What Is Brand Equity? (+ How to Build It)

Written by Coursera • Updated on

Discover brand equity and how to build it for your business.

A woman with blonde hair and wearing a white jacket and dress is running a meeting with charts and a computer, with a man in a blue jacket and glasses, and a man with a beard.

What is brand equity?  

Brand equity refers to a company’s visibility and reputation in the marketplace and consumers' view of the brand. Building positive brand equity can make it possible for businesses to:  

  • Gain market share

  • Increase profit margin

  • Extend your product line and introduce new products easily 

  • Charge premium prices 

  • Inspire customer trust and loyalty

  • Have a positive impact on customers’ lives

  • Form new partnerships with other brands and share their customer bases

Brand equity consists of three main components:

  • Consumer perception: What do customers believe about a brand? What does it represent to them? What features do they recognize about the brand? How does it make them feel? How familiar are customers with what the brand stands for? 

  • Positive or negative effects: Depending on how a company develops its brand and presents it to the world, brand equity can be positive or negative. How do customers experience the brand and its products? Do they associate it with attributes they admire? Do they prefer this brand and recommend it to others, or do they criticize or boycott it? 

  • Resulting value: What are the measurable results of customers’ perception and experience with the brand, such as increases or decreases in revenue? What other results can be observed, such as word of mouth inspiring new sales? 

It’s a good idea to prioritize brand equity for your business, as consumers are increasingly holding brands to higher standards of trustworthiness, quality, and goodwill. Consider Old Navy, a clothing company under Gap, Inc., as an example of a brand that reimagined its brand identity in response to the priorities and sentiments of its customer base. In August of 2021, Old Navy launched its BODEQUALITY campaign to offer a “size-integrated” shopping experience, eliminating price disparities for different sizes of the same style garment and special sections for clothing in a specific size range. Old Navy’s President and CEO, Nancy Green, called these efforts a “full transformation” of the brand based on years of researching customers and gathering their input. [1

Brand image is similar to brand equity and can be defined as the customer’s viewpoint of a brand, whereas brand equity is a measure that brands use to determine the effectiveness of their branding efforts. 

Placeholder

Now that we’ve defined brand equity, continue reading to learn how to build brand equity for a company. These skills and processes can be helpful in starting your own business or pursuing a career as a brand specialist or marketer. 

How to build brand equity 

To build brand equity, you will need to establish a coherent presence in the marketplace and be consistent with your efforts for the long term to gain traction. Keep in mind that it may take several months before you start seeing notable results, so it’s important to commit to the process from the beginning, adopt a success mindset, and stay focused on your goals. 

Follow the steps below to begin building brand equity and inspire customers to become loyal fans. 

1. Identify your brand equity goals. 

Reflect on your overall business goals to identify what you want to accomplish with the brand. By setting clear brand goals, you can measure success reliably and be intentional with every effort to build brand equity. 

Start by writing a detailed description of what positive brand equity looks like for your brand, using the following prompts as inspiration:  

  • How many followers, subscribers, and customers do you have? 

  • How do they perceive your brand? 

  • What feelings, thoughts, and experiences do you want them to associate with your brand? 

Here are two specific examples: 

  • Inspire X percent of our current customer base to become brand ambassadors through our affiliate marketing program by the end of the quarter.

  • Improve brand perception through customer feedback to improve products and messaging.

TIP: You may find it useful to examine other brands that have achieved the level of brand equity you desire in terms of awareness and measurable value. Having a concrete comparison can make it easier to specify the ideal scenario for your brand.

Placeholder

2. Design a winning brand. 

A brand that has the potential to establish positive brand equity has a clear visual identity undergirded by a distinctive voice, philosophy, and value system. Whether you’ve had your brand professionally designed or are considering doing so, it’s important to explore what makes your brand stand out from others and give it a competitive edge.  

  

  • What message does your brand send to the world? 

  • What tone, style, and voice will best convey this message? 

  • What values does this brand hold? What does it stand for? What kinds of customers share these values? What promises does this brand make to these customers? 

  • If you don’t yet have a brand design, what visual or auditory features can you develop to communicate your brand’s mission, values, and voice?

  • If you do have a brand design, how might its features be displayed more prominently and effectively across your marketing channels? 

Use these ideas to give shape and form to a new brand, refine an existing brand, and gain more recognition in the marketplace.  

Read more: What is a Brand Strategy? And How to Create One

3. Test your messaging and brand experience with a small campaign. 

Once you have all the components of a winning brand, the next thing to do is observe how it performs in the marketplace. It’s a good idea to run a small marketing campaign to gather data and gauge how your brand will be received on a broader scale. That way, you can make any necessary adjustments to the messaging before you invest in a larger brand awareness campaign. 

  • Based on the brand equity goals you’ve established, design a campaign and customer experience to deliver the desired results. For example, you might use a paid social media ad campaign to drive email sign-ups. In your follow-up emails, you can educate subscribers about your brand and survey them about their experiences. Or, you might post a series of videos on social media that introduces your brand, what it’s about, and who it’s for to see what kind of organic engagement it drives, including video views, likes, and comments. 

