Value of Branding
Determining a Brand’s exact value requires measuring all of the Brand’s countless intangibles, and one of the simplest ways to estimate a Brand’s value.
Branding, over time,
has become more than just a name, slogan, design, symbol, or any combination of these. Branding is getting your target market to see your brand as the sole provider for the answer to their problems. Branding creates trust and loyalty. Great branding doesn’t just create loyal customers, however. It also creates loyal employees. With a quality brand, people have something to believe in and be inspired by. Employees get a sense of purpose from the business they work for and can be empowered by feeling a part of something bigger.
A business is made up
of both tangible and intangible assets, where tangible assets are things like the building, land, and peripherals. Intangible assets are the brand and trademarks, sometimes known as intellectual property. A brand’s value isn’t just how your customers perceive you, but can also be market-based and income-based, where the valuation of the brand is a combination of both.
There are many other ways
to approach brand valuation, besides having your assets assessed, like figuring your brand equity. This valuation approach is based on three elements, effective market share, relative price, and durability. Effective market share is measured as a percentage of the industry’s total revenues. This is calculated by dividing your total sales over a fiscal year by the industry’s total sales in the same fiscal period. Companies can increase market share through innovation and increasing their relationships with customers, or even, acquiring competitors. Investors look at fluctuations in market share as a sign of the company’s competitiveness and growth potential. Higher market share puts companies at a competitive advantage, where companies with a higher market share often receive better prices from suppliers to increase their buying power.
A popular measure is NPS
or Net Promoter Score. This is a metric developed by Fred Reichheld, Bain and Company, along with Satmetrix. The NPS score uses the question: How likely are you to recommend the company/brand/product to a friend/colleague/relative? This scores the response on a scale from 0 to 10. Promoters usually give a score of 9 or 10, passives give scores around 7 and 8, and detractors give a score of 6 and less. The NPS score takes the percentage of promoters and subtracts the percentage of Detractors where the scores can range from -100 to +100.
Each method has its own strengths and weaknesses
but the most important thing is to establish your brand as an intangible asset that is worth a significant amount of money. This should be managed and respected as so, too. Determining a brand’s exact value requires measuring all of the brand’s countless intangibles, and one of the simplest ways to estimate a brand’s value is to use the “Willingness to Pay” test. People can be the best value of all. Having loyal fans who are willing to follow you through anything - that’s priceless.