Approaches to Brand Valuation

Interesting article on brand valuation on website. First off all the author is corectly placing the brand as a independent category among the intangible assets of a company:

Brand and relationship intangibles: these include trade names, trademarks and trade symbols, domain names, design rights, trade dress, packaging, copyrights over associated colours, smells, sounds, descriptors, logotypes, advertising visuals, and written copy. In addition, associated goodwill (the general predisposition of individuals to do business with one brand rather than another brand) should be included.

Then the article si focusing on several approaces to brand valuation:

There are two critical questions to answer in brand valuation. The first is exactly what is being valued. Are we valuing the trademarks, the brand or the branded business? The second important question is the purpose of the valuation. An important distinction can be made between technical and commercial valuations.

Technical valuations are generally conducted for balance sheet reporting, tax planning, litigation, securitisation, licensing, mergers and acquisitions and investor relations purposes. They focus on giving a point in time valuation that represents the value of the trademarks or of the brand as defined above.

Commercial valuations are used for the purposes of brand architecture, portfolio management, market strategy, budget allocation and brand scorecards. Such valuations are based on a dynamic model of the branded business and aim to measure the role played by the brand in influencing the key variables in the model.

Read full article here.

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