Brand equity

Brand equity can be defined in many different ways. I have developed a simple, yet powerful, definition of brand equity. For a brand to be strong it must accomplish two things over time: retain current customers and attract new ones. To the extent a brand does these things well, it grows stronger versus competition, and delivers more profits to its owners.

Breaking down the definition of "brand equity" into its two components, we can more easily determine a reliable way to measure brand equity, and to track changes in brand equity over time. The components of brand equity, retention and attraction of customers, stem from people's experiences with and perceptions of a brand.

The ability to retain customers is largely experiential. High equity brands exhibit stronger levels of customer satisfaction and loyalty. History has shown that consumers will continue to buy a brand that offers them "their money's worth."

The ability to attract new customers is largely perceptual. Because customers do not have actual brand experience, they must go by what they hear, see and believe about a brand. The two primary ways the market receives this information is through messages controlled by marketing, such as advertising and PR efforts, as well as uncontrolled messages such as press stories and "word of mouth."

Scott White is President of Brand Identity Guru a leading Corporate Branding and Branding Research firm in Boston, MA.

Brand Identity Guru specializes in creating corporate and product brands that increase sales, market share, customer loyalty, and brand valuation.

This Article may be freely copied as long as it is not modified and this resource box accompanies the article, together with working hyperlinks.

Over the course of his 15-year branding career, Scott White has worked in a wide variety of industries: high-tech, manufacturing, computer hardware and software, telecommunications, banking, restaurants, fashion, healthcare, Internet, retail, and service businesses, as well as numerous non-profit organizations.

Brand Identity Guru clients include: Sun Life Financial, Coca Cola, HP, Sun, Nordstrom, American Federal Mortgage, Franklin Sports and many others, including numerous emerging growth companies.

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