  • Determine the metrics you’re testing and ensure they help drive your brand equity goals. These could include the number of landing page clicks and email subscriptions; the number of video views, likes, and comments; or the number of new social media followers. 

  • Decide on a time frame for letting the test campaign run and produce results, such as six weeks or three months. 

  • Evaluate test campaign results. How are people responding to your branded messaging, materials, and experience? What can you learn about your audience based on the actions they take (or don’t take)? What is working well, and what can you improve? 

4. Generate brand awareness with a larger campaign. 

Using the results from your small test campaign, make any necessary adjustments to your messaging or to the brand experience and design a larger marketing campaign. The purpose of this campaign will be to generate awareness of and build affinity for your brand. 

Decide how you want to scale up your campaign. For example, if you successfully tested and refined a landing page, you might increase your ad spend to get more clicks and email subscriptions. If you tested a video series on social media without ad spend, you might produce additional videos, post more frequently, and promote the highest performing videos through a paid campaign. 

5. Deliver on brand promises. 

As your awareness campaign gains traction and you start building a positive consumer perception and converting traffic into customers, make sure that your products, services, and experiences are delivering on your brand promises. Continually identify improvements you can make to the customer journey, by improving the content at each touchpoint. Ask customers for feedback on how products represent brand values, and enhance products accordingly. Make sure you have a customer service system in place to handle questions about products or payments. 

6. Be a consistent presence in the marketplace.

As explored above, building positive brand equity is the result of consistent efforts over time. You’ll want to make sure that your branding itself is presented consistently, in terms of the overall look, feel and messaging.  

Here are examples of ways you can be consistent: 

  • If you’re posting content to a blog or social media, stick to a schedule that you can sustain over time, and will instill trust in your audience. 

  • Whenever you develop a new ad campaign or product line, make sure that your brand’s design features are displayed in a consistent manner across every piece of content, touchpoint, marketing channel, and platform.  

  • Be sure to communicate your brand’s values consistently across touchpoints, from social media, to sales pages, to your customer support system. 

7. Implement loyalty and retention strategies.  

One important component of brand equity is inspiring customer loyalty. You can do this in several ways:

  • Offer personalized rewards for multiple or recurring purchases, such as free gifts and discounts.

  • Offer bonuses to existing customers when their referrals make purchases. 

  • Set up an affiliate marketing program, so that brand fans become ambassadors and earn commissions for promoting your products.    

8. Measure your brand equity. 

Brand equity is, in large part, rooted in customers’ perceptions and other qualitative factors, so it can be a challenge to discuss brand equity in quantifiable terms. That said, you can measure your company’s brand equity over time through several qualitative and quantitative factors: 

Quantitative: 

  • Price premium: the amount a customer is willing to pay for a brand’s product 

  • Revenue: average sales price multiplied by the number of units sold 

  • Market share: company’s total revenue divided by the total sales of the industry

  • Company value: assets minus liabilities 

Qualitative: 

  • Customer behaviors after making a purchase, including contacting support, posting about purchases on social media, etc.

  • The reputation of organizations with which a brand partners 

  • Public sentiment about a brand observed in social media mentions, customer reviews, survey responses, etc. 

Brand equity key takeaways and best practices

Remember: Building brand equity takes time. With diligence and a consistent presence in the marketplace, you may be able to increase your company’s bottom line, make a difference in customers’ lives, and inspire their trust and loyalty. 

Keep these best practices in mind as you implement branding tactics: 

  • Make sure everyone on your team has a copy of your brand guidelines, detailing how design features should appear, how the brand voice should be used in all content, etc. 

  • Stay informed of what’s important to your target customer and update your brand strategy, product line, and messaging accordingly.  

  • Analyze competing brands regularly and the strategies they use to build brand equity. 

  • Always be thinking of ways to enhance the brand experience for existing customers. 

  • Conduct continual market research to uncover new niche markets that may be interested in your brand.    

 

Build brand equity with Coursera

Taking online courses is a great way to learn branding skills, get fresh inspiration, or launch a career as a brand specialist. In the Branding: The Creative Journey specialization, you’ll discover how to make brands stand out, generate values-driven content, and create engaging customer journeys. 

Placeholder

specialization

Branding: The Creative Journey

Begin your Career as a Branding Specialist. Master branding strategies, branded content generation, image creation and customer experience

4.6

(733 ratings)

28,303 already enrolled

BEGINNER level

Average time: 5 month(s)

Learn at your own pace

Skills you'll build:

Creativity, Journalism, Branding, Communication, CX, Advertising, Logo, Brand, Brand Identity, Employment, Leadership, Management, Customer Experience

Related articles

Article Sources

  1. Gap, Inc. “Old Navy Democritizes the Shopping Experience for Women of All Sizes With BODEQUALITY, https://www.gapinc.com/en-us/articles/2021/08/old-navy-democratizes-the-shopping-experience-for-.” Accessed April 7, 2022.

Written by Coursera • Updated on

This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.

Learn without limits