Brand Equity
„High values are not generated by force,
but by perspicacity.“
Samuel Johnson
Nurturing Brand Equity Means Feeding the Piggy-Bank – Big Time
Production lines, factories, and locations are interchangeable, frequently it is the brand which represents the true capital of a company. This is why frequently the prices fetched when a company is sold are several times higher than the company´s net worth reported in the balance sheet.
Although the selling price of a brand results from negotiations between sellers and buyers, an objective, scientifically corroborated basis can and should be used in order to calculate the monetary value of a brand. A set of methodological instruments developed by marketmind in cooperation with the Institute for Advertising and Marketing Research at the Vienna University of Economics and Business also proves its relevance in business practice.
This set of instruments can be used
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- to compute the selling worth of brands (also in the context of company acquisitions or takeovers)
- to evaluate brand equity in connection with issues of brand structure and decisions about the brand portfolio (esp. in the context of company mergers the question which brands are to be continued arises frequently)
- to compute an objective basis for licensing brands or reporting them in the balance sheet (the computing procedure is accepted by the Internal Revenue Authorities)
- to identify levers for increasing brand equity and hence as controlling instrument for marketing and brand management
- to compute input/output relations: What is invested in a brand and what does it generate in terms of revenue? What is the brand ROI?
- to create awareness of the values that branding has generated for the brand owner.
Put differently: What is in the piggy-bank?
