Brand Equity: How to Build, Measure, and Manage Your Brand's Value

Key takeaways

• Brand equity is the perceived value consumers associate with your brand, influencing their purchasing decisions and willingness to pay premium prices
• Positive brand equity drives customer loyalty, enables premium pricing, and provides resilience during market challenges
• Building brand equity requires consistent quality, memorable branding, strategic marketing, and legal protection through trademarks and copyrights
• Measuring brand equity involves both customer-based metrics (awareness, loyalty) and financial indicators (price premiums, market share)

What is brand equity?

Brand equity is the value that a brand adds to a product or service beyond its functional benefits. Marketing expert Kevin Lane Keller defines brand equity as "the differential effect that brand knowledge has on consumer response to the marketing of that brand." Simply put, it’s why customers choose your brand over competitors, even when alternatives offer similar features or lower prices.

This brand awareness and loyalty doesn't appear overnight. Sources of brand equity include consistent customer experiences, effective marketing, product quality, and your brand's overall reputation in the marketplace. When consumers see your logo or hear your brand name and experience positive associations—trust, quality, status, or emotional connection—that's strong brand equity at work. On the other hand, negative brand equity means your brand causes negative associations.

Brand equity vs. brand value

While often used interchangeably, the definition of brand equity and brand value are distinct concepts in marketing. Brand equity in marketing is the reputation your brand builds over time. It comes from how people feel about your business, including their trust, loyalty, and recognition of your name or logo. Strong brand equity can help you charge more and grow faster because people already believe in what you offer.

Brand value, on the other hand, is the dollar amount your brand is worth. This number comes from what someone would pay to buy your brand or what it adds to your bottom line. While brand equity is more about feelings, your brand’s value is all about money.

Why brand equity matters for businesses

Positive brand equity serves as one of your most valuable business assets, directly impacting your bottom line and long-term success. As markets become increasingly competitive and consumer choices multiply, high brand equity provides crucial advantages that can determine your business's survival and growth.

Pricing power and profit margins

Brands with strong equity can charge premium prices because consumers perceive greater value in their offerings. These brands maintain higher profit margins and customer loyalty compared to competitors offering similar technical specifications at lower prices. This pricing power directly translates to increased revenue.

Customer loyalty and retention

Strong brand equity creates emotional connections that keep customers coming back. According to a recent study, 63% of consumers are more likely to buy from brands they trust—and 55% are more likely to stay loyal. This loyalty provides predictable revenue streams and reduces marketing costs over time.

Market resilience during challenges

Brands with strong equity weather crises better than those with negative brand equity. When faced with bad publicity, product recalls, or economic downturns, strong brands maintain customer support because of the trust and goodwill they've built over time. Customers are more likely to give trusted brands the benefit of the doubt during difficult periods.

Business valuation and investment appeal

Positive equity can increase your brand’s value, making it more attractive to investors, partners, or potential buyers. Strong brands often sell for multiples of their tangible assets because buyers recognize the ongoing value of established customer relationships and market position.

Core components of brand equity

Brand equity consists of several interconnected elements that work together to create value in consumers' minds. Understanding these components helps you develop targeted strategies to strengthen each area and build overall brand value:

• Brand awareness forms the foundation of all brand equity. It measures how familiar consumers are with your brand and how easily they can recognize or recall it. Without awareness, consumers can't develop preferences or loyalty toward your brand.
• Brand associations are the thoughts, feelings, images, and experiences consumers connect with your brand. These associations can be functional (what your product does), emotional (how it makes people feel), or symbolic (what it represents about the user).
• Perceived quality represents consumers' judgment about your brand's overall excellence or superiority compared to alternatives. This perception may differ from actual quality, as it's based on consumer beliefs rather than objective measures.
• Brand loyalty measures customers' commitment to repeatedly choose your brand over competitors. Loyal customers provide stable revenue, cost less to serve, and often become brand advocates who recommend your products to others.
• Proprietary brand assets include trademarks, patents, copyrights, and other legal protections that prevent competitors from copying your brand elements. These assets provide exclusive rights to use specific names, logos, designs, or innovations.

