brand equity
Type 2 consulting, branding, brand, Jonathan Knowles
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Our point of view
Brand equity is widely-used and ill-defined term that encompasses a broad array of concepts. Our view is that brand equity is best understood as the potential of the brand to generate superior cash flow for the business. Sometimes this potential is unrealized and can be observed only in customer preference metrics; sometimes it is realized and can be observed in customer purchase behavior.  

In both cases, brand equity exists (but only in the latter case does it meet the finance requirement of generating current cash flow).

Brand equity needs to be distinguished from corporate reputation. Brand equity is "customer centric" and focused on the creation of relevance and differentiation; reputation is "company centric" and focused on the generation of credibility and respect among multiple audiences.

Profiling the differences between the accounting, finance and marketing perspectives on brand equity was the topic of the cover article "Varying Perspectives on Brand Equity" of the July/August 2008 edition of the AMA's Marketing Management magazine.

Clarifying the difference between brand and reputation was the topic of our article "Don't Confuse Reputation With Brand" in the Winter 2008 edition of the MIT Sloan Management Review.

We reviewed a number of the brand equity measurement techniques in our article "In Search of a Reliable Measure of Brand Equity" in the July 2005 edition of MarketingNPV.

Earlier work on whether there was a measure of brand equity that correlated consistently with superior corporate valuation was published under the title of "Value-based Brand Measurement and Management" in the June 2003 edition of Interactive Marketing.

"Credit for Credibility"— my piece on the role of trust in business relationships — was published in the McKinsey special report for the 2003 World Economic Forum in Davos.

While at Brand Finance, I co-authored a report for the Institute of Communication Agencies on "Measuring and Valuing Brand Equity" that was published by Canadian Business in November 2004 (please contact us directly if you would like a copy).

We have also written extensively on the topic of brand valuation — see the section "How Big is Brand?"
Type 2 consulting, branding, brand, Jonathan Knowles
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