What is Brand Equity?

A brand is nothing but a unique name, symbol, concept, design, or any other attribute which specifically identifies one product or service as different from the goods or services of other similar vendors. It is not intended to be a synonym for brand name or trademark. A brand is intended to distinguish an item from similar items and services. It is not intended to constitute an exclusive right to sell or use the item, the idea, or the logo. It is generally considered one of the most important marketing tools available.


Building a brand begins with establishing a reputation which is communicated both through words and actions. Reputation can be built by consistently exhibiting high standards of behavior towards the brand partner, customers, suppliers, colleagues and others. Constant communication regarding the expectations of the brand partner, customers, suppliers and colleagues builds the trust and loyalty between the brand and these key stakeholders. Brand equity is the total perceived value of a brand. The bottom line is always about profit; therefore, the perception of the brand matters a lot.

Consumers are the gateways to the marketplace, and the key to long-term sustainability and growth. Consumer loyalty is a powerful driving force that determines the financial future of organizations. Long-term success depends on the ability to build and maintain a sense of loyalty among consumers. Consumers are brand loyal because they have a deep sense of trust and they expect to be treated accordingly. Loyalty creates customer loyalty and consumers are brand loyal because they want to be associated with well-known and reliable brands.

There are many ways of defining and measuring a brand’s strength and power. A brand’s strength lies in its ability to create and maintain a positive brand image which is based on clear and consistent messaging. Brand equity is the total perceived value of a brand expressed against the price paid for the same product or services. The bottom line is always about profit; therefore, the perception of the brand matters a lot. The brand promise is the overall promise or thrust of the brand, and this promise must be communicated clearly to consumers.

To measure brand equity, several factors need to be taken into consideration. Among them is market share measurement which is determined by analyzing the share of total consumers for a brand over various product lines over a given time frame. The importance of brand equity is determined by how the consumer perceives and understands the brand. Some other factors that are important are recognition, loyalty and longevity.

Brand loyalty is measured by the extent to which consumers are willing to pay more than what they would for similar products from other companies. Break-even pricing is determined by the existence of a large enough residual value that it will not be necessary to recoup the cost of marketing the brand over and above the cost of production. Finally, profitability is determined by the extent to which a brand is able to generate an income stream that can be sustained over time. All of these factors go hand-in-hand to determine the financial worthiness of a brand. In short, the value of a brand can be measured by its ability to build customer loyalty and awareness.