How can I learn how to do brand strategy?
What’s worth a brand? How’d you explain importance and equity that a particular brand carries in companies with tighter budgets?
A “brand” is often seen as something imperceptible or intangible which is why people have less understanding of its value to the business. Components of a brand must be determines when valuing it and these include trademark, logo, packaging, digital assets, marketing strategy and elements, brand colour and so on.
In short, brand image is anything through which a company or business gains recognition in the mass market. The Forbes Magazine lists world’s most valuable brands namely;
- Apple
- Microsoft
- Coca Cola
- IBM
Development of a brand requires monetary investment and forecasting its value to the executive investors and leadership weighs equally important. Brand helps in identifying and differentiating goods, products and services from the competition but, how to represent it on the balance sheet! A few acceptable methods of brand value are;
Cost based
Brand is valued by addition of individual costs or values of brand liabilities and assets. It’s the accumulation of cost that has been incurred in lifting the brand since inception. Items to include in the sum are historical advertising, promotion expenditures, cost of campaign creation, licensing and registration cost. The method’s applicable whether you’ve just created a brand or already went through the process of redeveloping.
The cost base valuation would require evaluating the cost of the brand and restating actual expenditure in the current cost terms. Important; although costs can be collected and used, the obtained figured mightn’t necessarily represent existing value of a brand. Using this method, the brand value is equal to the historical or replacing cost of the brand.
Market based
This approach takes into account more valuation methods by comparing likewise brands that have already been sold. You would use comparable market transactions such as particular sale of a brand, comparable corporate transactions and stock market quotations. Think of it as a value that can be used to sell the brand. The brand value using this approach is equal to the market transaction price, bid or perhaps offer identical brands.
Income approach
This method also referred to as “in use” approach which considers valuation of future net earnings directly attributed to determination of the brand value and its current position. The brand value using this method is equal to the present income value, cash flows, cost savings or perhaps hypothetical due to the asset.
Brand equity is among the few business assets that provides a sustainable competitive advantage. With many different approaches, measuring brand’s equity and manipulating the results in an optimistic way isn’t too painstaking.
Conclusion
To prevent abuse of all this, identifying the objective of brand valuation and using the appropriate approach and assumptions would determine a fair value. In conclusion, it can be said that brand value is more of an art than science but, helps sufficiently in determining and developing value proposition supporting the corporate brand.
Traffic Digital; a leading digital agency headquartered in Dubai pay special attention to all the steps as defined above and value its esteemed customers
