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  • Writer's pictureAnpar Research

Brand Equity: Definition, Importance, Examples & Much More

Updated: Apr 13


The words "strong brand equity" on a white pad on a office desk

Brand equity is a crucial concept for any business, big or small. In this post, we'll dive deep into the concept of brand equity. We'll explain what it is, the elements involved, why it matters, how to measure it and how to build brand equity.


Table of contents:


What Is brand equity?


Brand equity can be defined as the value of a brand beyond its physical assets, and it includes elements like reputation, customer loyalty, and market share. It's the sum total of all the intangible components that make a brand valuable to its customers and the marketplace.


These components can include:

  • Brand awareness: The extent to which customers are familiar with a brand and its products or services.

  • Brand associations: The positive or negative associations that customers have with a brand, such as quality, reliability, or trustworthiness.

  • Brand loyalty: The degree to which customers are committed to a brand and its products or services.

  • Perceived quality: The perceived quality of a brand's products or services.

  • Brand personality: The traits and characteristics that customers associate with a brand.

  • Market share: The percentage of the total market that a brand commands.


All of these components contribute to a brand's overall value and help to create a competitive advantage in the marketplace.


Why is brand equity important?


The following are the top 5 reasons why brand equity is important for businesses and organisations:


1. Strongly influences the financial position of the brand

Brand equity can have a significant impact on a company's bottom line. Brands that have high levels of brand equity can charge more for their products or services, and they can also increase their market share. Additionally, brands with high levels of brand equity are more likely to be successful in introducing new products or expanding into new markets.


2. Creates a competitive advantage by standing out in the marketplace

Brand equity is an intangible asset that contributes to the overall value of a brand. It's what makes consumers choose one product or service over another, even if they cost more or offer similar features. This leads to increased market share, revenue, and profitability. In a crowded marketplace, brand equity can make or break a business, which is why it's important to have a clear understanding of where your brand stands.


3. It helps with the awareness of the brand

In relation to the above reason, brand equity helps to improve awareness of the brand, where the more people are aware of your brand, the more likely they are to choose it over others. This is particularly true if the perceived value of the brand is high.

4. Is a key driver of customer loyalty

When customers have a strong positive association with a brand, they are more likely to continue purchasing from that brand in the future. This leads to increased customer retention and lifetime value as well as them being more likely to recommend your brand to others.


5. Helps to minimise the impact of negative events

Brand equity can provide a buffer against negative events. Brands with strong equity are more likely to weather negative events, such as a product recall or a negative news story, without suffering long-term damage to their reputation or financial performance.


Examples of brand equity


There are many examples of brands that have strong brand equity. To give you a flavour of what this is like in the real world, below are the top 5 positive and negative real-life examples of brand equity.


Top 5 examples of positive brand equity


1. Apple – ability to charge a premium and maintain a loyal customer base

Apple is widely regarded as one of the most successful brands in the world, with a brand equity that is unrivalled in the technology industry. Apple's brand is associated with quality, innovation, and sleek design, and its products are highly coveted by consumers around the world. Apple's brand equity has enabled the company to charge a premium for its products and maintain a loyal customer base.


2. Coca-Cola – one of the world’s most recognisable brands built up over time

Coca-Cola is one of the most recognisable brands in the world, with a brand equity that is built on decades of successful marketing campaigns and product innovations. The Coca-Cola brand is associated with happiness, refreshment, and Americana, and its products are sold in more than 200 countries around the world. Coca-Cola's brand equity has enabled the company to maintain its position as the leading soft drink manufacturer in the world.


3. Nike - commitment to quality, innovation, and marketing to maintain its position

Nike is another brand that has built a strong brand equity based on its commitment to quality, innovation, and marketing. Nike's brand is associated with athletic performance, and its products are worn by athletes of all levels around the world. Nike's brand equity has enabled the company to charge a premium for its products and maintain a strong position in the highly competitive athletic footwear and apparel market.


4. Google – top search engine with a reputation for innovation, reliability, and user experience

Google is one of the most successful brands in the world, with a brand equity that is built on its reputation for innovation, reliability, and user experience. Google's brand is associated with search, information, and convenience, and its products are used by billions of people around the world. Google's brand equity has enabled the company to maintain its dominant position in the search engine market and expand into new areas, such as mobile operating systems and cloud computing.


5. Amazon – world’s leading online retailer based on customer service, innovation, and convenience

Amazon has built a strong brand equity based on its commitment to customer service, innovation, and convenience. Amazon's brand is associated with fast, reliable delivery and a vast selection of products at competitive prices. Amazon's brand equity has enabled the company to expand into new areas, such as cloud computing and streaming video, and maintain its position as the leading online retailer in the world.


