What is brand equity?

Brand equity refers to the value that a brand holds in the marketplace as a result of consumers' perceptions, experiences, and associations with that brand. It encompasses the intangible aspects of the brand, such as customer loyalty, recognition, and prestige, rather than just tangible assets or financial metrics. When a brand is positively perceived by consumers, it can lead to increased sales and market share, resulting from the customers' willingness to choose one brand over another due to their favorable associations.

The focus on consumer perception is critical because brand equity is not inherently linked to the physical attributes or financial performance of a company. Rather, it's influenced by factors such as brand reputation, marketing efforts, and overall consumer experience with the brand. A strong brand with high equity can command premium pricing, foster consumer loyalty, and ultimately provide a competitive advantage in the marketplace.