What is Brand Equity?

In brand design, it’s important to consider brand equity. Brand equity is a measure of the importance of a product or service to a consumer, especially when that product or service is compared to a generic equivalent. It is measured by assessing a brand’s visibility, associations and customer loyalty.

Brand equity can be increased for products or services by making them more memorable, relevant, visible, easily recognised, reliable or superior in quality. It can be decreased through the opposites to these.

It can, and should, be used to drive marketing and business strategies. At the very least it should be an important component.

Negative and positive brand equity

Brand equity is constructed through consumer perception and how the consumer experiences the brand. When a consumer has a negative experience with a brand (perhaps a product proves to be unreliable when the advert stated that it was anything but), it will have a negative effect on brand equity. If they have a positive experience (a service goes above and beyond what was promised in the marketing brochure), it will increase the brand equity.

Positive effects can lead to an increase in sales and revenue and a decrease in marketing spend. Negative effects can do the opposite.

Generally speaking, when positive brand experiences result in consumers being willing to pay more for a product or service than the generic equivalent, it is known as positive brand equity. When negative brand experiences result in consumers paying more for the generic equivalent, it is known as negative brand equity.