How to build brand equity

Building strong brand equity requires a systematic approach that addresses multiple touchpoints in the customer journey. Successful brands focus on creating consistent, positive experiences that reinforce their value proposition over time.

Develop quality products and services

Perceived quality forms the foundation of sustainable brand equity. Customers must experience value that meets or exceeds their expectations to develop positive brand associations. This means investing in product development, quality control, and continuous improvement based on customer feedback.

Focus on understanding your customers' needs and pain points, then design solutions that address these challenges better than competitors. Consistently delivering quality builds trust and credibility, which are essential for long-term brand equity.

Create a memorable brand identity

Your brand identity encompasses all visual and verbal elements that represent your business, including your name, logo, colors, typography, and messaging. These elements should work together to create a cohesive, memorable impression that differentiates you from competitors.

Invest in professional brand design that reflects your values and appeals to your target audience. Ensure your brand identity is distinctive, scalable across different media, and legally protectable through trademark registration.

Ensure consistent messaging and experience

Consistency across all customer touchpoints reinforces your brand identity and builds recognition. This includes your website, social media, advertising, packaging, customer service, and physical locations if applicable.

Develop brand guidelines that specify how your brand should be presented across different channels. Train employees to deliver consistent experiences that align with your brand values and promise. Inconsistency confuses customers and weakens brand equity over time.

Engage customers with effective marketing strategies

Active customer engagement builds emotional connections that strengthen brand equity. Use social media, email marketing, loyalty programs, and community building to maintain ongoing relationships with customers. Show appreciation for loyal customers through exclusive offers, early access to new products, or special recognition programs.

Strategic partnerships with complementary brands or influential individuals can also enhance your brand equity by association. Consider sponsorships, collaborations, or endorsements that expose your brand to new audiences while reinforcing your positioning. Be sure to choose partners whose values and reputation align with your brand to avoid potential conflicts.

Monitor and manage your reputation

Brand equity can be damaged quickly by negative publicity, poor customer experiences, or social media backlash. Implement systems to monitor what customers are saying about your brand online and respond appropriately to both positive and negative feedback.

Address customer complaints promptly and professionally, using negative experiences as opportunities to demonstrate your commitment to customer satisfaction. Proactive reputation management helps maintain the positive associations that drive brand equity.

Protect your brand with legal tools

Legal protection ensures your brand investments remain exclusive to your business, for example, by preventing trademark infringement. Register trademarks for your business name, logo, and key product names to prevent competitors from using similar branding that could confuse customers. LegalZoom's trademark services help businesses secure the legal protections necessary to build and maintain brand equity.

How to measure brand equity

Measuring brand equity is challenging, but several approaches help businesses track their brand's value, provide a comprehensive view of brand performance, and identify areas for improvement.

Customer-based measurement approaches

Customer-based measurement focuses on consumer perceptions, attitudes, and behaviors related to your brand. These metrics provide insights into how well your brand resonates with your target audience.

• Brand awareness surveys measure recognition through questions like "Which brands in this category can you name?" or "Have you heard of Brand X?" Track both aided awareness (recognition when shown your brand) and unaided awareness (recall without prompts).
• Brand association studies explore what consumers think and feel about your brand through open-ended questions, word association exercises, or social listening and sentiment analysis. They reveal whether consumers perceive your brand the way you want them to.
• Customer loyalty metrics include repeat purchase rates, customer lifetime value, and Net Promoter Score (NPS). NPS measures how likely customers are to recommend your brand to others, providing insight into brand advocacy levels.

Financial measurement methods

Financial approaches quantify brand equity's impact on business performance through measurable outcomes like sales, pricing, and market share.

• Price premium analysis compares your pricing to competitors' for similar products. Brands with strong equity can charge above market averages while maintaining sales volume.
• Market share tracking monitors your brand's percentage of total category sales over time. Growing market share often indicates a strong brand position, while declining share may signal negative brand equity.
• Revenue attribution measures sales increases following brand-building activities like advertising campaigns or sponsorships. While it’s challenging to isolate brand effects from other factors, it can help justify brand investments.

