Understanding brand equity

Brand equity is one of a company's most valuable assets. It's what makes us choose one brand over another (and even pay more) when the alternatives may look identical. It gives brands staying power, and in both good times and economic downturns, those with equity tend to “win”.

As Ulli Appelbaum, founder of First The Trousers, explains: "Brand equity is often described as the intangible value a brand holds in the minds of its stakeholders — consumers, investors, and employees." In other words, it's not just about what a brand sells, but what it means.

In this article, we explore what brand equity is, how it's built, how it can be measured, and why it matters now more than ever.

What is brand equity, and why does it matter?

When you picture the Nike swoosh, the Coca-Cola logo, or the Starbucks mermaid, do any associations, memories and emotions come to mind? That's brand equity in its most basic form.

It's why someone might pay more for Nike trainers than unbranded alternatives, even if the products are similar. Appelbaum describes equity as a "brand association network — the web of meanings, experiences, and emotions tied to your brand in people's minds. These associations determine whether consumers love, like, or ignore you — and ultimately whether they buy you at the moment of choice."