A brand is a promise made by a product or service to a consumer that the offering will meet or exceed expectations. Brands are the most important assets many organizations own.
Typically a brand’s foundation is an IP right, such as a trademark, patent, or copyright. Layered on top of this IP base is advertising and promotion informing the consumer about the offering’s quality, competitive differentiation and consistency. The consumer relies on these promises to make a purchase. If the promises are delivered, the consumer may return for future purchases and the consumer will be willing to pay more for that brand.
Three elements must be present for a strong brand:
Consumer brand loyalty
If one of these pieces is missing, the brand’s value diminishes. For example, if the owner of a brand does not invest in advertising and promotion, the promise message cannot be delivered to consumers and the brand may fall from the minds of consumers. If the brand fails to deliver its promised attributes, the brand value will be impaired and the consumer may not return to buy more of the brand.
To understand a brand’s value, Ocean Tomo uses traditional valuation methods coupled with an understanding of the qualitative factors that go into the three elements of a brand. We combine market research with financial results to understand what drives a brand’s value. For example, do consumers buy the brand because of a product attribute? Do they buy it because it is accessible in certain outlets? Do they buy it because of its distinctive packaging?
Next, we create a framework by benchmarking the brand against its competitors to assess the brand’s strengths and weaknesses.
Once we have gathered this information, we can build a financial model to assign numbers to the brand. In addition, the information gleaned in the brand valuation process creates a roadmap for driving brand strategy into the future.
Ocean Tomo’s Valuation experts have valued brands in nearly every segment including consumer brands, organization/association brands, naming rights and sponsorship, entertainment brands. We have valued brands for many different purposes, including strategy, financial reporting, M&A and litigation.