What is Brand Value and How Is It Used?
The notion of brand value, where the
branding of a company is seen as a business asset, only really came to the
forefront in the 1960s. Previously, brands were generally judged based on
product value and quality. Now, company identities have become household names,
and the result is that branding is more important than ever.
Brand management is now a key business process, and branding affects almost every buying decision by a target audience. You don't need to be a branding expert to learn more about brand value either. Here are all of the answers you need when you ask yourself, what is brand value, and how do I improve mine?
Defining Brand Value
At its most basic, brand value is the
amount of money that your brand is worth should you ever decide to sell it. For example, if Coca-Cola
was bought out by Pepsi, then Pepsi would have to include in the payment the
value of using the Coca-Cola name and brand identity, including logos and product designs. There
is a real market-based value to a strong brand, and companies can pay out a
vast fortune for the right branded products and services.
There is another way to measure brand value, and that's the cost it would take for a full re-brand. Using Coca-Cola as an example again, they would need to spend vast fortunes on designing, implementing, promoting, and then amplifying that new branding for it to be able to equal their existing branding. What is brand value? It's a reflection of how effective your existing branding is.
What is Brand Equity?
When business owners ask, what is brand value, they
often get crossed lines and get the answer brand equity instead. The two are very different.
While brand identity is essentially the monetary worth of your existing
branding, brand equity
is more to do with how customers perceive your company.
The more positive, the higher your levels of brand equity. If you have a target audience who will always buy from you over your competitors, then they are directly contributing to your brand equity. The problem for brand management is that brand value can be tricky to evaluate, especially if you start to factor in the impact of your brand equity on that brand value.
Brands can have plenty of brand value, but be totally lacking in brand equity, a much harder and more nebulous concept.
What is Brand Value Used For in Daily Operations?
The key to using brand value as part of
regular business processes is to focus on directional changes. By following
certain key metrics, it's possible to spot when brand value is going up or
down, and that can be used in a variety of ways. It's fantastic for competitor
research because you can see in close to real-time when a brand's value is
going down (or up).
Effective new marketing campaigns can boost brand value long term, while high rates of customer defection or harmful press coverage will mean brand value goes down. For brand managers, that means they can follow those changing values and turn them into insights that can drive better marketing strategies with an improved ROI.
What is Brand Value Measuring?
It's not a surprise that realistically measuring brand value can be a very complex process. That's why it's very common to find that companies tend to use a professional branding agency to carry out the process. There are multiple perspectives to evaluate brand value, including:
● Impact with a target audience
● Positive reviews of customer service
● The reputation of product or service
● Long term standing in the market
However, the fastest way to get a quick ballpark figure for your brand value is to simply evaluate how much it would cost to do a full re-brand. This needs to cover all of the expenses of the re-brand before the replacement branding equals or overtakes the existing branding. However, the 'brand value chain' suggests four steps to assessing existing brand value. These are:
● Marketing program investment
● Customer perception
● Shareholder performance
● Market performance
The brand value chain can be a useful set of metrics but, it is a little outdated. In the digital age, online reputation is a vital component of brand value.
How Can You Build Brand Value?
As well as ensuring that you have a firmly grounded branding strategy and branding identity book, there are three key ways to grow your brand value. These are:
● Marketing: Often backed up by the right branding agency services, marketing is the key to increasing brand awareness. If that awareness is positive, then brand loyalty (and therefore brand value) will grow.
● Sponsorships/Influencers: By aligning with the right people, brands can be linked to positive reputations, boosting brand value. However, your choice of influencer or ambassador will directly affect your brand perception, and a misstep can cause a drop in brand value.
● Customer service: High-quality products and services are only part of the buyer's journey. Now, consumers want an excellent experience every time that they buy something. Modern target audiences will often pay higher prices to be able to align themselves with a business with a positive brand reputation.
Brand value can be hard to define, but it's becoming an increasingly useful metric that can drive marketing decisions and business processes. Working on your brand value will provide business advantages, and should the time come that you want to sell your business, that brand value can help you earn a lot more of a profit.