What Is Brand Equity and How to Build It in a Competitive Market?

Having a great product or service in today’s market isn’t enough without investing in your brand equity.

If you’re wondering ‘what is brand equity’ then simply put this is the value a brand adds to a business, shaped by how customers perceive it. This includes how loyal your customers are and the recognition and trust your brand commands.

There are lots of advantages to building strong brand equity including being able to charge a premium price and being able to attract and retain customers.

Yet despite this power, many brands overlook the importance of brand equity, focusing instead on short-term, immediate sales. However in an increasingly competitive market where consumers are flooded with options left, right, and centre, brand loyalty is ever harder to earn.
Building brand equity enables you to create a meaningful and trusted brand that resonates with your audience on a deeper level that goes beyond surface pricing.

At Discovery Design, we work with a range of clients to help them build their brand equity, ensuring they’re not just seen, but remembered. In this blog, we’ll walk you through exactly what brand equity is, why it matters, and strategies you can implement within your own business.

Whether you’re a startup business or an established brand looking to strengthen your position in the market, understanding and developing your brand equity is key for long-term growth.

What Is Brand Equity?

Brand equity is the strength of your brand.

When you have strong brand equity, you can justify changes in your business such as premium pricing or new products and services.

Essentially it’s the combination of perceptions, attitudes, and emotions that consumers tie to your brand whenever they think of it. For example, what comes to mind when you think about the Apple logo or the Jo Malone colour palette?

These things don’t just exist – they trigger a feeling that you associate with the brand and as an extension, the quality of the products. Both of these brands have taken time to build this image in the minds of its audience through careful messaging, social media ads, product placements, and more, solidifying the right type of image in their ideal customer.

When a new product enters the market however, they don’t have this level of power. Whilst they might have a great name, slogan, and logo, there’s no history or relationship with their audience just yet.

This is what separate brand identity from brand equity as any company can have an identity but it takes time and effort to build equity

The more consumers interact with your products and services, the more they develop a connection to your brand. In turn this will build brand equity but it does not happen overnight.

It’s worth the time however as brands with strong, positive equity can charge more, retain loyal customers, and stand out in a saturated market.

“A set of assets or liabilities in the form of brand visibility, brand associations and customer loyalty that add or subtract from the value of a current or potential product or service driven by the brand.” (Aaker, 1991) – Marketing Theorist and Professor David Aacker

The Keller Brand Equity Model

In Strategic Brand Management, marketing professor Kevin Lane Keller describes brand equity as the way customers think and feel about a brand. This is shaped by the questions people ask themselves when interacting with your brand as this in turn, informs how they feel about it.

Keller’s Brand Equity Model shows that to build a strong brand, you need to shape these thoughts and feelings by creating positive experiences. When customers have positive perceptions, beliefs, and emotions about your brand, they are more likely to choose it.

The model is built around four key questions that a customer asks:

1. “Who are you?” – This is about brand identity as people need to recognise your brand and understand what it stands for.
2. “What are you?” – Customers need to assign some sort of meaning to your brand, including how it benefits their lives.
3. “What about you?” – Customers need to develop an emotional connection with your brand on a deeper level as this informs the way they feel and think.
4. “What about you and me?” – In this last step, if the first three stages are positive, customers are likely to form a long-term relationship with your brand and return back to it in the future.

Keller turned these stages into the brand equity pyramid. As a simple framework, it shows how strong brands are built step by step, from identity and meaning to emotional connection and long-term loyalty.

By understanding these stages, businesses can create strategies and experiences that strengthen each layer of customer perception, building lasting brand equity.

Why Is Brand Equity Important?

There are lots of reasons why building brand equity is important from being able to justify a higher price point, to harnessing more trust from your audience.

We’re breaking these down in more detail below.

1. Justify higher prices – Brands with strong brand equity can charge more and generate more sales because customers see added value.
2. Customers pay more – This ties into the point above; People are willing to spend money on brands they trust and like even if there’s not that much different about the actual product or service.
3. Loyal customers – Customers are more likely to make repeat purchases and return to brands with high equity, reducing churn and increasing lifetime value.
4. Increased trust- A strong, reputable brand gives consumers confidence, making it easier for them to choose you over your competitors.
5. Competitive advantage- Strong brands make an impact in a saturated market which makes it harder for customers to replace them.
6. More resilience – The market is always changing with new brands entering all of the time. Strong brands can better withstand market fluctuations as people are loyal and stay with what they know and trust.
7. Partnership opportunities – Brands are more likely to want to partner with your brand if you have brand equity as this also gives them presence a boost.

