Up until now, I’ve thought of brand value as having to do with how much a corporation is financially worth and the price that consumers are willing to pay for a brand’s product or service. This idea is really just a small part of what brand value is all about. What I am now learning is that brand value really depends on who you ask and what a brand considers valuable. And there way many ways to assess these different ideas of value. In discussion brand theory as it relates to the concept of brand assessment as a determinant for brand value. I will also evaluate and share my thoughts on the assessment methods of customer based brand metrics, incremental sales and branded business value.
Brand Assessment to determine brand value
Brand value depends on what is being assessed,by what measuring methods, by whom for what reasons. In my mind, I kinda think about this as someone wanting to know the value (or worth) of a ring because they want to know how much they can sell it for and then someone else valuing a piece of jewelry so much that no amount of money could make them give up. These two people are thinking about value in different ways and for different reasons.
So it is with brand assessment in determining brand value (or exactly what is it about the brand that is being valued) and what the desired outcome is.
Tybout and Calkins (2005) posit that there are several ways to assess brand value but the methods depend on the purpose, scope, definition and outcome. And that they are many questions to answer to determine the method used. Like these questions:
- What is being measured?
- What measuring tool will be used for what purpose?
- Are we trying to determine current value in the market to sell the brand?
- Are we trying to determine the value consumers place on the brand?
And there are many more questions that can be asked.
Brand value assessment processes: Customer-based, incremental sales, branded business value
So out of the many ways of measuring brand value Tybout and Calkins (2005) recommend three pathways; Customer-based brand methods, incremental brand sales, and branded business value. The methods measure different aspects of the brand and have various respective goals.
Customer-based brand metrics and theory. is centered on the idea that customers create brand value for themselves based on their perceptions and understanding of the brand and through marketing strategies brands can strengthen customer brand associations/perceptions. The theory here is that with that with the information gathered a brand can strategically create messaging that support positive perceptions of the brand. In turn, the positive perceptions can result in repeat purchases (or customer loyalty) or even switching brands (Tybout & Calkins, 2005).
I think this method can really work for a brand is very consumer/customer/stakeholder-centered and or relies heavily on co-creation of brand identity with consumers. For example, this can work for a new brand is looking to increase brand awareness such as an recording artist or personal figure. It can also work well, for a well-established brand who perhaps is looking to reinvent or evolve its brand identity, build a strong brand reputation and even restore reputation.
Incremental brand sales identify short-term financial returns the brand generates resulting from marketing and investments (Tybout & Calkins, 2005). This method assesses and helps a brand understand customer response by predicting who will respond at what level. The theory related to this method is that observing and understanding customer response can give a brand insight on the effectiveness of their messaging. This insight can be used to create messaging that creates the desired response of consumers and can work to increase brand awareness. I would think this approach would be necessary for any brand that wants to learn what marketing activities are working or not working and what adjustments they can make to get the desired results. It is also beneficial in learning who those super customers are by turning them into brand ambassadors via effective engagement. For example, a brand can activate brand ambassadors by rewarding them with incentives, exclusive content or product samples they can share with others (Kerpen, 2015).
Branded business value is all about providing a valuation (or appraisal) of the brand over time and is really about enhancing shareholder value. (Tybout & Calkins, 2005). What is measured in this method is the value of a brand trademark, intellectual property rights copyrights, colors, smells etc (brand valuation), and brand culture and customer experience programs (Tybout & Calkins, 2005). In theory, this method can help companies determine purchase price in the case the brand is sold, in litigation, trademark defenses and other situations such as negotiations with other companies. And to determine how well a brand is managed over time and forecast cash-flow, return on investments, shareholder value and assists companies in focusing their attention the factors that contribute to success in the long run (Tybout & Calkins, 2005).
This method brings to mind big mergers such as Comcast Cable acquiring Time Warner cable in a 4.2 billion dollar deal minus the Time Warner’s debt. With Time Warner’s debt, it was a 67 million dollar deal (Badkar, 2014). In these type of big dollar deals, companies must do the work in assessing financial value, debts included. I would also image a huge personal brand like Michael Jackson or Warren Buffett would need to utilize this method for estate planning.
Brand value is more than just about the price consumers are willing to pay for a product or service or the financial worth of a company. Above I talked about just three: Customer-based metrics, incremental sales, and branded business value. Customer based metrics is centered on consumer relationships with the brand, incremental sales measures short term financial returns while assessing the impact of marketing activities on the sales, and branded business value appraises the financial worth of a brand. And assessing the value of the brand determines what questions the brand wants to answers and their associated goals and there are many methods.
Kerpen, D. (2015). Likeable social media: How to delight your customers, create an irresistible brand, and be amazing on Facebook, Twitter, LinkedIn, Instagram, Pinterest, and more (2nd ed.). New York, NY: McGraw Hill.
Tybout, A. M., & Calkins, T. (2005). Kellogg on branding: The marketing faculty of the Kellogg School of Management. Hoboken, NJ
Badkar, M (2014, February 13 ) The 16 Biggest Corporate Mega-Deals Of All Time. Businessinsider.com. Retrieved from http://www.businessinsider.com/16-biggest-acquisitions-of-all-time-2014-2
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