I was in a grocery store a few months ago watching someone reach past a perfectly fine store-brand ibuprofen ($4.99 for 200 tablets) to grab the Advil ($11.99 for 100 tablets). Same active ingredient, same dosage, same FDA approval. The only difference was the name on the box. That price premium, that instinctive reach, that trust built over decades of advertising and consistent experience: that is brand equity.
Brand equity is one of those concepts that every marketer talks about but struggles to define precisely. Partly because the two most influential thinkers on the topic, David Aaker and Kevin Lane Keller, defined it differently. And partly because brand equity lives in the gap between what a product is worth functionally and what people will actually pay for it.
Brand equity is the commercial value that derives from consumer perception of a brand name, rather than from the product or service itself. It is the premium that a brand commands over an unbranded equivalent.
David Aaker defined it as "the set of brand assets and liabilities linked to a brand, its name, and symbol, that add to or subtract from the value provided by a product or a service." Note the "subtract" part. Brand equity can be negative. Ask anyone who owned a Volkswagen during the 2015 emissions scandal.
Keller's definition is more consumer-centric: brand equity is "the differential effect that brand knowledge has on consumer response to the marketing of that brand." In simpler terms, it is what happens in a customer's brain that makes them behave differently toward your product than toward an identical unbranded product.
Both definitions are useful. Aaker's model is better for strategic planning and asset valuation. Keller's model is better for understanding consumer psychology and brand positioning decisions.
David Aaker's 1991 framework identifies five components that build (or erode) brand equity:
| Component | What It Measures | Marketing Implication |
|---|---|---|
| Brand awareness | How easily consumers recognize or recall the brand | Invest in advertising reach and frequency |
| Perceived quality | Consumer perception of product/service excellence | Quality consistency, reviews, certifications |
| Brand associations | Mental connections (functional, emotional, symbolic) | Positioning strategy, brand storytelling |
| Brand loyalty | Likelihood of repeat purchase and resistance to switching | Loyalty programs, customer experience, retention rate |
| Proprietary assets | Patents, trademarks, channel relationships | Legal protection, distribution advantages |
I find Aaker's model most useful when talking to CFOs and finance teams. It frames brand as an asset on the balance sheet, which connects directly to goodwill in accounting terms. When a company acquires another company for more than its tangible assets, that premium is partly brand equity showing up as goodwill.
Keller's 1993 framework structures brand equity as a pyramid with four levels:
Level 1: Identity (Who are you?) Brand salience, top-of-mind awareness. Can customers recognize and recall your brand in the right contexts?
Level 2: Meaning (What are you?) Brand performance (functional attributes) and brand imagery (psychological and social meaning). This is where brand image lives.
Level 3: Response (What do I think/feel about you?) Brand judgments (quality, credibility, consideration, superiority) and brand feelings (warmth, fun, excitement, security, social approval, self-respect).
Level 4: Relationships (What connection do I have with you?) Brand resonance: intense loyalty, active engagement, sense of community, attitudinal attachment. This is the peak, where customers become advocates.
Qualtrics has a particularly good comparison of the two models, noting that Keller's approach is "more heavily based on an emotional response created with the customer, whereas Aaker focuses on recognition and how well the brand is known."
I think the best approach is using both. Aaker's model for the boardroom, Keller's for the marketing team.