You are on page 1of 11

BRAND

MANAGEMENT
- Dr. RAMKI

Techniques Of Brand Valuation


HISTORIC

VALUATIONS

Investments pumped into a brand over a period of time.


e.g. GM would look at the R&D they have invested and
amount spent on marketing and advertising.
When taken over a period of time this would
amount to a significant brand value
2
Contd.

HISTORIC VALUATIONS
Benefit of simplicity as it is easy to measure
Fails to capture the essential nature of the brand e.g.
Blue Pepsi was launched and died
Many brands which were supported by huge brand
building efforts but sank without a trace should be
also valued high.
e.g. Pastonjee Ice Cream
Contd..

HISTORIC VALUATIONS
Should the whole period be taken into consideration for
assessing brand value.

e.g. Lifebuoy came into India prior to 1902 while Coke is


half a century old.

Techniques Of Brand Valuation


PRICE PREMIUM VALUATION
A price premium is the difference in price between a
branded product and an unbranded equivalent product
It assumes that a price premium is the principal benefit
conferred by a brand

Volume X Price Premium = Brand Value

5
Contd

e.g. If Nirma sells 1 crore of washing powder cartons, its


average sells at a rough price premium of 30%. There
fore the brand in India is worth 30 lakhs.
Volume(1 crore) X Price Premium (30%) = Brand Value
(30Lakhs)
DRAWBACKS
Its is pointless if the associated cost of creating that
premium are not met by the price charged
e.g. Zodiac declares losses, now even at a premium
they wll not be able to cover their cost.
Contd
6

PRICE PREMIUM VALUATION


There is no generic to judge against in the market.
e.g. A brand which has monopoly
It is difficult to define what is generic
e.g. A person will buy a local brand for the name of a
national brand

Techniques Of Brand Valuation


ROYALTY PAYMENTS VALUATIONS
It is assumed that Company does not own the brand,
but instead had to be license it from a third party brand
owner. The royalties on turnover would be then
payable to the third party for the privilege of using the
brand
e.g. How much would be the brand value of Nescafe, or
how much would Nestle pay for Nescafe.
8

Contd

ROYALTY PAYMENTS VALUATIONS


The valuation is made by forecasting the likely value
of earnings attributable to the brand, and then
calculating the royalties that would be payable on this.
The limitation It does to little to illuminate the source
of value created by the brand.

Techniques Of Brand Valuation


MARKET VALUATION

The best means to place a value on a product or


service is to look at the price a buyer is willing to
pay i.e. the Market Value
e.g. On E bay we can get a clear price of a
1968 Ford Mustang i.e. what the buyer wants
to pay

10
Contd.

MARKET VALUATION
One difficulty with this approach
Market values are influenced by expectations of future
earnings and not all of those future earnings are
related to the inner strength and weakness of the
brand.

11