Define brand equity.

Brand equity refers to the value that a brand holds in the eyes of consumers. This value is primarily derived from customer perceptions, which encompass their awareness, attitudes, and experiences with the brand. When a brand is well-perceived, it can command customer loyalty, foster trust, and even allow for premium pricing compared to competitors. This perception translates into financial benefits for the company, as consumers often prefer brands they recognize and feel positively about.

In a marketplace where consumers have numerous options, strong brand equity can result in greater market share, as customers are likely to choose established brands over less-known alternatives. This concept emphasizes that the strength of a brand is not solely based on sales figures or marketing expenditures, but significantly influenced by how consumers perceive and connect with the brand.