How to Calculate Brand Equity
Whether it's sneakers, clothing, a mobile phone or just plain coffee, items carry a marketable image that becomes an extension of its consumer's personality and attitude. That image is known as a brand. Over time, the brand gains equity, or value, and it's reflected in the way people think, feel and act about the particular brand product. Equity can be positive or negative. Blackberry, for example, has built positive brand equity around its mobile phone through its association with on-the-go business professionals. There are a handful of direct and indirect ways to measure brand equity---from reviewing its financial performance to assessing brand awareness among consumers.
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Instructions
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Identify the price premium the brand commands compared to its generic counterpart. If a customer is willing to pay, for example, $300 more for a customized Dell laptop than a standard laptop from a rival company, that premium amount is important in identify the brand equity behind the product. While paying an additional $300 may seem reasonable to consumers, paying $800 more for the Dell laptop may not. Those figures show that brand equity only stretches so far.
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Prepare a survey you will distribute to a group of consumers---between 100 to 150 random people---to measure their brand awareness of the product. Select a specific demographic, if you like, to better focus your brand-awareness measure. You could, for example, ask teenagers about their perception of Sketchers' sneakers. Make sure the survey asks participants to rate the product on a scale of one to 10 and asks other questions concerning their satisfaction with the brand product. Ask them whether they are familiar with other products produced by the brand. Give examples and ask them to rate each one. If you were asking about the Apple Mac, for example, you'd ask the consumer if he's ever heard of the iPhone, iPod Touch and iTunes and, if he has, would ask him to rate each one. The stronger the brand awareness across the brand's products, the higher the brand equity.
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Based on your survey results, identify consumer attitude towards the brand. Is it positive or negative? Enter the survey data into an Excel worksheet and create a chart that will show you whether the consumer group you surveyed loves, hates or is lukewarm about the brand product you asked them about. You can also chart responses to other questions to note any trends or patterns, such as how they feel about other products in the brand.
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References
- Photo Credit man on cell phone image by Cora Reed from Fotolia.com
