Final answer:
2. Brand equity represents the value a brand contributes to a product or service, including customer trust, experiences, and loyalty. It allows businesses to charge premium prices and maintain a loyal customer base.
Step-by-step explanation:
The term that represents the worth that a business has established for a certain product is brand equity. Brand equity is the value a brand adds to a product or service, epitomized by a well-respected brand name that has been built up over many years. This value includes customer perceptions, experiences, and loyalty that result in the ability of a firm to charge a premium price or secure a more substantial market share. Companies with high brand equity, such as an established grocery store known for its reputation, can command higher prices compared to competitors because customers trust the brand and associate it with quality. Building strong brand equity is crucial as it contributes to customer loyalty and repeat purchases, which are essential for long-term business success.
For example, a well-established brand like Nike has significant brand equity because it is widely recognized and trusted by consumers. This allows Nike to charge a premium price for its products compared to lesser-known brands.
Brand equity can be built through various means, such as effective marketing campaigns, delivering consistent quality, and creating a positive brand image. It plays a crucial role in shaping consumer perceptions and purchasing decisions.