In simple terms, “brand equity” is a construct that is designed to reflect the real value that a brand name holds for the products and services that it accompanies. Measuring brand equity is considered important because brands are believed to be strong influencers of critical business outcomes, such as sales and market share. For example, Inc. Magazine notes that “branded products invariably command a higher price than so-called "generic" or "store brands"—even when the product is itself a commodity like sugar. In such cases the higher price is due almost entirely to the power of the brand. [1] Professor Kevin Keller, of Dartmouth College, lists the following seven benefits of brand equity[2]:

  • Be perceived differently and produce different interpretations of product performance;
  • Enjoy greater loyalty and be less vulnerable to competitive marketing actions;
  • Command larger margins and have more inelastic responses to price increases and elastic responses to price decreases;
  • Receive greater trade cooperation and support;
  • Increase marketing communication effectiveness;
  • Yield licensing opportunities;
  • Support brand extensions

Brand equity, like most constructs, has been defined and measured in numerous ways.  It is sometimes understood from the perspective of tangible financial assets of a firm.  However, from a marketing research perspective, brand equity is often viewed conceptually- as a framework for understanding the power of the intellectual and emotional associations consumers have with particular named products and services.  In contrast to the absolute dollar valuations that underscores the direct financial perspective; marketing researchers seek to measure and understand brand equity for strategic positioning and planning.

Modeling & Measuring Brand Equity

Brand equity has been defined and measured by experts from both academia as well as for-profit companies. In fact, many research agencies have developed their own brand equity models that are executed in partnership with end-user researchers. As Professor Kevin Keller, of Dartmouth College, observes “although the details of different approaches to conceptualize brand equity differ, they tend to share a common core: All definitions typically either implicitly or explicitly rely on brand knowledge structures in the minds of consumers- individuals or organizations- as the source or foundation of brand equity.[3]

Opinion researchers define and measure brand equity in terms of the knowledge consumers have of a brand.  To this end, numerous published models and measurements of brand equity are available.  The chart below details several of these constructs.  Notably, measuring brand equity may be only a single piece of a more comprehensive brand research program.  Likewise, an organization’s brand research program may be only a single facet of the larger research and insights program.  Review MRA’s other resources for a better understanding of how a comprehensive research and insights program fits together.

Brand Equity Chart 1

Brand Equity Chart 2

Brand Equity Chart 3

Brand Equity Chart 4

[1] INC. Magazine, “Brand Equity”

[2] Keller, Kevin Lane, “Measuring Brand Equity” Chapter 26, page 22 on 10/13/10

[3] Ibid., page 2