What Is Brand Equity?
You might not think that one of your company’s most valuable assets is something you can’t see, touch or find on your balance sheet. But your “brand”—what the outside world thinks and feels about your company based upon what they’ve seen, heard or experienced—is critical to your success.
The degree to which your brand generates positive thoughts and feelings is referred to as “brand equity,” and it can add considerable value to your business. One of the fathers of modern branding, David Aaker, defines brand equity as “a set of brand assets and liabilities linked to a brand name and symbol, which add to or subtract from the value provided by a product or service.”
When Aaker first connected “brand” to “equity” in the early 1990s, he was effectively saying that your brand is a valuable company asset to be created and meticulously nurtured. And history has proven him correct. Consider what strong brand development can do for a company. Think of Tiffany’s little blue box, or the Mercedes badge on a car hood, or what you feel when you hear the words “Save The Children.” Each of these conjures strong positive thoughts and feelings that add real value to an organization.
The fact is, if you wanted to remove marketing jargon from the equation, you could argue that “brand equity” is just another word for “reputation.” And you know what? You’d be right.