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How Brand Value is Measured?

What Does Branding Include?

Every boardroom wants to sustain success, brand equity, and superior shareholder value.

Most companies make the same mistake of giving a low organizational priority and focusing their plans and energy on something else they find more relevant.

Branding includes not just trademarks and identifies products and services. Branding includes mission, vision, strategic marketing business strategy, and communication programs.

The band must deliver ROI (return on investment) like any other business activity. So the brand must be perceived as the portfolio of brands and assets.  Today, companies keep the track with the right metrics, equity and Key Performance Indicators (KPI) to measure brand value. Understanding of branding and value of the brand to a company can be explained in financial terms which is the most powerful argument today.

Brand Financial results

These are the main six questions which consumers and customers ask themselves before the purchase (Consciously or unconsciously) :

  •   Is the product or service worth the price charged?
  • Will the product or service perform to expectations?
  • Will there be opportunity costs if the product or service fails
  • Does it fit the personality and values of the customer?
  • Does it pose a treat to personal health and the environment?
  • Is it safe to use this product?

Premium pricing - Supply and demand dictate products in higher order. Today, you can often find that pricing is the only competitive tool for the firms on the low-level margins.

Branded goods must often sell for a far more than their parts.  Sports shoes can be produced in Asia around 5 USD and sold to a sports shoe brand for 10, USD and it will eventually be sold to an end consumer by $100.

"Product to brand" value chain increase the price by twenty times.


Increasing the value of the company

Brand value can be beneficial for many reasons like acquisitions, licensing, joint ventures, financing negotiations, costs in merges. A stock exchange demonstrates how much value is derived from the value of the brand. There is a connection between shareholder evaluation and branding. Investment portfolio of companies with strong brands is one percent higher in monthly returns than a benchmark selection of companies from the principal stock exchange.

Measuring brand equity

Band equity is different than brand value, cause it is not defined just by financial standpoint. It's a way of calculating the reputational asset that a successful business builds in the minds of customers.

Ultimately the customers will determine the success or failure of the company, so brand equity is a valid measure of customers affinity to the company.Band equity is combined and linked thru three metrics: knowledge, preference and financial.

Knowledge metrics - is the way of emotional presence and stage recognition. Emotional associations of brands are, and awareness and social attributes can help the brands sustain their presence in the marketplace.

Preference metrics -  Brand seeks to optimize their recurrent revenues thru customer base. This is very important cause preference metrics will show brand's competitive position in the market.

Financial metrics - Is perceived through Market share, Revenue, Price premium, Transaction value, Lifetime Value, Growth Rate...


Chris Macomber   |   

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