Monday, January 18, 2010

Brand equity and brand value

In a market where products are similar, branding can have a large effect on the price that customers will pay. Brands therefore add value to a basic product or service by enabling the product or service to command a higher price, or higher market share than an unbranded equivalent. The term Brand equity is used to describe both the value of the brand and the brand's component values. It's value may be a monetary value (which may be discounted to a net present value), an increase in a rate of return or any number of softer market research measures such as awareness or consideration.

A common question is how much does the brand add and consequently, what is the value of the brand? There are a number of methods for calculating brand value and so inferring brand equity.