Measure brand equity with structural equations modelling

Michael Lieberman

Brand equity is one of the more popular concepts in marketing today. It is loosely defined as: 'The added value that a brand brings to a product or service beyond the functional benefits provided. Major asset categories are: brand name awareness; brand equity; perceived quality; and brand associations.' In fact, there are several definitions of brand equity, all of which stem from the concept of 'brand'.

Understanding brand equity is a process by which the researcher identifies how overall satisfaction with a company's products and services, and loyalty to the brand relate to all specific areas affecting these key issues. Determining this relationship can uncover perhaps the most important facet of this kind of study – the drivers of overall brand identity.

If a product is not a brand, it is a commodity. This is where brand equity demonstrates its value by translating into revenue – through increased sales driven by branding, as well as the willingness of consumers to pay a premium.