Relating Brand Equity and Customer Equity: An Exploratory Study

Abstract

Brand equity and customer equity, respectively, constitute the value provided by brand and customer portfolios to companies. These are metrics of marketing performance in the long term, as well as key factors in firm valuation processes. However, their relation has not been empirically analysed to date. This study explores the connection between brand equity and customer equity. We employ a simultaneous equations model in which brand equity and customer equity depend on each other and also on marketing expenditures. We find that these metrics partially overlap, particularly in some industries. Hence, our results highlight the importance of implementing models that consider the interaction between them in order to obtain reliable measurements of the overall productivity of marketing actions. Additionally, our results suggest that the value of brands and customer portfolios should be jointly measured so as to obtain trustworthy assessments of firm value.

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