Weitere ähnliche Inhalte Mehr von B2B International (6) Brand Valuation - How Much Is A Brand Worth?1. Brand Valuation – How Much Are Brands Worth?
A White Paper By Paul Hague Of B2B International Market Research
2. What Is A Brand?
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We all understand what brands are.
We buy them every day. However,
what is the best definition of a
brand.
It is important to say what a brand is
not:
• It is not just a logo
• It is not just a name
• It is not just a product
When we think of a brand we have an
expectation of what we will receive.
Therefore, the definition that we like
is - a brand is a promise delivered.
Brand Valuation: How Much Are Brands Worth? – © B2B International Market Research
3. Value Perceptions
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3 A good brand has a value and research must try and put a
figure on this. For example we can give people 100 points to
spend to indicate the weight of different factors that influence
their choice of products – price, reliability, product quality,
service and of course brand. In business to business markets
it is typical that the brand receives only 5 to 10% of the points
spend. In consumer markets this figure could be 20 to 30% or
even more.
When people are asked to place a monetary value on a car
(the same car is used in the photographs but different badges
are superimposed on the bonnet (hood) to suggest it is a
different brand) the Mercedes brand is seen to be worth more
than that of Ford and the Ford brand is perceived to be worth
more than the Chinese brand.
Brands very much influence our price perceptions and if we
can raise these perceptions at all, it is equivalent to obtaining a
price increase.
Brand Valuation: How Much Are Brands Worth? – © B2B International Market Research
4. Goodwill & The Value Of Brands
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• Over time, companies build up goodwill which reflects the intangible value that
comes from the loyalty of customers. Loyal customers who insist on doing business
with a company to the exclusion of other companies are valued highly. There is
therefore an important link between goodwill and brands.
• Nowadays goodwill includes any intangibles that can earn a company profits that
are over and above what could be achieved from a company’s tangible assets
alone. This concept of goodwill signifies that it is an asset like any other asset.
• At the time a company is sold, the real value of goodwill will be realised as it is the
difference between the tangible assets and the amount that somebody is prepared
to pay for the company. And before a company is sold, this asset may go
unrecognized on the balance sheet.
Brand Valuation: How Much Are Brands Worth? – © B2B International Market Research
5. Valuing Brands
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5 Top 20 world brands - 2011 Over the last few years there have been many
listings of the value of brands. The figure on
the left shows the listing of the global Top 20
brands according to Millward Brown Optimor.
This brand valuation model is similar to listings
by other brand measurement companies such
as Interbrand.
2011 saw big changes in the importance of
brands from the developing world. China now
has 12 brands in the top 100, up from 7 a year
ago. And of the 11 new entrants to the top-100
list, 7 come from the so-called BRIC countries:
Brazil, Russia, India, China.
The valuation of brands is contentious because it is based on subjective criteria and
the brand valuations swell the values of companies’ balance sheets and their share
values. However, in today’s world, brands (especially big consumer brands) have their
own special status and are not necessarily treated as part of the goodwill.
Brand Valuation: How Much Are Brands Worth? – © B2B International Market Research
6. Brand Vulnerability
• Brands are dependent on people’s perceptions and
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are vulnerable. Brands are built on spoonful's of
trust that can be destroyed by one false move.
• Perrier, one of the world’s leading suppliers of
bottled water, suffered an embarrassing blow to its
reputation in 1990 when a North Carolina study
reported benzene in their product. At first Perrier
tried to wriggle out of any culpability with various
explanations. They finally had to admit that it was an
isolated incident of a worker having made a mistake
in the filtering procedure and that the spring itself
was completely unpolluted.
• In order to retrieve their brand position of purity,
Perrier recalled 160 million bottles of water.
• There is no doubt that if this event had taken place
at a time when the Perrier company was being sold,
it would have knocked millions of dollars off the
purchase price.
Brand Valuation: How Much Are Brands Worth? – © B2B International Market Research
7. Brands On The Balance Sheet
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• The capitalisation of a company's brand
value on the balance sheet is contentious
as it requires the brand to be separated
out from the other intangibles and, as in
the case of the Perrier problem, the brand
value can melt away quickly.
• So, whether or not the value of a brand
can be separately assessed realistically,
remains a problem of confirming or
reassessing its value each year.
• Assessing the value of assets can be difficult on other parts of the balance sheet.
For example, property is a significant asset and yet its valuation can also fluctuate
widely from year to year. The difference in the case of brands is the lack of an
efficient market for them. The procedures and practices of valuation in this area
are not yet agreed.
Brand Valuation: How Much Are Brands Worth? – © B2B International Market Research
8. Industrial Brands
Page • This presentation has argued strongly that brands have a value that can be built up
8 over time. The value of a company’s brands can be assessed and put on the balance
sheet with just as much legitimacy as any other asset.
• In the past, goodwill on the balance sheet incorporated the value of brands. Today, the
intangible value of brands are just as important as a company’s physical assets.
However, we have yet to see this translated into the balance sheets of business to
business or industrial companies because it is assumed (wrongly) that these
organisations do not have brands that significantly influence the buying decision.
Influence on the
buying decision
Ra tiona l influences on the
70%
buying decis ion
Emotiona l influences on the
buying decis ion 10%
Strategic b2b Basic
Luxury goods and goods and
Cars
goods services services
Brand Valuation: How Much Are Brands Worth? – © B2B International Market Research
9. Branding in B2B Markets
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9 • In business to business markets the name
of a company is usually the umbrella brand
under which all products are sold. Thus, A 10% increase in the value
the main brand of the company and its of a brand is equal to a 10%
operating name are intrinsically linked. price increase and we know
what that does to profits!
• For many companies, B2B branding
equates to having product names that they
call brands but which are simply labels by
which the products are ordered.
• The value of a business to business
company lies in its incorporated name and
this has a real value that should carry a
premium.
• Industrial companies need to wise-up to the
opportunity of increasing their brand
values.
Brand Valuation: How Much Are Brands Worth? – © B2B International Market Research
10. Thank you for reading our White Paper on Brand
Valuation Methods and Brand Equity Research.
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10 To access further white papers and publications by
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