Brand Equity

Q: What is brand equity and how can it be used to my advantage?

A: To begin, a brand is a set of perceptions and images that represent a company, product or service. Common representations of a brand include a logo, tag line, audio jingles and many aspects we see within advertisements, the media and stores.

Brands are developed over time to enable a buyer to easily identify the offerings of a particular company. Once developed, brands provide an umbrella under which many different products can be offered--providing a company economic leverage in generating awareness of their offerings in the marketplace.

Brand equity is the value associated with the propensity of an audience to purchase a product from a particular company in a market where all products are identical. Stated another way, brand equity is the additional price a firm can charge for its product over the competition assuming the products are the same.

Brand equity can be measured (or at least well estimated) using various research techniques such as surveys, conjoint analysis and numerous quantitative models. These techniques calculate the brand equity to be total future revenue of a branded product minus the future revenue for an identical, unbranded product.