Trademark expert witness William D. Neal is Senior Executive Officer at SDR Consulting and in Modeling Brand Equity, he writes on branding:
We believe the total value of a brand in a particular product/service category is composed of three parts. One part is due to the physical and readily identifiable (and replicatable) features of the brand that delivers specific, tangible benefits to the purchaser, thus impacting purchase choice. We call these the tangible product features. The second part is due to some perceived intrinsic value associated with the brand name due to such things as the image transferred to the purchaser, trust, longevity in the marketplace, social responsibility, consistent performance, and so forth (i.e. the intangibles), impacting purchase choice. We refer to this as the brand’s image, or the brand’s equity. The third component is the price of the product. Thus, the total value (or utility) of a product or service is a function of 1.) its physical, tangible, deliverable features, 2.) its brand equity, and 3.) its price.
In addition, we believe that a brand’s value is directly related to customer loyalty. That is, if a particular brand maintains a significantly higher perception of value to a consumer than any other brand in the category, that consumer will consistently purchase that brand and consistently recommend that brand to others. Conversely, as brands in a category become less differentiated in terms of both tangible and intrinsic features, price becomes the major differentiator of value, and thus, there is little loyalty.