Collective: What is brand equity and why is it important

Brand equity describes what your brand is worth. This can be measured in many ways, however the best way to define it is to ask yourself:

  • Does the brand provide some value to your product or service in the eyes of the consumer?
  • How is it perceived by the target market – what does it stand for?
  • Is it recognisable?


There are many benefits of having a brand with high equity:

  • It usually means that the brand has high awareness and therefore will stand out in a competitive environment e.g. on the internet, in an advertisement in store
  • If the brand has a high perceived value, then it is easier to launch new products or services. For example the Virgin brand – can essentially launch into any market easily because the brand has high brand equity / value
  • A well established and valuable brand means that you don’t always have to enter into price wars in the market because the brand already has a perceived value and consumer are prepared to pay a little more. This could be because the previous experience with the brand was favourable or simply be how the brand makes a person feel, an emotional connection. (Think about when you last chose a product or service even though it wasn’t the cheaper option.)
  • Establishing the right brand personality will allow you to ENGAGE with your audience – so they can relate to the brand
  • Brand equity = growth = $