What is Brand Equity? The Benefits and How to Build It

When customers are looking for a solution to a problem, they will often turn to a company they trust. Sometimes, they will choose that company even if the product is slightly more expensive because they recognize and trust the name. For example, if a customer is looking for a quick OTC pain reliever, they may turn to Tylenol over a drugstore generic alternative because they know the brand and trust it. That is the essence of brand equity. 

What is Brand Equity?

Brand equity is the measure of the perceived worth of a brand’s product, especially when compared to a generic equivalent product. Essentially, brand equity is a measurement of how much customers trust your brand’s product over another similar product, which can indicate how much more likely a customer is to pick your product over others. The better your brand equity, theoretically the better your company will perform in sales and public perception in relation to other brands. If your brand consistently impresses customers and reaches their expectations, your brand equity will be positively affected. If your brand fails to satisfy your customers because of negative experiences or perceptions, your brand equity will be negatively affected. 

It can be difficult to definitively measure your brand equity, but there are a few ways to gain further insight into how your brand is doing. These are some of the quantitative methods that reflect your brand equity: 

  • Profit margins
  • Price sensitivity 
  • Profitability
  • Growth rate
  • Market share percentage
  • Purchasing frequency

Interviews, social media presence, and customer feedback surveys are another way to gauge how your brand equity is performing. 

Brand equity can help increase your profit margins and how customers view your brand, so it’s an important aspect of your business to nurture. We’ll walk you through the important aspects of brand equity, how to build good brand equity, and why it matters to help you get started nurturing your brand equity. 

Elements of Brand Equity

What is brand equity made up of? Good brand equity comprises several elements. Nurturing each of these elements will help create a full and balanced brand equity that can reach customers and improve public perception of your brand. 

Brand Perception

Brand perception is how customers view and regard a product or service. This is separate from what a company is saying about its own product. Essentially, brand perception is what a customer believes your product or service does—not what a marketing department publishes about the product. While it’s completely possible that brand perception of a product lines up with how a company discusses its own product, it’s not a given. 

There are two sub-stages of brand perception can happen in: brand recognition and brand awareness. Brand recognition is when products are identifiable as belonging to a particular brand. Basically, if a customer sees a product from your company, they would easily be able to identify that it belongs to your brand. Logos and jingles can all be a part of brand recognition. Brand recognition can help your brand become a household name and improve your brand equity. 

Brand awareness is knowing what a brand stands for. While brand recognition means customers recognize your brand, brand awareness shows they understand your brand. Brand awareness is about knowledge, values, and beliefs. A way to think about brand awareness is to think about a customer choosing which brand of laptop to buy. If a customer has a lot of knowledge about how a company crafts their laptops, they have brand awareness for that company. That brand awareness may sway their choice of which laptop to buy, potentially over something like price. Because while one laptop may be cheaper, the customer may be more likely to buy the laptop they feel they understand better and can trust. 

Customer Experience

Customers that have a positive experience with your company are more likely to trust your brand, which can increase your brand equity. Any time a customer comes into contact with your brand is an opportunity to improve their experience and ultimately their perception of your brand. That quality experience with your brand can create a positive impression of your company—and hopefully improve brand equity. The reverse can also be true. Bad experiences with a company can create a negative association with the brand. Doing what you can to improve your customer experience can go a long way with brand equity. 


Your brand is associated with more than just a product. Brands are also associated with the supply chain, reputation, and trust. Quality across all of these parts of your brand can affect your brand equity. For example, a company that is effective at shipping quickly, restocking, and supplying vendors could increase the quality of its brand equity. In addition, a company with strong leadership, good financial performance, and excellent innovation will also have brand quality—ultimately creating more brand equity. 

Customer Preference

Customers have preferences of brands they buy from, and that can come into play with your brand equity. For example, customers that grew up on a certain brand of cereal are more likely to choose that brand of cereal even as an adult. They simply have a preference for it—as well as more trust and experience with the brand. The same can be said for any brand in any industry. Working with customer preferences as part of your brand equity can help draw and keep customers in the long run. 

How to Build Good Brand Equity

Actively investing in each component of brand equity can improve your brand equity. Refining customer experience, improving quality, and working with customer preferences can help build good brand equity. In addition, building brand awareness, emphasizing positive associations, and forming good relationships with customers are also important to building good brand equity. 

