Brand Equity Definition, Components, Measuring Parameters & Examples

Brand Equity Definition, Components, Measuring Parameters & Examples
Article by DesignRush DesignRush
Last Updated: November 08, 2022

Brand equity is vital to winning in your industry. And the rise of social media has drastically changed the business landscape, helping you find more ways to build, maintain, and track brand equity.

78% of online users talk to friends and family about the brands they follow on social media, and 87% visit a company’s website or application.

These numbers suggest how social networking occupies a significant part of consumers’ daily life. The platform even influences how they view a brand and, eventually, their purchasing decisions.

This article will be defining brand equity, discussing its moving elements and value and looking into ways of measuring it.

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What Is Brand Equity?

Brand equity is the total commercial value of a brand name as a distinct asset. This is based on consumer perception and reception of the brand.

It pertains to assets and liabilities associated with the brand name and what it symbolizes. These assets and liabilities either increase or decrease the value of a brand based on its product or service offers.

The concept of brand equity enables you to position your offers and formulate your marketing strategies in a way that makes your enterprise stand out in a crowd of competitors.

This is the premium value your business generates from your products or services through a recognizable name, relative to the generic marketplace.

81% of consumers believe that they should be able to trust a business to do what is right. Hence, a brand’s cultural value varies over time according to public information and people’s collective opinion. It may build up or lower depending on how you communicate with your target audiences via advertising and other correspondences.

Components of Brand Equity

Brand equity involves achieving your vision and fulfilling your promise as a business entity to clients while keeping a healthy connection with them. It cannot be achieved overnight; it is an accumulation of these elements:

Brand Awareness

You should create awareness to build a reputable brand name. Prospective customers should be able to recognize your brand and its category to associate it with a specific niche.

Brand awareness helps your marketing specialists strategize to increase visibility and find the right audiences through various advertising campaigns.

It contributes to brand equity as awareness reflects people’s familiarity of your business, not confusing you with another brand name. The brand awareness scale ranges from discovery to choosing to buy a product from you or avail of your service.

A common example of effective brand awareness is a logo, icon, or tagline being associated easily with a brand.

Brand Association

Brand association refers to interactions and attributes that clients relate to a certain brand.

A good brand association results in repeat purchases and assists your company with word-of-mouth marketing. A critical contributor to brand equity, this association allows consumers to identify your brand and set it apart from competition.

People find it easier to recall your defining characteristics by relating them to other positive differentiators impacting your brand.

Brand Experience

Client experiences with your overall branding aggregate with time. If they have an excellent brand experience, they will continue transacting with you, considering your company superior to others.

Brand experience is a combination of the following:

  • The environment if you have a brick-and-mortar shop
  • The look and feel of your eCommerce website
  • Customer interaction with your business web pages
  • How your customer support representatives behave
  • The product or service quality
  • Uniformity of your product standards

Brand Perception

Brand perception pertains to how consumers think of and feel toward your brand.

Since the average individual needs to invest in your brand before forming an opinion, keeping your brand’s promise to your target market is another factor affecting brand equity. People evaluate and compare competitor brands based on quality and price point.

For businesses and marketers, quality perception will impact the company’s pricing decision. If you manufacture and provide exceptional quality products, you have the luxury to put a premium price tag on your offers.

After all, 90% of consumers are willing to spend more on a trusted brand, and 40% say that high-quality craftsmanship is a foremost factor affecting their brand of choice.

This is the resulting value of the positive characteristics of your products or services.

Brand Loyalty

There is brand loyalty when people choose to patronize your business over another. It leads to repeat sales and, in turn, helps you trim advertising costs because your customers become your brand ambassadors.

Loyalty also makes it easier for your business to introduce new product offers targeting the same consumer base.

Another crucial element of brand equity, loyalty decreases the likelihood of customers switching to a competitor brand. It displays preference and adds more value to your brand name. It suggests that consumers believe in your business enough to discuss and recommend you to their family and friends.

Importance of Brand Equity

Brand equity is a valuable step to your business growth and scaling. Here are the benefits of increasing your brand equity:

  • It helps increase your market share.
  • It helps improve your brand valuation in your industry.
  • You gain loyal customers who stay longer.
  • It lowers price sensitivity, letting you charge more for your offers than the average market price.
  • Brand equity is an asset that can be leased, sold, or licensed.
  • You can launch and market a new product line easier.
  • You can have longer tenure for your company.
  • It attracts and acquires new clients.
  • It can convince people to switch to your brand from another.
  • It is a solid indicator of your enterprise’s strength and performance, especially compared with competitors.
  • It inspires positive feedback and opinion from consumers.
  • It sets you up for long-term success.
  • You can experience lower customer churn.
  • You can enjoy greater brand recognition.
  • It helps advance your bottom line and profit margin.

Measuring Brand Equity

These are quantitative metrics for brand equity:

  • Brand visibility and recognition: How your brand comes to a customer’s mind easily when a need for your available offers arises
  • Value associations: The optimistic or negative feelings evoked when a customer is reminded of your brand name
  • Brand differentiation: How people distinguish your brand from the rest and how they describe your offers relative to similar products of another company
  • Customer loyalty: Consumers’ commitment to your brand depending on availability and pricing
  • Purchasing frequency: The number of times a singular customer buys from you within a specified period, for example, in one month

The following are the qualitative means to measure brand equity:

  • Website and social media traction: This is derived from and monitored via built-in or third-party analytics and insights on how many people visit your business page and social sites. It also covers how many online users talk about your brand and their sentiments based on social reactions and shares.
  • Surveys and focus evaluation groups: These refer to the regular tracking of any changes to your overall brand health by openly asking people’s opinions.
  • Product value: This defines the strength of your brand equity if buyers prefer your brand despite a high price point and potentially low availability, among other considerations.
  • Brand audit: It is a comprehensive assessment of your positioning on the market. Plus, an audit allows you to look into your business strengths to cultivate and the weaknesses to improve or eliminate.

Brand Equity Examples

Brand equity dictates your superiority over another. Listed below are examples of companies whose positive brand equity keeps them ahead of the competition and winning in their respective markets:


Consumer loyalty toward Apple, its demand, and its premium price point are higher than brands offering similar products.

Its use of technological innovation maintains Apple’s superior brand equity as a global household name.

The brand also owes its popularity to the unique way it positions itself on the market—a premium, luxury, and avant-garde label equipped with unparalleled technological modernity that never fails to deliver and amaze.


The social channel is consistent in attracting and maintaining brand loyalty from online users. Many of them do not even turn to other platforms for online networking.


A large volume of positive brand perception has catapulted the coffee chain into international success.

Its name being attributed to consumer trust and outstanding client service has empowered Starbucks to sell coffees at a premium price. This has also enabled the brand to expand into retail spaces and collaborate with other companies across the globe.

Wrap-up: Building Your Brand Equity

Brand equity represents the overall value of your enterprise. It consists of these elements:

  • Consumer awareness of your products and services (brand awareness)
  • How people associate their needs with your offers (brand association)
  • Their interaction or touchpoints with your brand—website, physical store, and client support (brand experience)
  • The way they see your brand as a thought and industry leader (brand perception)
  • Customers’ conscious decision to buy from you or employ your services (brand loyalty)

It helps shape your marketing projects and impacts your ability to maintain a competitive edge in the long term.

You can track your brand equity and its possible fluctuations through quantitative and qualitative metrics tailored to fortify your business amid dynamic economic trends.

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