Brand Equity
LEARNING OBJECTIVES
- Explain the concept of brand equity
- Discuss why and how marketers measure brand equity
In marketing, brand equity refers to the value of a well-known brand that conjures positive (or negative) mental and emotional associations. What does this actually mean? Let’s do a experiment with brand equity in action. Which brands do you associate with the following images and phrases?
A diamond is forever |  | Because I’m worth it |
 | When you care enough to send the very best |  |
Finger lickin’ good |  | Solutions for a smarter planet
|
(Answers, L to R, top to bottom: DeBeers, Energizer, L’Oreal, Geico, Hallmark, PBS, Kentucky Fried Chicken (KFC), Chanel, IBM)
Brand equity is what exists in your mind (or doesn’t yet exist) to help you recognize these branded images and phrases. Brand equity is also the set of positive, negative, or neutral thoughts, beliefs, and emotions you associate with each of the brands. Brand equity can manifest itself in consumer recognition of logos or other visual elements, brand language associations, consumers’ perceptions of quality, and consumers’ perceptions of value or other brand attributes.
For any given product, service, or company, brand equity is considered a key asset because it gives meaning to the brand in the minds of its consumers. Brand equity can help a strong brand remain relevant and competitive in the marketplace, and it can help brands and companies weather storms that threaten their value and existence. Volkswagen, for example, is hoping that the strong brand equity it built during the decades before the 2015 emissions scandal will help restore customer confidence in its company and product brand.
When consumers trust a brand and find it relevant to themselves and their lives, they may select the offerings associated with that brand over those of competitors even at a premium price. For example, Häagen-Dazs and Ben & Jerry’s both command higher prices per pint at the grocery store than many national brands and most store brands of ice cream. Starbucks can sell its coffee at a higher price than solid market competitors because consumers associate the brand with quality, value, and the experience of connecting with other people in a comfortable space. This is why brand equity often correlates directly with a brand’s profitability.