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What Is Brand Equity and How to Make It Strong?

Brand equity underlies every success of business in the market. Follow our guide to understand what it is and how to reinforce it for your company.

Written by RamotionNov 14, 202216 min read

Last updated: Feb 25, 2024

Do you know what makes customers want to pay more for some brands than others? What does motivate them to choose luxury or well-known brands over local ones? How do some brands become part of our everyday lexicon or synonymous with categories in the market? The answer hides in the well-thought-out branding and marketing strategy that develops strong, impressive, long-standing brand equity.

Being generally overlooked and underestimated by startups, brand equity is an intangible asset that stands behind huge profits, a strong reputation, high conversion rates, and an extended company life. This dark horse of brand development sets the company on a successful trajectory and helps avoid off-beaten tracks.

In this guide, we will dive deeper into this concept by defining its meaning and components, stating its importance, and revealing time-proven strategies to reinforce it.

Defining Brand Equity

Acquaintance with a brand's equity starts with answering the fundamental questions: what this concept is, what purpose it has and why it is so vital for businesses that all professional branding agencies strongly recommend reinforcing.

From the marketing point of view, it refers to the value a company gains from its name recognition.

This asset is intangible; however, its impact on the company's existence in the marketplace is pretty visible. It directly influences sales volume, market prices, profitability, shares, position in the market, and the lifetime of the product and company.

Coca-Cola is a niche synonymous and a bright representative of strong brand equity | Image by Bastian Riccardi

The Importance of Brand Equity

Although brand equity constantly lives in the shadow of its famous confreres, like brand identity or mission. However, as practice shows, it brings significant value to the brand's development, which is essential for a successful product's existence.

There is more. Consider some other good reasons.

  • It raises awareness. The latter develops familiarity and visibility that generate positive brand associations with the company and ipso facto compels users to stick with the brand and buy from it. According to recent studies, the mere fact of being known among the target audience brings value to the product.
  • It ingrains certain traits in consumers minds and links them with positive associations, providing them with valid reasons to buy from you.
  • It bridges the gap between the perceived benefits and perceived costs that partially eliminate questions concerning the price.
  • It supports long-term value creation that sustains a competitive advantage.
  • It promotes brand loyalty. It strengthens the genuine relationships between the company and its clients, thereby retaining loyal clients and saving lots of money on acquiring new ones.
  • It plays a crucial role in defining price structure. Based on brand popularity and characteristics associated with the company, the team may charge 'premium' prices for products without causing wobble or discontent.
  • It is an indicator of company performance. It helps marketers and branding specialists to define weaknesses in the company's presence in the market and eliminate them.

Benefits of Brand Equity

Working towards building high brand equity is essential for the company to corner the market and fight competing brands. However, there is a pleasant bonus. When well done, it offers some substantial benefits. For instance:

  • It drives engagement.
  • It generates higher profits.
  • It starts word of mouth around the company and product.
  • It influences conversions.
  • It allows collaboration with influential companies to enjoy enhanced brand equity.
  • It lays the foundation for potential expansion, offering the opportunity to enter new markets without sacrifices.
  • It increases market performance.
  • It develops a more significant market share by giving a competitive edge.
  • It allows charging more and switching to premium prices.
  • It makes it easier to sell to new and loyal customers.
  • It makes a company more attractive to talents.

McDonald's is also synonymous with the niche thanks to its strong brand equity | Image by Robi Pastores

5 Key Components of Brand Equity

Brand specialists identify essential components that form the core of this concept and significantly contribute to the company's financial value.

Generally, recognized brand equity has three prime components: consumer perception, negative and positive effects, and the result reflected through value. However, if you dive a little bit deeper, you may have noticed that this trio revolves around these smaller yet crucial elements:

  • Awareness. How well your target audience is familiar with your company's mission, current offerings, product benefits, and particular brand value defines whether they will get back to you in time of need or recommend you to their peers.
  • Reputation. Positive customer perception is directly linked to the company's overall value in their eyes. It is a complex term yet the most crucial element in a company's existence in the market.
  • Loyalty. The preference for a brand over similar companies in the market starts with a particular commitment. It defines whether your customers stay with you no matter what, whether they buy your products without price cuts and whether they end in repetitive sales.
  • Experience. Customer satisfaction caused by a great brand's experience makes the clients consider the company superior, reliable, and worthy of their money. Consequently, they will start preferring it to other such brands.
  • Relevance. Knowing your target audience's needs, requirements, standards, and expectations is rule number one in the company's successful development. It plays a massive role in creating strong brand equity.

