Branding is a complex process with many terms to describe the strategies and results. For example, you might be wondering, what is brand equity? Brand equity is the backbone of a brand’s reputation, turning a product or service into something customers remember, trust and choose over competitors’ offerings. In this article, we’ll explore what brand equity means, the benefits it can bring to your business, how to measure it and practical steps to build it. If you want your brand to be seen as head and shoulders above the rest, keep reading!
Key takeaways:
- Brand equity is the value a brand holds in the minds of consumers, beyond the actual product or service it offers.
- Strong brand equity boosts the perceived value of a business’s products or services, positively impacts profits, builds customer loyalty and gives a competitive edge.
- The two most popular models for understanding the key components of brand equity are David Aaker’s and Kevin Keller’s models.
- To measure brand equity, evaluate brand awareness, brand loyalty, market share, financial metrics, brand associations and perceived quality.
- To build and maintain brand equity, businesses need to boost brand awareness, build positive associations, improve perceived quality, position their brand effectively, increase customer loyalty and create brand resonance.
What is brand equity?
Brand equity is a way of evaluating how much a brand is worth in the eyes of its customers. Put simply, brand equity represents the value of a brand. It’s the added value that a well-known brand name gives to a product or service, beyond the actual product itself.
Picture two identical products on a shelf — one with a name you know and trust and one without. Which one do you pick? That’s brand equity at work. Think of it like a reputation score. The more people recognize, trust and feel good about your brand, the more valuable it becomes. It’s what makes you pick Nike over generic sneakers or Coca-Cola over unbranded supermarket soda.
Source: Branded product via VistaPrint
But it’s not just about awareness — it’s about what people feel when they hear your brand name. Positive brand equity means customers are willing to pay a little more, instinctively think of your brand when searching for a product, remain loyal when new options pop up and even recommend you to their friends.
Examples of brand equity
We’ve already mentioned a couple of big names with strong brand equity, but let’s explore some more familiar examples to understand how brand equity plays out in the real world.
- Apple: Apple’s brand equity is legendary. With Apple products, customers aren’t just buying gadgets; they’re buying into a lifestyle. The perceived quality and brand loyalty mean people line up for hours (or even days) just to get their hands on the latest release and don’t think twice about paying premium prices to stay aligned with the brand.
- LEGO: What began as a simple toy brand has become a cultural icon. LEGO’s brand equity is anchored in creativity, nostalgia and quality. They’ve expanded beyond plastic building blocks into movies, video games and theme parks, all while maintaining a reputation for reliability. That trust means parents and kids choose LEGO, even when similar products are available at lower prices.
- Amazon: Amazon’s brand equity is grounded in convenience, fast delivery and vast product selection. They’ve created a brand that’s all about customer satisfaction and ease of use. That trust in the Amazon name is why so many turn to them first and why Amazon has been able to expand into nearly every retail category while keeping customers loyal.
Why is brand equity important to your business?
As seen from the real-life examples of globally recognized brands, strong brand equity makes businesses stand out in a crowded market and drives long-term success. Let’s break down why solid brand equity matters and the key benefits it can bring to your business.
Higher perceived value
When a brand has strong equity, its products or services are perceived as more valuable, regardless of production costs. Customers are willing to pay premium prices because they associate the brand with higher quality or status. That’s why people choose an Apple iPhone or a LEGO set — they trust the brand to deliver something extra that makes the higher price worth it.
Source: Product options via VistaPrint
Financial impact
The higher perceived value of products from brands with positive equity lets them charge more, directly impacting the bottom line. A strong brand equity supports higher pricing, leading to healthier profit margins.
Customer loyalty
A positive brand reputation leads to greater trust, satisfaction and loyalty. Even when prices rise, customers who feel connected to your brand tend to stay. This results in repeat business from customers who choose your product because they believe in what your brand represents.
Competitive advantage
In a competitive market, strong brand equity can be the tipping point for customers. Even if your product is similar to others, effective brand positioning gives you a distinct advantage, keeping your brand relevant despite shifting trends and market changes. Plus, with healthier profit margins, you gain the financial freedom to invest back into research and development, driving innovation and introducing cutting-edge products.
Components of brand equity: 2 popular models
Different experts have different takes on what brand equity involves and how to build it. Let’s explore two of the most popular models for understanding the key components of brand equity: David Aaker and Kevin Keller’s models.
1. Four components of brand equity: David Aacker’s model
David Aaker’s model identifies four core components that contribute to brand equity.
Source: via VistaPrint
Brand awareness
This is all about recognition. Do people know your brand exists? The more familiar your brand is, the easier it is to attract customers. Think of Pepsi — nearly everyone can recognize the Pepsi logo and its brand colors.
