What Is Brand Value?

Most people have heard, and have a vague understanding, of brand value. But what exactly does it measure?

In simple terms, the monetary value of a brand—also known as brand equity—is the value that a brand adds to a company’s overall worth. It measures the difference between a consumer’s perception of a brand and the value of a generic product in the same category.

It takes into account a range of factors that include:

  • Brand awareness. The level of familiarity consumers have with a brand is a critical factor in brand equity. Higher brand awareness translates into more potential customers and revenue.
  • Brand loyalty. A strong brand creates loyal customers who are more likely to make repeat purchases and recommend the brand to others.
  • Brand association. The connections consumers make between a brand and a particular set of attributes or characteristics can significantly impact brand equity. For example, Apple is instantly associated with innovative design, high quality, and status; Walmart is synonymous with low prices and value.
  • Brand differentiation. The unique qualities that set a brand apart from competitors are essential to brand equity. These aspects don’t necessarily have to be product features; they can be realized through unique sales channels, manufacturing practices, retail locations/environments, and more.
  • Brand consistency. The degree to which a brand’s messaging, identity, and image remain constant over time can also impact brand equity. Since its beginnings, Airbnb has maintained a consistent brand strategy that focuses on a sense of belonging and local immersion in any travel destination.

However, no matter how strong a brand’s value may be, marketers are in a never-ending battle to maintain and strengthen their brand. Market forces today can change in the blink of an eye; new brands come on the scene faster than ever, and social media can build up or tear down brand equity in a matter in weeks or even days.

With these factors in mind, smart brands look to invest in the following areas to continue to reinforce and grow brand equity:

  • Innovation. Resting on recent successes is a surefire way to expose your brand to hungrier, more aggressive competitors. Constantly innovating and improving products or services is the status quo today and is necessary to increase brand value. Netflix became one of the strongest media brands today by realizing early on the limits of its original DVD rental business and breaking out into its now ubiquitous streaming platform as well as offering high-quality original content.
  • Social Responsibility. Brands that prioritize social responsibility and sustainability create a positive position for themselves that conveys a purpose beyond profitability and resonates more deeply with consumers. Patagonia has established a strong brand identity for decades as a socially responsible outdoor clothing company that prioritizes environmental sustainability and preservation of natural resources.
  • Customer Engagement. Maximizing the usefulness and delight of every customer touchpoint is a strategy that will always be successful in enhancing brand value. IKEA continues to achieves this through not only its expansive yet inviting retail environments but also through its online video chat and augmented reality technology that give customers a convenient, highly practical way to plan and purchase home furnishings.

All in all, brand value represents the true worth of a company or organization. It gives audiences motivation, emotional connection, and tangible reasons to seek you out over competitors. In other words, stronger brand value is essential to stronger business.