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Brand Equity Essay


In 2010, Coca-Cola has appeared at the top of the global brands with an estimate value of &78 billion. IBM has closely behind with 71$ billion. Despite those two businesses have totally different of business nature, these two firms have a significant common characteristic which is the value of their brand is extremely high. However, the value of branding isn’t only reveal in those two firms but the entire market has the common factors which are the most successful firm always has a high value of their brand. Branding is one of the critical enduring assets to a company which can be the name, term, design, symbol or any unique feature can be used to identify business. Kapferer (2008) suggest that branding is the most important factor to service industry as its instinctive uniqueness like inseparability, heterogeneity, perishability and tangibility. Furthermore, CEO of McDonald’s claimed that the value of brand is worth than any of their facility and equipment.

It indicate that importance of branding is powerful assets which every of marketing manager would have carefully develop and manage. In this paper, we explore the importance of Brand Equity and any of the associated metrics. Brand Equity is the differential effect that knowing the brand name has on customer response to the product or its marketing. America Marketing Association has given a definition of brand equity, it suggests that “The value of a brand. From a consumer perspective, brand equity is based on consumer attitudes about positive brand attributes and favorable consequences of brand use.” Brand equity is a critical marketing component for building a successful business which gives advantages to increase the profit of the product or services depends on the various value of the brand. Ad agency Young and Rubicm’s Brand Assest Valuator measures brand strength along four consumer perceptions which are the differentiation, knowledge, relevance and esteem. 4 strategy in brand equity

Differentiation refers to the process to distinguish a product or services to your rivals. The purpose of approaching differentiation is to position your product to your potential customer which makes the product or services more attractive to a particular market, also, it can increase the competitive advantage of the products. Successful differentiation can possibly leads the firms to the monopolistic competition which means business has occupy a specify market area. In 2007, Apple introduced the first IPhone in the market; the success differentiation of the IPhone push Apple to become a one of the most successful company in the world. Though, multiple brands has starting introduced new smart phone gradually, Apple has still occupy a mount 25-35% of the market as their successful differentiate their product against their rivals.

Moreover, in order to identify the nature of the product differentiation, firms can use some of the metrics to measure. Moreover, brand knowledge, also known as Brand awareness refers to the brands popularity toward firm’s potential consumers. Kevin (1993) declared Brand awareness is related to the functions of brand identities in consumers’ memory and can be reflected by how well the consumers can identify the brand under various conditions. Brand awareness is always the primary goal of advertising which include the brand recognition and recall performance. Larry and John (1992) claimed that Brand recognition refers to the capability for consumers to identify between new brand and consumer previous used brand. The primary objective isn’t to force consumer to recognise the brand names, it often means that consumers can response to a certain brand after viewing its visual packaging images.

On the other hands, brand recall refers the consumer’s ability to generate and retrieve the brand in their memory. Furthermore, brand relevance refers to how consumers feel its meets their needs. Aaker (2012) suggest that the brand relevance is to differentiate or innovate new product or services that route to consumer to have a ‘must have’ feeling. Finally, brand esteem refer as how highly consumers regard and respect the brand. consumer’s response to a marketer’s brand-building activity is driven by his perception of two factors: quality and popularity, both of which vary by country and culture. Brands such as Kodak, Maruti, Pepsi, Amul and Raymonds are esteemed in the consumer’s mind, based on popularity more than quality. Therefore, those 4 factors are the most crucial element of brand equity approach, it aims to develop a valuable customer equity which means the value of the customer relationships that the bread create.

3 Level of brand Equity

In order to evaluate a brand, there are three level that we can approach to measure the states of brand. The first level refers as the firm level which measure a brand as a financial asset. It means that firm treat a brand’s value as an intangible asset. Neumeier (2006) provides an example to describe the situation. He claimed that if manager 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. On the other hand, the term ‘Brand valuation modelling’ is also highly relevant to the brand equity in this level. Brand valuation models typically combine a brand equity measure with commercial metrics such as margin or economic profit. It can determine the actual value and the potential value of the brand in the future.

