What is Brand Equity?

By on November 17, 2011

What Constitutes Brand Equity

According to David Aaker, an expert in the field of Brand Equity measurement and management and the author of the famous book, Managing Brand Equity, “Brand equity is a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm’s customers.” In simpler terms Brand equity is the value of a brand, as an asset. It is the value that accrues to a product as compared to the value that would not accrue to the same product if it didn’t have that particular brand name.

So if “Coca Cola” the product (black cola) didn’t have the brand name “Coca Cola” associated with it, what would be the value of the company vis-à-vis the value of the company with the brand name associated with the product? This difference in value would be the brand equity of Coca Cola.

Easier said than done.

Even though correctly estimating the brand equity of a product or company is strategically very important (as it comes in the balance sheet as an intangible asset), it is a very difficult process as it involves correct estimation, in monetary terms, of the people’s value perception of a brand. Over the years many experts have developed tools to ascertain this asset, but still there is no universally accepted way of measuring brand equity.

We will discuss more on Brand equity measurement in one of our future posts.

Building Brand Equity

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