brand managemnt

BRAND VALUATION

UNIT - V

BRAND VALUATION• Methods for valuing brands differ from one

another.

• Result these leads to significantly different

brand valuations.

• Companies wished to value brands in order to

exhibit their strength through balance sheet

despite having undergone the process of

goodwill write offs.

• Though the brand valuation has led to a major

controversy in accounting circles.

• Important thing to be considered is in the context

of brands is that they are different from other

intangible assets.

• Brands are legally protected and identifiable

assets.

• They are bought and sold as property.

METHODS OF BRAND

VALUATION• Cost Based Valuation

• Market based approach

• Royalty approach

• Discounted cash flow method

• The interbrand approach

• Brand strength analysis

FACTORS OF BRAND STRENGTH• Market Characteristics

• Stability

• Leadership

• Internationality

• Trend

• Support

• Protection

CHOICE OF VALUATION

METHOD• Brand consultancy firm interbrand arrives at this

valuation.

• To arrive at the best possible valuation, it would

be wise to use as many methods as possible.

• This can be the right way to add robustness in

the results.

EXCESS OPERATING

PROFIT METHOD• Value of brand is determined by capitalizing

excess profits generated by a business.

• Calculated in many ways .

• The calculated excess profits are then

discounted to the present day to determine the

brand value.

CAUTION

• The excess profit so calculated should not

be attributable to anything other than the

brand.

PREMIUM PRICING METHOD

• Shadow of the excess profit method

• Both the branded and unbranded fast

moving consumer goods are being sold.

CHALLENGE

• Finding the true generic or commodity

product.

ROYALTY SAVING METHOD

• Guides the valuation.

• Charge imposed on the user of brand name.

• Business owning the brand does not have to

take it royalty basis or the business would have

to in – license it to earn the same returns.

• Royalty rate is critical.

MARKET APPROACH

• The market transactions involving sale and

purchase of comparable assets guide the

brand valuation.

• Valuation figure arrived at market value a

similar asset fetches in the market.

BRANDING INDUSTRIAL

PRODUCTS• In many b2b markets 25,15,or even just 10

customers account for 80% of sales.

• Companies which serve different segments of

industrial buyers can maximize their sales by

slotting prospective customers into a needs

based segmentation scheme.

STEPS FOR BRANDING

INDUSTRIAL PRODUCTS• Carving up the market

• Differentiate

• Bundle

• Deliver

CARVING UP THE MARKET

• Knowing who will pay for differentiation ?

• How much can be invested in the differentiation

process?

• What benefits are of value to their customers are

building blocks for a brand?

• This involves the following :

a) Gold Standard Customers

b) Potentials

c) Incorrigibles

GOLD STANDARD CUSTOMERS

• Concerns exceed a narrow fixation with rock

bottom price.

• Pays a premium for offerings that deliver the

true value in terms of process enhancement ,

cost reduction or benefits to end users.

• The true gold standard commodity customers will

consider long-term,strategic partnerships with multiple

levels of client interaction.

• Example :

Australian Wheat Board scans the global markets

looking for buyers who are seeking high quality wheat

with very specific characteristics.

POTENTIALS

• A Larger segment of the market

generally ranging from 30 to 45 percent

places a higher emphasis on pure price

but is occasionally willing to entertain

the notion of selective relationship

involving certain products or services.

• Customers in this segment have

some degree of interest in partnering

although they shy away from long

term commitments.

INCORRIGIBLES

• Customers not going to love one.

• They are not strategic thinker.

• Tightly focused on single goal.

• Marketers need to analyze the extent to which customers

truly contribute to their profitability rather than eating

up profits by failing to pay the true cost to serve.

DIFFERENTIATION

• Must be tangible,robust and capable of

withstanding intense scrutiny.

• The marketed offering must significantly

enhance some element of the customers value

chain in ways other competitors cannot match.

• Value is created in commodity

products through improving the

consistency of the offerings making it

more convenient or aggressively

customizing it to the customers

operation.

6 WAYS TO DIFFERENTIATE• Quality Control : value from product consistency.

• Reliability : value from consistent service

• Packaging : value from product convenience.

• Taking Responsibility : value from convenient service.

• Matching : value from product customization.

• Knowledge based applications : value from customized

service.

BUILDING BRANDS ONLINE• Establishing brand on internet now more

important than before.

• Without the well recognized brand the site will

remain one among the thousands of other sites

offering same services.

• Brands that are already well established offline

face a similar problems in online.

• Consumers that were loyal customers offline

usually have very different loyalties online.

• Brand building services develop a strong

online presence for business through multiple

forms of placement in various media formats

on the internet.

TIPS TO CARVE A

FOCUSED IDENTITY

• Define Brand Up Front

• Lead with what we do , not who we are

• Use a real person as a figure head

• Develop a fan club mentality

• Make good use of words

DEFINING BRAND UP FORNT

• When visitors arrive at website they should know

immediately what we do and why they should care.

• For too many websites shroud their identity in

flashy graphics and ambiguous slogans without

telling people what the company or person actually

does.

EXAMPLE

• Terri Lonier’s working solo site at

www.workingsolo.com does a good job of

establishing her as a resource for free

lancers

LEAD WITH WHAT WE

DO ,NOT WHO WE ARE

• It may defy logic, but making the company

name more visible element on home page may

not be the most effective way to reinforce

brand.

• A web-based or email marketing message

should state a benefit right-off the bat.

USE A REAL PERSON AS A FIGURE HEAD• The online world can be a cold mechanic place

• Branding efforts are more effective when the

recognizable, consistent human element is added.

• If the company has a CEO or a spokes person who is

closely identified with the company offline should

make sure that the connection carries to the

cyberworld.

• If a business is run by oneself, by all means

has to put his name , photo an personal

message on his website.

• Nothing creates mystery and distrust more

than a site that is void of a human contact and

asks visitors to send e-mail to the web-master.

DEVELOP A FAN CLUB

MENTALITY

• Most online marketers try to generate readers,

visitors or users.

• Encourage to switch gears and create fans.

• “Users” are people who visit website, subscribe

to newsletter or buy the products and services.

• “Fans” on the otherhand cheer on rave about

this to their friends and eagerly follow

everything that is done.

MAKE GOOD USE OF WORDS

• Verbal users are not only king, it’s

the entire kingdom.

• Even though designers decide to

squeeze as much graphic impact as

they can out of limited brand widths.