What is Brand Value and How is it Calculated?

Your company's most valuable assets aren't only its products and services. You may invest in a powerful plan for long-term advantages by recognizing and optimizing brand value.

 

It is only recently that a brand has been recognized as a significant asset. According to the Atlantic, in the 1950s, corporate success and customer choice were exclusively determined by product quality and value, not by the brand on the tin. 

 

Through the method of marketing, the 1960s advertising boom converted firm names into household names, bringing them into public consciousness. Sleek design, durability, refinement, service, and innovation became proxies for desired attributes.

 

We are so engrossed in the culture of brand identification and meaning that it's difficult to envision making purchasing decisions without it coming into play. We instinctively look at an item's brand name to estimate its worth.

 

 

Introduction to Brand Value

 

If you were to sell your brand, its value would be the amount of money you would receive.

 

If your firm were to merge or be purchased by another company, and they wanted to sell products or services using your name, logo, and brand identification, your brand value would be the sum they would pay you for that privilege. This is the market worth of a brand.

 

Another approach to look at brand value is in terms of how much it would cost to replace it (cost-based brand value). In this context, brand value refers to the amount of money it would take to create, execute, market, and magnify a completely new brand to the same level as your current one. 

 

The cost of employing a design agency, the time and effort spent on marketing and social media strategies, the cost of advertising, PR outreach and sponsorship, and so on may all be included in this amount.

 

Companies invest millions of dollars to promote their brand and raise product awareness. The return on this investment may make or ruin a business. This class will help you understand what brand value is and how it might affect your business if you are in charge of developing it.

 

First, let's clear up several terminologies that may be misunderstood. Both brand value and brand equity refer to the value of a brand. The financial amount a brand is worth as reported on a balance sheet determines its value. Consumer impressions and feelings about a brand are referred to as brand equity.

 

To increase Brand value , a company needs brand equity. The bigger the value of your brand, the more visible it is. For example, a well-known diaper brand such as Huggies or Pampers is more well-known than a lesser-known off-brand. 

 

Huggies and Pampers have invested much in promoting their brands, raising product awareness, and cultivating brand loyalty among diaper-buying customers, which results in increased income when customers pick their diapers over those of lesser-known brands.

 

Brand value not only generates more money, but it also has an impact on the market. When customers appreciate a brand and are loyal to it, it might deter other businesses from joining the market. Existing enterprises' market share is thereby protected.

 

How To Calculate Brand Value?

 

Examining the realized "revenue premium" over non-branded generic alternatives is one technique to calculate brand value. A non-branded alternative might be a generic or private label brand that does not have any promotion or brand investment. 

 

There are a few more factors to consider when determining this revenue premium. First and foremost, the market on which the premium will be computed must be determined. In most circumstances, identifying the market might be difficult. Niche brands will be valued less if market definitions are too wide, whereas mass brands will be valued less if market definitions are too narrow.

 

The term "served market" can also be used to define the market. This may lead to even more prejudices, since the served market may only catch loyal consumers. Such a section, for example, will very certainly need to be redefined as loyalties shift. 

 

Furthermore, the company will be ignorant to peripheral, emergent trends that might jeopardize the product category, perhaps leading to marketing myopia.

 

Rather of using the "revenue premium" technique described above, we feel that valuing consumers is a superior way to monitor a brand's worth. That is, locate each customer, calculate the lifetime worth of each client, then add all of these existing customers together. 

 

Of course, one must consider the rate at which the business is generating new consumers and determine a future customer worth based on their predicted lifespan values. After current and future consumers have been assessed, the total will be used to determine the brand's worth. 

 

Certain characteristics, such as margins and defection probability, must be calculated and approximated using this method. However, given technical advancements, they can be accomplished with a large-scale, near-real-time big-data infrastructure.

 

Also Read | Factors Influencing Customer Behavior

 

 

How To Achieve Your Ideal Brand Value?

 

Products are made in factories, but brands are developed in the mind, according to Walter Landor, the Branding Pioneer. It may be simple to quantify the physical worth of your items, but customer perception will ultimately decide the market value of your brand.

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How to Achieve your ideal Brand Value

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This means it's critical for you to invest in your brand's value and communicate it to your customers. If ‘brands are created in the mind,’ it’s vital to understand how to market your company positively so as to affect the perception leads and customers have of your brand. Here are some ways on how to achieve brand value :- 

 

1. Perform a 'Values Check'

 

Branding isn't about your logo; it's about the message you're sending out to the world. First, consider your personal values: Does the wording and appearance of your website, social media accounts, and products reflect those values? Make sure that all of your statements and pictures are consistent with your ideals, and the world will notice. 

