Guide
Brand equity
What it is, how it impacts your business, and how you can benefit from it
Brand equity is how much your brand is worth in the eyes of consumers. It’s the sum of every interaction that customers have with your products and brand, and translates to how much they’re willing to spend purchasing from you.
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What is brand equity?
Brand equity is the intangible price tag that customers place on your products and brand. It’s formed by brand awareness, perceptions, associations, experiences, and customer loyalty.
In other words, customers will determine how much your brand is worth in their eyes depending on:
- The extent to which they’re familiar with your offerings and visuals
- How your brand makes them feel
- The quality of your offerings
- What others say about you, your products, and your services
- Whether they have a positive brand experience interacting through all available touchpoints: your website and customer service channels, to name a few
Why is brand equity important?
Brand equity is important because it directly impacts your bottom line. It’s the intangible asset that gets factored into your brand’s overall valuation and financial worth.
You’ve probably heard the saying “the customer is always right.” Whether or not this is true, one thing is for sure: Customers’ perception of your brand will determine whether your products and services are going to be a conscious buying decision that they’re willing to repeat in the future, or a random, one-time purchase. Most importantly, it will determine how much they’re going to spend buying from you, and whether or not they’ll tolerate price increases on your products.
What is negative brand equity?
Negative brand equity occurs when a brand’s associations and brand experience become unfavorable among customers. This can stem from various factors, including product or service failures, unethical business practices, poor customer experience, outdated brand positioning, or negative publicity crises.
The consequences of negative brand equity can be devastating, leading to decreased customer loyalty, difficulty attracting new customers, and diminished brand recognition. It can also hinder a brand’s ability to successfully launch new products.
Overcoming negative brand equity requires a comprehensive strategy that addresses the root causes and rebuilds positive brand associations. This may involve product improvements, enhanced customer service, rebranding efforts, effective marketing campaigns, and a strong emphasis on their social media channels to regain consumer trust and brand awareness.
Brand management teams should closely review brand equity through various marketing metrics and key performance indicators (KPIs) to identify negative trends early and take proactive measures to mitigate potential damage.
Ultimately, maintaining positive brand equity is essential for long-term success.
What is the difference between brand equity and brand awareness?
While brand equity and brand awareness are closely related, they are distinct concepts. Brand awareness refers to how familiar and recognizable your brand is among consumers. It’s about recognition and recall. On the other hand, brand equity encompasses brand awareness along with other factors like perceived quality, brand loyalty, associations, and overall value of your brand. Brand equity is the tangible and intangible value your brand holds based on consumers’ perceptions and experiences.
When you achieve high equity, you can leverage your brand name to help retain customers, successfully deliver new product launch strategies, and introduce a higher price tag compared to businesses similar to yours. Measuring brand equity involves reviewing marketing metrics and key performance indicators (KPIs) like social media engagement, brand management effectiveness, and customer satisfaction to quantify your brand’s worth and equity over time.
While brand awareness lays the crucial foundation, cultivating true brand equity requires a comprehensive brand-building strategy that is based on high-quality interactions with current and future customers.
What are the five elements of brand equity?
The five key elements that drive brand equity are brand awareness, brand associations, perceived quality, brand loyalty, and other proprietary brand assets. Together, these factors determine a brand’s overall value and impact.
Brand awareness
Brand awareness is the foundation—it represents how well consumers can recognize and recall your brand within a product category. High awareness makes it easier for customers to consider and choose your brand when making purchases. By employing marketing tactics like paid advertising, social media campaigns, and consistent creative assets, you can help increase brand recognition.
Brand associations
Brand associations refer to any tangible or intangible attributes linked to your brand name in shoppers’ minds. These could include your logo, a celebrity endorsement, or positioning around a key value like quality or innovation. Strong, favorable brand associations help shape perceptions and differentiate brands.
Perceived quality
Perceived quality reflects customers’ subjective assessment of your brand’s overall excellence. It shapes brand equity, as customers often equate perceived quality with expected enjoyment, payoff, and value. Cultivating positive quality perceptions comes from effective marketing across channels, both digital and traditional, coupled with delivering outstanding customer experiences.
