Sunday, 3 April 2011

What is a Brands Value?

I was recently asked by a friend to give him some thoughts on the value of a brand,  he had a client who was potentially merging with a larger organisation and wanted to know what the value of the brand was.

When companies are bought and sold it is very easy to value property, machines and physical assets, but how do you value something that is as subjective as a brand?

It is fine if you are a coca cola, its clear that the brand has value, just take a bottle of Coke and change the label, put it into a generic bottle, call it Kaps Cola, sell it at half the price of coke and see how quickly your brand fly's off the shelf.  Six months go back and wipe the dust off, replace it with a bottle of Coke and then go back and put stock on shelf to replace the stock that has been sold.  The brand has sold the product.
Coca Cola one of the most recognized brands on the planet with a value to match.

If, however, you are a small brand with few people having heard of you, never been invested in then is there any value in the brand?  Well you can guarantee that the value does not match Cokes, but then few brands do.

Brand values are intrinsically intangible as much of their value is based on emotion and perception.  This is particularly in the case of a service brand but true of products too.

The value of the brand is measured by its importance and relevance to  its market.

Every day we see products with brand names, at home, at work, in the shops but just because a product or service has a name does not mean it is a brand or it has any brand value.

Some brands will be aimed at a small niche market and may not have general awareness amongst the market place, but within the small niche market it is well known and to its devotees there is an understanding of what the brand represents and in representing this derives a value to the market.

The key criteria for establishing your brands value relates to its worth to the market it represents.  For instance:-

How well recognized is it?
How many users does it have?
What is its income?
Does its market recognize it?
Would its target choose it against a competitor because they trust it more than the competitor?
What level of marketing support is invested in it?
Does it create an image in the users mind and what sort of image is this?
Can the brand demand a premium price from its users?

A brand is not made over night, it has to be developed and nurtured, its image created and implemented across all forms of recognition to give it presence and stature.

If a brand is just a name on a bottle then it is just a name, but if you can build values in to it as per the questions above, you create competitive saleability products that have USP's and  a value that can be placed on the balance sheet.

If this post has been useful, interesting or just enjoyable to read, please leave a comment.

Kap Varma has over 20 years experience creating and turning around brands, he has managed and developed leading brands in the UK including Ragu, Camel Cigarettes, Fray Bentos, Nivea, Goldshield and Silver Spoon. 

No comments:

Post a Comment