February 27, 2024

The term “brand equity” holds great importance in marketing. It reflects the brand’s value, consumer perception, and position in the market. A well-crafted brand management strategy emphasises on this factor. Brand managers put great efforts into creating and maintaining positive brand equity as it can influence consumers and market shares. 

Why does brand equity receive such significance? What are the different components of brand equity that you should understand? Read on to learn the answers!

What is Brand Equity?

Consumers often choose a product from a known brand over a comparatively lesser-known brand. Also, they are willing to pay higher for a popular brand’s products even if more affordable options with similar features and perks are available in the market. Why so? The controlling factor of these buying decisions depends on brand equity.

This phenomenon shows what and how the consumer thinks about the brand. The consumers’ belief and associations with the brand drafts its value. It is a non-quantifiable value; hence, its assessment becomes more critical and requires more attention. You can categorise your brand equity into positive and negative. Here’s how that will affect your brand.

When You Have Positive Brand Equity

Positive brand equity means consumers have a good opinion of your brand. They will prefer your brand and products over others. It can increase your sales, profit and overall business growth.

When You Have Negative Brand Equity

Negative brand equity indicates unfavourable opinions of the customers. It will be bad news for your sales, preventing growth. 

Different Components of Brand Equity

As you work to build awareness for your brand. Consumers get to know about your brand’s awareness. They form a positive or negative perception of your brand. This whole process includes the following components:

  • Brand Awareness: This component provides brand visibility that consumers are aware of your brand. 
  • Brand Association: It refers to any type of mental link between the consumers and the brands which could be product features or the personal values associated with your brand.
  • Brand Experience: It is the overall experience a customer has with your brand.
  • Perceived Quality: How does your customer perceive your brand, product and features compared to alternatives? 
  • Brand Loyalty and Preference: These two components will evaluate if the customer will choose your brand over others, establishing their loyalty. 

The Benefits of Developing a Positive Brand Equity

You can expect the following benefits when you successfully create and manage good brand equity:

Greater Market Share

To stand out in a competitive landscape and attract a larger customer base, positive brand equity is crucial. When customers hold a favourable view of your brand, they are more likely to choose you over competitors, contributing to an expanding market share.

Price Premium

The average selling price is a benchmark around which most products’ cost is set. Customers may not buy your product if your price is way higher than the selling price. However, your profit will be higher if you can charge more for your product. It is called price premium, and you can charge it if you have a strong brand value and customers are willing to pay more for you.

Product Line Extension

Launching a new product needs research, effort and money. Success isn’t always ensured. However, attracting customers towards new products becomes easier when your brand equity management is on point, and you have a high value in the market.

Bigger Impact

The more you increase your brand value, the bigger impact you can have as a brand. It creates your road easier to better partnerships, collaborations, supplier rates, etc. 


Strategic brand management can not only offer momentum profit but also ensures long-term success. Esteemed brands enjoy a loyal customer base and sustained growth due to their positive brand value. Remember that maintaining brand equity requires constant effort. Your brand value can decrease due to many reasons. It is important to continue monitoring and take timely measures to keep your brand equity in a positive light.

Leave a Reply

Your email address will not be published. Required fields are marked *