Source: Pepsi brand logo and colors via VistaPrint
Brand loyalty
Loyal customers are the backbone of strong brand equity. It’s about repeat business and customers choosing your brand over competitors time and again.
Perceived quality
Brand equity isn’t just about what your product is, but what people think it is. High perceived quality means customers view your product as top-tier, regardless of the competition. Apple is a master at this, with its reputation for design innovation.
Brand associations
These are the images, feelings and thoughts people associate with your brand. When someone thinks of your brand, what pops into their mind? For Nike, it’s motivation and performance. The more positive associations people make with your brand, the stronger your brand equity.
On top of the four core brand equity components, David Aaker’s model also addresses other brand assets that provide a competitive advantage like trademarks and patents.
2. Customer-based brand equity: Kevin Keller’s model
Kevin Keller’s model focuses on the customer’s perspective. He suggests that brand equity is all about building positive relationships and experiences.
Source: via VistaPrint
Keller breaks it down into four fundamental questions that lead to brand resonance — the ultimate goal of strong brand equity:
- Who are you? This is about brand identity — making sure your audience knows who you are.
- What are you? This question tackles the meaning attached to your brand. What does your brand stand for? What does it offer?
- What about you? This is about how customers respond to your brand, their judgments and emotions. How do customers feel about your brand?
- What about you and me? The final step is about building loyalty and connecting with your audience.
How to measure brand equity
Measuring brand equity boils down to tracking the right metrics. By keeping an eye on both qualitative and quantitative indicators, you can get a clear picture of how strong your brand equity is. Here are the key metrics and some actionable tips for how to measure them…
| Metric | What to measure | KPIs | Tools |
|---|---|---|---|
| Brand awareness | How well your target audience knows and recognizes your brand | Brand recognitionBrand recallSocial media mentionsSearch volume for your brand name and products | Google Analytics to track branded search trafficGoogle Trends for search interestMention or Brandwatch to monitor social media presence |
| Brand loyalty | How likely customers are to choose your brand over others and make repeat purchases | Customer retention rateNet Promoter Score (NPS)Repeat purchase rate | CRM software like HubSpot or SalesforceSurveyMonkey to gather NPS dataLoyaltyLion to track loyalty program metrics |
| Market share | Your brand’s share of the market compared to competitors | Market share percentageSales revenueBrand penetration rate | Market analysis platforms like Statista or NielsenGoogle Analytics to track sales data |
| Financial metrics | How brand equity impacts your bottom line | Price premium over competitorsProfit marginsRevenue growth | Tools like Excel or financial software like QuickBooksAdvanced BI platforms like Tableau for in-depth analysis |
| Perceived quality | How your customers rate the quality of your products or services | Customer satisfaction scoresProduct ratingsOnline reviews | Platforms like Trustpilot, Yelp or Google Reviews |
| Brand associations | The emotions, ideas and images people connect with your brand | Sentiment analysisBrand sentiment scoreBrand personality descriptors | Social listening tools like Sprout Social, Hootsuite or Brand24 |
Source: Happy customer in a branded hoodie via VistaPrint
You can also keep tabs on customer opinions and perceptions tied to your brand with open-ended survey responses, focus group insights and customer testimonials. Use survey platforms like Typeform or SurveyMonkey for direct feedback and conduct focus groups through Zoom or in person for a deeper dive.
How to build brand equity
If you’ve measured your brand equity and the results aren’t what you hoped for, don’t worry — there are specific branding strategies you can use to strengthen brand awareness and perception. In a nutshell, improving brand equity involves evaluating where your brand stands, spotting areas that need work and taking action.
Step 1: Increase brand awareness
Building brand awareness is the first step to strengthening your brand equity. It’s all about getting your name out there in a way that’s consistent and memorable.
Maintain brand consistency
Brand consistency builds familiarity. Use the same logos, color palette, fonts and packaging across all platforms so your audience recognizes your brand quickly and easily. This uniformity creates a cohesive brand identity that sticks in people’s minds. As design trends evolve, make sure to adapt while staying true to your brand’s core aesthetic.
Check out the color, packaging and font trends articles for inspiration on how to implement trends in a way that’s relevant and authentic.
Leverage digital channels and content
Digital is king when it comes to spreading the word. Make the most of social media, Google My Business and local SEO to ensure your brand has a solid online presence. Create engaging content that’s shareable — whether it’s a behind-the-scenes video or a customer story, viral content can boost brand visibility in no time.
Source: Social media content via VistaPrint
Engage with your audience
Engagement is about connecting directly with your customers. Positive interactions on social media, at events and during trade shows can make your brand more approachable. Respond to comments, share user-generated content and show your human side — these little actions can go a long way in building brand recognition and trust.
Source: Trade show promotional products via VistaPrint
Use brand visibility tactics
Think outside the box to get your brand noticed. Consider running print ads, partnering with local events, sponsoring community causes or using promotional products to spread the word.
