Brand equity refers to the value a brand adds to a product or service beyond its functional benefits. This value comes from consumer perceptions, experiences, and associations with the brand. For example, a well-known brand like Apple can charge higher prices for its products because customers trust its quality and innovation, which enhances its overall market position. Strong brand equity can lead to increased customer loyalty, making consumers more likely to choose that brand over competitors. Companies like Coca-Cola benefit from this loyalty, as customers often prefer their products due to positive past experiences and emotional connections, ultimately driving sales and profitability.