Brand Management

Brand Equity: What Is It & How Can It Affect Your Margins

In the last few years, many companies have begun to shift their focus from their products to their customers. And this makes sense when, according to Salesforce, 80 percent of customers now consider the experience a company provides to be as important as its products and services.

Positive experiences can leave a lasting impression on shoppers that might make them more likely to share their sentiments online or with friends and family. Which, in turn, can have a tremendous impact on the success of your business.

Think about it. If you were in the market for a new power drill for your home, would you be more likely to go with a well-known and established brand such as Milwaukee, or a smaller brand you’ve never heard of before? The smaller brand is probably cheaper, but you already know for a fact that other people like and trust Milwaukee.

The truth is that customer purchase decisions are often greatly influenced by a brand’s public image and product reviews. This is called brand equity.

What Is Brand Equity & Why Is It Important?

Brand equity refers to the value that brand image and reputation can add to a brand’s products. It has to do with the way customers perceive a brand.

Essentially, the more brand awareness and positive brand equity a business has, the higher its chances of successfully making a sale. This doesn’t necessarily mean that a brand with a higher brand value has superior products, but rather that their products are more established and well-received.

A brand’s equity can also be a powerful driver of brand loyalty, and a higher level of brand value can increase market share, demand, and profitability.

The Benefits of Building Positive Brand Equity

Developing your brand equity can lead to many positive effects, such as:

Increased Market Share

Some industries are more highly saturated than others, meaning that there are more sellers and therefore more options for customers to choose from. In these types of markets, it’s extremely important that your brand stands out among the crowd, and having a positive brand equity can help you gain this competitive advantage.

If you ensure that your brand name is memorable, this can lead to a higher level of market share for your business. This can be done in a variety of ways, such as interesting advertisements, stand-out logos, or an engaging and likable social media presence.

Higher Price Points

Because purchasing decisions are so highly influenced by a customer’s brand perception, businesses with a higher brand equity are able to charge premium prices. Shoppers are willing to pay a higher rate for products that they perceive as coming from higher quality brands.

New Product Expansion

Having brand equity allows you to form a large number of loyal customers who will be eager to try any new products you decide to add to your inventory. You might even consider asking these shoppers to test your new items while in production.

What Goes Into Building Brand Equity?

Brand equity assumes that a brand that is well-established, memorable, and reputable will be more successful than others. Much of your brand’s equity is based on how shoppers perceive you. If you can manage to establish a personal connection with many different customers, leading them to make more purchases, then your brand equity is very valuable to you.

So how do you go about creating positive brand equity for your business?

No. 1: Build Brand Awareness

Having brand awareness means that shoppers are able to recognize your business by its logo or name and associate it with a particular category, product, or service. Where brand awareness tells you how familiar, or “aware,” shoppers are of your business, brand equity refers to the added value on your products as a result of that awareness.

There are several ways you can improve your brand awareness, such as:

  • Consistently using the same, identifiable logo
  • Creating positive, perhaps personalized, customer experiences
  • Staying ahead of your competitors in the market
  • Keeping in touch with your customer-base via email or social media

No. 2: Create Brand Associations

Brand associations are characteristics of your business that shoppers come to associate with your brand. These associations can do wonders for your brand because it means that when shoppers need a product like yours, they automatically associate it with your brand over others.

Often, brands with great brand associations have products that have become synonymous with their brand name. This includes brands such as Kleenex, Tylenol, or Band-Aid. Another less extreme example of a brand with a high brand association is McDonald’s. The company happens to have multiple popular associations, such as the golden arches or the red and yellow color combo.

Creating associations for shoppers to remember your brand will make it easier for them to recognize your business, improving your brand equity.

No. 3: Inspire Brand Loyalty

Establishing a sense of loyalty from customers is essential when building brand equity. This means that the same shoppers will continuously return to one brand over others who offer similar products.

Brand loyalty not only ensures consistent sales to that customer, but also a higher chance at word-of-mouth marketing, which in turn leads to increased brand awareness.

However, loyalty can only be earned from shoppers through consistent positive shopping experiences with your brand. This means easy shopping in-store, helpful customer service, and, most importantly, high quality products.

Examples of Companies With High Brand Equity

Brand equity can be the deciding factor between superior and inferior brands. Many brands that have built up their positive brand equity have become highly successful and are very well-known as a result. This includes brands such as:


In the 50 years that Starbucks has been operating they have managed to become the most popular coffee shop in the world. The company has nearly 35,000 locations and has a logo that’s so recognizable that it doesn’t even have any words on it to signify that it does indeed belong to Starbucks.

Starbucks has cultivated its brand equity through its visual associations, relatability, and its ability to comfort and welcome every customer.



With memorable advertisements such as “Share a Coke” or the infamous Coca-Cola Polar Bear, it’s no wonder that this brand has exceptionally high brand equity. In some parts of the USA, people even refer to any carbonated soft drink as a “Coke.” This is the association that the brand has established for itself.

Most of Coca-Cola’s brand equity can be attributed to excellent advertising and consistent branding over the last hundred or so years. In fact, the Coca-Cola logo has only changed twice in all that time.


Named after the Greek goddess of victory, Nike is the largest shoe brand in the United States.

With a simple, understated, yet immediately recognizable logo, Nike shoes can be spotted from a mile away. Having expanded into more than just shoes, all Nike has to do is place its infamous checkmark on an article of clothing to make it shoot up in value. In addition to the logo is Nike’s popular slogan, “Just do it.” Both of these extremely identifiable brand associations have helped create Nike’s high level of brand equity.

Brand equity assumes that a brand that is well-established, memorable, and reputable will be more successful than others.

Brand Equity Can Be Positive or Negative

As you continue in your journey to build up your brand’s equity, keep in mind that it is also possible to establish negative equity for your brand.

For example, in 2016 Samsung faced extreme backlash when its latest smartphones began to catch fire and even explode in some cases. These incidents caused Samsung users to abandon the brand and Samsung lost an estimated $5.3 billion as a result.

This is an extreme example, but it doesn’t actually take huge events like this to tank a brand’s equity.

In 2018 Tide suffered from a loss in brand image as the notorious “Tide Pod Challenge” swept the internet. Despite repeated announcements from Tide advising not to ingest their products, young adults all over the US suffered from poisoning as a result.

However, in this situation, Tide was able to handle the negative brand associations with intelligence and strategy. Since the end of this challenge, Tide has remained a leading seller of laundry detergent and Tide Pods remain on shelves.

The point is that every move your company makes can affect your brand equity, for better or worse. So, take advantage of this and carefully plan your strategies and craft your public image with care.

Visit today to learn more about how to improve the consumer experience.

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