In today’s ecosystem of 28.8 million small businesses just in the United States, you need to have a solid branding strategy in order to succeed.

To stand out from the sea of similar companies, you have to choose a unique name, establish a visual framework for your brand, develop a well-optimized website, offer relevant content and share it via social media channels. Still, shaping your brand this way is just a half the job done. Living up to your customers’ expectations is, however, the other half.

In other words, your brand’s reputation is not crated within your company. On the contrary, it’s as a sum total of your customers’ perceptions, based on the experience they’ve gained by using your product. That’s when we get to the term “brand equity.”

Defining Brand Equity

When you cut your finger, you probably ask someone to hand you a Band-Aid. If you have a headache, you take Aspirin. Obviously, in both of these situations, we use a protected trademark to address a generic term. Even though the market is constantly evolving and there are numerous similar products out there, all of these brands are so famous that they have become synonymous with the entire category of items.

That’s exactly what brand equity is. In the world of marketing, this notion represents a commercial value a company gains from the customers’ perception of its brand.

The Importance of Brand Equity

As we can conclude from the previous examples, brand equity is a fundamental factor that influences a company’s ability to attract more customers and inspire them to stay loyal.

Its main purpose is to measure the strength of a brand. Logically, parallel with the growth of a company, the power of brand equity also rises.  As a complex notion, brand equity comprises several crucial segments:

Brand awareness.  Generally, brand awareness means that the target audience is familiar with the brand and the main use of the product. In aided recall, consumers can recognize your brand among a number of your competitors. When it comes to unaided recall, customers remember the brand themselves when looking for a particular product. Finally, there is top-of-the-mind recall, meaning that, when the need arises, your brand is a customer’s first choice.

Brand associations represent the customer’s perception about a particular brand. Put simply, people form associations based on the quality of the product, their relationship with the company representatives, company’s marketing strategies, the prices at which a product is sold, and many more. Of course, you need to keep in mind that such associations don’t always come from the personal experience of a buyer. They can also be a result of good old word-of-mouth publicity. As brand associations can be both positive and negative, you need to provide your target demographics with a personalized approach and, in that way, prevent them from making negative associations with the brand.

Perceived quality is the customers’ perception of the overall quality of a brand. It is important to note that this category is rather subjective. The customers assess the quality of a product based on their needs, usually by comparing it to similar products in the same category. What makes perceived quality important is the fact that it determines the position of the brand in the particular industry, as well as shapes the way the companies establish prices.

Brand loyalty is most commonly defined as the repetitive buying behavior. In other words, customers are loyal to a particular brand when they choose it over its alternatives. This category is usually rated as the most important one, based on the fact that it constantly turns customers’ satisfaction into purchases. According to a study below, more than 3 in 4 adults in the US return to the same brands over and over to make purchases.


How to Measure Brand Equity

What you could conclude so far is that the metrics brand equity consists of are qualitative rather than quantitative. Even though this makes the process of measuring brand equity is challenging, there is a wide range of practices that make it work.

Know what your Research Goals are

First, you have to determine what your research goal is. You need to have in mind that this process is quite subjective and that it varies based on your company’s needs.

For instance, if you are a startup, you aim to become recognizable in your industry. Therefore, you need to examine your customers’ engagement by focusing on the factors that influence their associations with your brand. On the other hand, if you’re planning to sell your company off, financial metrics would definitely be your top priority.

Take both Qualitative and Quantitative Approaches when Collecting Data

To measure brand equity properly, you need to assess both its qualitative and quantitative metrics. Quantitative data mostly revolves around sales numbers and revenue generated, enabling you to determine the value of your product and its position in the industry. Even though it provides you with straightforward digits, quantitative data cannot offer you the insight into your company from your customers’ perspective.

That’s exactly why you need to turn to qualitative metrics. Unlike quantitative (tangible) data, qualitative values are intangible, which means that they cannot be precisely measured. They incorporate subjective aspects, such as brand recognition, emotional relations and customer satisfaction.

The most effective way to assess such perceptions is to gain a feedback from your customers. There are a plethora of ways to do that, including paid surveys of products, feedback boxes on your website, usability tests and tracking user activity from your analytics. Demographic characteristics are important as well. For example, in the graph below you can see that generations like Millennials award higher brand equity than Baby Boomers in most retail categories.


Track Industry-Specific Trends and Inconsistencies

In order to offer relevant products, you need to constantly track the changes in your industry, both positive and negative. Apart from keeping the pace with the latest innovations, you can also detect some anomalies in your field of expertise and prevent them from affecting your brand. Alternatively, once you assess these macro-environmental factors, you also need to do a thorough analysis of your company’s branding efforts from within.


Measuring brand equity benefits your company in numerous ways and helps you develop a solid brand. By employing it, you will have better understanding of your target demographics, know how to personalize your marketing efforts and be able to meet your consumers’ needs throughout all stages of the sales funnel.

About the Author: Emma Miller is a digital marketer from Sydney. Emma works as a blogger, Senior Editor for Bizzmark blog and a guest lecturer at Melbourne University. Emma is interested in digital marketing, social media, start-ups and latest trends.