登录查看更多内容

How can you value brand equity when acquiring a company?

由人工智能和领英社区提供技术支持

Brand equity is the value that a brand adds to a product or service beyond its functional benefits. It reflects how customers perceive, recognize, and associate with a brand, and how loyal they are to it. When acquiring a company, you may want to consider its brand equity as part of the valuation process, as it can affect the future cash flows and growth potential of the target firm. But how can you measure and value brand equity objectively and reliably? Here are some methods and challenges that you should be aware of.

此文章中的业界达人

由社区从 3 条内容中精选。了解更多

Shakeel Jeeroburkan ACSI

Snr Fund Accountant at Fidelity International - Masters in Investment Fund Administration Candidate - 1st Class Honours…

1 Cost-based approach

One way to estimate brand equity is to calculate the historical or replacement cost of creating and maintaining the brand. This includes the expenses related to research and development, design, advertising, promotion, and distribution of the brand. The cost-based approach assumes that the brand value is equal to the investment made to build it. However, this method ignores the customer response and the market conditions that influence the brand performance. It also does not account for the intangible benefits and risks associated with the brand.

添加您的观点

Shakeel Jeeroburkan ACSI

Snr Fund Accountant at Fidelity International - Masters in Investment Fund Administration Candidate - 1st Class Honours Financial Services Analytics (1.1) - 2023 Apprentice of the Year National Award Winner (Finance)
举报内容
I think a subtle addition to the cost-based approach considers the strategic investments made in differentiating the brand from competitors. This includes not just the tangible costs but also the strategic decisions taken to position the brand in the market. It's important to evaluate how these investments have contributed to establishing a unique brand identity, which can significantly influence its valuation. This perspective shifts the focus from mere cost accumulation to understanding the value generated through strategic brand positioning, offering a more comprehensive view of brand equity within the cost-based framework.

已翻译

赞

2 Market-based approach

Another way to estimate brand equity is to compare the market value of the branded product or service with the market value of a similar unbranded or generic product or service. This difference represents the premium that customers are willing to pay for the brand. The market-based approach reflects the current demand and competition for the brand in the market. However, this method requires reliable and comparable data on the sales and prices of both branded and unbranded products or services. It also does not capture the future potential and sustainability of the brand.

添加您的观点

3 Income-based approach

A third way to estimate brand equity is to project the future net cash flows that the brand will generate over its expected life, and then discount them to the present value using an appropriate discount rate. This method is also known as the royalty relief method, as it assumes that the brand owner would have to pay a royalty to use the brand if it did not own it. The income-based approach captures the future earnings and growth prospects of the brand. However, this method requires many assumptions and estimates about the future performance and risk of the brand, which may be subjective and uncertain.

添加您的观点

加载更多内容

4 Customer-based approach

A fourth way to estimate brand equity is to measure the customer perceptions and preferences that affect the brand loyalty and profitability. This method uses various indicators and surveys to assess the customer awareness, recognition, recall, association, satisfaction, and attachment to the brand. The customer-based approach focuses on the psychological and emotional aspects of the brand that influence the customer behavior and decision making. However, this method may be difficult and costly to collect and analyze the customer data. It also may not be directly linked to the financial outcomes and value of the brand.

添加您的观点

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

添加您的观点

Walter Miller

Product Manager| Brand Manager| Marketing| Marketing Coordinator| Marketing Analyst & Digital Marketing| Inventory Management| Data Analysis Forecasting| + 5 years of experience in brand budget management for retail
举报内容
Something that one may not see at a glance is what, the business, brand and behavior say about the company. One has to make sure that all three aspects are on the same line, for example if you are a logistics company that prides itself on getting things on time. That behavior is part of your brand value and if you doubt to consider keeping up with new technology. That action or lack of action may keep you out of issue. But that purchase delay of new technology may save you money in the beginning but cat hurt you if you start to run late. Those are things people may not see that goes into a brand.

已翻译

赞

Financial Management

+ 关注

给文章评分

我们借助人工智能创建了此文章。您认为这篇文章怎么样？

很棒不太好

举报此文章

查看全部

How can you value brand equity when acquiring a company?

1

2

3

4

5

1 Cost-based approach

2 Market-based approach

3 Income-based approach

4 Customer-based approach

5 Here’s what else to consider

Financial Management

给文章评分

感谢您的反馈

更多Financial Management相关文章

更多相关阅读内容