Brand Equity: What is it and How do you Built it?

Jun 29, 2021

Imagine a woman shopping online for a certain type of face wash. She narrows it down to two options, one from a brand she’s not familiar with, and one from the millennial cult-favorite brand Glossier. The two face washes have almost identical ingredients and descriptions, though the Glossier one is more expensive. After clicking back and forth between the two for a while, she ultimately decides to go with the Glossier wash. This seems illogical — why would you spend more money on an identical product? — but it all makes sense when you understand the essential branding concept of brand equity.

What Is Brand Equity?

Brand equity can be a confusing topic to wrap your mind around, as it's a product of a number of other different brand components. In the simplest terms, brand equity refers to the public’s perceived valuation of a brand. While it’s related to the financial worth of a brand, the two are decidedly different, and one doesn’t necessarily guarantee the other. Financial worth is based on hard numbers, whereas brand equity is a framework for understanding the power of brand reputation and consumer emotions in your brand’s success.

Consider Instagram, which is owned by Facebook. Facebook can look at the revenue that Instagram brings in through ads to determine its financial worth; but Instagram’s brand equity is higher than just that revenue. Instagram has a huge market share (does anyone use a different photo sharing app?) and a good reputation, giving it powerful brand equity beyond finances alone. The same concept is at play in the face wash example: it’s the customer’s personal valuation of the Glossier brand that ultimately informs their purchasing decision.

Based on these examples, you can start to see one of the reasons that brand equity matters: often, it can be the deciding factor in a consumer’s decision-making process. People use products and services from brands they recognize and trust, ones that they believe to have inherent value. When your brand doesn’t have this inherent assumption of value, it’s easy to lose market share to competitors.

In the same vein, brand equity allows your company to remain competitive when the market becomes crowded or you need to raise your prices. It also allows you to extend your product line more easily, as consumers are much more likely to try a new product from a brand they already value and trust. Plus, brand equity gives you credibility among other brands, companies, and public figures, often opening the door to exciting partnerships or collaborations.

As we defined loosely above, brand equity is the perceived value of a brand. Because it’s an intangible concept, there are numerous different interpretations of what determines that perceived value. Generally though, brand equity is comprised of some or all of the following factors:

Brand perception. This is a combination of brand recognition and brand awareness.
Perceived quality. The amount of money a consumer thinks a product or service is worth.
Customer retention. How loyal customers are to your brand, and how frequently they come back for another purchase.
Customer experience. The impression a customer is left with after interacting with your brand.
Customer preference. How often customers choose your brand over the competition.
Unique selling proposition. Having a clearly defined, emotionally resonant reason for why your brand exists.


One of the most popular models for defining and measuring brand equity is the Keller Brand Equity Model, which asserts that in order to have brand equity, you need to shape how consumers feel about your brand. Specifically, you need to shape their answers to four essential questions:

  • Who are you? (i.e., Brand recognition. Being able to identify your brand.)
  • What are you? (i.e., Brand awareness. Being able to explain what your brand does and what makes you different)
  • What about you? (i.e., The customer’s judgment of your brand. Built on factors including perceived quality and customer experience.)
  • What about you and me? (i.e., Bow the customer feels about their relationship with your brand. Shapes factors including customer preference and customer retention).

Of course, the answers to these questions aren’t set in stone, and brand equity isn’t something that a brand just has or doesn’t have. It’s the result of hard work and thoughtful strategy, and anyone can increase their brand equity by focusing on various components of their brand.

How to Build Brand Equity

Brand equity is built on a foundation of awareness and experience. To build strong brand equity, your audience needs to be aware of who you are and why you’re special, and have positive experiences with your brand. Sounds simple, right? Well, of course it’s not. Each of these two components is made up of various different elements, and each of those is subtle and challenging in its own right. Still, it’s an achievable goal with a bit of work.

 To begin building brand equity, focus on the following strategies:

Use customer feedback from the get-go.

If you want to resonate with your target audience, you need to have them at the forefront of your mind from the beginning. That means you can’t develop your brand messaging in an ivory tower with a team of consultants. Instead, gather feedback from people, and continually test messaging to determine what’s resonating and what isn’t. When you finally land on something, it’s much more likely to succeed with your target audience.

Drive awareness through brand campaigns.

When you’re trying to build brand equity, it’s important to go brand-forward, rather than product-forward. Focus on brand campaigns that tell your brand story, showcase your values, and make it clear why you’re different. Brand campaigns can be anything from ads to social media campaigns to free content, podcasts, events, and more.

Ensure stellar brand consistency.

For people to be able to recognize and remember your brand, your brand needs to be easily recognizable across every platform. That means setting out clear brand consistency guidelines and putting processes in place to keep your brand consistent everywhere.

Focus on customer experience.

If you want your audience to value your brand, you need to up your customer experience game. This is especially true in the era of social media, where increased transparency and accountability mean that customers’ expectations are higher than ever. Make sure that you always put the customer first, and make it easy for them to contact your customer service team if issues arise.

Build strong relationships.

Taking customer experience a step further, brands should also invest in building lasting relationships with their audience. This means encouraging a two-way conversation and regular customer engagement, transforming a transactional relationship into a substantive one. Some ways to do this include live Q&As on social media, sharing user-generated content on your channels, follow-ups after purchases, personalized newsletters, and many more.

Create something of real value.

While brand is so much more than your product or service, your product or service still matters a lot. Do your homework to figure out exactly what your customers want, as well as how much they believe it should cost. Extrapolate from that data to create something that will meet their expectations, and add some extra elements of surprise and delight to make them feel like they’re getting more than their money’s worth.

Continually assess and measure.

To know if your brand equity efforts are succeeding, it’s important to take stock of how you’re doing. Poll customers to understand what they think about your products and your brand as a whole, as well as non-customers to get a sense of what the general public thinks about your brand, products, and prices. Use these learnings to gauge your success and choose where to focus your energies going forward.

Building brand equity can feel like a momentous investment of time and resources. That’s because that’s exactly what it is: an investment. When you spend the time to build brand equity, you create a company that delivers real, measurable value to investors, stakeholders, employees, and customers alike.

Chat to us to find out more.

Want to receive our blogs?

Subscribe to our weekly blog.