 

 

2. Understand Your Target Audience

 

You must understand your clients and appeal to their requirements if you want to establish a good brand. This implies you should come up with unique and imaginative advertisements that go beyond items and features and appeal to the emotions of your customers.

 

For example- Sugar cosmetics give a chance to the upcoming MUA’s to do a makeover for their customer without any extra charges at the sugar stores, this provides a chance to both the MuA’s and the cosmetics to attract target customers 

 

Building brand value requires knowing who your consumers are and addressing their demands. This will offer you some ideas for what to say to them. 

 

Finding a group of individuals who genuinely care about what you're saying is also essential to building brand value. Instead of casting a wide net, you should focus on those who will value your brand and products. As a result, you must determine which medium your target audience uses and tailor your brand message to that channel.

 

 

3. Maintain a Consistent Tone of Voice (ToV)

 

Brand consistency is critical in developing brand value. The more frequently you communicate your company's personality to prospective consumers, the more likely they will remember you.

 

When you utilize the same tone, vocabulary, and viewpoints in all of your production, you eliminate confusion and help your audience to form simple associations with your work.

 

Create a formal set of ToV rules to guide future content development and guarantee that your blogs, emails, and social postings all communicate with a consistent voice.

 

 

4. Invest money in Video Marketing

 

We can do digital marketing through a variety of means. You should employ all of them, but video marketing is particularly effective. It has the potential to greatly increase brand recognition and consequently brand value.

 

The tool has demonstrated its value for a number of well-known businesses. It provides a much-needed competitive advantage as you promote yourself and your work to millions of people via video. You may contact individuals all around the world by using the sharing channels.

 

If you intend to engage in video marketing, be certain that the material is properly thought out. The films should be brief, succinct, meaningful, and simple. It should promote your message without putting too much attention on the advertisement.

 

 

5. Use High Design Standards

 

Design is beneficial to visual communication. The way you employ shapes, colors, and typefaces, as well as how you arrange items on your website, product packaging, or email campaign, will affect whether or not your brand is seen as value.

 

The way your brand is packaged influences how it is seen and interpreted. Your firm may be modest, but a "strong visual branding system" may make it appear more powerful or give buyers the sense of the strength of a huge corporation. On the other hand, if you use a poor design, you will undermine the value of your brand.

 

 

6. Build a Attractive Website

 

In this day and age of information technology, you can't succeed without a fantastic website. It is a digital storefront that anyone from all around the world may visit. It is the platform where you may give all of the important information about your company.

 

Many individuals use their mobile devices to research products and services before making a purchase. With a high-quality website, you can ensure that your brand is visible on the internet.

 

Invest in digital marketing and search engine optimization (SEO) to improve your ranking in search results. It is critical to have a responsive design so that the website works properly on various devices.

 

Conclusion

 

Companies devote a significant amount of time and effort to developing a marketable product. This product is mostly connected with a name or a personality, which creates the brand of a company's product. 

 

A significant amount of money is invested in developing brand recognition, equity, and identity in the market, which, if successful, may help the product stand out among rivals. Brand value measures its entire worth in terms of cash and can be utilized in a financial statement.

 

If a firm is being purchased, the brand value is the amount that, together with the other factors, is factored into the total calculation. A figure can be used to depict it. A well-known brand may fetch millions or billions of dollars in value. 

 

When a firm has to be valued for the sake of investment or acquisition, brand value becomes extremely crucial. The valuation would be wrong if the brand value was not taken into account.

 

The financial worth of a brand that may be reflected on a financial statement is known as brand value. The net present value or future worth of cash flows attributable to the brand name or brand personality as contrasted to a generic equivalent is referred to as brand value. 

 

A brand is an intangible asset of a company that aids in distinguishing between a firm's book worth and market value. The majority of the variance may be attributed to the brand.

 

One major application of such a brand-value indicator is the knowledge acquired by examining directional changes. That is, one can distinguish between brands that are gaining and those that are losing value. 

 

Further research may point to a range of causes such as defection rates, effective campaigns, or market-based trends. Breaking down to market and consumer data allows for the creation of relevant campaigns with spending justified by changes in brand value.