How to Measure Brand Equity

Sideview of olorful darts in dartboard
••• Nicolevanf/ GettyImages

A brand is a logo, symbol, or name associated with a product. The impact that a brand has on consumer purchases or perceptions about a product is known as "brand equity." The word "equity" indicates that the brand serves as an asset that holds some type of value.

Brand equity, which is measured in terms of consumer recognition, translates into consumers buying a particular branded product or service versus a different version of the same product. 

Brand Equity Perspectives

Brand equity can be viewed from several different perspectives. The hard-line perspective is that of financial outcomes which look at price premiums. That is, how much more will a consumer pay for a product or service that is branded over one that is generic?

A softer perspective looks at brand extension and the value that a brand leads to the introduction of other products. This approach also considers the reverse dynamic of the impact of a new product or service on the existing brand.

A third perspective, customer-based brand equity, looks at how consumers think, feel, and act with respect to the brand.

It can be helpful to first clarify which perspective to adopt by pinpointing what outcome you wish to achieve.

Determine Brand Equity Research Goals

Brand equity market research falls into one of three camps: Tracking, exploring change, and/or extending brand power.

Market research that focuses on tracking makes comparison among competitive brands or products against a benchmark. When exploring change is the research goal, customer brand attitude is tapped regarding branding decisions that might result in repositioning or renaming products or services. A deeper examination of extending brand power is carried out when substantive additions to a brand are considered. Each research goal requires a different tactic.

Understand Customer Brand Attitude

A customer-based perspective in the measurement of brand equity focuses on the experiences that consumers have with a brand. The stronger the brand, the stronger the customer's attitude toward the products or services associated with the brand.

When customers experience a product or service, they gauge the overall brand quality and tend to infer certain brand attributes. If these experience measures are positive and endure over time, brand loyalty typically results.

Customers can and do easily communicate the strength of their brand attitude to others via customer reviews and social sharing.

Identify Brand Equity Components to Measure

Awareness, reach, and image association are all aspects of brand equity that may not be closely associated with consumer experience. These measures of brand equity may reflect the impact of traditional advertising campaigns, and the influence of social or interactive media.

Brand awareness is an indicator of how branding efforts spotlight a product or service. Reach indicates how far and wide that spotlight shines. And image association reveals what the brand promises and what it stands for in the eyes of consumers.

Measure Perceived Brand Differentiation

Product differentiation is a lynchpin for brand loyalty, confidence in a brand, and the potential for brand switching. Customer perceptions about brand differentiation tend to be strongest when an actual product or service experience has occurred, but brand differentiation is not immune to the influence of advertising.

Differentiation may float on product or brand recommendations in social media rather than any personal experiences with a brand. Because differentiation is so susceptible to social influence, it lends itself to measurement across multiple media channels.

Use Both Qualitative and Quantitative Approaches

Ideally, brand equity measurement will include both qualitative and quantitative approaches. Qualitative examples include focus groups, which can provide a good forum for exploring customer perceptions and motivation.

On the quantitative side, a numerical type of method, such as the survey-based statistical technique called conjoint analysis, can reveal key consumer decision-making processes.