Brand Equity Tutorial: Complete Guide For Beginner

brand equity

What Is Brand Equity?

Brand Equity refers to a value premium that a company generates from a product with a recognizable name when compared to a generic equivalent. Companies can create equity for their products by making them memorable, easily recognizable, and superior in quality and reliability. Mass marketing campaigns also help to create equity.

When a company has positive brand equity, customers willingly pay a high price for its products, even though they could get the same thing from a competitor for less. Customers, in effect, pay a price premium to do business with a firm they know and admire. Because the company with it does not incur a higher expense than its competitors to produce the product and bring it to market, the difference in price goes to the margin.

Understanding Brand Equity

It has three basic components: consumer perception, negative or positive effects, and the resulting value. Foremost, consumer perception, which includes both knowledge and experience with a brand and its products, builds it. The perception that a consumer segment holds about a brand directly results in either positive or negative effects. If it is positive, the organization, its products, and its financials can benefit. If it is negative, the opposite is true.

Examples of Brand Equity

A general example of a situation where it is important is when a company wants to expand its product line. If the brand’s equity is positive, the company can increase the likelihood that customers might buy its new product by associating the new product with an existing, successful brand. For example, if Campbell’s releases a new soup, the company is likely to keep it under the same brand name rather than invent a new brand. 

Which Brand Equity Metrics Should You Measure?

According to Branding Strategy Insider, measuring brand equity requires you to consider three metrics:

  • Knowledge Metrics
  • Preference Metrics
  • Financial Metrics

3. Strategies for Measuring Brand Equity

Now that we know what entails, let’s take a look at some ways to measure it.

Come to a Consensus

Before you assess your brand’s equity, you’ll need to ensure your company’s stakeholders have a complete understanding of what brand equity actually is.

Above all else, make sure everyone understands the above-mentioned facets of brand equity, as well as how they relate to one another.

When analyzing its metrics, both consistency and inconsistency among the data collected can provide information that can be valuable to your company.

First, take a look at your industry as a whole. Are there any areas in which some, most, or all companies fall short when it comes to providing value to customers? Have certain companies within the industry recently seen better results than in the past? If so, what have these companies changed that may have caused such improvements?

Think Quantitatively and Qualitatively

We alluded to this sentiment earlier, but it bears repeating:

To get a good sense of your brand’s equity, you need to think in both quantitative and qualitative terms.

As you might expect, quantitative data is most pertinent when analyzing financial data relating to brand equity. Data such as sales numbers, revenue generated, and your company’s net worth are all worth paying attention to, as are data regarding market position and product value.


In conclusion, brand equity is an important concept that can help businesses build a strong, recognizable brand that customers are willing to pay a premium for. Positive brand equity can lead to increased revenue, market share, and customer loyalty. Measuring brand equity requires careful consideration of various metrics, including knowledge, preference, and financial metrics. To successfully measure brand equity, companies should aim to establish a consensus among stakeholders, look for trends and anomalies in the data, and consider both quantitative and qualitative data. With a clear understanding of brand equity and effective measurement strategies, businesses can develop and maintain a strong brand that stands out in a crowded market.

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