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The Value of a Brand

Your product is not the only valuable asset your company owns. Many other factors determine the price of your product/service, a key one being brand value. By understanding brand value, you can add intangible value to your product and price it at more than the sum of its parts.

Your product is not the only valuable asset your company owns. Many other factors determine the price of your product/service, a key one being brand value. By understanding brand value, you can add intangible value to your product and price it at more than the sum of its parts.

Increasing Influence of Brand Value

People started seeing the value in branding recently. According to the Atlantic, product value and quality were the sole factors determining sales in the 1950s. There was an advertising boom in the 1960s that gave companies identities through marketing recognisable to the common people. Brand names started getting recall value through desirable characteristics like design, colours, copy, consistency and service.

In today's world, it's hard to come across non-branding products in retail. It has become complicated for a consumer to make a purchase decision without branding coming into play. We instinctively look for the brand that we know about and trust. That is how much branding has integrated into our capitalistic culture. So it is no wonder that brands are now valuable commodities that are built, nurtured, and even bought and sold between companies.

However, even today in companies where budgets are tight, it may be hard to explain the importance that a brand carries since it is intangible.

What is Brand Value Exactly?

Before valuing your brand, we need to establish what the brand includes. You must consider the value of anything that consumers associate with your brand and image, such as your trademark, brand name, visual assets such as a logo or colours, unique marketing strategy, digital assets or licences, and level of customer loyalty.

Brand value is the monetary value of your brand, if you were to sell it or if your company were to merge with another. Only the company that owns the brand can use the name, logo and all other brand elements that are being trademarked to sell products or services. The Brand value is the amount that they pay for that right. This is known as market-based brand value. There is also cost-based value. In this case, brand value is the amount you need to spend on creating and nurturing the brand image. For example, the design services, execution and promotion costs that are required to build a complete brand from scratch to bring it to the same level as your old one. This could also include costs for PR outreach, sponsorship, social media, advertising etc.

Brand value can also be seen as a tool used for developing your brand and forecasting the value of your business.

Usually, the first brand valuation would be done at a cost, and then as there is organic brand growth it becomes more memorable and more valuable to the point where other companies would be willing to pay more than the cost value for it. That becomes your market-based brand value.

Something people often get mixed up or use interchangeably is brand value and brand equity. Brand equity is more to do with positive customer perception than the actual financial value of your brand. If customers prefer a brand to others and show loyalty to it, they are contributing to the brand equity. This, in turn, can influence your brand value. Marketing research is done to find out a customer's perceived value of the product. Brand recognition, brand recall, positive perception about the product etc. are all factors that influence revenue by increasing sales as well as customer loyalty.
 
But did you know that a brand can also have value without having equity!? A product that isn't out in the market yet cannot have brand equity, however, the company has still invested into developing the brand before the future customers see it, therefore it still has brand value. There is also consumer research done on products before releasing them, which is also taken into account.

Compared to brand value; brand equity is a more ambiguous concept and harder to calculate because it depends on consumer perception and behaviour rather than financial figures. But, just like everything in the research field, it can be measured.

How to Measure Brand Value

There are many ways to value a brand, and the method that you go with will depend on the industry you are in, the business and the situation.

Now that the world acknowledges the power of branding, there is a much more nuanced conversation around brand value. Many new factors come into play regarding what makes a brand successful such as how well you can understand your consumer’s psychology, and even what the true definition of a brand should be. So, undoubtedly it is a complex task to measure a brand’s value without the right strategy.

That said, the most fundamental ways of measuring brand value are still quite simple in theory. Perhaps one of the most straightforward methods is to research what companies are willing to pay for the rights to your brand. This will provide you with an average fair market value. It may seem straightforward, but it is complicated in execution and the research should be conducted with care and understanding.

Similarly, you can gather quotes from providers or make internal projections to find out how much it would cost to develop a brand equivalent to your current one.

Building Brand Value

Marketing experts Keller and Lehman developed a Brand Value chain model, a framework for building and quantifying brand value. It is a 4-step schematic that describes how brand value can be built through marketing and the variables that affect progress along the journey.

In this Value Chain Model, there are 4 stages:
1.    Marketing Investment
2.    Customer Mindset
3.    Market Performance
4.    Shareholder Value

These stages are moderated by three “multipliers” which may affect how fast and well brand value can be increased. They are:
1.    Marketing program quality
2.    Marketplace conditions
3.    Investor sentiment

Since it was developed in 2003, the brand value chain does not specifically take into account digital marketing and how brand value and reputation are built online- in particular, how digital culture has changed consumer behaviour. However, it provides a useful framework for building and quantifying brand value.

Some key ways you can boost your brand equity and in turn, your brand value are:

Marketing /Advertising
Marketing is the first step in the brand value chain as it is the first thing that establishes the brand in a consumer's mind.

Marketing helps customers become aware and recognise your brand. It helps make it a brand that people understand, align with and are loyal to.

Ambassadorship /Sponsorship
Aligning your brand with another well-known personality who has their brand value, whether it is social media influencers, celebrities, musicians, sports stars etc. is a well-established form of brand building.

Their influence leads to your brand value. Not just that, but if your collaboration is with someone that matches your brand purpose i.e. if their ethical and social values align, then that purpose is enhanced and amplified.

Customer Experience
Even if your product is great, providing an enhanced customer experience will boost your brand equity. In today's world, it is not a bonus rather an expectation that the entire customer journey experience is- smooth, effortless, and delightful. Research shows that customers are willing to pay more for brands that provide positive experiences.

Knowing how to implement these tips can be daunting without any direction. Aeon provides data-backed insights about your customers and the business environment to enable you to make the correct informed decisions. Feel free to reach out to us to know more about our range of services!

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Published On - March 24, 2022