What is meant by brand equity?

Brand equity refers to the added value that a product or service gains from having a strong, recognizable brand name. This added value comes from consumer perceptions, loyalty, and the overall brand experience associated with that name. When a brand is well-known and trusted, it can command higher prices, attract more customers, and create a competitive advantage in the marketplace. Strong brand equity often leads to enhanced customer loyalty, increased market share, and potentially greater profitability for businesses.

In contrast, options such as the cost of creating a brand, the legal protections offered to a brand, or the total assets of a brand do not encapsulate the essence of brand equity, which is fundamentally about the perceived value brought to a product or service by its recognized brand status.