Brand Equity - Definition
With reference to Brand Finance literature, the term "Brand Equity" is considered to be the net present value of the estimated future cash flows attributable to the Brand.
Brand Finance use the Royalty Relief (Relief from Royalty) methodology to value a brands equity, which is described in more detail on the Royalty Relief definition page
Brand Equity is also referred to has Brand Value. A brand can be an intangible asset, used by consultants like Brand Finance to rationalise the variation between a company's "book value" and market value. For example, Brand Finance condusted groundbreaking research and demonstrated that 62% of the world's business is now intangible. This represents $19.5 trillion of $31.6 trillion global market value.
Brand Equity in the case of consumer product brands can be measured through customer loyalty, staff retention/recruitment. Therefore Brand Equity can be influenced positively and negatively.
Further information:
Related Glossary terms