Measuring brand equity allows a company to establish a baseline and track changes in its brand equity over time. If a company consistently works to improve the strength of its brands, it must trace progress, or risk "flying blind." Changes in a quantitative measurement of brand equity can show the company the effects of its work, and greatly aid in setting marketing and management priorities in the next business planning cycle.

Once a brand equity measurement system is established, a company can better understand and therefore determine if equity in a given brand can be leveraged or transferred to an entirely new product or service category. Thus, a firm can increase the return from the investment in building a particular brand over time by extending that brand's equity into new categories.

A company may want to measure its brand equity to aid in assigning a monetary value to a brand. Wall Street measures the strength of a brand by looking primarily at current and historical financial measures, with minimal use of information directly from the "voice of the marketplace" (i.e., current and prospective customers). While historical financial performance is important in understanding brand strength, it does not tell the whole story, especially in terms of what the future might hold for the brand. This potential deficiency derives from the choices made in defining brand equity.

Scott White is President of Brand Identity Guru a leading Corporate Branding and Branding Research firm in Boston, MA.

Brand Identity Guru specializes in creating corporate and product brands that increase sales, market share, customer loyalty, and brand valuation.

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Over the course of his 15-year branding career, Scott White has worked in a wide variety of industries: high-tech, manufacturing, computer hardware and software, telecommunications, banking, restaurants, fashion, healthcare, Internet, retail, and service businesses, as well as numerous non-profit organizations.

Brand Identity Guru clients include: Sun Life Financial, Coca Cola, HP, Sun, Nordstrom, American Federal Mortgage, Franklin Sports and many others, including numerous emerging growth companies.