Brand evaluation

1. Definition
Brand evaluation is a method used to determine the tangible and intangible assets of a corporate or product brand. The goal is to quantify the overall impact of a brand and – partly – to convert it to monetary terms. There are more than 40 different approaches and models for brand evaluation.

Three approaches apply: purely monetary, finance-oriented philosophies consider brand value from the point of view of the brand owner and evaluate the brand on the basis of profits or sales clearly attributable to the brand and that would not have been achieved without the brand. Behavioral science or consumer-oriented approaches believe that brand value is essentially dependent upon perception of the brand, brand images in the minds of the consumer, and the associations conjured up as a result. Integrative models combine consumer and market approaches: economic data and positive and negative associations are considered equally important in terms of defining and determining brand value.

The diversity of methods produces very different results that are not inter-comparable. Brand value depends on the underlying attitude, the reason for evaluation (e.g. Mergers & Acquisitions, control, protection) and the model-specific definition and operationalization of indicators and factors.

2. Applications
The main reasons for brand valuation are: market transactions, i.e., sale of brands, brand control and monitoring, and brand protection.

When brands are sold, finance-based methods are mainly used. The sales currently and potentially achieved with the brand then appear to be the most important consideration and these determine the brand value at a given time. Where the aim is to evaluate the efficacy of brand strategy and efficiency of brand management, consumer-oriented behavioral science based methods are appropriate. These enable statements to be made with respect to brand presentation, determination of budget figures and endpoints, or justification of a particular budget. If integrative approaches are used, brand value can also be used as a measure of success, as a comprehensive evaluation tool, or as a basis for setting target agreements for the responsible brand manager. This approach is also common for legal protection of brands: licensing fees, the amount of compensation demanded in the event of brand infringement, and other payments for utilization rights are based on consumer and economics-oriented brand value.

It is becoming increasingly common for organizations to voluntarily include brand values alongside obligatory accounts in their external reporting during brand sale transactions (e.g. in the corporate report, external accounting system). Among other things, this shows potential investigators, acquisition/takeover candidates externally bound intangible assets and the associated market and sales potentials.

3. Implementation
The purpose for which brand value is to be determined is the starting point for conduct. How this is defined has implications for the selection of an appropriate model and for determining the factors to be taken into account, and for the time taken for evaluation. At least 4 to 8 weeks are likely to be required. The cost of brand evaluation differs greatly depending on the size of the market, whether the brand evaluated is national or international, and the depth in which the method is to be performed. Very simple processes may cost as little as €30,000, after which the sky's the limit.

Important: The values obtained with different methods are not comparable and may be difficult to comprehend in many cases. No uniform evaluation approach exists that would produce a valid representation to fit all circumstances. All the approaches are deficient to a greater or lesser extent from a communication science point of view, as they tend to neglect aspects of public communication.

4. Indicators
Brand income: Brand income is the income share of the total income of the company, based on the brand's design. It also features the brand generated by the added value of a product or service as compared to an unmarked offer.

Brand equity: Brand equity is the portion of a company's overall equity that is attributable to the brand. It also describes the added value of a product or service generated by the brand versus an unbranded offering.

Brand image: Brand image describes the attitudes, connotations and associations connected with a particular brand in the minds of existing or potential consumers.

Stability: Brand stability refers to the steadfastness of a brand in the face of social and market changes and influences.

5. Service providers in Germany

6. Links

7. Further reading

8. Case studies

Please send us short texts from your projects on this topic in the same structure as the existing case studies, and more information (pdf or links) on the methods employed in as much detail as possible.

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