Top 5 negative examples of brand equity


1. United Airlines – PR crisis when passenger is forcibly removed

United Airlines experienced a major public relations crisis in 2017 when a passenger was forcibly removed from an overbooked flight. The incident was captured on video and went viral, resulting in widespread backlash against the airline. United Airlines brand equity suffered a significant blow as a result, with many consumers vowing never to fly with the airline again.


2. Volkswagen – scandal around illegal software in diesel vehicles to cheat emissions tests

Volkswagen faced a major scandal in 2015 when it was discovered that the company had installed software in its diesel cars that allowed them to cheat emissions tests. The scandal resulted in a massive recall of vehicles and significant damage to the company's brand equity. The scandal also led to a decline in sales and a loss of trust among consumers.


3. BP – Major PR crisis after the largest oil spill in U.S. history

BP faced a major public relations crisis in 2010 when an oil rig operated by the company exploded in the Gulf of Mexico, resulting in the largest oil spill in U.S. history. The incident caused significant damage to the environment and had a major impact on the local economy. BP's brand equity suffered a significant blow as a result, with many consumers boycotting the company's products.


4. Pepsi - controversial advertisement criticised for trivialising social justice movements

In 2017, Pepsi released a controversial advertisement featuring Kendall Jenner that was widely criticised for trivialising social justice movements. The ad depicted Jenner giving a can of Pepsi to a police officer during a protest, which many saw as an inappropriate response to the issue of police brutality. The ad was widely mocked on social media and resulted in significant damage to Pepsi's brand equity.


5. Equifax – major data breach resulting in a loss of trust amongst consumers

Equifax, a credit reporting agency, experienced a major data breach in 2017 that exposed the personal information of millions of consumers. The breach was a significant blow to the company's brand equity, as consumers lost trust in the company's ability to protect their sensitive information. The incident also resulted in significant financial losses for Equifax, including legal fees and the cost of implementing new security measures.


How to measure brand equity?


To measure brand equity, businesses can use methods such as customer surveys, brand valuation, social media analytics, sales data analysis, and market research. Metrics like the brand equity index, NPS (Net Promoter Score), and share of voice analysis can provide insights into a brand's overall strength and performance.


Determining your brand's equity involves understanding its value from the perspective of both customers and business standpoint. Brand equity is essentially the worth of a brand in the eyes of its customers. It is the added value that a brand name gives to a product or service in the market place.


Measuring brand equity is an essential step towards building a strong brand that resonates with your target audience. It allows you to gauge how your customers perceive your brand and whether it aligns with your brand values and image. However, measuring brand equity can be challenging as it involves intangible factors such as customer loyalty, brand awareness, and trust.

Below is an explanation of the most common ways of measuring brand equity:


Brand tracking surveys

These surveys allow you to gather feedback from your customers on your brand's attributes, such as quality, customer service, and reliability. You can also track your brand's performance over time to identify any changes in customer perception including factors such as brand awareness, brand loyalty, and overall brand image and adjust your brand strategy accordingly.


Social media monitoring

Another approach to measuring brand equity is through social media monitoring. Social media platforms provide a wealth of information on how your brand is perceived by your target audience. Analysing social media data can help you identify patterns in customer behaviour, sentiment, and engagement, giving you valuable insights into your brand's perception.


Using financial metrics

You can measure brand equity through financial metrics such as revenue, market share, and profitability. These metrics provide a tangible reflection of your brand's performance and can be used to track the effectiveness of your brand strategy over time.


Brand Audits

A brand audit is a comprehensive analysis of a brand's strengths and weaknesses. This analysis can include a review of the brand's marketing strategy, product offerings, customer experience (CX), and overall brand image. A brand audit can provide valuable insights into the areas where a brand may need to improve in order to strengthen its brand equity.


A combination of these methods can provide a comprehensive view of a brand's equity, helping businesses make informed decisions about their brand strategy. By leveraging these different methods, you can gain a deeper understanding of your brand's impact on your target audience and make informed decisions to strengthen your brand equity.


Factors affecting brand equity


Brand equity is influenced by a variety of factors, both internal and external. Below are the top 3 factors that influence brand equity.


1. Level of quality of the product or service

One of the most significant internal factors is the quality of the product or service itself. If a product consistently meets or exceeds customer expectations, it builds trust and loyalty, which in turn increases brand equity. On the other hand, poor quality or inconsistent performance can quickly erode brand equity and lead to negative associations in the minds of consumers.


2. Maintaining brand consistency

Brand consistency is an important factor, which refers to the ability of a brand to maintain coherence across all brand touchpoints and channels. This includes everything from the visual identity and messaging to customer service and product experience. Consistency helps to establish a clear identity and reinforce positive associations, ultimately building brand equity.


