How does brand equity impact business performance and value?
Frequently Asked Question

How does brand equity impact business performance and value?

When a brand has strong Brand Equity, this typically translates into superior performance on a number of key behavioural metrics. These are the most common metrics on which brand performance and thus brand equity can can be judged:

  • Market penetration: A measure of the number of consumers purchasing or using a particular brand as a proportion of the total number of consumers purchasing or using that brand in a defined time period.
  • Frequency: For each given buyer or group of buyers of a brand the number of times in a defined time period that the brand is purchased. Thus, in a given time period: Penetration × average frequency × size of target universe = total volume of purchases.
  • Recent purchase: The proportion of those purchasing a brand in a given time period who purchase it again within the same time period. Repeat purchase is often used as a measure of customer loyalty to a brand and is usually seen as a key indicator of brand strength.
  • Loyalty: Customer loyalty can be thought of as both an attitudinal and behavioural tendency to favour one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand.
  • Price Premium: One of the strongest and most important consequences of strong brand equity is the ability of that brand to command a price premium vs other brands in its sector.

For more information on this, read our whitepaper on value-based brand management here.

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