Brand Equity is a term that describes the value a brand adds to a product beyond its functional benefits. It refers to the economic value a brand creates for a company through consumer perception, customer loyalty, and brand awareness.
The concept of brand equity has been around since the 1960s, but it wasn't until the 1980s that academic research focused on it. In the following decades, the definition and measurement of brand equity evolved, leading to various models and frameworks that companies use today to evaluate the strength of their brands.
Brand equity consists of three main components: brand loyalty, brand awareness, and perceived quality. Brand loyalty refers to the repeat purchase behavior of customers, while brand awareness refers to the consumer's recognition of the brand. Perceived quality is the consumer's assessment of the brand's superiority compared to competitors.
"A brand with high equity is a valuable asset for a company because it enables the firm to charge premium prices, launch new products more easily, and enjoy greater customer loyalty." (Keller, 1993).
In conclusion, brand equity is a crucial aspect of brand management, as it directly impacts a company's financial performance and long-term success. Companies can build and maintain brand equity by consistently delivering high-quality products and experiences, engaging with customers, and investing in brand awareness and reputation.