The first module counted where people stand with a brand. That is its brand equity, made up of four things: awareness (do people know it?), consideration (would they think of buying it?), favourability (do they like it?) and preference (would they pick it over the alternatives?). What equity does is change the chance that someone chooses the brand when they need to buy in its category. So the question of what it’s worth has a simple answer: take the equity away, and see how many sales go with it — to a rival that still has its own.
The charts here are sketches from a simple model. They show proportions and directions, not sizes — nothing on this page is a benchmark.
A hundred shoppers need to buy in your category. A rival is always on the shelf. Set how strong your brand equity is next to the rival’s — how well people know it, consider it, like it and prefer it — and how often you’re in the first place they look.
With nothing to choose between you, being there decides it. Almost every time you’re missing, the rival is a good enough alternative and gets the sale.
Being easy to find isn’t the only thing that shapes favourability and preference — price does too, and so does the product itself. The pattern is the same: when people prefer you, they’ll put up with more to get you; when it’s level, the easier or cheaper option wins. And a few sales survive with no equity at all — someone who buys an unfamiliar product on the spot, or a purchase with no real choice.
What equity is worth also depends on how often people need to buy. This uses your setting from part 01 — change the number of buying occasions and watch what moves.
The equity is the preference; its worth is what that preference can earn. More occasions — a growing category, a busy season — make the same equity worth more without making it any stronger. Fewer occasions do the opposite. Try it with No equity set above: however many occasions there are, there’s nothing for them to multiply.
To turn this into money: the extra sales your equity wins × what you make on each one, for as long as people keep preferring you.
Sales like the gold squares above happen without any of this period’s advertising. So measurement reports often file them as “baseline” or “organic” — sales the business would have made anyway. They would have. But that doesn’t mean marketing had nothing to do with them: they’re the return on equity built earlier, by past advertising, good experiences, price, and being easy to find.
It works the other way too. A search ad that wins a sale today gets the credit, but it often only worked because the shopper already knew and trusted the brand. The “baseline” isn’t free: it was built, and it has to be kept up.
Knowing that equity produces most of your sales tells you what’s at stake if it’s neglected. It doesn’t tell you how much the next dollar of brand spend will add — that depends on how far it moves people, and how fast they drift back. Those are questions for “Brand and performance” and “Splitting the budget”.
If equity is what changes the chance that people choose the brand, then removing it hands those sales to a rival that still has some. Only purchases decided in the moment, or with no real choice, survive. And more buying occasions make the same equity worth more.
One rival, always on the shelf. Awareness, consideration, favourability and preference move together as one dial — a stand-in for where people stand with the brand, as in the first module. People who prefer you will often look elsewhere when you’re missing; people who see the two brands as level won’t. A stranger rarely picks you on the spot. The inputs are invented to show these proportions; none of them are benchmarks.
How your equity compares with your main rivals’, and how often you’re missing where people first look. How many shoppers will look elsewhere for you, and how many of your sales are decided on the spot by people with no prior relationship. What you make on each sale, and how long people keep preferring you.
Buying occasions create the opportunities. Brand equity wins the choices. The sales that result are its return — and what the brand is worth is the sales it would lose without it.
Illustrative model · proportions, not sizes