Branding Management for Lawyers (MKTG 205)

Brand Equity
(Madhavi Gupta)
When a brand consistently under-delivers and disappoints—to the point that people
recommend others avoid it—it has negative brand equity.

Positive brand equity has value:

1. Companies with a great deal of brand equity can charge more for a product.
2. That equity can be transferred to line extensions (i.e. products related to the brand that
include the brand name), so a business can make more money from the brand.
3. It can help boost a company’s stock price.

How brand equity develops

Brand equity develops and grows as a result of a customer’s experiences with the brand. The
process typically involves a customer or consumer’s natural relationship with the brand that
unfolds following a predictable model:

Awareness: The brand is introduced to its target audience—often with advertising—in a way
that gets it noticed.

Recognition: Customers become familiar with the brand and recognize it in a store or
elsewhere.

Trial: Now that they recognize the brand and know what it is or stands for, they try it.

Preference: When the consumer has a good experience with the brand, it becomes the
preferred choice.
Loyalty: After a series of good brand experiences, users not only recommend it to others, it
becomes the only one they will buy and use in that category. They think so highly of it that any
product associated with the brand benefits from its positive glow.

Examples of positive brand equity

Apple, considered one of the world's most valuable brands, is a classic example of a brand with
positive equity. The company built its positive reputation with Mac computers before extending
the brand to iPhones, which deliver on the brand promise expected by Apple’s computer
customers.
On a smaller scale, regional supermarket chain Wegmans has so much brand equity that when
stores open in new territories, the brand reputation generates crowds so large that police have
to direct traffic in and out of store parking lots.

Brand Equity FAQ

What do you mean by brand equity?
Brand equity is the value of a brand, determined by the consumer’s perception of its quality
and desirability. It is based on factors such as the brand’s recognition, customer loyalty, and
customer satisfaction. Brand equity is a key factor in a company’s success, as it can influence
consumer decisions, marketing strategies, and potential partnerships.

What are the 4 elements of brand equity?

Brand Awareness: Recognition of the brand by customers and potential customers.

Brand Loyalty: Customers’ willingness to purchase from the same brand over time.
Perceived Quality: The level of perceived quality associated with the brand.
Brand Associations: The values and attributes associated with the brand.