The second level is product level refer as compare the price of the product with infamous brand. We assume that the different in price, consumers would be favourite in our brand. Firms always determine their sales price by the result of this level. The third level is the consumer level which defines as seeks to measure the awareness and brand image. 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, favourable and unique associations are high equity brands. (Keller 1993)

The 3 Brand Equity Metrics

In order to identify the level of success for the brand equity, there are three metrics which can be used to measure the performance from three different aspects. Firstly, financial brand equity metrics is used to measure a brand’s profitability and it is include market share, price sensitivity, profitability, revenue etc. Roll (2009) reveals that Measure a brand’s monetary value through the various parameters of market share, price premium a brand commands, the revenue generation capabilities of a brand, the transaction value, the lifetime value of a brand and the rate at which brands sustains growth. The purpose of this measure is to allow a firm to evaluate an accurate financial value of brand equity linked to marketing metrics. Moreover, Knowledge metrics is the key driver of brand equity which refer to measure brand’s awareness and popularity via many stages of recognition, aided, unaided and top of mind recall.

Similarly, the functional and emotional associations of a brand are important drivers of brand equity. Knowledge metrics include the loyalty, retention and awareness. For example, PlayBoy is recently changing their target consumers and markets. It must be imperative to them as their recognition has decreased significant in the global market such as China. As the result, PlayBoy has suffered of a huge loss because the losing of knowledge metrics. The third metrics is Consumer Brand Equity Metrics which refer to track consumer sentiment and behaviors related to your brand to get a complete understanding of brand equity. If consumers believe in a brand, it has far more equity than a brand that consumers don’t care about or believe in. (Gunelius). In order to approach this metrics, firms has to ask questions through surveys and research that gives information of how people feel about the brand and how they make purchase decision. Firms can use those dates to track the brand equity to ensure it’s growing in a positive direction.

The Benefit of Brand Equity

Approaching brand equity is always giving a lot of advantages to the firms. I strongly suggest should use brand equity to gain the benefit shown below 1. Increase market share of the company

If a firms successfully approach brand equity in the market, their product value will be excess the market expectation which will attract potential investor to invest into the company. It increase the market share at the market, moreover, it accelerate the development of new firms. Beats electronics is developed on 2008 and it has become one of the most valuable audio product manufactures in the world. As they have unique strategy to promote and differentiate their product, the value of their brand has increase 27 billion dollars in 3 years and it has been purchased by Apple on 2014.

2. Helps build Brand loyalty

Brand loyalty is directly related with brand equity. Well-developed and promoted brands make product positioning efforts more effective. Brand loyalty is the consumer’s commitment to repurchase to a specific brand while brand equity refers to the marketing effects which a product’s value increases because the branding effect. This means that people will always show more brand loyalty a specific brand if the brand equity of the product is higher. For example, Apple as one of the leader sheep of the smart phone market, their unique feature and design has earned a lot of brand loyalty in the market.

3. Helps to introduce new product

When Firms are trying to establish a new product in the market, it is always easier if the firms have successful brand equity as their brand is already well-known in the market.

4. Reduce promotion cost

Promotion is always costly ecstatically through media channel. However, brand equity can reduce the price of the promotion as they have a solid consumer base which will promote firm’s product by word of mouth.


Brand equity is a phrase used in the marketing industry to try to obtain the benefit from the brand’s power, based on the idea that the owner of the well-known brand name can make more revenue from products or services. As consumers believe that products with famous names is better than less well-known products as another word for “brand equity” is the “brand value”. The value will have be premium when a firm realizes from a product with a recognizable name as compared to its generic equivalent. Companies can create brand equity for their products by 4 aspects which are differentiation, knowledge, relevance and esteem. Therefore, business should approach brand equity as their primary goal as it provides a lot of advantage and it increase the marketing productivity significantly.

Reference list
Gunelius, S 2014,’ Brand Equity Basics – Part 1: What Is Brand Equity?’ retrieved 07 September 2014, < http://www.deakin.edu.au/students/study-support/referencing/harvard> Aaker, D 2009 Managing Brand Equity, The Free Press, New York Kohli, C& Leuthesser, L 2001,’ BRAND EQUITY: CAPITALIZING ON INTELLECTUAL CAPITAL’,
retrieved 07 September 2014, < http://www.brandchannel.com/images/papers/brandequitycapitalizing.pdf> Keller, K L 1993,’Conceptualizing, Measuring, and managing Customer-Basaed Brand Equity’, Journal of Marketing, retrieved 07 September 2014, < http://www.iseg.utl.pt/aula/cad1849/conceptualizing_measuring_managing_cbbe.pdf>

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