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Brand Equity. What it is and why it matters

Brand equity: what it is and why it matters

March 2023 · 17 Min Read

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Brand equity. It’s a marvellous thing. Imagine yourself for a second, walking into a shop and seeing a plastic bottle filled with a dark, thick, looking drink. In this fictional world, you’ve never heard of Coca Cola or Pepsi. The shop owner looks at you with a raised eyebrow and smirk. She says “go on, open it, I’ll let you try it out for free.” As you turn the lid, you hear a hissing noise and a pop. The smell is sweet but not like anything you’ve ever had before. Would you drink it? Would you even trust that it was safe?

It's likely that some of us would give it a go and some wouldn’t but most of us couldn’t be sure. Now, bring yourself back into the real world and add the red label that we’ve all seen a million times before. Many of you would pick it up without thinking. You’d buy it, drink it and come back for more. Some of you would run a mile. Whatever your choice, it would be based on several reasons:

This is all part of brand equity but what exactly is brand equity? How does it compare to brand awareness and how can it affect your business? Let’s dive in!

Table of contents

What is brand equity?

Brand equity is the extra value your business or products get from having a recognisable name. Think about your favourite coffee, perfume or car. What is it that makes you love them? You’ll recognise them anywhere, you might think they’re more reliable and you probably think their quality is far superior to competitors.

Brand equity makes a tangible difference to sales volumes and the price customers are willing to pay. It makes an intangible difference too. The general feeling customers have towards you and the way they talk about your business when you’re not in the room comes from your brand equity. From an accounting perspective, it’s known as goodwill.

What’s the difference between brand equity and brand awareness?

Let’s be honest, there are too many terms with the word “brand” in them. Having said that, the meaning behind the terms matter. Brand awareness is a simple concept. Have you heard of “Ralph’s Whiteboards and Blackboards”? It’s a surprise if you have because we just made the name up, which means you’re not aware of the brand and the brand has no brand awareness.

Let’s pretend Ralph’s exists. You’ve seen their advertisements on social media, you’ve heard about the new shop they’ve opened, which has created 100 new jobs for the community and you’ve been told stories about their products by friends and family. By now, you have a feeling about Ralph’s. If you were asked where to buy a new whiteboard, you might suggest Ralph’s or you might tell people to steer clear. All of this contributes towards the tangible and intangible effects we mentioned earlier and it’s all part of Ralph’s brand equity.

Brand awareness means that people know a brand exists. Brand equity is the value a brand has in the market.

Brand Equity Stages Inforgraphic. 5 stages from awareness to loyalty

Brand equity stages

Lots of components affect brand equity and your brand’s perceived value will have its own path. Still, most brands go through the following stages at some point. We’re going to take Marylin’s Mugs as an example for each stage:


Jacinda saw an image of a beautiful, hand-crafted mug flash up in front of her as she was scrolling through her Facebook feed. She doesn’t usually stop for ads but this one caught her attention. The shape and design were completely different and the colour pallet was exactly to her taste. Even the logo made her feel like she would have designed it herself. She was too busy to click through but when she saw an article in her favourite craft magazine about Marylin’s Mugs a few days later, she connected the dots and realised they were the same company. She had brand awareness.


It felt like Marylin’s Mugs were everywhere to Jacinda. Every time she passed by a kitchen shop or a craft store, she connected with the logo and the style. She was familiar with the brand and had brand recognition.


One weekend, Jacinda had a bit more time to shop. She went into her local kitchen shop and picked up one of Marylin’s Mugs. It had a good weight and felt like it would be perfect for her regular nightly hot chocolate so she bought one to give it a try.


Jacinda really loved her new mug. She rarely drank from anything else and on the odd occasion that she had to drink from a different mug, it never seemed to hold in the heat quite as well. She bought more of Marylin’s Mugs and started gifting some to friends. When Marylin’s Mugs released new products, she was the first in line.


Facebook, Instagram, Pinterest, wherever Marylin’s Mugs was, Jacinda was too. She became part of their brand marketing by recommending it to all her friends and never bought a generic mug or a mug from another brand again.

Brand Equity Positive Benefits

Why does brand equity matter?

The example we used above related to one buyer and one brand but imagine being able to create that level of loyalty from hundreds or thousands of customers. The knock-on effect would be huge. Your sales volumes would increase, you could charge more and much of your marketing would be done for you.

For each loyal customer that recommends 2-3 new customers, you skip the awareness and recognition stage and go straight to the testing stage. Positive brand equity makes you stand out and increases your chance of long-term success. Sprout social says that 77% of customers prefer to buy from a brand they follow on social media and according to Edelman, 59% of customers will stop buying a product if they don’t trust the brand behind it.

Positive brand equity benefits

You’re probably getting a sense of positive brand equity benefits already, both tangible and intangible. Let’s break them down:

Market share

You go into business for many reasons but most business owners want a larger slice of the pie. Growth and profits aren’t always the end goal but they are, at the very least, a means to an end. A recognisable, positively thought of brand will gain a greater share of the market than an unknown brand or a brand with a bad reputation.


