Measuring Brand Equity: Inside the Mind of the Consumer

Ming Hsu

Brands are often seen as one of the most valuable assets for firms. Yet the answer to “how much is a brand worth?” is surprisingly elusively. For example, measures of brand value using consumer surveys (customer-based brand equity; CBBE) often yield estimates dramatically lower than those estimated from cash flow data (financial-based brand equity; FBBE). As one writer puts it, “perhaps the only thing that has not been reached with regard to brand equity is a conclusion”. Using a new model based on recent breakthroughs in the neuroscience of consumer choice, we show how and why standard CBBE measures systematically understate the brand value of (especially) well-known firms. Moreover, these results provide actionable insights into challenges and tradeoffs made in managing brand equity.


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