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Brand Equity

Brand equity is how awareness, associations, perceived quality, and loyalty add up to a brand people will pay for.

The questionWhat does the brand add to the product in what customers know, believe, and do, and which part of that is weak?

Model · David Aaker and Kevin Lane Keller, 1991 and 1993

Aaker's five assets

Brand loyalty How likely customers are to stay
Name awareness Recognition and recall of the brand
Perceived quality The customer's overall judgment
Brand associations What the name calls to mind
Other proprietary assets Trademarks and patents that protect the rest

Keller's four levels

Salience Level 1, identity
Performance and imagery Level 2, meaning
Judgments and feelings Level 3, responses
Resonance Level 4, relationship

Simplified view of the two models that share the name, Aaker's list of assets and Keller's levels, each resting on the one below.

When to use it

A client wants to know why a competitor with a comparable product wins at a higher price or with less promotion.
Marketing spend is judged on this quarter's sales, and nobody can say whether the brand is getting stronger or weaker.
A brand is being extended, merged, or renamed, and you need to know what customers actually associate with it.
Tracking research produces a pile of metrics with no structure for deciding which gap matters.

When to avoid it

You need a financial value for a deal, an impairment test, or a royalty rate. That is brand valuation, with its own methods and its own specialists.
The category is bought on price or specification alone, as in many procurement-led markets. Brand adds little there, and the exercise will mostly confirm it.
The question is how volume reacts to a price change. Price elasticity measures that directly.
There is no customer data and no budget to collect any. The model will be filled in with the team's opinions.

Overview

Brand equity describes what a brand adds to a product, seen from the customer’s side. Aaker’s version lists the assets a brand holds: loyalty, awareness, perceived quality, associations, and proprietary assets. Keller’s version builds a sequence in the customer’s mind, from knowing the brand through what it means to how customers respond and whether they form a relationship with it. Both support the same choice: which part of the brand to invest in, and which to leave alone.

Brand valuation, the financial figure in annual rankings, is a different measure. Equity work needs customer evidence, and behavior counts for more than stated opinion. Choose one model per deliverable and name it.

Aaker's five assets and Keller's four levels

Aaker: Brand loyalty

How attached customers are and how likely they are to stay when a competitor makes an offer. It lowers marketing cost and buys time to answer competitors.

Aaker: Name awareness

Whether customers recognize or recall the brand, and in which settings. Recognition gives familiarity. Recall puts the brand on the list when need arises.

Aaker: Perceived quality

The customer's overall judgment of quality, which may differ from measured quality. It supports price premiums and acts as a reason to buy.

Aaker: Brand associations

Whatever the name calls to mind, such as attributes, uses, people, feelings, or a personality. Strong, favorable, and distinctive associations are what differentiate.

Aaker: Other proprietary assets

Trademarks, patents, and channel relationships that keep competitors from copying what the brand has built. They protect the other four and are not a customer perception.

Keller: Salience

The first level, identity. How easily and in what situations the customer thinks of the brand, and whether they place it in the right category.

Keller: Performance and imagery

The second level, meaning. Performance is what the product does functionally. Imagery is what using it says about the buyer, and who the buyer imagines uses it.

Keller: Judgments and feelings

The third level, responses. Judgments are the customer's evaluations, such as quality and credibility. Feelings are the emotional reactions the brand produces.

Keller: Resonance

The fourth level, relationship. Active, intense loyalty, including repeat purchase, attachment, a sense of community, and engagement beyond the purchase. In Keller's model each level rests on the one below it.

What it is not

Brand valuation. A league table of brand value in currency answers a financial question. A high valuation does not say which customers think what.
Brand awareness. Being known is one asset in Aaker's list and one block in Keller's, and a well-known brand can be disliked.
A single model. Aaker lists assets that the brand holds. Keller builds a sequence in the customer's mind. A slide that mixes them without saying which is which confuses both.

The steps

Pick the brand, the segment, and the rival

Decide which brand level is in scope (corporate, line, or product), which customer segment, and which competitor you are measuring against. Equity differs by segment, and an average across segments hides that.
Choose one lens and say so

Use Aaker's assets when the job is to audit what the brand holds. Use Keller's levels when the job is to find where customers stall. Do not blend them in one deliverable.
Collect evidence from customers

Run interviews and a survey on awareness (unaided and aided), associations, perceived quality, and attitude. Add behavior from sales data where it exists, such as repeat purchase and the price premium over the rival. Prefer behavior to stated attitude when they disagree.
Place each element against the rival

Score each asset or block as strong, weak, or absent, with the evidence beside it. Look for the weakest element that sits beneath a strong one, since spending above it will not hold.
Choose measures and a re-test date

Pick a few measures, one for each element you plan to change, and record a baseline. Repeat with the same method on a set date so the comparison means something.

In practice

A commercial printer could not explain why it lost quotes to a cheaper rival while its awareness scores were strong. We ran Keller's levels with about thirty buyer interviews and a short survey. Salience was fine, since buyers named the firm first when asked about the category. Meaning was the gap. They described it as reliable and slow, and reliable was not a reason to pay more when turnaround was what they cared about.

On Aaker's list, perceived quality was high and associations were narrow. The firm was strong on one attribute that buyers took for granted. The plan was to stop spending on awareness, fix turnaround in operations and in what sales promised, and only then change the message. Advertising a brand that is already known for the wrong thing would have made the gap more visible.

What you leave with

A statement of what the brand means to a named segment, in customers' own words.
Each element scored against the main rival, with the evidence.
The weakest element in the chain, and the action aimed at it.
A short set of tracking measures with a baseline and a re-test date.

Failure points

Awareness surveyed and called equity

A high recognition score is read as a strong brand. The survey said the name is known. It did not say what the name means or whether anyone prefers it.

Attitudes without behavior

Customers say they love the brand and buy it only on promotion. Without repeat purchase and price premium data, a stated attitude is the only evidence, and it overstates.

Resonance campaigns before meaning

Community programs and engagement stunts are funded while customers still cannot say what the brand stands for. The top of the pyramid depends on the levels beneath it.

One score for every segment

Equity is strong with long-standing customers and absent with new ones, and the blended score hides it. The decision that follows is wrong for both.

Treating the scorecard as a valuation

An executive asks for a currency figure and someone turns the scores into one. The number has no financial basis, and it will be quoted in a deal.

The failures above are usually Commercial Acumen: the work was not tied to money, for the client and/or for you.

Origin

This page covers two models that share a name. David Aaker's Managing Brand Equity (1991) defines brand equity as the assets and liabilities linked to a brand's name and symbol that add to or subtract from the value of a product. He groups them into five categories: brand loyalty, name awareness, perceived quality, brand associations, and other proprietary assets such as trademarks, patents, and channel relationships. Kevin Lane Keller's 1993 Journal of Marketing article defines customer-based brand equity as the difference that knowing the brand makes to how a customer responds to its marketing, and splits brand knowledge into awareness and image.

The pyramid in Keller's name came later, in his textbook Strategic Brand Management and a 2001 report for the Marketing Science Institute. It arranges four levels and six building blocks. Brand valuation is a separate field. Annual rankings of what brands are worth in currency use financial methods, answer a different question, and do not tell you what customers think.