What does brand equity refer to?

Brand equity refers to the value a brand adds based on consumer perception. This concept emphasizes how consumers view a brand and the significance they assign to it, driven by factors such as brand loyalty, recognition, and the perceived quality of its products or services. High brand equity means that consumers are willing to pay a premium for a product, trust the brand, and remain loyal, which can significantly affect a company's overall financial success.

For instance, brands with strong equity often command higher prices and experience greater customer loyalty, making them more competitive in the marketplace. This added value is not just about the product itself but rather the emotional and psychological associations that consumers have with the brand.

While the other answers describe aspects related to marketing and branding, they do not capture the essence of brand equity. Spending on advertising reflects investment efforts but does not directly measure brand value. Legal rights concern trademarks or copyrights, which protect a brand but do not define its market goodwill. Lastly, total revenue pertains to financial performance rather than the perceived value and loyalty generated from a brand's identity and reputation. Thus, the focus on consumer perception underscores why the second choice is the best representation of brand equity.