What is brand equity?

Brand equity refers to the value that consumers associate with a brand, which influences their perceptions and purchasing decisions. This value often stems from the brand's reputation, customer experiences, perceived quality, and emotional connections formed over time. When consumers view a brand positively in comparison to its competitors, it enhances the brand's equity, making it more valuable and competitive in the marketplace.

Factors that contribute to brand equity include brand loyalty, brand awareness, perceived quality, and brand associations. When these elements are strong, they not only encourage customer loyalty but also allow the brand to charge premium prices, thereby driving profitability. In essence, brand equity is a critical asset for any business, as it helps differentiate a company's offerings in a crowded market.

Other responses focus on specific financial metrics or costs related to branding and advertising, which do not directly capture the consumer perception aspect that defines brand equity.