All You Need to Know About Brand Equity


By Dennis Vu

Brand equity is a concept that stretches across multiple aspects of a brand that include brand loyalty, awareness, perceived quality of a brand, and more. It represents the value of a brand measured through its popularity and social perception or simply “through the customers’ eyes”.

Brand equity is directly related to the value that a renowned brand name can add to products & services launched under it. 

For smaller businesses, it might be hard to build strong brand equity that converts. To aid these building efforts, these businesses can use a small business phone system for effective and streamlined communication with their customers.

What’s more, making a branded website is important because the website is usually the first point of contact between the company and its customers. That way, you can make your brand recognizable from the start and later use its elements to further market over social media or email. 

Let’s delve deeper and cover all you need to know about brand equity.

An example of brand equity

Just think about Coca-Cola and its popularity in the beverage industry.

If Coca-Cola launched a new product under their brand name it would create hype and would sell like crazy compared to the same product under a different brand name. 

Put simply — would you buy a product that looks and tastes just like Coke, but in different packaging, say with green colors and an oval bottle? Would you buy it even if you knew it was Coke in the flesh? 

Well, you would probably be suspicious and unsure and wouldn’t trust that it’s the real Coke, so you would feel safer to just skip it and head for the Coke in its original packaging. Precisely this is where the importance of brand equity comes into place and it’s an example of how it can affect products. 

Now, let’s cover what comprises brand equity.

Brand equity elements

Brand equity is a broad term with several integral segments that should supplement each other to provide for the best possible value of a brand. Brand equity is an intangible quality, but it can be observed through these elements:

  1. Brand awareness
  2. Brand association
  3. Perceived quality
  4. Brand loyalty
  5. Proprietary assets of a brand

Brand awareness

Brand awareness is the first step in brand equity creation. It refers to the level of awareness of your brand in the eyes of your audience. In other words, it tells you to what extent the customer recalls your brand when thinking about a specific product category. 

For example, when you ask someone which Soda brand first pops to mind, most will say Coke, Pepsi, etc, and would be able to clearly describe them (brand’s logo, colors, slogans). This is an example of the highest awareness level. 

An example of lower-level brand awareness is when you would ask them to keep recalling as many Soda brands as they can. Once they finish — all Soda brands that aren’t recalled would be the ones with the lowest awareness levels. 

You need to have a strong brand awareness if you want to build a strong and profitable brand name and equity.

Brand association

Brand association represents all of the associations customers have when they think about a certain brand. In short, it includes all the traits that differentiate one brand from other brands in the same category (the competition). Associations can be both positive and negative and are formed through:

  • Testimonials of others 
  • Interactions with the customers
  • Brand advertisements
  • Publicity
  • Company’s PR activities

Every brand should cater to creating positive associations with proper and personalized brand communication and activities and initiatives that match its mission and values.

Perceived quality 

Perceived quality can be also considered as an association, but it is observed as a separate trait. It shows how the customers perceive the quality of a brand. Perceived quality is the perception of the customer about the quality of a brand in general. 

Quality perceptions dictate pricing decisions and the higher quality perception is, the higher product’s price can be. Companies can use quality perception to position their brand.

Therefore, some companies might want to position their brand as premium and the way to do that is through making high-quality products at high prices. Others might want to create an affordable brand aimed at the majority of average customers, by creating mid-range quality products at very low prices.

Brand loyalty

Brand loyalty is created when customers repetitively choose to purchase products from one brand over others in the same category. Not only does it establish the customers’ loyalty to one brand, but it also accounts for them advocating that brand to others. 

With higher levels of brand loyalty, companies usually have lower marketing expenditures and can easily introduce new products to the market under that brand.

Proprietary assets

These include trademarks, channel relationships, and patents with the purpose to stop the competition from eroding the brand’s customer base or attacking the company. Trademark prevents the competitors from copying the brand’s logo, name, slogan, etc., in an attempt to trick the customers.

Measuring brand equity

Since it is an intangible quality, it is hard to measure brand equity. However, there are some methods to measure it, like:

  • Cost-based valuation
  • Income-based valuation
  • Market-Based valuation

These methods include qualitative (customer satisfaction, loyalty, etc) and quantitative (profit, expenses, loss) approaches to measure brand equity, so you can get close to an accurate estimation of your brand’s value.

The top 10 brands with the highest brand equity (among which the top 5 are from the Technology sector) measured in 2020 were: 

Brand Brand value
Apple $241.2 B
Google $207.5 B
Microsoft $162.9 B
Amazon $135.4 B
Facebook $70.3 B
Coca-Cola $64.4 B
Disney $61.3 B
Samsung $50.4 B
Louis Vuitton $47.2 B
McDonald’s $46.1 B

Final words

Brand equity is a bedrock of the uniqueness and distinctiveness of a particular company compared to others in the same industry. It is important to invest enough time and resources to effectively build brand equity that converts in multiple ways. That creates a strong brand identity that sells and has the power to set the bar high in its category.

You should start by building brand awareness and positive, unique associations powered by the quality of your products. That will help increase customer loyalty and trust and will help boost your market share, future marketing endeavors (like market expansion), and, ultimately, sales.

About the Author

Dennis Vu Dennis Vu is the CEO and Co-founder of Ringblaze, a virtual business phone system company that helps teams to better serve their customers, anywhere


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