Brand loyalty
Brand loyalty is the measure of customers’ commitment to your brand, demonstrated through repeat purchases over time. Loyal brand advocates tend to be less sensitive to price changes and promotional efforts by your peers. Loyalty programs, customer engagement, and consistently meeting expectations help build brand loyalty.
Other proprietary brand assets
Other proprietary brand assets, such as branding elements, patents, trademarks, cost structure, or manufacturing capabilities factor into your brand’s equity. These help you stand out from the crowd in ways that other brands, similar to yours, can’t easily replicate.
What are the benefits of brand equity?
Strong brand equity yields numerous benefits that can positively impact your bottom line. By strategically improving the five elements of brand equity, you can help boost brand value, enjoy greater flexibility in pricing, increase the visibility of your products within your industry and category, drive new product success, and measurably improve key marketing metrics.
- Customers tend to pay more for brands they perceive as high-quality and align with their values. This pricing power helps further increase revenue and brand equity.
- Positive brand equity helps make marketing efforts exponentially more effective and efficient. With high brand recognition and favorable associations, marketing and social media campaigns can better resonate.
- Strong brand equity builds loyalty and advocacy, lowering customers’ churn rates. Loyal customers act as ambassadors through word-of-mouth, generating free promotion, and, in some cases, free user-generated content in the form of social media posts and reviews. This helps cement your brand as the go-to provider in your category.
- Brand equity provides a buffer against negative press or product issues. Setbacks and missteps come with the territory of running a business. If managed properly, those mistakes have less impact on purchase intent for customers emotionally invested in your brand name.
- With high brand equity, you can inspire greater stakeholder support, from employees to partners, based on your brand’s perceived value and potential. This, in turn, can help you unlock resources, collaborations, and synergies that will propel business growth initiatives.
- Most importantly, robust brand equity allows you to seamlessly grow your business by leveraging the “brand halo effect.” Shoppers tend to transfer their positive perceptions and associations from existing products they know and trust over to newly launched products from the same brand. A strong reputation can help mitigate risks associated with new product launches and extensions into new categories.
Strong brand equity delivers compounding value and growth opportunities. This translates into increased revenue, empowering you to invest in innovation and further brand-building activities, creating a positive reinforcing loop. As you innovate and enhance your offerings, your equity strengthens, attracting more customers and driving further growth.
Examples of brand equity
Case studies
Nespresso strengthened brand equity by creating an immersive digital storefront spotlighting their quality products, sustainability values, and brand identity through curated content and visuals. Maintaining multichannel brand consistency fostered recognition while regular updates provided continued relevance, deepening emotional connections with customers.
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The Martha Stewart brand enhanced equity by launching “The World of Martha,” a dedicated digital shop focusing on branded home essentials, recipes, and lifestyle content. This centralized destination immersed customers in Martha Stewart’s taste and expertise across categories like cookware and bedding, and reinforced the iconic, aspirational brand identity.
Case studies
ClearSpace, purveyors of clutter-free living, amplified brand equity by curating a product selection aligned with their “less is more” philosophy. Highlighting their sustainable, functional designs across lifestyle imagery strengthened ClearSpace’s brand identity as a destination for mindful consumers seeking simplicity. Consistently promoting their minimalist aesthetic through inspirational content fostered deeper connections with their customers.
Case studies
Bro Glo, a men’s self-tanner brand, leveraged Sponsored Products and Sponsored Brands ads to reach new customers and increase brand awareness for an underserved audience. Their strategic approach of optimizing product listings, testing campaigns, and measuring ad performance helped drive positive results and brand recognition.
How do you improve brand equity?
Brand equity is a crucial aspect of business success, and it’s essential to continuously work on improving it. As a business owner or marketer, you can enhance brand equity by following these five steps:
Step 1: Implement a brand storytelling strategy.
Craft a compelling narrative that resonates with the audiences you want to reach, and infuse your brand story into all customer touchpoints—from marketing campaigns to product packaging. Don’t forget to use various storytelling mediums, such as videos, imagery, and immersive experiences, to amplify your story.
Step 2: Ensure consistent brand messaging and visual identity across channels and communications.
