What does brand equity refer to?

Brand equity refers to the value a brand adds to a product, which plays a significant role in consumer perception and decision-making. This concept encompasses the relationship between consumers and the brand, highlighting how positive associations, loyalty, and recognition can enhance the overall worth of the product beyond its physical attributes. When consumers trust a brand or have a favorable opinion of it, they are often willing to pay a premium, choose it over competitors, or exhibit loyalty, which contributes to long-term profitability and competitive advantage.

In contrast, while the measurable size of a brand, the number of products a brand sells, or the overall market share can provide insights into a brand's performance, they do not fully capture the deeper psychological and emotional value that brand equity embodies. Brand equity is fundamentally about how consumers perceive and value a brand, making it a crucial aspect of marketing strategy and brand management.