NOV.

2021 | VVP_N4

BRAND VALUATION
A monthly update by Vivid Valuation Professionals LLP

BRAND NAME BRAND EQUITY

A brand name is the name of the Brand equity refers to a value
distinctive product, service, or premium that a company generates
concept. from a product with a recognizable
It is common intangible asset which name when compared to a generic
can be traded and therefore is a equivalent.
Valuable Asset. It deals with a It deals with a consumer based
company based perspective. perspective

BRAND VALUE
Meaning & Importance

Brands today are not restricted to marketing or profits made by a company, but
are a part of our everyday life. In the light of emergence of concepts of consumer
awareness and the new world economy, brands have a quintessential role to play.
The term brand, infers to names, terms, signs, symbols and logos that identify
goods, services and companies. Brand value is the financial worth of a company. It
influences the revenue of certain businesses and markets and corresponds to
customers' awareness of a good.

Brand value is the

‘perceived value’, and
how often people will
choose one brand over
alternatives.
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WHY IS BRAND VALUATION DONE?

Brand values help distinguish your brand from your competition
Enables teams to weigh up marketing cost, time and activities, and model the
returns in real financial terms.
Used in Merger & Acquisition to estimate the financial value of a brand which
helps to determine the premium over book value that a buyer should be paying
Organisations with solid brands consistently acquire preferable budgetary
terms over organisations with poor brands. The higher the estimation of the
brand through brand valuation, the better the terms.
Allow companies to gauge their return on brand investment and to develop
appropriate investment strategies across a portfolio of brands.

WHAT MAKES A BRAND VALUABLE?

Highly recognizable (people know who they are)

Positively perceived (people have a good view of them)

Popular (people actually buy and use the products or services)

Have a loyal following (customers are ambassadors of the brand)

USES OF BRAND VALUATION -

Financial applications (e.g. mergers and acquisitions, balance sheet valuation,

investor relations)

Brand management applications (e.g. brand portfolio management, resource

allocation)

Strategic / Business case applications (e.g. brand architecture, brand

repositioning)
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APPROACHES METHODS
MARKET APPROACH
Market based approach basically deals with the Comparable Approach or the Brand
amount at which a brand is sold and is related Sale Comparison Method
to highest value that a "willing buyer & seller" Brand Equity based on Equity
are prepared to pay for an asset. This approach Evaluation method
is most commonly used when one wishes to Residual Method
sell the brand

COST APPROACHES

Cost approach is primarily concerned with the Accumulated Cost or Historical

cost in creating or replacing the brand cost method:
Replacement Cost Method
Use of Conversion Model:
Customer Preference Model

INCOME APPROACHES
Income Based or Economic Use approach is Royalty Relief Method:
the valuation of future net earnings directly Price Premium Method
attributable to the brand to determine the Volume Premium Method
value of the brand in its current use. This Multi-period excess earnings
method is extremely effective as it shows the method
future potential of a brand that the owner Brand Equity based on discounted
currently enjoys and the value is useful when cash flow:
compared to the open market valuation as the Income split method
owner can determine the benefit foregone by Brand Equity based on differences
pursuing the current course of action.
in return on investment, return on
assets and economic value added.
NOV. 2021 | VVP_N4

source: https://www.visualcapitalist.com
 NOV. 2021 | VVP_N4

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These updates are compiled for the general information of readers. Readers are advised

to seek professional opinion before initiating any action based on this document. We

don't accept any responsibility for any loss arising out of such action.

Info Source:
https://en.wikipedia.org/. https://www.mondaq.com/