“If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trademarks, and I would fare better than you.”
– John Stuart, Chairman of Quaker (ca. 1900)
Corporations are increasingly beginning to realize that brands are not just a marketing tool, but strong business assets which can be leveraged strongly in the market. Organisations today understand that a large part of their market cap is attributable to the value of the brand(s) they own – which is very often more valuable than their tangible assets. It is amazing to note that over 70% of the shareholder value of McDonald’s Inc. is attributable to the brand McDonald’s, and this number is over 50% for Coca-Cola.
Brand Valuation is the process of thorough Brand Analysis and Brand Research that allows firms to quantify the value of their brands. It helps put concrete numbers and facts to what has hitherto been a very qualitative discussion. Many companies today have started reflecting the value of their brands on their balance sheets.
There are different reasons why you may need to value your brands
- Licensing the brand
- Calculating the true valuation for the company at the time of sale or partial divestment
- Dispute/litigation pertaining to your brand or IP
- Regulatory or accounting compliance requirement
- Incorporating enhancement of your brand value in the strategic planning process
- Measure the return on brand investments