Brand equity: what a brand is worth, and how communication builds it

Brand equity is the value a brand name adds to what is being sold: the reason people choose it, pay more for it or forgive it a bad day. It is the brand's balance sheet, and every campaign either adds to it or draws on it.

• David Aaker described it in 1991 as a set of assets: loyalty, awareness, perceived quality, associations and the brand name and symbol^1, 2.
• Kevin Lane Keller defined it in 1993 from the customer's side: the difference that knowing the brand makes to how people respond to its marketing³.
• Jean-Noël Kapferer starts one step earlier, with the brand's identity, and his Brand Identity Prism is a tool for writing it down⁷.
• It is measured three ways: in customers' minds, in the market (penetration, price premium, price sensitivity) and in money.

The decision it informs: what the brand must stand for, what to measure every quarter, and how much of the plan should build the brand rather than harvest it. Read it with the brand platform and message house and the glossary entry for brand equity.

Aaker's Managing Brand Equity, published by The Free Press in 1991¹, organised the subject around assets a company can build, protect and lose: brand loyalty, brand awareness, perceived quality, brand associations, and the brand name and symbol². The book argued against sacrificing long-term brand health for short-term results².

For a communications planner the value of Aaker's list is that each asset suggests its own work. Awareness is a reach job. Associations are a consistency job: the same few ideas, said and shown everywhere. Perceived quality depends on proof (reviews, awards, demonstrations, expert endorsement) as much as on claims. Loyalty is earned mostly by the product and the service, and communication's role is to remind and reassure. Names and symbols need protecting: Jenni Romaniuk's work on distinctive brand assets at the Ehrenberg-Bass Institute measures them by fame and uniqueness, that is, how many people link the asset to the brand and how exclusively¹⁴.

Two years later Keller looked at the same question from the customer's side. In the Journal of Marketing he defined customer-based brand equity as the differential effect that brand knowledge has on how consumers respond to the brand's marketing³. Equity is positive when people respond more favourably to a price, an advertisement or a product when they know which brand it is than when the same thing comes from an unnamed or fictitious brand³. Brand knowledge, in his model, has two parts: brand awareness and brand image, the set of associations held in memory³.

In a 2001 Marketing Science Institute paper, Keller turned the definition into a blueprint: four steps (establish the brand's identity, create its meaning, elicit the right responses, forge relationships) supported by six brand-building blocks⁴. His textbook, now in a fifth edition with Vanitha Swaminathan, presents the model as the brand resonance pyramid⁵.

Keller describes the left side of the pyramid as the more rational route to building a brand and the right side as the more emotional one⁶. The practical lesson is the order: a brand that is not salient has nothing to build on, and resonance cannot be bought with a loyalty scheme if people do not yet think well of the brand.

Aaker and Keller mostly look at the brand from the customer's side. A useful complement starts from the company's side, with the brand's identity: what the brand team decides the brand is, before anyone perceives it. Jean-Noël Kapferer's The New Strategic Brand Management, now in a fifth edition from Kogan Page, includes the Brand Identity Prism among its models and has sections for luxury, corporate and retail brands⁷. The book is the expanded sequel to his Strategic Brand Management, first published in French in 1992⁸.

For an integrated plan, the prism's use is simple: it makes a brand team write down what the brand is before agencies start interpreting it, which is exactly what a brand platform is for.

No single number captures equity, so mature teams use three levels and read them together.

Tracking. A brand tracker asks the same questions of category buyers at regular intervals. Kantar's Meaningful, Different and Salient (MDS) framework is one widely used version: it is designed to capture the equity held in consumers' minds and its effects on penetration and share, willingness to pay and future growth potential⁹. In Kantar's BrandZ rankings, brand value is a company's financial value multiplied by the brand's contribution, the part driven by equity measured with MDS¹⁰.

Price premium and price sensitivity. Keller's definition implies a market test: if people respond better to the brand than to an unbranded equivalent, the brand can hold a higher price. Les Binet and Peter Field's analyses of the IPA effectiveness databank found a correlation between very large brand-building effects and very large reductions in price sensitivity¹². Binet explains the mechanism: when price elasticity is low, a price rise costs relatively little volume, so profit improves¹³.

Money. When a brand must be valued for accounts, a licence or a sale, ISO 10668 sets the requirements: a declared purpose, a stated premise of value and a clear identification of the brand, with behavioural, financial and legal parameters taken into account and income, market or cost approaches applied¹¹. The standard deliberately prescribes no single method¹¹, so two valuations of the same brand can differ; compare like with like.

Integrated communication is the main way most companies add to equity, because equity is the sum of what people have seen, heard and experienced of the brand, wherever that happened.

• Pick a few associations and repeat them everywhere Keller's brand image is a network of associations³; every touchpoint that says something different weakens the network. This is why the message house and consistency rules matter more than any single campaign.
• Build distinctive assets and use them every time A colour, a sound or a character only works if it is famous and unique to the brand¹⁴; changing it every season throws equity away.
• Balance building and harvesting Promotions and performance media convert existing equity into sales. Long-running brand communication adds to it, and Binet and Field's work links that to lower price sensitivity^12, 13. See budgeting for IMC.
• Supply proof for perceived quality Earned media, reviews, demonstrations and expert voices carry quality claims better than advertising alone; this is where public relations earns its place in the plan.
• Keep the experience true to the promise Loyalty, Aaker's first asset², is built mostly after the sale: service, CRM and loyalty programmes and every message a customer receives.

1. Treating equity as a logo The visual identity is one asset among five²; a redesign without a reason can destroy the familiarity it was meant to refresh. If you are planning one, read the rebrand hub first.
2. Tracking only your customers Equity that drives growth is held by category buyers who do not buy you yet.
3. Reading one number A rising awareness score with a falling price premium is a warning, not a success.
4. Measuring the brand once a year Associations move slowly, but a tracker read quarterly catches a drift before it becomes a decline.
5. Letting each channel invent its own brand Social, sales decks and packaging written by different teams to different briefs build different brands.

Illustrative example. A regional insurer wants to stop competing on price alone. Its team writes the identity first (what the brand is, for whom, and the two associations it wants to own), using the brand platform canvas. It sets a quarterly tracker among category buyers (awareness, the two target associations, perceived quality, consideration), adds a market measure (the premium it can hold at renewal against the two nearest competitors) and agrees that every channel's brief starts from the same platform. A year on, the board sees three lines on one page rather than a campaign report.

Your checklist for Monday:

1. Write the brand's identity in one page: what it is, for whom, its values and the few associations it must own.
2. List the brand's distinctive assets and check whether each is used consistently in every channel.
3. Set up, or audit, a tracker among category buyers, not only customers.
4. Add one market measure of equity: price premium, price sensitivity or repeat rate.
5. Agree how much of next year's plan builds the brand and how much harvests it, and write down why.
6. Brief every agency and team from the same platform and message house.
7. Report mindset, behaviour and value together, at least quarterly, to the CMO and the board.

• David Aaker, Managing Brand Equity (The Free Press, 1991)^1, 2.
• Kevin Lane Keller, the 1993 Journal of Marketing article³, the 2001 MSI blueprint⁴ and Strategic Brand Management⁵.
• Jean-Noël Kapferer, The New Strategic Brand Management (Kogan Page)⁷.
• Kantar on MDS and brand valuation^9, 10, and ISO 10668 for monetary valuation¹¹.
• On IMC Report: how brands grow, measuring effectiveness, and the glossary entries for distinctive brand assets and mental availability.