Brand valuation

After reading Brand Valuation, I think the one thing that makes a brand valuable is its capability to provide long-term competitive advantage. Brands influence the choices of customers, employees, investors, and government authorities, they have an economic impact. According to a study by Interbrand in association with JP Morgan, brands create significant value either as consumer or corporate brands or as a combination of both. On average, one-third of shareholder value. Besides, companies with strong brands outperform the market in respect of several indices. Other than the economic value, brands also create substantial social value by increase competition, improve product performance and the pressure on brand owners to behave in socially responsible ways.

Out of all my favorite brands, I would like to focus on my favorite brands related to food. Below are my favor brands and the reason for each of them:

McDonald’s
I like McDonald’s for several reasons. First, the kids playground. In Hong Kong, none of the MCD have kid playing area, I’m surprised when I come to the US that most MCD have playground. This allow the parent to eat and socialize when their kids play around. Second, they offer collectables with menu from time to time, at least it is the case in Hong Kong. There always a long line waiting for the collectables. Third, Ronald McDonald House Charities is a great cause.

Yoplait
They offer a lot of different choices for their yogurt, you won’t be bore eating yogurt all the time. Besides, their Save Lids to Save Lives program helps people with breast cancer.

Campbell
Campbell soup test good and also offered a lot of variety. I also like their participation in Labels for Education.

Cheetos
While I’m not a cheese lover, I lover Cheetos! I just can’t stop eating them.

Just like all other assets, brands are one of the assets for the company, even though they are intangible. As mentioned above, brands create not only to the company, but also customer and shareholder etc. Companies also find brand valuation helpful in the following ways:

• Making decisions on business investments
• Measuring t he return on brand investments
• Making decisions on brand investments
• Making decision on licensing the brand to subsidiary companies
• Turning the marketing department from a cost center into a profit center by connecting brand investment and brand returns
• Allocating marketing expenditures
• Organizing and optimizing the use of different brands in the business
• Assessing co-branding initiatives
• Deciding the appropriate branding after a merger
• Managing brand migration more successfully
• Establishing brand value scorecards
• Managing a portfolio of brands across a variety of markets
• Communicating where appropriate the economics value creation of the brand to the capital markets in order to support share prices and obtain funding
• Assessing fair transfer prices for the use of brands in subsidiary companies
• Determining brand royalty rates
• Determining the contribution of brands to joint ventures
• Using brands for securitization of debt facilities

Due to the wide range of applications for brand valuation, I think Brands should be on the balance sheet.