How to Build Brand Equity

When strengthening your brand equity, follow the steps below. This will help ensure your efforts are targeted at the right people (your customers) to deliver a consistent brand experience.

1.Understand who your audience are and what they want

When it comes to building your brand, your audience are always going to be the most important people. They’re the ones buying your product or service so they need to be invested for it to be a success.

The ideal audience will differ from one company to the next but its important you get crystal clear on who these buyers are and what they care about. You need to understand what makes them buy so that you can craft your brand and messaging around this.

If you’re unsure of your target audience, we have your complete guide along with a free audience template.

2. Invest in targeted marketing

A key part of building brand equity is making sure customers know who you are and what you do. This results from strong marketing by building your presence in the industry and telling people why they should choose you over someone else.

This starts with understanding your audience (why is why this is point #1) as once you know who your audience are, you can utilise the right marketing channels to capture their attention.

For example, a younger audience will probably be active on social platforms such as TikTok and Instagram whilst an older audience might sway towards email marketing.

3. Create positive customer feelings and beliefs

You want customers to have a positive association to your brand as that’s what makes them buy.

Whether that feeling is happiness, excitement, trust, confidence, safety, the feeling will differ depending on the nature of your business. For example if you’re a bank, the two emotions you probably want to evoke are safety and confidence.

However as a fashion brand, you might want to evoke excitement and happiness.

As long as the emotion is positive it really doesn’t matter. However by focussing on creating this association it means customers are more likely to choose you as you make them feel a certain way.

The saying ‘people buy from people’ stands true when it comes to building your brand equity as you can’t be a faceless, corporate brand. Customers want to feel something as this is what separates your brand from others on the market.

4. Create your brand story

Your brand story is a powerful tool when building brand equity as it shapes how customers think and feel about your brand.

It goes beyond your logo as this is the story that communicates who you are, what you stand for, and most importantly, why customers should care about you.

When done right, your brand story helps:

• Create emotional connections – Customers relate to stories and invest in the narrative, making them more likely to trust and choose your brand.
• Reinforce your brand identity – A clear story shows customers what makes your brand different and why it’s relevant to their needs.
• Build loyalty – Customers who connect with your brand on a deeper, emotional level are more likely to become loyal brand advocates.
• Strengthen perceived value – A compelling story makes your brand memorable and harder for competitors to replace.

To craft your story, focus on these three things:

1. Your purpose – Why does your brand exist, and what problem are you solving?
2. Your values – What do you stand for, and what principles guide your decisions?
3. Your difference – What makes you unique compared to others in your market?

Sharing your brand story across marketing materials, social media, packaging, and customer interactions helps shape customer perceptions, making each positive experience contribute towards building brand equity.

5. Differentiate your brand and stand out

One of the fastest ways to build brand equity is to clearly stand out in your market. Brands that are distinctive and memorable are easier for customers to recognise, recall, and choose—key drivers of long-term value.

To differentiate effectively:

• Identify your unique value proposition – What do you offer that no one else does? Focus on what makes your brand exceptional.
• Develop a signature experience or feature – Whether it’s your product design, service approach, or brand personality, create something customers associate uniquely with you.
• Be bold in your messaging and visuals – Memorable brands aren’t forgettable. Invest in visuals, campaigns, and communications that stick.
• Leverage your niche or expertise – Own a space in your market where you can be seen as the go-to brand.

When customers can easily recognise and remember your brand, every interaction strengthens your equity. A differentiated brand isn’t just noticed; it’s preferred, recommended, and hard to replace, which makes it far more valuable in a competitive market.

What Is Brand Equity and How to Build It in a Competitive Market

Building brand equity means creating consistent experiences that your customers come to know and trust. It’s not enough to do one great campaign then leave it – it’s a long-term investment in your brand. By making your audience feel a certain way every time they interact with your brand, you build positive customer experiences that encourage them to invest in your offering.

In a saturated market where customers are overwhelmed with choice, strong brand equity is the way you can stand out as it builds trust on a deeper level. It’s not about the surface level elements such as deals or flash sales but rather building long-term value that protects your business in market fluctuations.

If you need help strengthening your own brand equity, get in touch with the team at Discovery. We work with a range of brands helping them solidify their position in their market so they’re positioned to grow.