3. External factors – competition, trends and partnerships

External factors such as market trends, competition, and cultural shifts can also impact brand equity. Brands that are able to anticipate and adapt to these changes are more likely to maintain relevance and stay top of mind with consumers. Additionally, factors such as endorsements, sponsorships, and partnerships can impact brand equity by associating the brand with positive attributes or values.


Understanding these factors is crucial for building and strengthening brand equity over time. By consistently delivering high-quality products and maintaining a cohesive brand identity, brands can establish trust and loyalty with consumers. Anticipating and adapting to external factors ensures that brands remain relevant and top of mind, while strategic partnerships can help to reinforce positive associations and drive brand growth.


How to build brand equity?


Building brand equity is a complex process that requires careful planning and execution. Here are some key strategies to consider:


1. Develop a strong brand identity

Developing a strong brand identity involves creating a unique name, logo, and messaging that differentiates your brand from competitors and resonates with your target audience.


2. Deliver a consistent brand experience

Consistency is key in delivering a strong brand experience, ensuring that all brand touchpoints, from packaging to customer service including in-store experiences, reflect your brand values and create a cohesive customer experience. By consistently delivering high-quality products or services, a brand can establish trust and loyalty with consumers.


3. Invest in advertising and marketing

Advertising and marketing are important for building brand awareness and increasing brand recognition and brand recall through targeted campaigns that reach your target audience.


4. Foster customer relationships

Fostering customer relationships through engagement on social media, email marketing, and other channels helps build brand loyalty amongst your customers and positive word-of-mouth to tempt potential customers to engage with your brand.


5. Monitor and manage brand reputation

Monitoring and managing brand reputation through proactive responses to customer feedback questions and online reviews helps maintain a positive brand image and mitigate negative publicity. Social media listening is one tool to help you do this online to enable you to respond to reviews and other feedback.


6. Innovate and adapt to changing needs, trends and cultural shifts

Innovating and adapting to changing customer needs and trends helps ensure that your brand remains relevant and competitive in the marketplace, helping to build long-term brand equity. Brands that are able to do this are more likely to maintain relevance and have a better chance of staying top of mind with consumers.


7. Building strategic partnerships

Strategic partnerships can also play a role in building brand equity. The right partnership can help to reinforce positive associations and drive brand growth. Sponsorships and endorsements can also be effective in associating a brand with positive attributes or values.


In summary, building and strengthening brand equity is a long-term process that requires consistency, an understanding of external factors, and strategic partnerships. By doing so, brands can establish trust and loyalty with consumers, remain relevant, and ultimately drive growth.


Strategies to maintain brand equity


Maintaining brand equity requires a combination of the following strategies focused on delivering quality, engaging customers, and staying relevant in the competitive market landscape:


1. Use storytelling

Engaging customers emotionally through storytelling is a powerful way to maintain brand equity. It not only informs customers about your brand but also connects them on an emotional level. This can create a strong relationship and loyalty towards your brand.


2. Maintain consistency

Consistency in your messaging, logos, colours, and overall branding is essential for maintaining brand equity. This helps to create a strong brand identity that customers can easily recognise and trust.


3. Keep up with trends

To stay competitive and relevant, brands should continuously monitor market trends and customer needs. This can help to adapt and evolve their branding strategies to meet changing customer demands, thus maintaining their brand equity.


4. Engage with customers

Interaction with customers can significantly influence brand equity. Brands can use social media platforms, surveys, or events to engage with their customers. This can foster a sense of community and belonging among customers, which can positively affect brand equity.


5. Deliver quality

Quality plays a crucial role in maintaining brand equity. Brands should ensure their products or services meet or exceed customer expectations to build and maintain their reputation. This leads to customer satisfaction, loyalty, and word-of-mouth referrals, which all contribute to brand equity.


6. Use influencer marketing

Collaborating with influencers who align with your brand values can help to reach a wider audience and increase brand awareness. This can result in enhanced brand equity.


7. Implement a strong SEO strategy

A robust SEO strategy can significantly impact your brand's online visibility, making it easier for potential customers to find your products or services. This can boost brand awareness and recognition, leading to an increase in brand equity.


8. Offer exceptional customer service

Providing excellent customer service can help brands to build strong relationships with their customers. This can lead to customer loyalty and improved brand equity.


9. Create a Unique Selling Proposition (USP)

A strong USP can differentiate your brand from competitors. It gives customers a clear reason to choose your brand over others, which can increase brand loyalty and equity.


10. Leverage customer reviews and testimonials

Positive customer reviews and testimonials can boost your brand's credibility and trustworthiness. This can enhance brand image and equity.


Conclusion


Building and strengthening your brand equity is essential if you want to succeed in today's business landscape. By understanding what brand equity is, why it matters, and how to measure and build it, you can position your brand for long-term success.


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