Brand equity is a construct that refers to the assets and liabilities associated with a brand and its instruments thereof (such as its brand name and symbol or logo).
To put it simply, brand equity is the degree with which a brand is able to generate positive thoughts, feelings, and goodwill among its customers and the general public as well.
How to Measure Brand Equity
Brand equity—though it may sound like an accounting term—is something that can’t be measured and rated through figures and formulas. It is an abstract concept—one that can’t be listed on a balance sheet and talked about in concrete terms. In non-marketing jargon, the closest synonym would be “reputation.”
Still, financial and marketing experts believe that some of the components of brand equity can be defined in terms of the tangible and intangible value that they give.
For example, consumer perception can give various obvious and non-obvious effects depending on whatever state it is at the moment. Positive consumer perception can result into profit increase, more brand awareness, increase in social media following, etc. while negative perception (especially in the aftermaths of events such as product recalls, social media fiascos, and scandals) can result into decreased profits, loss of brand loyalty, and negative brand association in the future.