November 30, 2022
5 min read

The Difference Between Brand Awareness and Brand Equity

The Difference Between Brand Awareness and Brand Equity

You’ve likely heard the term “brand awareness,” and probably have a good understanding of what the phrase means. A phrase you probably haven’t heard as often is “brand equity,” and while it’s not as common, it's often used interchangeably with brand awareness. Brand awareness and brand equity complement each other in the business world, but they mean different things. Brand awareness is a subcategory of overall brand equity.

What is Brand Awareness?

Brand awareness is how familiar consumers are with your brand: when your name is mentioned will consumers know who you are? Or if consumers see your logo on a product, will they recognize your brand’s name? Whether or not consumers know your brand exists is a part of brand awareness.

What is Brand Equity?

Brand equity is the perceived value of your brand. This value is measured by what consumers think about your brand. Consumers measure “value” in several ways: product or service quality, customer service experience, and brand consistency.

The Importance of Brand Awareness and Brand Equity

Studies show that consumers are more likely to purchase products from a company that they know or that has been recommended to them by a friend. This reason right here is why brand awareness is important. If a consumer has never heard of your brand they're probably going to be very skeptical when they see a product from you.

Consumers always have underlying emotions surrounding a brand that they've experienced before, whether it's good or bad. There are so many bad quality brands out there that our preconceived idea of a new brand is distrustful. When consumers see a new brand they often need a recommendation from friends in order to try it themselves. If they just try it as a new brand, they’ve typically taken time to research the brand from their website, social pages, or reviews.

Brand Equity is important because it affects the success of your business by narrowing down who will actually purchase from you, and by increasing customer loyalty. For example, when going to Starbucks, I can expect my drink to be made the same way regardless of my location, be it on the East or the West coast of the U.S. However, a local coffee chain can have drinks that vary significantly from location to location that are less than 20 miles away from each other.

For this reason, I rate Starbucks with a higher overall brand equity than the local coffee chain because my drink is always consistent, even though I like the actual coffee from the local chain better. In this case, as a consumer, I value consistency over occasional quality, meaning I’ll choose Starbucks coffee over the local shop because I get what I expect every time. Because of their good brand equity, Starbucks gains a customer.

How They Complement Each Other

Brand awareness is a subcategory of brand equity. In order for a consumer to rate a brand with positive brand equity, they have to have been exposed to that brand before. So to build brand equity, businesses need to start by building brand awareness. The more people that know about your brand the better, but the goal goes beyond just this.

You want consumers to interact with your brand, whether it’s following you on social media, commenting, joining an email list, or making a purchase. How you interact with your customers and express your personality throughout your marketing efforts will highly influence how valuable consumers think you are.

In Summary

You want consumers to know about your brand and think highly of your brand and its perceived quality. While the ultimate goal of a business is to make sales, there are a lot more factors that can be used to measure a brand’s success, with brand equity and brand awareness just being a piece of the overall marketing puzzle.