You’re worth it! That’s not just a positive mantra to make you feel better, although you definitely are worth it. What really matters isn’t what we think, it’s what your potential customers think. If they value your products and if your name, logo and brand attributes give them a positive feeling, they’ll be willing to pay more.

New product sales

Launching a new product isn’t easy. There’s a lot of planning involved and if no-one knows who you are, they have no reason to trust that what you’re offering is worth buying. Positive brand equity gives you a head start. Customers who have bought your products in the past will give you the benefit of the doubt on new products and will move straight to the testing stage.


It’s not as easy to measure perception as pricing or market share but the better perceived your brand is, the more likely it is that your customers will spend more, more often. You can get a sense of how your customers and different stakeholders perceive your business by keeping track of social media posts that mention your business name, by reading reviews and by sending out surveys.


Influencers aren’t just social media gurus with billions of followers, everyone influences someone. Positive brand equity widens your business’ scope of influence. You can start to steer the market in a particular direction, it’ll be easier to find collaborators, you can build stronger relationships with suppliers and that business pitch will become much easier.

Ad-spend reductions

Advertisements and marketing are expensive but the better your brand equity, the less you need to spend. Customers will search for you so you don’t have to spend as much time searching for them.

Customer loyalty breeds “promotors”. Think about Android and Apple. Promotors of both companies will happily tell their friends about the advantages of each one and conversely, the disadvantages of their competitors. PR Newswire states that 67% of promotors are likely to forgive a brand if they make a mistake.

Customer retention

It’s a lot easier to keep a customer when you have positive brand equity. This means you can spend more time looking after them and use your consistent income to find ways of attracting new customers. Treat them well, increase your brand equity further and the positive cycle will continue.

Define your brand

For a clear, consistent, relevant message that stands out.

Positive brand equity examples

You’ll probably have heard of these brands, especially if you’re their target audience and that’s because they have positive brand equity. Remember, you might not like some of these brands but that’s not the point. The audience they’re trying to attract know about them, like them, prefer them to their competitors and will even fight for them in an argument.


Always Coca-Cola. We all know the slogan and this $265 billion company has an incredible history. Coca-Cola’s own website gives us their version. A story of a man who goes by the name Dr. John Stith Pemberton. The local pharmacist produced a syrup and carried a jug of it to Jacobs’ Pharmacy. The “delicious and refreshing” drink was attached to the Coca-Cola logo and the rest is history.


One of the key elements of defining your brand is standing out from the crowd. Oatly have done that. Oatly was founded in 1994 but many of you will have only heard about them in recent years. An investment group, which includes Oprah Winfrey and former Starbucks CEO Howard Schultz injected $200 million into the company in 2021, showing their perceived value. Incredible, a story of brand equity success! Yet, there was roughly a 27 year gap between their founding and many of us having any idea who this Swedish powerhouse is.

Toni Petersson joined Oatly in 2014 and he understood the power of positive brand equity. According to CNBC, he saw that the plant-based “milk” industry was growing in America and pushed for brand awareness. The packaging became bolder, the copy changed to English and the brand started to get recognised. Over time, Oatly connected directly with Baristas, allowing them to test the product and gain a preference for it. By the end of 2017, Oatly was being served in about 650 cafes in the US. Oatly was better known, customers were becoming loyal and sales rocketed from $6 million to $40 million from 2018 to 2019.

A true test of loyalty came when Blackstone Group invested in Oatly. Oatly is seen as a beacon of sustainability and that’s part of what makes its brand equity so valuable. Some allege that Blackstone have invested in companies connected to deforestation, although this is strongly refuted by the investment group. Oatly knew this could be a PR disaster and some fans even boycotted the brand, causing a potentially massive hit to their brand equity. Oatly defended their position strongly and brought many fans back on side. Their value dropped with some customers but their overall awareness and value to others increased significantly. We’ll see how the story unfolds.

How to measure brand equity

If brand equity seems a little abstract to you, we get it. Lots of it is in a way. It’s all about value and perceived value and fairies. Maybe not fairies but the other two. Although each person’s idea of a brand’s value is hard to measure, there are things we can track.

Customer retention, conversions and price are all quantifiable. Customer research and sentiment analysis asks qualitative questions. Each gives you a better idea of value. None of these measurements are perfect, although AI is getting better at combining data sets to get a fuller picture.


What happens when something goes wrong? Does your brand survive, thrive or collapse? Strong brands survive despite change, however unexpected. Many brands suffered during the global pandemic. No matter how strong the brand equity, it was impossible for some to survive. For everyone else, brand equity made a huge difference. Customers would find ways to buy take away coffee from their favourite cafes or to get deliveries from their favourite clothing stores because they wanted them to survive and eventually thrive.

Eurotunnel provided a great example of how to increase customer loyalty during the covid pandemic. Instead of waiting for customers with their Frequent Traveller tickets to request refunds or extensions, they offered extensions free of charge and without hassle for almost two years. They lost out on revenue but gained value and loyalty.


