Updated: Dec 16, 2022
What is Brand Valuation?
Over the years, brand valuation is being recognized as an important factor to be used in the analysis of marketing and finance efforts involved in the company. It falls under the intangible business assets category and is being closely looked into for ways to expand market share. Hence, many are undertaking new approaches that will boost efforts to increase the value of a given brand.
Since brand is a potent factor in every business, business owners are more interested in being able to translate that into financial terms. This is where brand valuation comes in. It is closely associated, if not directly related, to consumer perceptions about a brand and its list of products or services. However, aside from monetizing that value, business owners also utilize the impact of brand valuation as a way to determine areas that need to be improved to boost performance.
Determining Value of Brand
As a corporate asset, a brand is essential in helping increase the company's bottom line. If you can create a solid brand that increases your company's value to shareholders or consumers, then it will help increase your business potential. The concept of brand value remains quite hazy though, given the fact that no clear method has been established to measure exactly the value and worth of a given brand, especially because it is an intangible asset.
Still, there are a few who remains unconvinced as to what a brand really means. It could be the symbol that represents your company such as a name or logo. This then becomes a symbol for what the company stands for and promise to deliver. That definition of the brand is where value comes in as a brand is expected to deliver the expectations it has created to the consumers. To be able to do that takes commitment from the internal operations of the brand.
However, one cannot precisely give an exact value for a brand. There are direct and indirect processes involved though that enables a company to come up with a definite price for the brand, based on the investment put into developing it.
Direct Valuation Methods
To come up with a direct valuation method for a brand, it takes into account all investments put into the brand while also considering inflation. Other direct methods of value measurement used are Franchise Valuation and Awareness Valuation. When business owners plan on releasing a new product into the market, they typically include into the product value the advertising budget for that given product to increase awareness among consumers.
Indirect Valuation Methods
This is a more complicated process of determining the value of a brand than the one above. One process involves assessing the probable profit earnings that a particular brand is projected to produce. This method takes into consideration the effect that a brand has on the actual sales and profits acquisition. Another method also employs the use of the brand name in considering how one arrives with a value for the product.
Basically, all these methods are merely educated guesses to be able to account an efficient method for putting a price into the brand. Despite all existing debates about what the best method to use in computing brand value, or if brand value does offer any significant impact at all in the sales department, is something that will be settled only with the help of proper strategy. A brand is primarily not just a logo or name, but it is the set of values exhibited by your company for a consistent period.
So, as long as you have established the quality of your brand, then brand valuation should be easier to figure out.