Additionally, specialists add flexibility, perceived quality, customer preference, differentiation, association, energy, and emotions to this mix. Each one brings its contribution. For instance,

  • Flexibility allows the brand to add features to the product without losing its quality and overall perception. It also helps the company to leverage it in various campaigns and even introduce it in other market sectors.
  • Quality shows customers that the company fulfills its promise. It influences pricing decisions and allows availing the luxury of premium goods.
  • Differentiation identifies how the company separates itself from the competition. Even when the company begins its journey, its unique brand personality, character and charisma help it build a solid foundation for brand equity.
  • Association is everything that consumers relate to the brand. At some point in the customer's lifecycle, it triggers the required gamut of emotions that compels them to buy from the company.

Apple products that bear a sense of perfectionism and sophistication due to brand equity | Image by Pixabay

Basic Steps and Approaches to Building and Managing Brand Equity

Some say businesses can easily create positive brand equity simply by making their products memorable, recognizable, and superior in quality and reliability. However, not everything is that simple. Customers will tend to buy a product they recognize and trust. Even if you have a top-notch item that meets all standards, it does not mean prospects will take your word for that. According to marketers and brand specialists, developing strong brand equity is a long process that requires businesses to make branding efforts in various directions, do consumer research and invest in approaches. Generally speaking, it can be broken into two main stages:

  • Stage one is the introduction. The company should introduce a high-quality item worth the customer's attention that perfectly complies with the requirements and demands of the marketplace.
  • Stage two is maintenance. The company should carry a consistent image, stick to high standards across the boards and keep the promise to provide the best quality with products and interactions with customers.

Let us consider five popular ways implemented during the second stage that build strong brand equity.

State Who You Are and What You Are Doing

First things first. Before building brand equity, it is crucial to get things straight and figure out the brand meaning and ways to communicate this with the stakeholders clearly. Your task is to ensure users and existing customers quickly tell why you are so unique to make them love you for what you are. The basic steps to do that are:

  • Delineate the brand's mission, vision, and goal.
  • Set core brand values.
  • Establish company standards.
  • Test positioning with customers.
  • Analyze the target audience's preferences, consumer demand, and needs.
  • Create brand guidelines for all departments and put every team on the same page.
  • Keep up with the trends to adjust the brand to new realms without sacrificing identity and core values.

Create a Positive Customer Experience

Start building brand equity by taking basic steps to improve the company's existence in the market. First and foremost, this means providing a positive customer experience.

Recent surveys state that brands are no longer defined by how they position themselves in ads. Great customer experience is what matters. It nurtures and retains clients, encourages them to refer your company to others, and establishes healthy relationships that translate into a strong reputation. It is one of the most influential elements in driving purchase decisions today. According to

Forbes, it makes the difference between a one-time customer and a loyal customer in over 80% of cases.

  • Improving customer experience is a vast process. So, what can you do?
  • Ensure your support team addresses all customer issues in time.
  • Make the web platform meet all standards (such as being responsive, mobile-friendly, accessible, and usable).
  • Create chats, virtual assistants, interactive FAQs, and guides.
  • Comply with users' needs and expectations.

Call center | Image by Tima Miroshnichenko

Maximize Brand Awareness

This is one of the most popular practices among entrepreneurs. There is a good reason for that. Building brand awareness is about making your brand widely recognizable and perceived in the way the company intends. It catches the eye of prospects and pushes them towards the company and its products. However, it is not that easy to handle.

Specialists recommend companies start by measuring brand equity and the current company's success to define weaknesses and strengths. Then, design a strategy based on Keller's CBBE model to improve overall presence. Finally, follow these tips:

  • Provide an ongoing value.
  • Ensure consistency with brand image and message.
  • Monitor brand response.
  • Nurture brand advocates.
  • Tell a story.
  • Create value beyond product.
  • Show appreciation by giving away freebies.
  • Create shareable content and add functionality to share products through social media platforms and news portals.
  • Use various distribution channels to reach customers: digital emails, social media, and phone.

