Brand equity
Definition
Brand equity is the measurable value a brand adds to a product or service beyond its functional features. It represents how customers perceive and trust the brand, and how that perception influences their willingness to pay a premium or remain loyal. Strong brand equity can drive competitive advantage, increase market share, and improve financial performance.
Brand equity is built over time through consistent identity, messaging, customer experiences, and reputation. It captures the emotional and financial value tied to customer recognition and trust, making it one of the most important intangible assets for a business.
Advanced
At an advanced level, brand equity is evaluated through financial metrics, customer-based assessments, and competitive benchmarking. Models such as Aaker’s Brand Equity Model and Keller’s Customer-Based Brand Equity (CBBE) pyramid are widely used to measure strength and depth of brand relationships.
Key components include brand awareness, perceived quality, associations, and loyalty. Businesses use tools like brand valuation studies, sentiment analysis, and equity transfer mapping during mergers or portfolio decisions.
Why it matters
Use cases
Metrics
Issues
Example
A sports apparel company with strong brand equity launches a new line of running shoes. Even before major advertising, the products sell well because customers associate the brand with quality and performance. The positive equity allows the company to charge higher prices compared to new entrants in the same category.