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Brand valuation

Brand valuation is the job of estimating the total financial value of the brand. Like the valuation of any product,
of self review, or conflicts of interest if those that value
the brand also were involved in its creation.[1] The ISO
10668 standard sets out the appropriate process of valuing brands, and sets out six key requirements:

the cost approach is that a potential user of real estate
won't, or shouldn't, pay more for a property than it would
cost to build an equivalent. The cost of construction minus depreciation, plus land, therefore is a limit, or at least
a metric, of market value.

2.2 The market approach

1. transparency,

In this approach a comparison with the market is done.
For example if a person wish to buy a property in place
A, it is quite likely that the price of neighborhood would
be checked before arriving at conclusion on the existing
property, leading to an approach based on the market.
This valuation method relies on the estimation of value
based on similar market transactions (e.g. similar license
agreements) of comparable brand rights. Given that often the asset under valuation is unique, the comparison
is performed in terms of utility, technological specificity
and property, having also in consideration the perception
of the asset by the market. Data on comparable or similar
transactions may be accessed in the following sources:

2. validity,
3. reliability,
4. sufficiency,
5. objectivity, and
6. financial, behavioural, and legal parameters.
Brand valuation is distinguished from brand equity.

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Brand value

1. Company annual reports.
Traditional marketing methods have examined the
2. Specialized royalty rate databases and publications.
price/value relationship in terms of dollars paid. Some
marketers believe customers perceive value to mean the
3. In court decisions concerning damages.
lowest price. While this may be true for commodities,
some branding techniques are moving beyond this
evaluation.[2]
2.3 The income approach
Brand valuation emerged in the 1980s.[3][4] Early firms
involved in providing brand valuations included British This approach measures the value by reference to the
branding agency, Interbrand led by Michael Birkin,[5] present value of the economic benefits received over the
who is credited with leading development of the rest of the useful life of the brand. There are six recogconcept[6] and laid out a brand earnings multiple model nised methods of the income approach.
of brand valuation in the 1991 book Understanding
Brands.[7][8][9]
1. Price premium method – estimates the value of a
brand by the price premium it generates when compared to a similar but unbranded product or service.
This must take into account the volume premium
2 Valuation methodologies
method.
There are three main types of brand valuation
methods:[10]

2.1

2. Volume premium method – estimates the value of
a brand by the volume premium it generates when
compared to a similar but unbranded product or service. This must take into account the price premium
method.

The cost approach

In real estate appraisal, the cost approach is one of three
basic valuation methods.[1] The others are market, or sale
comparison, and income. The fundamental premise of

3. Income split method – this values the brand as
the present value portion of the economic profit attributable to the brand over the rest of its useful life.
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business. Bulldog Reporter. Methods for Assessing Brand Value: A Comparison Between the Interbrand Model and the Bbdo’s Brand Equity Evaluator Model. Retrieved 6 April 2015. TechnoBrands: How to Create and Use ?Brand Identity? to Market. The royalty relief method uses available data of similar arrangements in the industry and assigns the value of the brand as the present value of future royalty payments. [8] Chuck Pettis (2001). Points to Mobile and Experiential Marketing as Future Focus”. [10] ISO 10668 and brand valuations: a summary | BVR’s IP Management & Valuation Wire . pp. ISBN 978-3-8366-5872-0. iUniverse. (2000). “New Branding Trends to Watch: Former Omnicom Vice-Chief Birkin Says PR Trumps Others in Driving Brand Value. 3 Uses of brand valuation Common purposes are: • value reporting • licensing • dispute resolution • legal transaction • accounting • strategic planning • management information • taxation planning and compliance • liquidation • litigation support • Investor’s presentation/ Shareholder’s report • Raising funds REFERENCES 4 References [1] Campaign for Independent Brand Valuation [2] Knapp. [6] Frank Zeccola (9 September 2009). 4. ISBN 9781462099573. and Van Weelden (1991). Business Standard.18% In Fy03”. The Brand Mindset. [4] Tatiana Soto J. [9] Boersma. 211. Royalty relief method – Assume theoretically a company does not own the brand it operates under. “There’s No Accounting for Brands”. “Birkin’s Brand of Ambition”. “Infosys Brand Value Up 3. Retrieved 16 March 2015. Understanding Brands. Diplomica Verlag. Incremental cash flow method – Identifies the extra cash flow in a branded business when compared to an unbranded. 6. (April 2008). the remaining is used as the value of the brand. [5] Heather Farmbrough (16 July 1987). New York: McGraw Hill. [3] Geoffrey Foster (1 October 1989). Multi-period excess earnings method – this method requires a valuation of each group of intangible assets to calculate the cost of capital of each. However it is rare to find conditions for this method to be used since finding similar unbranded companies can be difficult. This method uses qualitative measures to decide the portion of economic profits to be accredited to the brand. [7] Debjoy Sengupta (23 May 2003). Advertise and Sell Technology Products. 24–35.2 4 This has problems in that profits can sometimes be negative. 80. ISBN 0-07-134795-X. and comparable.M. Management Today. leading to unrealistic brand value. Retrieved 6 April 2015. and also that profits can be manipulated so may misrepresent brand value. 14–. Duane E. pp. p. but instead licenses the use from another. Financial Times. The returns for each of these are deducted from the present value of future cash flows and when all other assets have been accounted for. 5. p. J. London: Kogan Page.

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