Brand equity: What it is, how to measure it and why it matters

Why do people choose one brand over another when the products are similar? Why will someone pay more for a brand they know and trust? And why can some brands launch something new and immediately have an audience willing to give it a try?

A lot of it comes down to brand equity.

Brand equity is the value that comes from what people know, think and feel about your brand. It builds over time as consumers see your advertising, use your products, hear what others say about you and form opinions about what your brand stands for.

When those experiences add up to strong, positive associations, they can influence everything from preference and loyalty to willingness to pay for your brand name and long-term growth.

But brand equity isn't something you can build with one campaign — it's the result of many consumer experiences adding up over time.

In this article, I'll look at what brand equity means, why it matters, how to measure it and what marketers can do to build stronger brand equity over time.

What is brand equity?

Brand equity is the value that comes from the way consumers perceive and experience a brand.

Every interaction can shape those perceptions. An ad might reinforce what a brand stands for. A great product experience might build trust. Distinctive packaging might make the brand easier to recognize. A frustrating customer service experience can work in the other direction.

Over time, these experiences create a picture of the brand in consumers' minds. That picture can influence whether someone notices the brand, considers it, chooses it and comes back to it.

That's what makes brand equity broader than brand awareness.

Someone might recognize your brand but have no particular reason to choose it. Strong brand equity means consumers have developed positive associations with the brand that give them a reason to choose it over another.

Positive brand equity

Positive brand equity happens when consumers have strong, favorable associations with a brand.

They might see the brand as trustworthy, high quality, distinctive or relevant to their needs. And they may be more likely to consider it or recommend it to someone else.

Those positive perceptions can also give a brand more flexibility. If consumers see meaningful value in a brand, they may be more willing to pay a premium or stick with it when competitors offer similar alternatives.

Negative brand equity

But brand equity can work against a brand, too.

Poor product experiences, inconsistent messaging, negative publicity or a brand failing to deliver on its promise can all create negative associations.

Take this year’s Callaway x Good Good driver ad for instance. The now pulled ad shows a female golfer reaching towards a male golfer's new driver club, who immediately runs towards her and pushes her to the ground to prevent her from using it — naturally sparking a lot of backlash.

When moments like that happen, consumers may be less likely to consider or choose the brand. The brand's existing reputation becomes a barrier rather than an advantage.

That's why understanding brand equity means looking at both sides.

Why is brand equity important?

Brand equity matters because what consumers think and feel about a brand can influence what they actually do.

Strong brand equity can make a brand easier to choose, easier to stay loyal to and, in some cases, worth paying more for.

Consumer preference

Think about two similar products sitting next to each other on a shelf.

If consumers already know one brand, trust it and associate it with qualities they value, that brand may have an advantage before they even compare the products.

Brand equity helps create that preference. It gives consumers a reason to choose your brand over another option.

Brand loyalty

Positive experiences and associations can also give people a reason to keep coming back.

Loyalty isn't built through awareness alone. Consumers need a reason to stay with a brand, whether that's trust, product quality, familiarity, emotional connection or a belief that the brand consistently delivers what they expect.

Over time, those repeated choices can strengthen the relationship between consumers and the brand.

Pricing power

Strong brand equity can also affect what consumers are willing to pay.

If people see a brand as meaningfully different or more valuable than the alternatives, they may be less likely to switch based on price alone.

Brand growth

Brand equity can also give brands a stronger foundation for growth.

Strong awareness, distinctive associations and positive consumer perceptions can help when a brand enters a new market, launches a new product or competes for more share.

Of course, brand equity isn't the only thing driving business performance. Pricing, distribution, product quality, promotions and category dynamics all play a role.

But brand strength can be an important part of the picture.

What builds brand equity?

As I mentioned earlier, brand equity isn't built through one marketing activity. It comes from the combination of what consumers see, experience and remember about your brand.

Here are some of the biggest factors that contribute to it.

Brand awareness

People need to know your brand before they can choose it.

That makes awareness an important foundation for brand equity. But being known isn't enough. A brand can have high awareness without being particularly well liked or preferred.

The goal is to move beyond simply being recognized toward being remembered for something meaningful and distinctive.

Distinctive brand associations

What comes to mind when people think about your brand?

Maybe it's a particular benefit, emotion, product quality, visual asset or experience. Whatever it is, the key question is: Does that association belong to your brand in consumers' minds?

Strong associations can help people understand what makes your brand different and make it easier to recognize and remember.

Consumer perception

There's often a gap between what a brand wants people to think and what people actually think.

A brand might want to be known as innovative, for example, while consumers primarily associate it with reliability. Neither perception is necessarily good or bad, but the difference matters.

Understanding consumer perception helps marketers see whether their positioning is actually landing.

Customer experience

Advertising can shape expectations. The experience has to deliver on them.