Create authentic content that showcases your brand’s personality and expertise, and your products’ unique selling points. This cohesive approach to branding allows consumers to effortlessly recognize your business and products amid the multitude of brand messages they encounter daily.
Step 3: Embrace purpose-driven marketing.
Engage in cause-related marketing campaigns to build emotional connections with customers. Demonstrate your commitment to ethical and sustainable practices through campaigns designed to connect you with new audiences wherever they spend their time. This will help you build positive perceptions within a wider pool of potential new customers.
Step 4: Implement customer feedback loops and actively address customer pain points.
Continuously innovate and enhance the customer experience across all touchpoints and in all possible ways— from the keywords you use when listing your products to your return policies. This will strengthen positive brand associations in the minds of consumers.
Step 5: Embrace an insights-driven brand management.
Monitor brand equity regularly through various methods, such as brand awareness surveys, customer satisfaction scores, and brand-related success metrics. Use these insights to not only refine your brand strategy, but also gauge interest for new product launches.
5 ways Amazon Ads helps build strong brand equity
Creating a valuable and enduring brand takes time and dedication, but even small steps can lead to big results. Don’t get discouraged if you don't have all the resources right now. You can still make progress by focusing on what you can control.
Here’s what you can start doing today with help from Amazon Ads:
- Ensure your products are visible: You can create advertising campaigns in a few clicks that draw upon a rich understanding of shoppers’ behaviors and purchase journeys, and appear in prominent places, such as top-of-search results. This will bring your brand top-of-mind for shoppers when they’re searching for products similar to yours, and help you establish a foothold in your respective category. Sales of recently launched products in the Amazon store that were added to a Sponsored Products campaign increased 181%.1
- Benefit from high-traffic shopping events: Through advertising solutions like Sponsored Display, you can expand your reach beyond Amazon and get your brand and products in front of new potential customers across third-party sites and apps, especially leading up to key shopping events when traffic is expected to increase. 87.8% of shoppers surveyed globally have researched products during Black Friday and Cyber Monday before making purchases, either in the Amazon store or third-party destinations.2 Remember, not every customer will convert on their first experience with your brand. Focus on building audiences that you can nurture and remarket to over time.
- Stand out from the crowd and drive halo effects: Sponsored Brands video format is the way to go when aiming to catch shoppers’ eye. And, with creative tools like the Video Builder you can create professional-looking videos that capture attention, for free and in only a few clicks. By promoting your top-selling products with rich media and video ad formats, you can help attract new customers and leverage the halo effect. This means the positive associations with your popular products can spill over to your entire brand, generating interest in related items and creating exciting cross-selling opportunities.
- Build strong customer connections and help drive repeat purchases: Showcase not one but all of your products in one place, and help drive stronger customer connections. Brand Stores allows you to create an immersive storefront for free, and Sponsored Brands help you turn browsers into buyers with eye-catching ads. Leverage Brand Stores and Sponsored Brands together, and you’ve got a winning advertising strategy. Shoppers visit a storefront to learn more about the business they’re purchasing from. This is your chance to showcase who you are and create a space that shoppers will visit time and again to connect with you.
- Quantify brand equity: Make informed marketing decisions using campaign reporting that is easy to understand and can help you quantify your brand equity through relevant metrics, such as top-of-search impression share, new-to-brand metrics, repeat purchases, viewable impressions, and brand searches. You can use the insights to measure brand health indicators and see how your brand awareness and customer engagement evolve over time.
Sponsored ads allow us to develop brand awareness and product visibility whilst increasing sales at speed and scale across Amazon globally.
- Joe Fisher, Brandvault
Brand equity holds immense power in driving business success. With a strategic approach and the right advertising solutions, you can help elevate your brand to new heights and forge lasting connections with your customers, old and new.
If you have limited experience, contact us to request services managed by Amazon Ads. Budget minimums apply.
1Amazon internal data, WW, Jan 2021–Sept 2022. Recently launched products are products added to their inventory within last 90 days and are marked as Sponsored Products ready. Lift represents the median percentage increase of sales during the first four weeks of a Sponsored Products campaign, compared to the four preceding weeks of the campaign launch.
2Kantar, WW, 2022. 3,507 study respondents who have shopped Q4 shopping events in 2021 and planned to do so in 2022.