Source: 2024 Small Business Marketing Report top marketing tactics via VistaPrint
Step 2: Build strong brand associations
Building strong brand associations means that when people think of your brand, they think of the good stuff. It’s about crafting a personality, telling your story and creating positive associations that stick in customers’ minds.
Create a strong brand personality
Start by defining your brand personality. Think about how you want your brand to be seen — maybe friendly, professional, bold or quirky? Identify traits that resonate with your target audience and weave them consistently into your brand messaging and visual identity.
Source: Brand identity for a canned cocktail brand by goopanic via 99designs by Vista
Tell your story
Storytelling is a powerful way to create emotional connections and lasting associations. Share your story, your values, your mission and the journey that got you here. Stories humanize brands, making them relatable and easier for customers to connect with.
Don’t be afraid to let your personality shine through — authentic stories are the ones that resonate and stick.
Show you care about more than just profits by demonstrating your commitment to social responsibility, sustainability or ethical practices. Highlight your efforts in these areas — whether through sustainable packaging, fair-trade sourcing or supporting local charities — to set your brand apart. Customers are more likely to develop positive associations if they see that your brand aligns with their values.
Source: Eco-friendly packaging design for reusable straws by bow wow wow via 99designs by Vista
Form positive collaborations
Partner with like-minded businesses, celebrities or influencers that your target audience respects and admires. This creates a halo effect, where customers associate your brand with the positive values and qualities of your collaborators.
Step 3: Enhance perceived quality
Ensure that customers see your brand as the go-to for top-notch products or services by continuing to innovate and live up to and exceed their expectations.
- Focus on details: Prioritize quality control in production, packaging and delivery.
- Listen to customers: Use feedback to refine your offerings and identify areas for improvement.
- Stay relevant: Keep an eye on industry trends and adapt your products to meet evolving needs.
- Showcase development: Communicate any product improvements clearly in your marketing to highlight your commitment to innovation and quality.
Step 4: Position your brand consistently
Positioning your brand consistently means staying true to your core values, keeping your product benefits clear and clarifying your place in the market. Make sure your messaging consistently reflects what your brand stands for, avoiding any mixed signals. Assert your unique selling propositions (USPs) across all platforms, so that your audience knows exactly what sets you apart. Define your market position clearly, so customers understand what your brand is — and isn’t — compared to the competition.
Step 5: Foster brand loyalty and build relationships
Fostering brand loyalty is all about building strong, lasting relationships with your customers. Create engaging customer loyalty programs that offer more than just discounts using:
- Points-based rewards
- Exclusive early access to new products
- A VIP tier with special perks like free shipping or members-only events
To make customer loyalty programs more tangible, design and print loyalty cards.
Source: Customer loyalty cards with a custom loyalty card stamp via VistaPrint
Personalize your customer service to make interactions more memorable. Use customer data to tailor experiences — like personalized product recommendations (one of the latest marketing trends is to do so with AI), birthday discounts or follow-up emails to check satisfaction.
Step 6: Aim for brand resonance
As well as having loyal customers, to build brand resonance and establish solid brand equity, you also need brand advocates — the people who believe in your business so much they recommend to their network. To achieve this, you need to pay attention to community building and encourage word-of-mouth marketing.
Source: Brand advocates in branded T-shirts via VistaPrint
Successful brands like LEGO and Nike have thrived by building spaces where fans can connect, share experiences and celebrate what they love. You, too, can build a community around your brand and differentiate yourself from the competition if you create:
- Social media groups to foster interaction
- Exclusive events for loyal customers
- Online forums where fans can exchange ideas
Start working on your brand equity today
Establishing strong brand equity is a high effort, high reward process, demanding careful attention to every component. But when done right, brand equity can drive your business to new heights, turning a product or service into a brand that people love, trust, pay a premium for and recommend to others.
By focusing on the right strategies — boosting brand awareness, building positive associations and fostering loyalty — you can create a brand that stands out in a crowded market. The best time to start? Now! Don’t wait for brand equity to grow on its own — start building it today. Every step you take brings you closer to a brand that not only attracts customers but keeps them coming back.
FAQs about brand equity
What is brand equity?
Brand equity is the value your brand holds in customers’ minds. It matters because it boosts loyalty, allows for premium pricing and gives you a competitive edge, all of which drive business growth.
How can small businesses measure brand equity?
Small businesses can measure brand equity through brand awareness, customer loyalty and perceived quality using surveys, social media analytics and customer feedback. Financial metrics like profit margins also offer valuable insights.
How can a business build strong brand equity?
To build strong brand equity, focus on increasing brand awareness, creating positive associations, staying consistent and delivering quality. Engage customers through loyalty programs, personalized service and compelling storytelling.
