Brand equity represents the premium value a brand name brings to a product. When two identical products exist, consumers will pay more for the recognized brand, and that price difference is brand equity.
Apple's iPhone sells at premium prices because of strong brand equity. Coca-Cola is essentially a soft drink, yet its brand is valued at billions of dollars.
Brand equity is built through consistent quality, trustworthiness, and positive customer experiences over time. It enables premium pricing, easier product launches, and greater resilience during market downturns.