Brand equity refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name. And, at the root of these marketing effects is consumers’ knowledge. In other words, consumers’ knowledge about a brand makes manufacturers/advertisers respond differently or adopt appropriately adept measures for the marketing of the brand. The study of brand equity is increasingly popular as some marketing researchers have concluded that brands are one of the most valuable assets that a company has. Brand equity is one of the factors which can increase the financial value of a brand to the brand owner, although not the only one.

Measurement

There are many ways to measure a brand. Some measurements approaches are at the firm level, some at the product level, and still others are at the consumer level.

Firm Level: Firm level approaches measure the brand as a financial asset. In short, a calculation is made regarding how much the brand is worth as an intangible asset. For example, if you were to take the value of the firm, as derived by its market capitalization – and then subtract tangible assets and “measurable” intangible assets- the residual would be the brand equity. One high profile firm level approach is by the consulting firm Interbrand. To do its calculation, Interbrand estimates brand value on the basis of projected profits discounted to a present value. The discount rate is a subjective rate determined by Interbrand and Wall Street equity specialists and reflects the risk profile, market leadership, stability and global reach of the brand.

Product Level: The classic product level brand measurement example is to compare the price of a no-name or private label product to an “equivalent” branded product. The difference in price, assuming all things equal, is due to the brand. More recently a revenue premium approach has been advocated.

Consumer Level: This approach seeks to map the mind of the consumer to find out what associations with the brand the consumer has. This approach seeks to measure the awareness (recall and recognition) and brand image (the overall associations that the brand has). Free association tests and projective techniques are commonly used to uncover the tangible and intangible attributes, attitudes, and intentions about a brand. Brands with high levels of awareness and strong, favorable and unique associations are high equity brands.

All of these calculations are, at best, approximations. A more complete understanding of the brand can occur if multiple measures are used.

Meer kennis enĀ  informatie hierover kunt u verkrijgen tijdens de NIBAA masterclass design en branding en/of opleiding brand management en opleiding design management, opleiding reputatie management, cursus communicatie management of opleiding merkmanagement in Utrecht. Thema’s die hierin behandeld worden zijn: merkidentiteit, positionering, merk, strategie, marketing, brand identity, merkarchitectuur, branding, brand portfolio, merkmeerwaarde, merkwaardecreatie, design management, brand equity, brand building, internal branding, merkwaarden en diverse merkconcepten (www.nibaa.nl)