Brands have the power to change the world. It gives life to businesses creating identification, differentiation and value. Brand valuation methodology provides insightful analysis of the brand, how it contributes to the business result. Strong brands have the impact to stakeholders that influence the performance of their businesses, customers (choice and loyalty), employees and even investors. Value for the customers and for the shareholders.
The business applications for brand valuation can be categorized into brand management, strategy and financial application relative to competition. Brand management aims to put market, brand, competitor, and financial data into a framework in which we can assess the performance of the brand, identification of improvements, and enhancement of the future influence of the brand on business results.
Brand valuation methodology provides framework for brand strategy options such as positioning, extension and make the brand case for brand change. Financial applications forecast from the foundation of the brand valuation. Firstly, it measures the profits generated by the branded products and services.
Role of brand analysis is about understanding purchase behavior, the brand’s influence on the generation of demand through choice. It measures the portion of the decision to purchase that is attributable to the brand relative to other factors. Applying role of brand forecasts profits give us the earning attributable to the brand alone. Brand strength measures the ability of the brand to create continuity of demand into the future through loyalty and, therefore, to reduce risk.
Internal factors include clarity, commitment, protection and responsiveness. External factors include differentiation, relevance, presence, consistency, authenticity. It supports brand management by identifying the areas of highest business impact. A stronger brand generates more loyal customers, reducing risk and increasing brand value.