Quick answer
David Aaker defines brand equity as “a 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 service to a firm and/or to that firm’s customers” (Managing Brand Equity, 1991, page 15). Kevin Lane Keller defines customer-based brand equity as “the differential effect of brand knowledge on consumer response to the marketing of the brand” (Journal of Marketing, 1993). Kotler and Keller call it “the added value endowed on products and services” (Marketing Management, 14th edition).
Brand equity is one of those terms everyone uses and few people can define without opening a slide. The original definitions are short, and they disagree in ways that are actually useful.
Aaker counts it like a balance sheet. Keller puts it inside the customer’s head. Kotler and Keller sit between the two. The finance people measure it in cash flow.
Here they are, quoted exactly, in the order they arrived. This is a companion to my posts on branding definitions by Kotler, Aaker and Keller and the definition of marketing by Kotler and other authors.
Peter Farquhar (1989): brand equity as “added value”
“We define brand equity as the ‘added value’ with which a given brand endows a product.”
Peter H. Farquhar, “Managing Brand Equity”, Marketing Research, Vol. 1, No. 3 (September 1989), page 24
This is the most garbled quote in the whole topic. Blogs rewrite it as “the value a brand gives a product” or flip it around so the product gives value to the brand. Farquhar’s direction is clear: the brand endows the product. Same product, more value, because of the name on it.
David Aaker (1991): assets and liabilities
“Brand equity is a 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 service to a firm and/or to that firm’s customers.”
David A. Aaker, Managing Brand Equity (1991), page 15
Aaker groups those assets and liabilities into five categories:
- Brand loyalty
- Name awareness
- Perceived quality
- Brand associations
- Other proprietary brand assets
The word most people skip is “liabilities”. So is “subtract from”. Aaker’s definition allows brand equity to be negative. A name can make customers less likely to buy, and his definition counts that as brand equity too. Read that again, because most brand decks only ever list the assets.
Kevin Lane Keller (1993): customer-based brand equity
“Customer-based brand equity is defined as the differential effect of brand knowledge on consumer response to the marketing of the brand.”
Kevin Lane Keller, “Conceptualizing, Measuring, and Managing Customer-Based Brand Equity“, Journal of Marketing, Vol. 57, No. 1 (January 1993), pages 1 to 22
In 2001, Keller turned this into the customer-based brand equity (CBBE) pyramid, in “Building Customer-Based Brand Equity: A Blueprint for Creating Strong Brands” (Marketing Science Institute working paper 01-107). It has two layers that blogs often mash into one list:
- Four steps: establish brand identity (awareness), create brand meaning (associations), elicit brand responses, and forge brand relationships.
- Six building blocks: brand salience, brand performance, brand imagery, brand judgments, brand feelings and brand resonance, with resonance at the top.
Keller’s is the definition I find most useful, because it gives you a test. Show the same customer the same product, once with the name and once without. If their response doesn’t change, the name isn’t carrying any equity yet. It’s the mirror image of the delete-the-brand-name test in my post on positioning statement examples: there you remove the name to see if the words still belong to you, here you add it back to see if it changes anything.
Kotler and Keller: “the added value endowed on products and services”
“Brand equity is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands.”
Philip Kotler and Kevin Lane Keller, Marketing Management (14th edition), page 244
This is the textbook compromise. Farquhar’s “added value”, Keller’s customer response (“think, feel, and act”), and the business result (“prices, market share, and profitability”) in two sentences. If you need one line for an exam, this covers the most ground.
Kotler and Armstrong: Principles of Marketing
Principles of Marketing defines brand equity as “the differential effect that knowing the brand name has on customer response to the product or its marketing” (Kotler and Armstrong, 2010 printing, page 203).
It’s close to Keller’s 1993 wording, but it isn’t the same sentence. Keller’s is about “brand knowledge”. This one is about “knowing the brand name”. Credit each to its own book.
Simon and Sullivan (1993): the financial view
“Brand equity is defined as the incremental cash flows which accrue to branded products over unbranded products.”
Simon and Sullivan, “The Measurement and Determinants of Brand Equity: A Financial Approach“, Marketing Science, Vol. 12, No. 1 (1993), pages 28 to 52
This is the version your CFO will recognise. No feelings, no pyramid. Just the extra cash a branded product earns over an unbranded one. It’s narrower than Aaker or Keller, and that’s exactly why it lands in a budget meeting.
Brand equity definitions compared
| Author | Year | Source | Brand equity is… | Where it lives |
|---|---|---|---|---|
| Peter Farquhar | 1989 | Marketing Research | the “added value” a brand gives a product | The product |
| David Aaker | 1991 | Managing Brand Equity | assets and liabilities that add to or subtract from value | The balance sheet |
| Kevin Lane Keller | 1993 | Journal of Marketing | the differential effect of brand knowledge on consumer response | The customer’s mind |
| Simon and Sullivan | 1993 | Marketing Science | incremental cash flows of branded over unbranded products | The cash flow |
| Kotler and Keller | 14th edition | Marketing Management | added value, seen in how people think, feel and act, and in price, share and profit | Customer and business |
| Kotler and Armstrong | 2010 printing | Principles of Marketing | the differential effect of knowing the brand name on customer response | The customer’s response |
Which definition should you use?
For an exam: Aaker or Keller, with the year. They’re the two the others build on.
For a board or a CFO: Simon and Sullivan. Cash flow is the language in that room.
For a small team with no research budget: Keller’s test. You don’t need a tracking study to ask whether customers respond differently when they see your name.
Common misquotes to avoid
- Kotler and Keller’s sentence ends “the profitability the brand commands”. Versions that add “for the firm” are paraphrases.
- Farquhar’s brand endows the product, not the other way round.
- Aaker’s full definition keeps “its name and symbol” and ends “to a firm and/or to that firm’s customers”. Shorter versions are summaries.
- Keller wrote “the differential effect of brand knowledge on consumer response”, not “consumers’ response”.
- Keller’s four steps and six building blocks are two layers of the same model, not one list.
- “The differential effect that knowing the brand name has” is from Kotler and Armstrong’s Principles of Marketing, not Keller’s 1993 article.
Frequently asked questions
What is brand equity according to Aaker?
David Aaker (Managing Brand Equity, 1991) defines it as “a 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 service to a firm and/or to that firm’s customers.”
What is brand equity according to Keller?
Kevin Lane Keller (Journal of Marketing, 1993) defines customer-based brand equity as “the differential effect of brand knowledge on consumer response to the marketing of the brand.”
What is brand equity according to Kotler?
In Marketing Management, Kotler and Keller write: “Brand equity is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands.”
What are Aaker’s five dimensions of brand equity?
Brand loyalty, name awareness, perceived quality, brand associations and other proprietary brand assets.
Can brand equity be negative?
Yes. Aaker’s definition counts liabilities as well as assets, things linked to a brand that “subtract from” the value a product provides.
My challenge to you: take Aaker’s word “liabilities” seriously for one meeting. List what your name costs you, not only what it earns you. That list is part of your brand equity too, whether or not it makes the deck.
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