Brand equity is the added or subtracted value given to a current or potential product or service, influenced by the brand. It is “the differential effect of brand knowledge on consumer response to the marketing of the brand” (Keller, 1993). Consumers have a perception and desire that a brand will meet their promise of benefits. The higher the perception of value, the higher the premium customers are willing to pay. An elevated level of positive brand equity requires cooperation between the tangible and intangible aspects of a product or service. The intangible aspects come from a customer’s subjective experiences with a brand, the brand’s uniqueness and personality and ability to stay relevant and build a relationship with loyal customers. Companies can create brand equity by making products and services memorable, easily recognisable, and superior in quality and reliability. Marketing is a major driver of brand equity through differentiating products from competing brands. Marketing builds strong brand equity through influencing the brand associations held in a consumer’s mind. Enhance the strength of your brand by investing in advertising and resist often discounting products. Create a personality for your brand expressed through your marketing mix. The connection a consumer feels with your brand’s personality can define your relationship with customers.

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WHAT IS BRAND EQUITY?
Brand equity is the added or subtracted value given to a current or potential product or service, influenced by
the brand. It is “the differential effect of brand knowledge on consumer response to the marketing of the
brand” (Keller, 1993). Consumers have a perception and desire that a brand will meet their promise of benefits.
The higher the perception of value, the higher the premium customers are willing to pay.
An elevated level of positive brand equity requires cooperation between the tangible and intangible aspects of
a product or service. The intangible aspects come from a customer’s experiences with a brand, the brand’s
uniqueness and their relationship with the customer, your uniqueness, your relationship with the customer.
“Brands, in their ability to create choice, build trust and loyalty and drive a premium price.” (Interbrand,
2010)

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PRICE PREMIUM
Consumers gravitate toward products with great reputations. Brands with strong positive brand equity can
generate a premium when compared to a generic equivalent. Customers are more willing to pay a higher price
- even if they can get a comparable product or service from a competitor for less.
This is how Apple charge so much for an iPhone when a comparable alternative can cost less than half the price,
yet Apple’s legions of loyal fans will queue outside the store to buy the latest phone on release. If a customer
attaches elevated levels of quality or status to a brand, it is perceived as worth more than alternatives.
Brand equity is not limited to consumer products - a study on industrial products (See Bendixena, Bukasaa, &
Abratt, 2003) found that the leading industrial brand name could command a price premium of 6.8% over the
average industrial brand and 14% over a new and unknown brand. Technical specialists were willing to pay a
price premium of up to 26%.

4. 4
OTHER BENEFITS OF POSITIVE BRAND EQUITY
• Higher profit margins because businesses with high brand equity can charge more, but do not incur a higher
expense to produce the product or service.
• The brand is more recognisable and trusted, therefore there is increased demand by customers which
results in higher sales volumes. Brands are more easily extendable, which means the parent brand can
develop a preference and favourable impressions towards their new products or services with their
customers.
• Your target market more readily accepts marketing communications due to your existing positive
reputation.
• A reduction in new product failure rates and launching costs are lower due to a higher level of brand
awareness and trust with their target market.

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OTHER BENEFITS OF POSITIVE BRAND EQUITY
• Reduced marketing costs to achieve the same volume - it costs more to acquire new customers than to
retain existing customers.
• Due to the brand reputation of delivering a certain level of quality, customer retention and loyalty is high as
consumers like to reduce their risk and simplify their choice.
• Higher resilience to competitors’ actions as customers are loyal and unlikely to switch. This creates entry
barriers to the marketplace for competitors as it is not a profitable market segment for their brand to target.
• Provides strategic support to a the overall strategy that will add long-term value to the organization.
• Brands with high equity can have higher marketing budgets to invest back into marketing through their
higher profit margins. This helps ensure brand equity remains strong.

6. 6
Brand equity is defined from the customer’s point of view. Brand equity attracting (or repulsing) consumers to
(from) a product, generated by the ‘non-objective’ part of the product. It is the added value of a product in a
customer’s mind, influenced by a customer’s brand knowledge.
“Customer-based brand equity is defined as the differential effect of brand knowledge on consumer response
to the marketing of the brand.” (Keller, 1993)
Drivers of brand equity include perceived quality, brand loyalty, brand awareness and brand associations.
Brand associations are anything that creates a positive or negative feeling toward a brand. Marketing aims to
create strong, favourable, and unique brand perceptions and associations with a brand that customers
remember. It can be based on functional benefits of the product, but often
CUSTOMER-BASED BRAND EQUITY

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MARKETING’S ROLE IN CREATING EQUITY
Companies can create brand equity by making products and services memorable, easily recognisable, and
superior in quality and reliability. Marketing is a major driver of brand equity through differentiating
products from competing brands. Marketing builds strong brand equity through influencing the brand
associations held in a consumer’s mind. Enhance the strength of your brand by investing in advertising and
resist often discounting products. Create a personality for your brand expressed through your marketing mix.
The connection a consumer feels with your brand’s personality can define your relationship with customers.
“Brand equity is developed through enhanced perceived quality, brand loyalty, and brand
awareness/associations; which cannot be either built or destroyed in the short run but can be created only in
the long run through carefully designed marketing investments.” (Yoo, Donthu & Lee, 2000)

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BRAND VALUE
Marketers in the 1980s started to realise that certain brands offered considerable added value to products.
They saw brand equity was a durable and sustainable asset to a business and wanted a way to estimate the
unique value of each brand. One of the formulas introduced to estimate a brands value is by taking the value of
the firm and subtracting the tangible assets and "measurable" intangible assets. The remaining value is the
firm’s financial brand equity. This measure used at the macro (market) level, to put a monetary value on a
brand for resale purposes.
Now separated from brand equity as BRAND VALUE. Brand equity what a brand does for a customer, while the
brand value is what it does for the business. Brand value is the financial worth of the brand.

9. Daniel Hopper
Marketing Specialist - BYB MARKETING
#50WEEKSOFMARKETING
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