Build Brand Awareness

It’s hard to have positive brand equity when potential customers aren’t sure what your brand is or what it stands for. When customers understand your brand and your products, they are more likely to consider buying them—even when there’s a price difference. You can build brand awareness with strong advertising and marketing, as well as making your brand’s values very clear and visible. 

Emphasize Positive Associations 

Making sure your brand is associated with positive things is an important part of improving your brand equity. To do this, ensure that your business is using responsible and ethical business practices. Those go a long way in giving your company a positive association for customers. In addition, emphasize any time your brand comes into contact with something positive or makes a positive connection or collaboration with an influential organization or person. 

Form Good Relationships

In the end, good relationships with customers are what will truly strengthen your brand equity. Stay in touch with your customers on social media and through any other viable channels. In addition, provide them with excellent customer service through every step of the customer journey. Keep track of negative feedback and use it to smooth out problems in your customers’ experiences with your brand. Ultimately, be authentic with your customers and foster those relationships. 

Benefits of Brand Equity

Brand equity can have a meaningful impact on your company. While it’s obvious that brand equity improves public perception and recognition, there are several other benefits of nurturing brand equity that can really help your company. 

Dedicated Customers

One great benefit of improved brand equity is that you have the opportunity to develop a strong base of dedicated customers. At the end of the day, dedicated customers who support your brand are one of the most important factors for your business future. Loyal customers tend to spend more on average than new customers, and they become advocates for your brand and products. Strong positive experiences with your brand and products through brand equity can help your company reach this. 

Loyal Customer Base: Brand Equity Example

So many brands have been use brand equity to cultivate this passionate customer base. For example, Coca-Cola has actively used brand equity to create a strong sense of brand recognition which keeps drawing customers to its company time and time again. With unique marketing campaigns and recognition as one of the top soda companies, Coca-Cola has developed a loyal customer base that understands what the brand stands for and will continue to purchase its products.  

Extending Product Lines

Positive customer experiences with current products not only improve brand equity, but can also give your company the opportunity to extend its product lines. Once customers trust your brand and know what it stands for, they often more likely to trust future products and services your company offers. That gives your company the opportunity to expand product offerings. A good brand equity will win you lifelong customers that are more willing to purchase new products—ultimately making product line expansion beneficial and profitable. 

Product Line Extension – Brand Equity Example

Many brands have used their brand equity to their advantage in extending product lines. One example is Tiffany & Co, famous for high-end jewelry and engagement rings. Because of the success the company has in jewelry, they have expanded its brand to encompass games, home decor, watches, perfumes, and more. Not only does Tiffany & Co have numerous brand extensions because of its brand equity, but they can also charge a premium for every product sold.

More Impact for Good: Brand Equity Example

One example of a company that has used brand equity to increase their influence for good is Foot Locker. Foot Locker, famous for athletic footwear, has collaborated with NBA stars to award scholarships to student athletes and students in need. They have also worked to be inclusive and diversify their customer base through projects and grants aimed at helping people impacted by discrimination. It comes to show that the more brand equity you can create, the more good your company can do.

Great Impact as a Company

When your company has good brand equity, it is able to make better connections that increase your impact as a company. For example, more success as a brand can lead to brand collaborations that benefit your company and bring more recognition. Your company can also find new investment opportunities or supplier rates that allow you to have greater impact. 

Increased ROI

When customers trust your brand, they are more likely to make future purchases from your companies. If customers are continuing to purchase from your company, you are going to see a return on investment for what you put into improving your brand equity. Brand equity isn’t something that will leave your company without visible results. The ROI for your efforts can be seen in product lines. 

Overall, brand equity is an important measurement of the perceived worth of your company’s products and services over generic alternatives. Brand equity can be cultivated through many aspects of your business, including awareness and building relationships. When your company is nurturing brand equity, your brand can extend product lines and see ROI on investments made in brand equity. 

Here at InMoment, we want to help your company build its brand equity and CX reputation. It’s time to start nurturing your brand equity with InMoment.

Request a demo of our CX solution to see how InMoment can help you improve your brand equity.

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