Product quality, customer service, packaging, retail experiences and digital interactions can all reinforce or weaken what a brand promises.

A great campaign can create positive associations, but a poor product experience can quickly undermine them.

Consistent brand building

Brand equity builds over time, which makes consistency important.

Your advertising, packaging, products and customer experiences don't all need to look or feel exactly the same. But they should reinforce a recognizable idea of what your brand stands for.

Those repeated cues help strengthen memory and associations over time.

How to measure brand equity

There isn't one universal brand equity metric.

That's because brand equity is made up of several different consumer perceptions and behaviors. To understand it, marketers typically need to look at multiple measures together.

The right mix will depend on your brand, category and business questions, but these are some of the most useful areas to track.

Awareness and salience

First, do people know your brand? And when they're thinking about the category, does your brand come to mind?

Useful measures can include:

• Aided brand awareness
• Unaided brand awareness
• Brand recall
• Mental availability or salience
• Familiarity

Together, these measures help answer a simple question: Will people think of your brand when it matters?

Consideration and preference

Awareness doesn't automatically lead to choice.

Consideration and preference measures help you understand whether people would actually include your brand among their options — and whether they would choose it over competitors.

This is where you can start to see whether awareness is translating into potential behavior.

Brand associations

What do consumers think your brand stands for?

Brand association measures can help answer questions like:

• What qualities do people associate with your brand?
• What needs do they see your brand as meeting?
• What makes your brand different from competitors?
• What emotional or functional benefits do they associate with it?
• Which associations are becoming stronger or weaker?

These measures can also highlight gaps between the position you're trying to build and the way consumers actually see your brand.

Loyalty and advocacy

Loyalty measures can help you understand whether positive perceptions are turning into an ongoing relationship.

Depending on your business, these could include:

• Repeat purchase
• Retention
• Recommendation
• Advocacy
• Purchase intent

These measures aren't interchangeable, but together they can give you a broader picture of how consumers are responding to the brand.

Willingness to pay

A strong brand can create value beyond the functional benefits of a product.

Willingness-to-pay measures can help you understand whether consumers see enough additional value in your brand to pay more for it.

Business performance

Finally, it's useful to look at consumer measures alongside commercial indicators such as:

• Market share
• Revenue
• Customer retention
• Price premium
• Penetration
• Growth

These metrics don't measure brand equity on their own. Sales can move for all sorts of reasons, from pricing and promotions to distribution and category changes.

But looking at consumer perceptions alongside business performance can help marketers understand how brand strength may be contributing to commercial outcomes.

Why brand tracking matters for brand equity

There's another important piece here: time.

A single survey can tell you where your brand stands today. Continuous brand tracking can show you whether awareness, consideration, associations and other signals are strengthening or weakening — and when those changes happen.

That context matters because since brand equity builds over time, it can take years to establish, and it can shift as consumer expectations, competitors and market conditions change.

Brand tracking gives marketers a consistent way to keep an eye on those shifts instead of relying on individual snapshots.

For a deeper look at brand tracking itself, check out our guide to what brand tracking is and how it works.

Brand equity vs. brand value

Another area worth covering is the difference between brand equity and brand value. While they are related, they're not the same thing.

Brand equity

As I covered above, brand equity is the strength and value a brand holds in consumers' minds.

It's shaped by consumer perceptions, associations and experiences and can influence things like consideration, preference, loyalty and willingness to pay.

Brand value

Brand value is the financial value attributed to a brand as a business asset.

Brand valuation methodologies can combine financial performance with consumer research to estimate how much value a brand contributes to the overall business.

How do brand equity and brand value connect?

Strong brand equity can contribute to greater financial brand value.

The relationship isn't one-to-one. Brand value also depends on financial performance and other business factors.

But consumer perceptions can influence demand, pricing power and future growth, which can in turn contribute to the financial value associated with a brand.

How to build brand equity

Measuring brand equity tells you where your brand stands. The next question is what to do with that information.

Understand what consumers think today

Start with a baseline.

Measure awareness, consideration, preference, associations and other relevant brand health indicators to understand how people currently see your brand.

And don't look at your numbers in isolation. Comparing your brand with competitors can tell you much more about where you stand.

A metric might look healthy on its own but tell a very different story when you see how other brands are performing.

Strengthen distinctive associations

Figure out which associations you want your brand to own and understand which ones are strongest today.

Then reinforce those associations consistently across advertising, packaging, product experiences and other consumer touchpoints.

You don't need consumers to associate your brand with everything. Focus on the associations that matter most and make those easier to recognize and remember.

Invest in memorable advertising

Advertising is one of the most visible ways brands shape consumer perceptions.

Strong advertising can reinforce distinctive assets, build associations and give people a reason to remember your brand.