Form Strategic Partnerships with Reputable Brands

A brand partnership is an oldie-but-goodie practice that works excellently in marketing and branding niches. It is arguably one of the most inspiring approaches that bring numerous benefits to the company. For instance, it generates buzz, builds consumer trust, and adds value to your business.

There are many opportunities: you may explore co-branded products and product lines, co-sponsor events, or create a new service.

However, there is a catch. It is vital to ensure this partnership does not end with brand dilution or over-extension that weakens the overall brand health and equity. Therefore, introduce consumer involvement, maximize brand consistency, and prioritize your branded product.

Build Brand Loyalty

Few people know that acquiring new customers is almost five times more expensive than keeping the existing ones. Loyal clients are the lifeblood of the company. They are willing to buy more and pay more for the products. Marketers consider customer loyalty one of the most crucial strategies in brand management because it translates into actual revenue and prosperity of the business.

  • Much like brand awareness, there are some approaches companies may adopt to build and improve it. For instance,
  • Deliver everything you have promised.
  • Meet the highest standard.
  • Watch customer's preferences.
  • Socialize with your customers.
  • Build on feedback and reviews.
  • Invest in memorable and eye-catching brand identity.
  • Stay consistent with everything.
  • Find simple initiatives to create connections.
  • Capitalize on reward programs.
  • Do more than your customers expect.

Customer loyalty | Image by Energepic

Connect with Target Audience

Connecting with your market is a true challenge; however, if you manage to do that, you may take your company's presence to a new level by establishing healthy relationships and laying a strong foundation to move forward.

With proper analytics tools, the team derives lots of benefits from this connection. They may understand clients' and prospects' reactions, wants, needs, preferences, and expectations, as well as measure brand equity and how consumers feel about the brand. These insights help to define what strategies and companies resonate the best.

As we have already mentioned, connecting with users is not simple. However, it is real when you know what to do. Follow these best practices:

  • Create social media accounts and post there regularly.
  • Foster positive emotions in every interaction with the brand and encourage users to pass the word on.
  • Trigger warm feelings towards the product.
  • Deliver the message that your company is consistent in its credibility, quality, relevance, and superiority over the competition.
  • Form a psychological and emotional bond by leveraging retention, nurturing, and appreciation campaigns.
  • Make consumers feel part of a community or VIP club.
  • Conduct targeted focus groups to collect feedback.
  • Add widgets to web platforms to gather reviews, opinions, and comments.
  • Use online tools and AI-powered instruments to reach a bigger audience and analyze data more efficiently.
  • Get the most out of the brand audit.

Last but not Least, Keep on Moving

Building brand equity is a continuous process. Although you may obtain strategic goals and reach some peaks, you should not be over-confident. There are some good reasons for maintaining sustained branding.

First and foremost, the target audience's preferences and expectations change constantly. If you stay still, you will not meet them in the long run, and your brand equity will lose points.

Second, brand equity can be easily damaged. Multiple factors can ruin it: bad reviews, mistakes of the customer support team, and even downtime of essential services on the platform.

Third, competition is getting fierce every single day. Brand equity is one of your reliable and trustworthy tools to fight it. It should undergo constant improvement to face the obstacles set by your opponents.

Fourth, negative brand equity is a real thing. It may occur due to unavoidable circumstances. However, consequences can be eliminated with ongoing marketing efforts.

Finally, continuous brand equity investment allows the company to conquer new markets, maintain growth, and continue as a niche leader.

Nike has been synonymous with sports niche for decades thanks to the ongoing development of brand equity | Image by Deybson Mallony

Steps to Improve the Existing Brand Equity

Do you know your company already has brand equity, whether or not you have worked on it? If you wonder how to improve it, follow this basic two-step routine.

Step 1 – Measure the Company's Brand Equity

Even though brand equity is an intangible asset of the company, you can still measure it. Marketers analyze it using three primary criteria: brand knowledge, preference, and financial metrics. Let's break them into pieces.

