What does "brand equity" refer to?

"Brand equity" refers to the value that a brand adds to a product or service based on its recognition, reputation, and the perceived quality associated with it. This concept encompasses elements such as customer loyalty, awareness, and overall perceptions that consumers have towards the brand. When a brand is well-regarded and trusted, it can lead to higher sales, the ability to charge a premium price, and greater market share.

This value arises from the cumulative effects of marketing and branding efforts over time and is connected to emotional and psychological factors for consumers. A strong brand equity can give companies a competitive advantage by fostering customer attachment and preference, thus influencing purchasing decisions even in a crowded market. This highlights the impact of brand equity not just as a measure of financial worth but also as a crucial intangible asset that affects consumer behavior and company performance.