The literature on brand building is enormous (though its quality is rudimentary), but if we look at some of the more serious literature, we find that brand building can be described as “a group of potentials customers’ willingness in the future to buy a ‘brand’ at a premium cost.” Thus the value of the brand can be reduced to preference (the willingness to buy the brand at a premium cost) and awareness (the size of the group of people who will pay premium prices and are aware of the product). This leads us to a more fundamental understanding of a brand, where the value of the brand can be seen as the product of awareness and preference. And not surprisingly, preference and awareness are the key value drivers in most brand equity models.

The value of working with brand equity as a marketer is not that brand equity can show up in the annual report, but that it gives us a tool for analyzing and understanding the effect of our marketing. And even more importantly, it gives us a tool to estimate the competitive situation in the market.