What is Brand Equity and How to Measure it

Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential impact of brand knowledge on consumers response to the Brand Marketing.

Brand Equity exists as a function of consumer choice in the market place. The concept of Brand Equity comes into existence when consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong and distinctive brand associations in the memory.

Brand Equity can be determined by measuring:

• Returns to the Share-Holders.

• Evaluating the Brand Image for various parameters that are considered significant.

• Evaluating the Brand’s earning potential in long run.

• By evaluating the increased volume of sales created by the brand compared to other brands in the same class.

• The price premium charged by the brand over non-branded products.

• From the prices of the shares that an organization commands in the market (specifically if the brand name is identical to the corporate name or the consumers can easily co-relate the performance of all the individual brands of the organization with the organizational financial performance.

• OR, An amalgamation of all the above methods.

Factors contributing to Brand Equity

1. Brand Awareness

2. Brand Associations

3. Brand Loyalty

4. Perceived Quality: refers to the customer’s perception about the total quality of the brand. While evaluating quality the customer takes into account the brands performance on factors that are significant to him and makes a relative analysis about the brand’s quality by evaluating the competitors brands also. Thus quality is a perceptual factor and the consumer analysis about quality varies.

   Higher perceived quality might be used for brand positioning. Perceived quality affect the pricing decisions of the organizations. Superior quality products can be charged a price premium. Perceived quality gives the customers a reason to buy the product. It also captures the channel member’s interest. For instance - American Express.

5. Other Proprietary Brand Assets: Patents, Trademarks and Channel Inter-relations are proprietary assets. These assets prevent competitors attack on the organization. They also help in maintaining customer loyalty as well as organization’s competitive advantage.