Integrated measurement frameworks

Many businesses combine multiple approaches to create comprehensive brand equity dashboards that track various metrics over time. These frameworks might include:

• Quarterly brand awareness and perception surveys
• Monthly social media sentiment analysis
• Ongoing price premium monitoring
• Annual customer loyalty assessments

Regular measurement helps identify trends, evaluate marketing effectiveness, and make data-driven decisions about brand investments. Consider working with market research professionals to design measurement systems appropriate for your business size and industry.

Brand equity examples and case studies

Real-world examples illustrate how different companies have built, managed, and sometimes lost brand equity across various industries and market conditions.

Apple: Innovation and premium positioning

Apple exemplifies how consistent innovation and premium positioning create extraordinary brand equity. The company transformed from a niche computer manufacturer to one of the world's most valuable brands by consistently delivering products that combine cutting-edge technology with elegant design.

Apple's brand equity allows the company to charge premium prices while maintaining strong customer loyalty. For example, iPhone users often upgrade to new models without considering alternatives, demonstrating the power of brand equity to drive repeat purchases and reduce price sensitivity.

Campbell's Soup: Heritage and trust

Campbell's Soup has built brand equity over more than a century by emphasizing quality, tradition, and family values. The iconic red and white label design has remained largely unchanged, creating strong brand recognition and associations with comfort and reliability.

Despite facing increased competition from fresh and organic alternatives, Campbell's brand equity helps maintain market share by appealing to consumers who value familiarity and trust. The company's "M'm! M'm! Good!" slogan reinforces positive associations that differentiate Campbell's from generic alternatives.

Facebook/Meta: Challenges to brand equity

Facebook's transformation to Meta illustrates how brand equity can be damaged and how companies attempt to rebuild it. Privacy concerns, data breaches, and regulatory scrutiny significantly impacted Facebook's brand equity, leading to user departures and advertiser concerns.

The rebranding to Meta represents an attempt to distance the company from negative associations. This case demonstrates how brand equity requires ongoing management and can be rebuilt through strategic repositioning and consistent execution.

Brand equity FAQs

What is brand equity in marketing?

The main elements of brand equity in marketing include brand awareness (recognition and recall), brand associations (thoughts and feelings connected to your brand), perceived quality (consumer judgments about excellence), brand loyalty (commitment to repeat purchases), and proprietary brand assets (trademarks, patents, and other legal protections). These elements work together to create the overall value consumers place on your brand.

Can small businesses build strong brand equity?

Yes, small businesses can build strong brand equity by focusing on consistent quality, memorable branding, and exceptional customer experiences. While they may lack the advertising budgets of large corporations, small businesses often have advantages in personal customer relationships, agility, and authentic storytelling. Local businesses frequently build strong equity within their communities through consistent service and community involvement.

What are the risks of negative brand equity?

Negative brand equity occurs when consumers have unfavorable associations with your brand, leading them to choose competitors even at higher prices. This can result from poor product quality, bad customer service, negative publicity, or ethical scandals. Negative brand equity reduces sales, limits pricing power, and makes customer acquisition more expensive. Recovery requires significant time and investment to rebuild trust and positive associations.

How long does it take to build brand equity?

Building brand equity can take several months to a few years, depending on how consistent you are with your branding, customer experience, and marketing. It grows faster when people trust your business and feel connected to what you offer. Over time, strong brand equity can lead to loyal customers and more sales without extra effort.

How LegalZoom can help protect your brand's equity

Building brand equity requires significant investment in marketing, product development, and customer experience. Protecting these investments through proper legal safeguards ensures your brand remains exclusively yours and maintains high brand equity over time.

LegalZoom's trademark services help secure federal protection for your brand name, logo, and key product names. This protection prevents competitors from using similar branding that could confuse customers and dilute your brand equity.

Beyond trademark protection, LegalZoom offers comprehensive business formation services. Whether you're forming an LLC, corporation, or other business entity, we can help you establish proper legal structures for brand ownership.

As your business grows and your brand equity increases, LegalZoom can also provide ongoing support to help you navigate complex brand management challenges.

Edward A. Haman, Esq., contributed to this article.