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Definition: Brand equity

What is brand equity?

With the term brand equity, marketers describe the "value" of a brand. Brand equity doesn't refer to a brand's financial value. It is determined, instead, by consumer perception and is driven by positive (or negative) customer experience.

The benefits of positive brand equity are many: consumers are willing to pay more money for the same products; when brands extend product lines, new products are perceived just as favourably; ultimately, brand equity directly affects stock price.

Wondering what the latest trends driving brand equity might be? We've asked 1000+ branding professionals for their opinion. Take a look at our 2020 State of Branding Report.

What drives brand equity?

Brand equity develops over time and is based on the experiences customers have with a brand. Brands craft detailed strategies to drive brand equity and break them down into specific steps. Some of these are:

Creating brand awareness: introducing the brand to its target audience through ads and a social media presence.

Creating brand recognition: making the elements that represent the brand always recognizable by customers.

Improving consumer perception: using impeccable customer experience to shape the perception and opinion customers have of the brand.

Creating brand loyalty: having a base of loyal customers who regularly turn to your brand and recommend it to others.

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