brand equity and social media go hand in hand in this virtual world we live in. When a brand is building up their social media following, they are opening their audience. Using apps like Instagram, Twitter, and TikTok allows for brands to reach a younger audience.

Social Media Usage

As well as reaching a younger audience, social media allows for your brand equity to grow. Through creating content and engaging with your followers, your brand will build a relationship between consumer and brand.Through using social media, it is important to make sure to utilize all the tools within the social media apps. Tools such as Instagram Insights will allow you to see the numerical scales of engagement, audience, and content.Depending on the nature of your brand, there are many ways to market your brand in order to grow your equity. Email marketing, using local SEOs, and using employees as ambassadors are all ways to boost your business virtually.

Using social media and the internet in order to grow your brand’s level of equity requires time and effort. However, the relationship potential built between your brand and your consumers is priceless. Your consumers are the backbone of your brand’s potential equity levels. Utilizing social media in a way that serves your consumers in a personal way will grow your brand’s equity.


When a company wants to expand its product line, it is extremely important for them to have positive brand equity. If they do, the company has the ability to assume that their customers will buy its new product. This is because if a new product comes out under the name of an existing, successful brand, customers will trust the product.


Some examples of brand equity are Tylenol, Starbucks, and Coca-Cola. Since being first manufactured in 1955, Tylenol has been able to grow its market. Tylenol’s product line now includes Tylenol Extra Strength, Tylenol Cold & Flu, Children’s Tylenol, and Tylenol Sinus Congestion & Pain. In 2020, Fortune magazine rated Starbucks was rated the sixth most admired company in the world. Starbucks has more than 31,000 stores globally in 2019 and is highly regarded for its pledge to social responsibility. The brand of Coca-Cola is sometimes called the best soda brand in the world. The brand itself represents more than just soda. It is symbolic of proud history, positive experiences, and even the U.S. itself.


  • What is brand equity?
  • How to measure brand equity?
  • What is brand association?
  • How does brand equity work in marketing?
  • What are examples of brand equity?

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