Ideas about brand equity - that mystery quality which marks out muscular brands from flabby ones - have become something of a cottage industry. Thick books are written about it and companies change hands on the strength of it. But actually `equity' (along with the image scores that supposedly reveal it) is almost entirely dependent on a brand's size and market share. A simple theoretical model, the `Dirichlet', demonstrates this. Smaller brands with poor images suffer from `double jeopardy' - fewer people buy them; of these, few buy them often, or like them all that much. Yet they survive, and may indeed be more profitable than the leaders.
Brand equity is becoming a fashionable management focus: being successful supposedly means having strong brands. A strong brand has been defined as `having a name, symbol, design, or some such entity which identifies the company's product as having a sustainable competitive advantage'. Firms pay vast sums to buy strong brands (eg RJR Nabisco, Rowntree, Perrier). Yet a recent report from the Marketing Science Institute said that despite the growing recognition of the importance of brand equity, little consensus has emerged about how to measure it.