Brand equity is the additional benefit a consumer associates with a brand, which makes it unique compared to all the other brands available in the market. In other words, brand equity means the customer’s perception and loyalty to a brand and brand awareness, which measures the potential customers’ ability to recognize and associate a brand with a company’s product or service.

Brand equity can reduce the competitive rivalry within the industry (allowing companies to achieve higher sales and command premium prices) and the threat of new entrants (by preventing customers from easily switching to new product or service offer thanks to intellectual property rights).

That’s why brand equity is crucial, especially in the following strategies: the differentiation strategy, the brand extension strategy, the co-branding strategy and the ingredient branding strategy.

The differentiation strategy involves developing products or services perceived as unique, thus allowing companies to charge higher prices. Companies enforcing this type of strategy often have a high brand equity for quality and innovation.

The Brand extension strategy means using an established brand name on new products or services, thus reducing time and cost because the brand is already known, reinforcing the brand equity of the brand when the new product or launched service is a success.

Co-Branding consists in combining two brand names owed by two companies to capitalize on the brand equity of each to enhance the success of the new product or launched service.

Ingredient Branding refers to the process in which the marketing strategy of a product is based on the “ingredient” used in it to signal the high quality of the product through the brand equity of this ingredient.

So, if brand equity is important for a company’s strategy, thus having to be implemented during the early growth stage, this is especially because of its impacts:

  • The strong influence on the financial position of the brand;
  • The creation of a competitive advantage by standing out in the marketplace;
  • The creation of brand awareness;
  • The minimization of negative effects of actions.

The significance of brand equity can be illustrated through the Apple example. Indeed, Apple has:

  • successfully influenced its financial position by consistently launching successful products, allowing it to command premium prices for each new product launched;
  • created a competitive advantage through its ecosystem which integrates into customers’ daily lives (communication, entertainment, work);
  • built strong brand awareness thanks to its distinctive products and services’ designs and social commitments (consumer privacy, diversity, environmental sustainability);
  • been supported by its existing brand equity to minimize the negative impacts of its actions (notably regarding the commercial released at the beginning of 2024, which was interpreted by many artists as a sign AI was intended to replace human art).

This diploma project was presented by DU graduate Madison Pytel in the final oral examination.

Madison is an in-house lawyer specialized in IP/IT/Business law with French degrees from Université Panthéon Assas, Institut Supérieur du Droit and Université de Montpellier. After working in law firms and international companies, she is currently working at URIAGE, a PUIG Group’s company.

 

Here is her presentation of the diploma project: