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brand equity

brand EK-wih-tee /brænd ˈɛkwɪti/

nounC2GRE

businessmarketing

The commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself.

It's the intangible value of a brand, built on consumer loyalty, awareness, perceived quality, and associations. It allows a company to charge more or expand into new markets more easily.

The story behind the word. The 'brand' part, as we know, comes from the Old Norse 'brandr' (a mark). 'Equity' comes from Latin 'aequitas,' meaning 'equality, fairness,' and later in finance, 'the value of shares.' So, 'brand equity' combines the idea of a distinctive mark with the financial concept of value or worth. It refers to the special value a brand name adds to a product or service, beyond its functional attributes.

Word relationships

brand value: More general term for the worth of a brand, often used interchangeably.
brand capital: Emphasizes the brand as an asset.

brand liability: Negative value associated with a brand due to poor perception or reputation.

Commonly confused with

market share: Market share is the percentage of total sales in a market, while brand equity is the intangible value of the brand itself, which can influence market share.

Word family

equitable (adjective): fair and impartial
equity (noun): the value of the shares issued by a company

Collocations

strong brand equity
build brand equity
measure brand equity
positive brand equity
brand equity value

Example sentences

"Investing in consistent marketing and customer service is crucial for building long-term brand equity." In a business strategy meeting.
"The acquisition was driven by the desire to leverage the target company's strong brand equity in the Asian market." An article on corporate mergers.

Memory hook

Think of 'equity' as 'equal value' or 'fair share.' Brand equity is the added value a brand name brings, making it 'equal' to or 'more' than its generic counterpart. Brand's Added Value

When not to use

Don't use it to refer to the physical assets or direct sales revenue of a company. It's about the added value a brand name brings.

Fun facts

Interbrand's annual 'Best Global Brands' report estimates the monetary value of brand equity for top companies like Apple, Google, and Amazon.
Brand equity can be negative if a brand has a poor reputation, making consumers less likely to buy its products.

Related words

brand loyalty, brand awareness

Explore more words

brand, positioning, awareness, trademark, dilution, asset