Brand Equity

Brand Equity - Brand equity is the premium on the price that a buyer is willing to pay for the name rather than the physical characteristics of the product. Classic test: blind tasting of Pepsi vs Coca-Cola. In a blind test, Pepsi wins. In the open - Coca-Cola. The difference in perception is brand equity converted into preference.

The Aaker model identifies five components: awareness, perceived quality, brand associations, loyalty, proprietary assets (patents, channels). All five take years to build and collapse quickly. This is the main thing you need to understand about brand equity as an asset: it is asymmetrical - it takes longer to build than to break.

In digital marketing, brand equity is often ignored in favor of performance - because it is difficult to measure and justify in a quarterly report. This is a mistake. Brands with high equity pay less for advertising (because conversion is higher), lose fewer customers when making mistakes, and recover faster from crises. Investment in a brand is an investment in reducing future CAC.