What is Brand Equity and How Does It Impact Your Business

In today’s competitive market, building a strong brand is essential for businesses looking to thrive and succeed. Brand equity plays an important role in establishing a reputable and recognisable brand that commands customer loyalty and premium pricing.

In this blog post, we delve into the concept of brand equity and its importance. Let’s dive in.

What is brand equity?

Essentially, brand equity refers to the intangible value and perception that a brand holds in the minds of consumers. It encompasses the overall strength and positive associations that customers attribute to a brand, allowing it to stand out from competitors. Brand equity represents the accumulated impact of various factors, such as brand awareness, loyalty, associations, and perceived value.

The importance of brand equity

Brand equity is of paramount importance for businesses for several reasons. Firstly, it serves as a competitive advantage by differentiating a brand from others in the market. A strong brand equity instills confidence and trust in consumers, which translates into repeat purchases, customer loyalty, and positive word-of-mouth.

Secondly, brand equity enables companies to command premium pricing. When customers perceive a brand as superior, reliable, and trustworthy, they are willing to pay a higher price for its products or services. This premium pricing contributes directly to increased profitability and revenue for the business.

The 4 elements of brand equity

1. Brand awareness: Brand awareness measures the familiarity and recognition of a brand among consumers. It involves ensuring that the target audience is aware of the brand’s existence and has a clear understanding of its offerings.
2. Brand loyalty: Brand loyalty refers to the degree of attachment and commitment customers have towards a brand. It involves fostering long-term relationships, providing exceptional customer experiences, and consistently meeting or exceeding customer expectations.
3. Brand associations: Brand associations encompass the thoughts, feelings, and perceptions linked to a brand. These associations can be built through strategic marketing efforts, such as aligning the brand with positive attributes, values, or celebrity endorsements.
4. Brand value: Brand value represents the perceived worth and benefits that customers associate with a brand. It involves delivering high-quality products or services that fulfil customer needs and provide a superior value proposition compared to competitors.

How brand equity affects your bottom line

Brand equity has a profound impact on a business’s bottom line. Here are two key ways in which it contributes to overall success:
Higher ROI: Companies with strong brand equity often enjoy a higher return on investment. This is because the trust and positive reputation associated with the brand lead to increased customer acquisition, retention, and reduced marketing costs over time.
Increased sales: A brand with strong equity is also more likely to attract new customers and retain existing ones. That’s because positive brand associations and loyalty lead to increased customer satisfaction, which in turn drives repeat purchases, higher sales volumes, and market share growth.

How to create brand equity

Building brand equity requires a strategic and holistic approach. Here are a few key steps to help you create brand equity for your business:

1. Develop a clear brand identity:

Define your brand’s values, mission, and unique selling propositions. Craft a compelling brand story that resonates with your target audience and differentiates you from competitors.

2. Use consistent brand messaging: Ensure consistent and coherent messaging across all marketing channels and touch points. This includes visual elements, tone of voice, and the overall brand experience.
3. Deliver exceptional customer experiences: Focus on providing outstanding customer service and consistently exceeding customer expectations. Positive experiences foster brand loyalty and enhance brand equity.
4. Invest in marketing and advertising: Implement targeted marketing and advertising campaigns to increase brand awareness and reach across your target industries.

How to measure brand equity

Measuring brand equity is important in order to understand the effectiveness of your branding efforts and to track the progress of your brand over time. Here are some common methods to measure brand equity:
1. Brand tracking surveys: Conduct regular surveys to assess brand awareness, perception, and customer loyalty. These surveys can gather data on key brand metrics, such as brand recognition, recall, preference, and likelihood to recommend.
2. Customer feedback and reviews: Monitor customer feedback, reviews, and testimonials to gauge customer satisfaction and loyalty. Positive feedback and high ratings indicate a strong brand equity.
3. Market research and competitive analysis: Analyse market trends, customer preferences, and competitor strategies to understand your brand’s position in the market. This information helps identify areas of improvement and opportunities for differentiation.
4. Financial analysis: Examine financial indicators, such as revenue growth, market share, and price premiums, to assess the impact of brand equity on the company’s financial performance.

Examples of companies with high brand equity

Looking at successful companies with high brand equity gives us valuable insights into effective brand-building strategies. Here are two great examples:


Porsche is renowned for its strong brand equity in the luxury automobile industry. The company has meticulously crafted a brand identity centred around engineering excellence, performance, and heritage. Porsche’s consistent focus on delivering high-quality vehicles, innovative technologies, and exceptional customer experiences has earned it a devoted customer base and a reputation for automotive excellence.


Tylenol, a leading over-the-counter pain reliever, exemplifies a brand with high equity in the healthcare industry. Tylenol has successfully positioned itself as a trusted and reliable brand, known for its safety, effectiveness, and care for its consumers. Through rigorous quality control, responsible marketing, and a commitment to customer well-being, Tylenol has established strong brand loyalty and is a preferred choice for many consumers seeking pain relief.

What comes next?

Building and maintaining brand equity is a strategic endeavour that can significantly impact a business’s success. A strong brand equity drives customer loyalty, premium pricing, increased sales, and ultimately, a positive bottom line. By focusing on key elements such as brand awareness, loyalty, associations, and value, businesses can enhance their brand equity and stand out in a crowded market.

At LD, we understand the importance of brand equity and the impact it can have on your bottom line. Our team of digital marketing experts is dedicated to helping businesses like yours build and strengthen their brand equity through comprehensive branding strategies, targeted marketing campaigns, and exceptional customer experiences. Book a free coffee chat to find out more about how we can help you create a strong brand equity that drives your business forward.


Back Yourself With An Expert Digital Marketing Team



A fully managed and executed digital marketing strategy and business growth service that is customised to your budget, target audience, industry and business goals.


An expert consultant to help guide your own efforts by providing marketing and audience analysis, business and industry insights, and solution-based strategies to execute.

We use cookies to give you the best experience. Cookie Policy

× Chat Now