How To Build Brand Equity?

Learn the importance and definition of Brand Equity and know how to implement it to enhance your business identity.
Brand Equity

Have you ever wondered why devoted customers would buy everything a company produces or manufactures, regardless of price, quality, or even randomness? That’s the power of the company’s brand equity at work!

The increased value a firm obtains from a product with a recognized name over a generic version is known as brand equity. It’s the brand’s worth, an abstract amount defined by branding strategy and public opinion. Unlike other financial assets, brand equity is far more difficult to quantify, yet it nevertheless has a significant influence on a company’s bottom line.

This tutorial explains what businesses should know about brand equity and how to create brand strength. We discuss the value of brand equity in a company strategy, as well as how to establish brand equity from the bottom up.

Brand Equity Model

brand equity model

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What is Brand Equity?

As a marketing term, brand equity refers to both the fame and recognition a brand name possesses, as well as the amount of power it possesses in the minds of consumers.

Organizations build brand equity by providing great experiences that encourage customers to choose them over rivals that provide identical goods.

This is accomplished through raising awareness through marketing that relates to target-consumer values, following through on promises and qualifications when customers use the product and focusing on loyalty and retention.
Consumer psychology and a company’s success are both factors that influence brand equity and brand strength. It comprises, in particular, of:

  • A consumer’s positive or negative emotional attachment to a brand based on prior experiences
  • Consistency of a corporation in areas such as product quality, customer service, and specialty marketing

As you can see, both have evolved through time, providing older businesses a competitive edge in terms of brand equity. However, by enhancing their brand marketing approach, even new companies, such as startups, may speed up the process and rapidly increase their brand equity. This is primarily reliant on advertising, the product life-cycle, and brand design elements like logos and websites.


The Three Elements That Make To Brand Equity


There is no correlation between what a customer believes a product or service to be or what the brand’s owner claims it represents. In effect, the consumer, not the firm, owns brand perception.


Positive consumer reactions boost a company’s reputation, goods, and bottom line, but negative consumer reactions have the reverse impact.


Intangibles include increased branding, goodwill, and profits; tangibles include increased profits and revenues. By negative consequences, tangible and intangible goods can both be damaged. In late 2016, Uber, for example, rose to prominence before a series of scandals including sexism and espionage tarnished its reputation, bottom line, and brand value.

Brand Equity’s Importance

In a word, brand equity increases the appeal of a product and brand line, providing it a higher market position and allowing the firm to charge more. The benefit is that you don’t have to modify the product, but rather the public’s perception of your brand.

Consumers’ perceptions of a brand influence whether or not they do business with it, which is why businesses spend so much money on enhancing brand strength. Past experiences, product consistency, and what’s in the press may all have a favorable or bad impact on a brand’s perception.

When you link Google with useful tools that make it simpler to use the internet, you increase its brand equity. When you identify Google with data breaches or other negative headlines, you diminish its brand equity. Whatever you associate Google with impacts your purchase decisions when they introduce a new product or service.
Brand equity has an impact on a company’s sales, earnings, and overall worth, most notably by allowing it to charge a greater markup.

The impacts of brand equity are most visible at its extremes, such as in the fashion business, where the average markup for both retailers and designers is between 125 and 150 percent – for comparison, the typical markup for a retail grocer is less than 15%.

For example, suppose a T-shirt costs 565 Rupees to produce and is sold to a merchant for roughly 1300 Rupees, who then sells it to clients for around 1800 Rupees. A consumer may buy a virtually similar, unbranded T-shirt for 565 Rupees, but if the t-shirt had a MANGO logo on it, some buyers will consider 1800 to be a steal!

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What Are the Components of Brand Equity?

Because brand equity is so abstract, various individuals use different methodologies to measure it, especially if they’re measuring it for different purposes. For example, if you’re a stockholder analyzing shareholder interest and want to measure brand equity, you may employ event studies, which track how a company’s stock value reacts to current events like new celebrity endorsements.

Because it’s straightforward, thorough, and generic enough to be applied to practically any firm, we’ve used David Aaker’s “Brand Equity Ten” model below. You may evaluate your own brand equity, as well as that of your rivals, by calculating your success in the following areas.

The ten most significant components of brand equity, grouped into five categories:

1. Loyalty

  • Premium : How much more are your customers ready to pay for your brand over the top competitors’? Customer loyalty may be measured in this way.
  • Customer’s Contentment : Are your consumers satisfied with your product or service once they’ve bought it? Is that something they’d do again? Do they utilize your rivals to supplement what you have to offer at the same time? Do they think they’d tell a friend about your company?

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2. Perceived Leadership And Quality

  • Leadership : What is your brand’s position in the market? Is it a market-leading brand or a laggard? Is it a trailblazer, the first to introduce new features or updates? Do you lead or follow the newest branding trends? Take into account the rate at which your popularity rises and falls.
  • Quality : This metric determines the level of quality of your products in relation to the consumer market. Are your goods regarded as high-end or low-cost knock-offs? Is your product’s quality consistent?

3. Associations And Differentiation

  • The personality of the brand : How would you define your brand if it were a person? It’s important to consider how your business practices, outreach, content, and visual identity all contribute to the “person” your brand grows up to be.
  • Organization : “Organization” refers to the administration of a firm, covering aspects such as structure and leadership, as well as charitable activity and negative publicity. Is your organization, in particular, dependable?
  • Value : This is comparable to perceived quality, but with a price focus. Do customers think they’re receiving a good deal or being taken advantage of? Why should people choose your products above those offered by your competitors?