The key is to connect creativity back to the brand. An ad can be entertaining or culturally relevant, but if people don't connect that experience to the brand, it may do less to strengthen brand equity.

After all, if no one can remember who the ad was for after it ends, how can there be any value to promoting it?

Deliver on the brand promise

Brand equity isn't built through communications alone.

If your advertising promises quality, the product needs to deliver quality. If your brand promises convenience, the customer experience needs to make life easier.

Every interaction is a chance to reinforce, or undermine, the perceptions you're trying to build.

Track equity over time

And finally, keep measuring.

Regular brand tracking can help you see whether your marketing efforts are changing consumer perceptions and how those changes compare with competitors and the category.

It also becomes more useful when you connect brand data with other research and marketing data. Looking at changes in brand perceptions alongside advertising, innovation, customer experience and business performance can help you understand what's driving those changes.

How Zappi can help measure brand equity

Zappi's Brand Tracking solution gives marketers a continuous view of the consumer signals that contribute to brand strength, including measures such as awareness, consideration and mental availability.

Rather than trying to boil brand equity down to a single score, tracking can help you understand the individual perceptions and behaviors behind brand strength — and how they're changing over time.

That gives marketers a more useful view of the brand: what's moving, where you're gaining or losing ground and where there may be an opportunity to act.

Learn more about Zappi's Brand Tracking solution.

Turning brand equity into business decisions

Brand equity measurement becomes much more useful when it helps answer a real business question.

Advertising decisions

If consumers aren't associating your brand with the qualities you want to own, advertising could be an opportunity to strengthen those associations.

Brand equity data can help identify which perceptions a campaign should reinforce and whether those perceptions change after the campaign runs.

Positioning decisions

The way you want consumers to see your brand isn't necessarily the way they see it today.

Comparing your intended positioning with actual consumer perceptions can reveal gaps and help inform future positioning and messaging.

Innovation decisions

New products can strengthen a brand — or take it somewhere consumers don't expect.

Understanding your existing brand associations can help innovation teams assess whether a new idea fits naturally with what the brand stands for and whether it has the potential to strengthen or dilute those associations.

Competitive decisions

Brand equity is relative.

Tracking your own metrics without looking at competitors can make it difficult to know whether you're actually gaining ground or simply moving with the category.

Competitive brand measurement can show where other brands are building awareness, preference or distinctive associations and where there may be opportunities for your brand.

Investment decisions

Finally, brand equity data can bring consumer perceptions into broader investment conversations.

Looking at brand health alongside commercial performance gives marketers a fuller picture of where the brand is strong, where it's vulnerable and where additional investment may be needed.

Brand equity FAQs

What is an example of brand equity?

A simple example is a consumer choosing a familiar brand over a less expensive alternative because they associate that brand with higher quality, reliability or trust.

The additional value comes from the consumer's perception of the brand, not simply from the physical product itself.

What are the main components of brand equity?

There isn't one universal framework, but common components include brand awareness, salience, associations, consideration, preference, loyalty and other measures of consumer perception and behavior.

The right combination depends on the brand and the questions you need to answer.

How is brand equity calculated?

There isn't one formula for calculating brand equity.

Most approaches look at multiple consumer indicators — such as awareness, associations, consideration, preference and loyalty — and examine how they change over time and compare with competitors.

What is the difference between brand equity and brand awareness?

Brand awareness measures whether consumers know and recognize a brand.

Brand equity is broader. It includes the value created by what consumers know, think and feel about the brand, including associations, preference and loyalty.

Awareness can be an important foundation for equity, but high awareness doesn't automatically mean strong brand equity.

What is the difference between brand equity and brand loyalty?

Brand loyalty describes the strength of a consumer's ongoing relationship with a brand, including behaviors such as repeat purchase or advocacy.

Brand equity is broader. It includes the perceptions and associations that can contribute to loyalty as well as outcomes such as consideration, preference and willingness to pay.

How long does it take to build brand equity?

Brand equity is built over time through repeated experiences and consistent brand building.

There's no fixed timeframe. It depends on factors such as the category, competitive environment, brand history, consumer behavior and the experiences a brand delivers.

That's why measuring brand equity consistently matters. It lets marketers see gradual changes instead of waiting for a major shift to show up in business results.

Conclusion

Brand equity is built through the way consumers perceive, experience and remember a brand.

It can influence whether people notice a brand, consider it, choose it, remain loyal to it and see enough value to pay a premium. But those outcomes aren't created by one campaign, and they can't be captured by one number.

The more useful approach is to understand the signals behind brand equity — awareness, associations, consideration, preference, loyalty and other measures of brand health — and watch how they change over time.

That's where brand tracking can play an important role. By consistently measuring consumer perceptions and comparing them with competitors and business performance, marketers can see where their brand is gaining or losing strength and make more informed decisions about where to focus.