What Is Brand Equity? (+ How to Build It)

What is Brand Equity?

Brand equity refers to a company’s visibility, reputation in the marketplace, and consumers' view of the brand. Building positive brand equity can make it possible for businesses to:

• Gain market share

• Increase profit margin

• Extend your product line and introduce new products easily 

• Charge premium prices 

• Inspire customer trust and loyalty

• Have a positive impact on customers’ lives

• Form new partnerships with other brands and share their customer bases

Brand equity consists of three main components:

• Consumer perception: What do customers believe about a brand? What does it represent to them? What features do they recognise about the brand? How does it make them feel? How familiar are customers with what the brand stands for? 

• Positive or negative effects: Brand equity can be positive or negative depending on how a company develops its brand and presents it to the world. How do customers experience the brand and its products? Do they associate it with attributes they admire?

Do they prefer this brand and recommend it to others, or do they criticise or boycott it? 

• Resulting value: What are the measurable results of customers’ perception and experience with the brand, such as increases or decreases in revenue? What other results can be observed, such as word of mouth inspiring new sales? 

It’s a good idea to prioritise brand equity for your business, as consumers increasingly hold brands to higher standards of trustworthiness, quality, and goodwill.

Now that we’ve defined brand equity, continue reading to learn how to build brand equity for a company. These skills and processes can help you start your own business or pursue a career as a brand specialist or marketer. 

Brand image is similar to brand equity and can be defined as the customer’s viewpoint of a brand, whereas brand equity is a measure that brands use to determine the effectiveness of their branding efforts. 

How to build brand equity

To build brand equity, you will need to establish a coherent presence in the marketplace and be consistent with your efforts for the long term to gain traction. Remember that it may take several months to start seeing notable results, so committing to the process from the beginning is important, adopting a success mindset, and staying focused on your goals. 

Follow the steps below to build brand equity and inspire customers to become loyal fans. 

1. Identify your brand equity goals 

Reflect on your overall business goals to identify your goals with the brand. By setting clear brand goals, you can measure success reliably and be intentional with every effort to build brand equity. 

Start by writing a detailed description of what positive brand equity looks like for your brand, using the following prompts as inspiration:  

• How many followers, subscribers, and customers do you have? 

• How do they perceive your brand? 

• What feelings, thoughts, and experiences do you want them to associate with your brand? 

Here are two specific examples:

• Inspire X per cent of our current customer base to become brand ambassadors through our affiliate marketing programme by the end of the quarter.

• Improve brand perception through customer feedback to improve products and messaging.

2. Design a winning brand 

• What message does your brand send to the world?

• What tone, style, and voice will best convey this message?

• What values does this brand hold? What does it stand for? What kinds of customers share these values? What promises does this brand make to these customers?

• If you don’t yet have a brand design, what visual or auditory features can you develop to communicate your brand’s mission, values, and voice?

• If you have a brand design, how might its features be displayed more prominently and effectively across your marketing channels? 

Use these ideas to give shape and form to a new brand, refine an existing brand, and gain more recognition in the marketplace.

3. Test your messaging and brand experience with a small campaign

Once you have all the components of a winning brand, the next thing to do is observe how it performs in the marketplace. It’s a good idea to run a small marketing campaign to gather data and gauge your brand’s reception on a broader scale. That way, you can make any necessary messaging adjustments before investing in a larger brand awareness campaign. 

• Design a campaign and customer experience to deliver the desired results based on your established brand equity goals. For example, you might use a paid social media ad campaign to drive email sign-ups. In your follow-up emails, you can educate subscribers about your brand and survey their experiences. Or, you might post a series of videos on social media that introduces your brand, what it’s about, and who it’s for to see what kind of organic engagement it drives, including video views, likes, and comments. 

• Determine the metrics you’re testing and ensure they help drive your brand equity goals. These could include the number of landing page clicks and email subscriptions; the number of video views, likes, and comments; or the number of new social media followers. 

• Decide on a time frame for letting the test campaign run and produce results, such as six weeks or three months. 

• Evaluate test campaign results. How are people responding to your branded messaging, materials, and experience? What can you learn about your audience based on the actions they take (or don’t take)? What is working well, and what can you improve? 

4. Generate brand awareness with a larger campaign 

Using the results from your small test campaign, make any necessary adjustments to your messaging or the brand experience and design a more extensive marketing campaign. The purpose of this campaign will be to generate awareness of and build affinity for your brand. 

Decide how you want to scale up your campaign. For example, if you successfully tested and refined a landing page, you might increase your ad spend to get more clicks and email subscriptions. If you tested a video series on social media without ad spend, you might produce additional videos, post more frequently, and promote the highest-performing videos through a paid campaign. 

5. Deliver on brand promises 

As your awareness campaign gains traction and you start building a positive consumer perception and converting traffic into customers, ensure that your products, services, and experiences deliver on your brand promises. Continually identify improvements you can make to the customer journey by improving the content at each touchpoint. Ask customers for feedback on how products represent brand values, and enhance products accordingly. Ensure you have a customer service system to handle questions about products or payments. 

6. Be a consistent presence in the marketplace

As explored above, building positive brand equity results from consistent efforts over time. You’ll want to ensure that your branding is presented consistently regarding the overall look, feel, and messaging.  

Here are examples of ways you can be consistent: 

• If you’re posting content to a blog or social media, stick to a schedule that you can sustain over time, and will instil trust in your audience. 

• Whenever you develop a new ad campaign or product line, ensure that your brand’s design features are displayed consistently across every piece of content, touchpoint, marketing channel, and platform.  

• Communicate your brand’s values consistently across touchpoints, from social media to sales pages, to your customer support system. 

7. Implement loyalty and retention strategies  

One crucial component of brand equity is inspiring customer loyalty. You can do this in several ways:

• Offer personalised rewards for multiple or recurring purchases, such as free gifts and discounts.

• Offer bonuses to existing customers when their referrals make purchases. 

• Set up an affiliate marketing programme, so that brand fans become ambassadors and earn commissions for promoting your products.    

8. Measure your brand equity

Brand equity is largely rooted in customers’ perceptions and other qualitative factors, so discussing brand equity in quantifiable terms can be challenging. That said, you can measure your company’s brand equity over time through several qualitative and quantitative factors: 

Quantitative:

• Price premium: The amount a customer is willing to pay for a brand’s product 

• Revenue: Average sales price multiplied by the number of units sold 

• Market share: A company’s total revenue divided by the total sales of the industry

• Company value: assets minus liabilities

Qualitative:

• Customer behaviours after making a purchase, including contacting support, posting about purchases on social media, etc.

• The reputation of organisations with which a brand partners 

• Public sentiment about a brand observed in social media mentions, customer reviews, survey responses, etc.

Brand equity key takeaways and best practices

Remember: Building brand equity takes time. With diligence and a consistent presence in the marketplace, you may be able to increase your company’s bottom line, make a difference in customers’ lives, and inspire their trust and loyalty. 

Keep these best practices in mind as you implement branding tactics:

• Ensure everyone on your team has a copy of your brand guidelines detailing how design features should appear, how the brand voice should be used in all content, etc. 

• Stay informed of what’s important to your target customer and update your brand strategy, product line, and messaging accordingly.  

• Analyse competing brands regularly and the strategies they use to build brand equity. 

• Always think of ways to enhance the brand experience for existing customers. 

• Conduct continual market research to uncover new niche markets that may be interested in your brand.

Build brand equity with Coursera

Online courses are a great way to learn marketing skills, get fresh inspiration, or launch a career as a brand specialist. The Google Digital Marketing and E-Commerce Professional Certificate course can prepare you for the job market.