4. Awareness

  • Awareness of the brand : Is your company well-known or relatively unknown? Brand recognition may be increased by using narrative in your content and advertising, as well as other methods listed.

5. Market Behavior

  • Indices of price and distribution : A collection of facts that help to indicate the brand’s position in the market. The average price of all product and service variants (excluding incentives) is compared to the average price of competing items in the relative market pricing. The number of shops that carry your brand and the number of consumers who have access to what you have to offer is referred to as distribution coverage.
  • Market share : Market share is the most measurable component of brand equity, with a monetary value based on sales, consumer surveys, and other syndicated data.

ALSO READ : All you need to know about branding design. HOW DOES BRANDING INCREASE THE VALUE OF THE BUSINESS?

Formula To Measure Brand Equity

Do you want to know how much your brand equity is worth? As previously stated, there is no universally acknowledged brand equity formula; instead, different organizations employ different techniques, such as cost-based, market-based, or income-based computations.

The most useful brand equity formula may be found in the Branding for Dummies series of books, published by Bill Chiaravalle, former creative director of Landor Associates, and Barbara Findlay Schenck, marketing author.

The cost to establish or replace your brand and the economic worth of your brand’s premium market position are used in this brand equity calculation; I’ll explain what those terms imply in a minute. Depending on your needs, you can utilize one or both approaches.

If you’re selling your firm, for example, you’ll want to know the exact cost of establishing or replacing your brand, or if you’re only trying to raise pricing, your brand’s market premium position will assist with the arithmetic.

The price of establishing or replacing your brand

Essentially, this is the amount of money you spend on branding and enhancing your brand strength. It’s the total of all of your spending for:

  • Marketing Costs : All of your advertising, promotions, web outreach, and other paid PR charges are included in your marketing costs.
  • Acquiring And Maintaining Customers : All marketing expenditures listed above, additional money spent on lead generation, customer acquisition, loyalty programs, or other ventures such as viral marketing.
  • Brand Identity : The costs of registering your name, creating a logo, trademarking your logo, developing a slogan, establishing an internet presence (including site design and domain name), and any other strictly branding charges such as a musical jingle or mascot.

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The worth of your brand’s premium market position in terms of money.

Essentially, this assesses the economic benefit that your brand provides you in the marketplace. It is divided into two sections:

  • Premium pricing : How much extra will your buyers pay for your branded items compared to their unbranded counterparts? Take the price differential between your branded items and their generic competitors (an unbranded product or a store brand), multiply it by the number of units sold, then adjust the findings for future estimates to arrive at this figure.
  • Favorable pricing elasticity : What is the maximum price increase you can make without losing customers? This may be determined by experimenting with various pricing to discover what your clients are willing to accept.

Build Brand Equity With These Three Tips

1. Concentrate on your ideal clientele

Customers with large client bases have diverse interests, making it difficult to target specific preferences, emotional requirements, or pain issues. Instead of spreading yourself too thin attempting to please everyone, you should focus on more specialized target groups and adjust your branding strategy to their specific needs.

Examine your current consumer data to determine your strengths and the best ways to change your approach. When you’ve decided on a niche, conduct some research to find out what they want in terms of goods and brand personality. You may even target numerous groups with carefully designed marketing campaigns for each if you have the means.

2. Examine your advertising campaigns

Marketing is one of those areas of a company that should never stop changing. Experiment with various campaigns and channels, and track your results to see how successful they are. Using tools like Google Analytics, Similarweb, or BuzzSumo to gather data is always more trustworthy than guessing what people want.

At the same time, you may tweak your existing campaigns to improve specific areas. To discover whether your ad performs better, try a different color, typeface, or layout. You may always do a fast split test to evaluate the results before investing your ad money to reduce the risk. You may even use one of viral marketing’s six main parts in an existing campaign.

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3. Try outside-the-box advertising

If standard advertising isn’t yielding the desired results, try something else. A fresh, original approach to advertising will not only get you noticed, but if it’s memorable enough, it’ll also create a lasting impact, increasing brand recognition. It may even strike an emotional chord with your clients, boosting loyalty and satisfaction while enhancing your brand’s individuality.

Bumble, for example, recognizes that their target demographic of users in their twenties is mostly uninterested in internet marketing, so they make their social media content more engaging in order to increase brand recognition.

Viral content, public demonstrations, and guerrilla marketing are all prevalent but yet unusual means of marketing. Methods like these that stand out are excellent examples of how to increase your brand image while mostly ignoring your larger business plan.


The broad impression of a brand is more crucial than ever as firms increasingly shift their attention from the product to the consumer. Furthermore, 74% of today’s customers want more from businesses in terms of how they treat their customers, staff, and the environment. Organizations must analyze how their different marketing strategies contribute to brand recognition in order to remain ahead of this transition.

When it comes to aesthetics like logos or website design, brand equity has a lot of emotional significance. Hire a professional Branding Design Agency like Jootoor Designs today. Take advantage of the knowledge of our branding consultants and explore the commercial side of the graphic design field.

You’d be shocked how much a fresh logo can alter the impression of a company! What are you still waiting for? Dial 91888 16888 and get the best quote today!

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