How do you measure consumer product brand equity and why is it important?

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Brand equity is the value and perception that consumers associate with your product, compared to other similar products in the market. It can influence their purchase decisions, loyalty, and word-of-mouth. But how do you measure it and why is it important for your consumer product business? In this article, we will explore some of the methods and benefits of measuring brand equity.

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1 Customer-based approach

One way to measure brand equity is to use customer-based metrics, such as awareness, recognition, recall, preference, satisfaction, and loyalty. These metrics reflect how well your customers know, like, and trust your product, and how likely they are to choose it over competitors. You can use surveys, interviews, focus groups, or online tools to collect data from your target audience and analyze their responses.

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Tom Tran

Brand Manager ?? | Michigan Ross MBA ?? | UC Berkeley Alum ?? | Bernedoodle Dad ??
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In my experience, it's great to have a long term brand health tracking program in order to monitor how marketing activities are affecting awareness, consideration, and conversion. Review it once a month to see how your brand is doing relative to the competition.

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Eric Trypucko

Sales Manager at Kittrich Corporation | Prestige Beauty | Private Label | Stephan Roberts
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However, it's important to note that brand equity is not just about what customers think and feel about a brand, but also how it is perceived by other stakeholders, such as investors, employees, and partners. Therefore, it's important to use a range of metrics, including financial metrics, to provide a more complete picture of a brand's equity. Another key point is that brand equity is not static and can change over time. Therefore, it's important to regularly measure and track brand equity to identify trends and changes in customer perception and behavior. By doing so, companies can take proactive steps to improve their brand equity and maintain a strong and positive brand image.

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Fayne Frey, MD

Dermatologist | Founder, FryFace | Author, The Skincare Hoax | Educating consumers how to select a simple skincare regimen that promotes healthy skin. And reminding you that you’re awesome the way you are!
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In my experience, a customer-based approach is a powerful way to gauge brand equity. It's not just about what the company thinks of its brand, but more importantly, what the customers perceive and feel about it. These metrics like awareness, satisfaction, and loyalty provide invaluable insights into how well a brand resonates with its audience. Conducting surveys, interviews, or focus groups to collect this data can be an eye-opening experience. It often reveals aspects of the brand's identity and reputation that may not have been apparent from an internal perspective. In essence, it bridges the gap between a company's perception of its brand and the reality of how it's perceived by its most critical stakeholders – the customers.

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2 Financial-based approach

Another way to measure brand equity is to use financial-based metrics, such as price premium, market share, revenue, profitability, and return on investment. These metrics reflect how much your product can charge more than similar products, how much of the market it captures, how much it generates in sales and profits, and how much it contributes to your overall business value. You can use accounting, financial, or market data to calculate these metrics and compare them with industry benchmarks or historical trends.

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Eric Trypucko

Sales Manager at Kittrich Corporation | Prestige Beauty | Private Label | Stephan Roberts
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It's important to note that financial-based metrics do not capture the total value of a brand. While market share, revenue, and profitability are essential indicators of a brand's financial success, they do not necessarily reflect customers' emotional connection and loyalty to a brand. Customer-based metrics, such as preference, satisfaction, and loyalty, provide essential insights into how customers perceive and interact with a brand. These metrics can help companies identify areas for improvement and develop strategies to enhance customer engagement and loyalty, which can ultimately drive long-term financial success.

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3 Combined approach

A third way to measure brand equity is to use a combined approach, which integrates both customer-based and financial-based metrics. This approach can provide a more comprehensive and balanced view of your product's performance and potential, as well as identify the drivers and outcomes of brand equity. You can use frameworks, such as the Brand Asset Valuator (BAV) or the BrandZ model, to assess your product's strength, stature, differentiation, and relevance.

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4 Brand extension

Measuring brand equity can help you leverage it for brand extension, which is the strategy of launching new products or entering new markets under the same brand name. Brand extension can benefit your consumer product business by increasing your product portfolio, reaching new customers, enhancing your brand image, and creating synergies. However, brand extension also involves risks, such as diluting your brand identity, confusing your customers, or damaging your brand reputation. Therefore, you need to measure your brand equity carefully and ensure that your new products are compatible and consistent with your existing products and brand values.

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Fayne Frey, MD

Dermatologist | Founder, FryFace | Author, The Skincare Hoax | Educating consumers how to select a simple skincare regimen that promotes healthy skin. And reminding you that you’re awesome the way you are!
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In my experience, brand equity measurement plays a vital role in successful brand extension – the strategy of introducing new products or entering new markets under an established brand name. This approach offers benefits such as diversifying your product range and reaching a broader customer base. However, it also carries risks, including potential brand dilution or customer confusion. Careful measurement and alignment of new products with existing offerings and brand values are essential.

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5 Brand management

Measuring brand equity can also help you manage your brand effectively and efficiently. Brand management is the process of planning, implementing, and evaluating your brand strategies and activities to achieve your brand objectives and enhance your brand equity. By measuring your brand equity, you can monitor your brand performance, identify your brand strengths and weaknesses, evaluate your brand opportunities and threats, and adjust your brand actions accordingly. You can also use your brand equity measurement to communicate your brand value to your stakeholders, such as customers, employees, partners, and investors.

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Eric Trypucko

Sales Manager at Kittrich Corporation | Prestige Beauty | Private Label | Stephan Roberts
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Brands constantly evolve, and their value and perception can change over time due to various internal and external factors. Therefore, it's important to regularly measure brand equity to stay current with the changing market and consumer trends and to adjust brand management strategies accordingly.

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6 Brand improvement

Measuring brand equity can ultimately help you improve your brand and your consumer product business. Brand improvement is the outcome of applying your brand equity measurement to your brand management and brand extension. By measuring and managing your brand equity, you can increase your customer loyalty, satisfaction, and advocacy, as well as your product quality, innovation, and differentiation. By measuring and leveraging your brand equity, you can expand your product range, market reach, and competitive advantage. By improving your brand and your product, you can boost your sales, profits, and growth.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you measure consumer product brand equity and why is it important?

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1 Customer-based approach

2 Financial-based approach

3 Combined approach

4 Brand extension

5 Brand management

6 Brand improvement

7 Here’s what else to consider

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