Korbel Foundation College, Inc.

Purok Spring, Brgy. Morales, City of Koronadal

Tel Number 877-2051/0228-1996

Product Management and New

Product Development
MKTG 104
Product Management

Prepared by:
Junry Heyres

KFCI-Module 11
 Learning Objectives:

At the end of the Chapters, the students must be

able to

• Present the importance of Brand

Valuation;
• Explain the various methods adopted for
estimating the value of a brand; and
• Apply the methods on a corporate
example.
 TOPIC 18

Brand Valuation

KFCI-Module 11
The Introduction

Marketing people have often accused

accounts of “outmoded accounting
practices” which record assets in the
balance sheet according to their “future
economic benefit” irrespective of
whether current market conditions
allow for such value to be realized or
not.

KFCI-Module 11
The Introduction

However, there is no easy answer to this,

because the value of brand image can
change very quickly . Hence proper
valuation bases are necessary. As
markets become more global and
transparent, more companies are
beginning to recognize the importance of
brand valuation and have started
including this is their balance sheets.

KFCI-Module 11
Methods of Brand Valuation

The Historic Cost Method

This method is used when valuing

own brand image for inclusion in the
balance sheet.

KFCI-Module 11
Methods of Brand Valuation

The Market Value Method

this method is used when business is

acquired for brand name of its product
mainly.

KFCI-Module 11
 The goodwill paid for that could be used as a starting
point with due adjustments made for differences in:

• Market position
• Market size
• Risk
• Underlying net assets
• Terms of the deal
• Valuation at market price (the best bidder
quote) can be at divergence from the
fundamental value of the brand.

KFCI-Module 11
Methods of Brand Valuation

The Earnings Valuation Method

In this method, valuation is done by

identifying, separating and quantifying
earnings that can be attributed to the
brand and capitalizing these earnings
at a suitable discounting rate.

KFCI-Module 11
 The multiple would depend on several factors such as:

• Category growth prospect,

• Emerging competition,
• Brand’s relative position,
• Edge in terms of technology,
• Strength of loyalty to the brand, etc.

KFCI-Module 11
Methods of Brand Valuation

The Bert Technique

this technique values brands base on

the following factors. It gives scores on
each factor and values the brand as
multiple of sales/ earnings based on
the aggregate score.

KFCI-Module 11
 • USPs of the Brand
• Stability of the Brand
• Markets, namely, the industry in
which the brand is in use.
• Internationally of the brand
commanding a higher weightage than
a local brand.
• The long term trends of the brands.

KFCI-Module 11
 • Brands receiving consistent
investments are more valuable.
• Legal protection commanded by
brands through registration and
trademark laws.
• Quality of support received by the
brands.

KFCI-Module 11
 Summary

Valuation of a brand is desirable from

the point of view providing objectivity to
the ‘value’ of the brand, which valuation
can otherwise tend to become a
subjective exercise and less useful as a
guide for marketing decision making.
There are five main methods used by
corporates to establish the right value
for their brands.
KFCI-Module 11