What does brand equity refer to in advertising?

Brand equity refers to the value a brand adds to a product based on consumer perception. This concept is crucial in advertising because it encompasses the associations, loyalty, and perceived quality that a brand holds in the minds of consumers. When people view a brand favorably, it can influence their purchasing decisions, leading to increased sales and market share. Advertisers strive to build and maintain strong brand equity as it can significantly impact the overall success of a product or service.

The other options do not capture the essence of brand equity as clearly. While financial investment in a brand, the types of products offered, and a brand's popularity can all play roles in influencing consumer perception, they do not directly define the added value that brand equity provides. Instead, brand equity specifically focuses on the perception and relationship consumers have with the brand, which ultimately drives their behavior in the marketplace.