Final answer:
Brand equity creates customer value by offering communication, functional, and perceptual benefits. It's built through product differentiation and brand association, which may be tangible or intangible such as advertising influencing customer preferences.
Step-by-step explanation:
The correct answer to the question "______ can create customer value by offering communication, functional, and perceptual benefits" is Brand equity. Brand equity refers to the value a brand adds to a product or service, which is over and above the functional benefits of the product itself. This value can result in customer loyalty, the ability to charge premium prices, and a strong brand association.
Product differentiation is a key element in building brand equity. It can manifest in various forms, including tangible differences to products or through intangible methods such as advertising that shapes customer preferences. For instance, despite many people being unable to discern between the taste of common beer brands when blindfolded, advertising and brand reputation lead to strong brand preferences among consumers. This preference translates into perceptual benefits that significantly contribute to brand equity. Meanwhile, functional benefits address the practical aspects of a product, such as effectiveness or ease of use, enhancing customer value.