  • Knowledge centers around overall brand awareness. It answers the question of how well clients and prospects know your brand. This implies checking feedback, reading reviews, and conducting surveys to understand how well your customer is acquainted with your current products, offerings, brand value, and mission.
  • Preference is all about purchasing behavior. Marketers create heat maps and analyze customers' shopping history to understand how consumers interact with the brand on a website, what products they prefer to buy more often, and whether their behavior is consistent.
  • The financial performance revolves around operational and experience data. The first factor is about numbers: prices, bounce rate, conversions, number of purchases or subscribers, growth rate, revenue, the cost to retain customers, and investment. It can be easily audited through analytical tools. The second criterion refers to customer emotions and perceptions. This one is hard to measure. The time-proven way is to create surveys or use social listening tools.
  • Based on regular brand tracking, marketers deduce how good or bad brand equity is and whether it meets the company's expectations and goals.

Step 2 – Introduce Improvements Depending on the State of Brand Equity.

Consider these enhancements and best practices.

  • Create a professional brand equity model.
  • Break down existing brand strategy into elements that influence brand equity. Polish them to make the most out of campaigns. Continue emphasizing the brand's critical differentiating aspects in every marketing and communication initiative.
  • Take relationships between company and customer seriously. The stronger that bond, the higher your brand equity. Build connections through various mediums and maximize retention and nurturing campaigns.
  • Invest in user service to create a positive experience. Not only does it help to improve customer lifetime value, but it also supports marketing efforts, reinforces brand identity, and generates marketing opportunities.
  • Deliver quality products to your customers and keep the company's promise. Always thoroughly test your product and ensure its performance meets customers' expectations and standards. Do not turn product development into a race.
  • Quantify your brand across various distribution channels. If your company obtains impressive results, do not hesitate to show them to your customers. Reach them with this news through email, social media, print media, and brick-and-mortar stores.
  • Adapt to market changes. Audience preferences, requirements, and expectations undergo constant changes. Do not expect your customers to stay the same. Ensure your brand and product are flexible enough to keep up with the rest of the World.
  • Do competitive analysis and market research regularly. Along with knowing your target audience in and out, it is crucial to be thoroughly informed about your competitors' activities.
  • Keep an eye on industry trends. Ensure you follow the mainstreams and use them wisely. If your product is irrelevant to your target audience, it will not do much good. Explore trends to define those that influence the brand's positioning and, consequently, brand equity.
  • Target a particular niche. Do not spread yourself too thin. First, earn a good reputation in one sector, and only then move forward.
  • Ensure consistency across all distribution channels and marketing communications. Every part of your brand that interacts with prospects and customers should stay in sync with your brand's goal, vision, and mission.
  • Stick to one gamut of emotions. Do not send mixed messages – this will confuse your audience and damage your brand equity.
  • Listen to customers and react quickly. If your product does not meet their expectations, remedy your mistakes without hesitation.
  • Collect feedback and reviews and conduct targeted focus groups regularly. They gather insights into your brand, becoming an excellent source of the company's strengths and weaknesses. Do not take critics personally. Remember, it provides excellent growth opportunities.
  • Create marketing and communication campaigns that strengthen brand equity.
  • Take your time, and do not rush things. While brand recognition levels may get ramped up quickly, brand equity needs time to build up and bring "fruits."

Amazon constantly improves its brand equity.


People do not buy products on a whim - they have a complex decision-making process that involves numerous factors. According to marketers and psychologists, customers analyze the hard data they find about the company and their perception of the brand. On top of that, they put into this mix emotion and peers' recommendations. Therefore, the key to their heart often lies in the brand's reputation and ipso facto brand equity.

Brand equity is an intangible yet powerful asset that is crucial no matter what your business's stage is. When well done, it brings numerous benefits, like generating positive feedback, encouraging social media buzz, boosting subscription list growth, reducing bounce rate, getting widespread recognition, and so on. All this translates into actual revenue and prosperity of the company.

To improve and reinforce it, follow the best practices and never stop branding – this way, your company will occupy a strong position in the market and move towards its long-term goals despite the economic climate.