Brand Equity Concept – Brand Management – BBA Notes/MBA Notes

Brand Equity Concept


Meaning, Definitions and Factors



Brand equity is the value that a brand adds to a product. That value is determined by consumer perception of and experiences with the brand. If people think highly of a brand, it has positive brand equity. When a brand consistently under-delivers and disappoints to the point where people recommend that others avoid it, it has negative brand equity. Companies can create brand equity for their products by making them memorable, easily recognizable, and superior in quality and reliability.


The value of a brand. From a consumer perspective, brand equity is based on consumer attitudes about positive brand attributes and favorable consequences of brand use.”

                                                                                                                                                                                         — American Marketing Association

“A set of assets and liabilities linked to a brand, its name and symbol, that adds to or subtracts from the value provided by a product or service to a firm and/or to that firm’s customers.”

                                                                                                                                                                                           — David Aaker

“The tangible and intangible value that a brand provides positively or negatively to an organization, its products, its services, and its bottom-line derived from consumer knowledge, perceptions, and experiences with the brand.”

                                                                                                                                                                                            — Susan Gunelius


Brand equity can be thought of as the additional cash flow achieved by associating a brand with the underlying product or service.

                    – Biel


The brand equity is the total accumulated value or worth of a brand; the tangible and intangible assets that the brand contributes to its corporate parent, both financially and in terms of selling leverage.



Factors determining Brand Equity

Brand equity is set of brand assets and liabilities linked to a brand, its name and symbol, that add or subtract from the value provided by a product or service to a firm and /or to that firm’s customers. For assets or liabilities to underlie brand equity they must be linked to the name and /or symbol of the brand. If the brand’s name or symbol should change, some or all of the assets or liabilities could be affected and even lost, although some might be shifted to a new name and symbol. The assets and liabilities on which brand equity is based will differ from context to context. However, they can be usually grouped into five categories:

1. Band loyalty

Brand loyalty—central construct in marketing, is a measure of the attachment that a customer has to a brand. It reflects how likely a customer will switch to another brand, especially when that brand makes a change, either in price or in product features. As brand loyalty increases, the vulnerability of the cus­tomer base to competitive action is reduced.

2. Name awareness

People will often buy a familiar brand because they are comfortable with the brand. Or there may be an assumption that a brand that is familiar is probably reliable, in business to stay, and of reasonable quality. A recognized brand will thus often be selected over an unknown brand. The awareness factor is particularly important in contexts in which the brand must first enter the consideration set. It must be one of the brands that are evaluated.

3. Perceived quality

A brand will have associated with it a perception of overall quality not necessarily based on the knowl­edge of detailed specifications. Perceived quality will directly influence purchase decisions and brand loyalty, especially when a buyer is not motivated or able to conduct a detailed analysis.

It can also sup­port a premium price which, in turn, can create gross margin that can be reinvested in brand equity. Fur­ther, perceived quality can be the basis for a brand extension. If a brand is well regarded in one context, the assumption will be that it has high quality in a related context.

4. Brand associations in addition to perceived quality

The underlying value of a brand name is often based on specific associations linked to it. Associations such as Ronald McDonald can create a positive attitude or feeling that can become linked to a brand such as McDonald’s. If a brand is well positioned on a key attribute in the product class (such as service backup or technological superiority), competitors will find it hard to attack.

5. Other proprietary brand assets-patents, trademarks, channel, relationships, etc.

Brand assets will be most valuable if they inhibit or prevent competitors from eroding a customer base and loyalty. These assets can take several forms. For example, a trademark will protect brand equity from competitors who might want to confuse customers by using a similar name, symbol, or package. A patent, if strong and relevant to customer choice, can prevent direct competition. A distribution channel can be controlled by a brand because of a history of brand performance.

Brand Equity Concept – Brand Management – BBA Notes/MBA Notes

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