Brand equity is the value a brand adds to a product or service. It is the intangible sum of a brand's perceived value, reputation, and loyalty. Interbrand, a global brand consultancy firm, has developed a methodology for measuring brand equity called the Interbrand Brand Equity Index. This index is based on the belief that a brand is a business asset that adds value through the emotional and tangible benefits it provides to consumers.
According to Interbrand, there are three key components to brand equity:
The financial performance of the branded products or services
The role the brand plays in influencing consumer choice
The strength of the brand to create loyalty and, ultimately, customer advocacy
To measure brand equity, Interbrand uses a combination of financial analysis and market research to evaluate the strength and performance of a brand. The financial analysis includes a review of the financial performance of the brand's products or services, as well as the brand's market share and market growth potential. The market research involves surveying consumers to understand their perceptions and attitudes towards the brand, as well as the emotional and functional benefits they associate with it.
The Interbrand Brand Equity Index is a valuable tool for businesses as it allows them to understand the value of their brand and how it compares to competitors. By understanding the strength of their brand, businesses can make informed decisions about how to invest in and grow their brand. This may include developing new products or services, increasing marketing efforts, or improving customer experiences.
In addition to measuring brand equity, Interbrand also offers a range of services to help businesses build and manage their brands. These services include brand strategy, brand architecture, visual identity, and design.
Overall, Interbrand's Brand Equity Index is a comprehensive tool for understanding and measuring the value of a brand. By understanding the financial performance, consumer perceptions, and loyalty of a brand, businesses can make informed decisions about how to invest in and grow their brand.
Best Global Brands 2020: Methodology
What is the difference between brand value and market value? Table 1: Brand Strength Specific Attributes Factor Evaluation Criteria Maximum Score Leadership Market share, market position, market segment and brand awareness 25 Stability History, current position, satisfaction, customer loyalty 15 Market Competitive structure concentration , market growth, volume, sales 10 International image Presence in foreign market, export history 25 Trend Consideration, attractiveness 10 Support Quality, consistency is translated in term of advertising, identity 10 Protection Date of registration, legal coverage and monitoring 5 Source: Interbrand Stage 4. Thus brand and value within a brand is one of the most important concepts in marketing. The sum of the value of the individual segments yields the total value of the brand. Example of Brand Valuation Using Interbrand Method When using Interbrand method, brand value is the net present value of the forecast brand earnings, discounted by the brand discount rate. Closely related to perceived quality and the extent to which the brand is growing in popularity. With this intelligence as our basis, we are able to set an ambition for a business and build in flexibility, meaning you can stay true to your direction while responding to the market. Brand Finance, similarly to Interbrand, calculates the brand strength a number from 0 to 100 based on the opinions of its experts rather than consumers.
What is the Interbrand Brand Valuation Method? Definition and meaning
Today, the brand is considered to be the most important element of the intangible assets of the company. Role of Brand This measures the portion of the purchase decision attributable to the brand as opposed to other factors for example, purchase drivers such as price, convenience, or product features. The main argument of their opponents is that they provide different values to the same brands. The model assumes a relationship between brand strength and discount rate: the higher the brand strength score, the lower the discount rate. For example, it treats Gillette as a single entity, even though it has many sub-brands and extensions, and treats Marlboro, which is a single brand, by the same rules. What are the three basic steps in market positioning? The German brands The eleven German brands in the ranking can report clear growth in 2021.
However, all three have different methodologies of getting to the final number and today we will try to explain these differences in the simplest terms. As evinced by these criteria, Interbrand takes a business-oriented rather than consumer-oriented view of brand. The brand equity is the term that represents the added value of products and services, and this value is reflected in everything that consumers think, feel and make in relation to the brand. We bring quantitative and commercial logic to decision making. Thus, a brand with an average strength score will be discounted at the industry WACC, and a leading brand with a maximum brand score of 100 will be discounted at a risk-free rate. Qualitative methods of measurement include intangible factors such as consumer satisfaction, consumer awareness, brand perception, etc. Strong brands influence customer choice and create loyalty; attract, retain, and motivate talent; and lower the cost of financing.
Brand Valuation: A versatile strategic tool for business
The majority, however, are looking for a business case that goes further. The determined discount rate is then applied to earnings attributable to brand in order to arrive at the brand value. What is Interbrand ranking? Valuation Using Interbrand Method Interbrand is a brand consultancy firm, specializing in areas such as brand strategy, brand analytics, and brand valuation. Rumour has it that soon it may help us Move, too. Introduction When we visit the KLCC Suria in Kuala Lumpur, Malaysia, a popular shopping mall, our eyes would be dazzled by illuminations of brands, from local brands to international brands.
Apple helps us Connect, Do, Belong, Play, Pay and — more recently — Thrive. The equations represent an attempt to overcome issues with other methods that assess brands solely in terms of present earning power. Creating a well-defined and well-protected ecosystem of proprietary assets extends your brand into multiple channels, broadening its influence and deepening its brand equity. Technology brands thus continue to dominate the ranking. Esteem—Measures whether a brand is held in high regard and considered best in its class. They want to understand the likely overall financial impact on the business over time, covering a range of alternative scenarios. How is brand loyalty measured? Understanding the perceived quality of your brand starts with Perceived quality gives customers a reason to buy your brand, differentiates your brand from the competition, attracts channel member interest, and serves as the basis for line extensions.
The Definitive Guide to Rebranding Everything you need to know about rebranding your business-and avoiding costly mistakes. In terms of growth, in the automotive sector Volkswagen 47th is the winner with a plus of 9%, followed by Audi 46th, plus 8% , BMW 12th, plus 5% and Mini 96th, plus 5% , Porsche 58th, plus 4% and Mercedes-Benz 8th, plus 3%. Create Proprietary Assets As mentioned above, proprietary assets can include everything from names and taglines to patents and trademarks. . We transform insight and intent into experiences that change behaviour and improve the way people interact with a brand, a business, or a category. Its Interbrand method determines the earnings from a brand and capitalizes them by making suitable adjustments.
This flaw reinforces the need to develop more refined and rigorous methods of brand analysis. The company rankings are based on three key components. What are Some Examples of Brand Equity? Brands are more valuable when they are in markets with growing or stable sales levels and a price structure in which successful firms can be profitable. To receive our bi-weekly newsletter with the latest blog post and update on new brand case studies added to BrandStruck, just send your email to brandstruck brandstruck. Brands that are high on both dimensions the upper-right quadrant have the greatest equity to protect and exploit. By tapping into 500,000 customers across the world in real-time, we derive fresh, provocative and generative insights.
Brand owner pays high rents to display its brand Conclusion Brands are valuable intangibles as they can generate continuing income for their owners. Brand value is often based on the opinion of accountants, banks and marketing experts, who analyze market research to ascertain the value. This is the only ranking that uses real consumer data to estimate the role of the brand in the purchasing decision, rather than opinions of industry experts. Some CEOs are willing to make these critical brand strategy decisions based on qualitative strategic analysis and intuition. It is quite possible that you believe that your brand could be or is a significant source of competitive advantage for your business, but you are unsure of how a brand valuation exercise could help you.
