Varying Perspectives on Brand Equity
By Jonathan Knowles

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MM July/August 2008

Yo u s a y t o m a y t o a n d I s a y t o m a h t o .

I started business life in finance (at the Bank of England in London), and in those early days I did not give brands a second thought. My life was dominated by financial facts and figures. And for the first 10 years of my career, I believed that these metrics were essentially all that were needed to manage and run a successful business. This view survived my transition into management consulting—at least initially. But the more I worked on developing value-based business strategies for companies, the more I came to appreciate the need to expand beyond a purely financial approach. If (as management consultant Peter Drucker famously observed) the purpose of business is to create and keep a customer, then strategy necessarily involved understanding and catering to the functional and emotional needs of customers.

MM July/August 2008

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EXECUTIVE

Brand equity is a widely accepted concept—but its definition is frustratingly elusive. Here we’ll explore the different perspectives that marketing, finance, and accounting have on the topic— and how these can be reconciled. Doing so is important because of the critical role that brand

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equity plays in the demonstration of marketing accountability. This article puts forward four arguments that marketers can use to show how brand equity is a critical measure for demonstrating marketing’s role in adding to business value.

My desire to develop a systematic approach about how to do this led me into brand consulting and a series of roles focused on brand strategy, brand measurement, and brand valuation. The combination of my new focus on customer value and my background in shareholder value proved to be an excellent foundation for exploring when,