Measuring Brand Equity

Published by MBA Skool Team, Published on June 27, 2011

Brand is a perception and an image that captures the imagination of people. It creates a world in their mind which leads to the people becoming loyal to a particular brand. Branding with mascots, logos, designs, characters all creates a visualization in the mind of consumers which ultimately plays a crucial role in determining the success of a product of service. Brand equity is the sum of all the hearts and mind of every single person that come in contact with that brand and it is the overall value of that brand. Thus, to understand the value and the growth of a brand, it is critical to undertake an important task; Brand Equity Measurement.


Measuring Brand Equity

A brand is a distinguishing name or symbol intended to identify the products or services of one seller and to differentiate those goods or services from those of competitors by the means of trademark, logos, packaging or designing. A brand takes a long time to get created as people with their own knowledge and experience of a product or service get emotionally attached to a brand. If a person getting loyal to a brand, then he spreads a positive word of mouth for the service and it helps establishing the brand. Also, the ease of access, richness, presence and intensity of the brand also strengthen its value. Thus, brand equity is a set of brand assets and liabilities linked to a brand, its name and symbol that add or subtract from the value provided by a product or service to the firm’s customers. In simpler terms, Brand Equity is the value of the brand.


Brand equity measurement is a critical process for companies to understand their strengths and weakness. There are various ways in which brand equity can be measured. The company’s perspective of measuring brand equity can be understood by studying average sales, profit, and growth as compared to previous years or with industries competitors. Similarly, measuring the stock price, market capitalization gives the market perspective for the value of a particular brand.


The Cost based method of measuring brand equity includes historical data, replacement costs, discounting cash flow methods and also inter brand method. On the other hand, price based method considers price premium, market share capitalization, price premium at indifference. Another important aspect of measurement is using the Customer based method as ultimately the value of the brand is best decided by the customer only.


Customer based brand equity involves the consumer’s reaction to the marketing mix for the brand in comparison to the same marketing mix attributed to a fictitiously named or unnamed version of the product or service. Brand equity is measured by customer’s interpretation, brand recall, confidence in purchasing decision and also satisfaction from product use.


The dimensions of brand equity are brand awareness, brand loyalty, perceived quality, brand association and other brand assets which collectively form the image in the consumers mind.  Each of these can be explained as below:


Brand awareness is analyzed by judging brands of various levels like Top of the Mind (TOM), Brand recall, brand recognition and people being unaware about the brand

Brand loyalty helps in understanding price sensitivity, brand switchers, satisfied buyers and committed customers.

Perceived quality based on performance, features, specifications, reliability etc also helps in evaluating the brand value.

Brand associations like packaging, accessories, merchandising etc also helps in understanding the strength of a brand.

Names, logos, symbols also have to be analyzed to determine the value of a brand.


Branding is a concept which is very difficult to be defined within limits as it deals with the perceptions of the human mind. Small budget campaigns can really improve a brand’s image whereas on the other hand sometimes surplus money can be disastrous. There is no certain way of achieving success, but one way in which companies can understand themselves it through brand equity measurement.

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