Last updated: May 27, 2019
Topic: AutomotiveMotorcycles
Sample donated:

What is brand equity and how does it affect consumers?


Brand equity is the amount of loyalty and trust that a particular brand has from its consumers. Having a lot of brand equity is a competitive advantage to an organization and can be seen as a value-added benefit for the consumers purchasing that brand. Organizations acquire brand equity by making a commitment to obtaining the necessary brand awareness, gaining the trust of consumers and providing superior service that meet or exceeds the expectations of those consumers. An article, “Measuring Customer-Based Brand Equity,” in the Journal of Consumer Marketing states that there are “five underlying dimensions of brand equity: performance, value, social image, trustworthiness and commitment.”

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Consumers are affected by brand equity in a number of ways. A brand with a lot of equity allows consumers to spend less time in the decision-making process. They recognize the brand, trust it and know that it has worked in the past. Therefore, purchasing that brand allows the consumer to save effort and time, but not necessarily money. Brands that have gained the respect and trust from its consumers can often charge higher prices than other brands for the same product. Many consumers are willing to pay the cost differential for the perceived benefit of the “better” product.


Another way that brand equity can affect consumers is through reference groups. If a new consumer of a product does not have any brand awareness within that product group, they will look to their reference groups to help make their decision. For example, a new motorcycle rider who doesn’t know anything about motorcycles may look to a friend of his that owns a motorcycle. That friend will most likely recommend the brand of motorcycle that he perceives to have the most brand equity. In conclusion, consumers often purchase brands that they perceive to have more brand equity and are more likely to be repeat consumers of those brands.



Lassar, W., Mittal, B., Sharma, A. (1995). Measuring customer-based brand equity Journal of

Consumer Marketing. Retrieved December 1, 2006, from Emerald on-line database.