How to value your brand

Sanlam NEW

A brand is far more than a logo. It relates to the entire customer experience and is what your customers think of when they hear your brand name. Apple will generally lead to thoughts of “cool”, elegant and innovative design. Therefore a good brand will have value and should be seen as an asset.

So, how does one place a monetary value on a brand? Abratt and Bick wrote a paper “Valuing Brands and Brand Equity: Methods and Processes”. Some approaches to Brand Valuation are as follows:

  1. Cost-based approaches: consider all costs (R&D, market testing, promotion, product improvement, design etc.) related to the creation or replacement of the brand. The brand value is determined by the sum of accumulated
    costs spent on the brand to date.
  2. Market-based approaches: are driven by how much a brand can be sold for. It’s essentially an open market
    valuation based on the highest value that a “willing buyer and willing seller” is prepared to transact for the brand.
  3. Economic use or incomebased approaches: take into account the value of future net earnings that are wholly attributed to the brand in order to ascertain the brand’s value in its current use.
  4. Special situation approaches: relate to specific circumstances that are not necessarily in line with external or internal valuations. An example of this is if a strategic buyer is prepared to pay above market value
    for a brand due to synergies that would allow the purchaser to unlock even greater value.

It’s important to remember that no particular approach will provide a perfectly correct brand valuation. There is still much debate amongst scholars and the business world as to what the most appropriate valuation method is. However, the point of departure should be to firstly understand what the purpose of the valuation is, and secondly what the brand delivers.

The above notwithstanding, it is one thing to possess a high value brand, it is another to ensure that it remains so. In order to achieve the sustained growth of your brand, one must ensure that every customer touchpoint is 100% in line with your brand promise. In order to achieve that, the correct structure, systems and process within the business is
imperative. Brand equity is enhanced by the 4 factors outlined below and these need to be built into the DNA of the business through systems, processes and company culture..

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