Market share, profitability, revenue, pricing, growth rate, cost to retain customers, cost to acquire customers and the levels of branding investment needed are all good ways to measure brand equity. As you’ve seen with the Eurotunnel example, you have to be careful about using any of these individually. A loss in revenue doesn’t necessarily mean a loss in brand equity. Financial measurements are only one part of the overall assessment.


Your brand is how you influence what people say about you when you’re not in the room. Your reputation and your brand equity can be measured by listening closely to what your audience says. To track brand equity, you need to track buying habits, social media conversations, customer reviews and anything else that relates to who you are as a business. You can’t measure everything in business so measure what you can with the resources you have.

How to measure brand equity

Build your brand equity

OK, you can’t control every part of your brand equity. Outside influences have a big effect. What you can control is who you are and how you behave. That starts with defining your brand.

Make sure you have a well-defined brand

Your brand is who you are as a business. Everyone who works with you has to know who you are and behave in a way that reflects what you stand for. Defining your brand isn’t fancy jargon, it’s setting out why you’re in business, who you’re trying to help, what values underpin the work you do and how you communicate with the world. A well-defined brand has a tone of voice and a personality that’s instantly relatable, it offers a clear, consistent, relevant message and it stands out from the crowd.

Did you know? You can create a clear, consistent, relevant brand that stands out from the crowd with Puck Creations? We facilitate Defining Your Brand Workshops to make sure your team always knows who you are and who you strive to be.

Build visibility

You can have the best values, a shining personality and the strongest why known to humankind but if nobody knows you exist, it’s all for nothing. Strong brand equity only exists if you do. You need to get out into the world, network, connect with people. The way you do that is unique to you. Physical networking is perfect for some. Facebook or LinkedIn work for others. Emails, blog articles and regular radio advertisements have kept many a brand top of mind for a long time. The most important element of visibility is that you’re where your audience are, so go find them. A little tip… a powerful website is like a beautiful home, ready to take your audience back to when they’re ready.

Hello, we’re here! Yes, we’re taking our own advice and we’re being visible. Sometimes, it’s hard to stay visible and creating copy or content that really makes a difference can seem impossible. Even if you’re good at it, where will you find the time? Ask Puck Creations instead and we’ll do it all for you.

Make your why clear

Your why is the reason you do what you do. It’s what gets you up in the morning and more importantly, it’s what gets your whole team excited. A strong why connects everyone in the business from suppliers, to collaborators, to employees and customers. At least, it connects people if it’s clear. When you define your brand, your team understand your why and over time, everyone else will too.

Stay consistent

Consistency is the key to building and keeping trust. When you say your values are flexibility and reliability but your staff must work from 9am to 5pm and your suppliers never get paid on time, you’re neither flexible nor reliable. Consistency is about every interaction and every action abiding to who you are as a business and a brand. It’s not enough to treat your customers well. You and everyone on your team have to show the same values, personality and drive towards a shared vision for anyone to believe you are who you say you are.

Keep it relevant

So, there was a man on a bus the other day, he was talking about his favourite handbag and he asked the person on the phone if they liked chocolate. None of this has anything to do with the article, except to show that if your messaging isn’t relevant, your customers won’t care. That’s not to say you always have to talk about your products and services. Far from it. Instead, you need to make sure that your content and communication always connects to who you are as a business, your values and why you do what you do.

Stand out

It’s a cliché by now but it’s also not usually very well explained. One of the best ways to stand out is to know yourself better. Nobody can be you, no matter how hard they try and you can’t be anyone else. Standing out isn’t always about having brand new inventions or the latest products, it’s about doing it your way. How do you achieve that? You know where this is going, don’t you! You define your brand!

Customer experience

You’ve seen how a customer can go from zero knowledge of who you are to brand awareness and eventually brand loyalty. That doesn’t happen by accident. Make sure you have a plan for bringing your customers through every stage so you never miss out on a chance to increase your brand equity.

Increase your brand equity by working with Puck Creations

Brand equity isn’t just another term after all, it’s valuable, it’s profitable and it’s worth your time and investment. It starts with knowing who you are and defining your brand. You can find ways to do this on your own and we’ll happily recommend some great guidelines. Having said that, many businesses prefer to work with Puck Creations to define their brands, as we’ve defined our brand as the kind of people who know how to define your brand.

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Brand Equity FAQ

Q.) What do you mean by brand equity?

A.) Brand equity is the value customers attach to your business through perception and experience. You can’t decide what customers think of you but you can influence them by defining your brand.

Q.) What are the 5 elements of brand equity?

A.) Brand equity has 5 elements, broken down into stages: awareness, recognition, testing, preference and loyalty.

Q.) How do you build brand equity?

A.) Building brand equity takes time. You start by defining your brand so you can offer a clear, consistent, relevant message that stands out from the crowd. This helps you to increase awareness and recognition, to ensure customers are happy when they test your products, to become a brand of choice and to increase customer loyalty.

Q.) How do you value brand equity?

A.) The value of your brand equity is measured by checking the strength of your brand, its financial impact and the way customers talk about you.

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