What Are Brand Values?

Brand value is the most core part of brand management elements, and it is also an important sign that a brand is different from similar competing brands. Michael Porter mentioned in his brand competitive advantage that the brand's assets are mainly reflected in the core value of the brand, or the core value of the brand is also the essence of the brand.

Brand Value

Brand value is the most core part of brand management elements, and it is also an important sign that a brand is different from similar competing brands. Michael Porter mentioned in his brand competitive advantage: the brand s assets are mainly reflected in the brand s

Brand Value:

1. It refers to the amount calculated by the brand at a certain point in time using a similar tangible asset evaluation method = market price. If it is appropriate, or

The more popular brand value evaluation agencies 010: 86290776 There are four main methods for brand value evaluation, namely market structure model method, Kemin model method, Interbrand value evaluation model, and thousand brand value evaluation models.

Brand Value Market Structure Model

This is the main method used by Financial World in the United States. The idea is to get the value of your own brand through comparison on the premise that the value of a brand in the same or similar industry is known. It believes that the value of any brand must be reflected through market competition. The value of different brands is positively related to the brand s market occupancy, market profitability and market development capabilities. At the same time, it is necessary to consider the uncertainty of the market on the value of the brand. Influence to accurately assess the value of the brand. Specific steps are as follows:

(1) Calculate the three ability values of known value brands and evaluated brands.

Market Capability: Enterprise Sales Revenue / Industry Sales Total Revenue

Market profitability = Return on equity-Industry average return on equity

Market development capability; sales growth / previous year sales

(2) Find out the percentage of each capability of the evaluated brand to the corresponding capability of a brand of known value, and then adjust the weights of the three capabilities according to the specific conditions of the industry, such as the size of the enterprise and industry characteristics, and then weight them. Average calculation.

(3), substituted into the formula

Value of evaluated brand = a brand's value x adjusted weighted average percentage

The advantage of this method is that it takes into account the market share, profitability and growth of the brand, and evaluates the value of the brand more objectively. The disadvantage is that there is a problem with practicality, because the prerequisite is that the value of a certain brand of the same or similar industry is known, how to calculate this value, even if it is accurate, because the deviation or error of the premise will lead to the error of subsequent data, this The problem is a major cause of the difficulty in applying the market structure model method.

Brand value model

It is a brand value evaluation model designed by Interbrand. It assumes that the value created by the brand will be stable for a period of time in the future, and determines the value of the brand by calculating the brand revenue and the intensity coefficient of the brand. The calculation method is: V = IxG, where V is the brand value, I is the annual average profit that the brand brings to the enterprise, and G is the brand strength coefficient. When using it, generally consider the following three issues:

(1) Excluding the profits created by the brand and other factors in the same brand. The first is to exclude the profits of the products created by the remaining brands when assessing the profits of one brand. That is to say, if Procter & Gamble is to evaluate the value of the "Rejoice" brand, it must exclude the profits created by its other shampoo crystal brands such as "Pantene" and "Shifen". Secondly, we must exclude the revenue created by other factors in the same brand of products, because raw materials, fixed assets, management and other operating factors also contribute to the profit of the product. However, since it is almost impossible to calculate the returns of each factor in practice, their profits are generally calculated by calculating the expected return of these factors. The determination of the expected rate of return varies from industry to industry. In general, the industry with a low technology content expects a high rate of return, and vice versa.

(2) Determination of average profit. The Interbrand model considers the brand's ability to continue operating, so it adjusts the brand's profit by a weighted average. The profit weight for that year was 0.5, the profit weight for the previous year was 0.33, and the profit weight for the previous year was 0.17, and adjustments were made accordingly according to economic development trends and inflation rates to ensure data comparability and Profit stability.

(3) Determination of the intensity coefficient. Interbrand gave a scale of influencing factors on brand strength through investigation, and determined the brand strength coefficient through expert scoring. The index items include leadership position, industry characteristics, brand stability, geographical influence, brand development trends, brand support, brand legal protection, etc. The higher the total score, the stronger the brand s strength and the longer the expected service life. Interbrand has defined a range of G between 6-20 through extensive research. The higher the score, the closer G is to 20.

Kemin Kemin model of brand value

The evaluation of Kemin model is based on the market performance of the company's brand and the technological innovation ability possessed by the company, and taking into account the general fund interest rate of the market. Because this method does not take into account the future benefits of the brand, it can only draw a market reflection of the value of the new and old brands. It has no guiding significance for the long-term development of the brand, but its biggest advantage is that it is simple and easy to implement.

Fourth, Qianjia brand value evaluation model.

Thousands of brand laboratories formally proposed a brand value evaluation model based on the brand index system in March 2009, including two evaluation methods: brand cumulative value evaluation and brand conversion value evaluation. This evaluation method has three basic principles:

1. The object of brand value evaluation is to strip off the tangible assets of the brand parent, that is to say: the plant, equipment, raw materials, inventory products, working capital and debts, and personnel of the brand parent are not included in the scope of brand value evaluation. In other words, brand value is another asset besides tangible assets. 2. The brand value of an individual brand is related to other competing brands in the industry. The most critical of this correlation is that the brand ecological competition position of this brand individual is related to other individuals, the brand value is determined by the relative competition position of the brand, and the brand index is a tool for measuring the ecological competition position of the brand. 3. The brand can reflect the brand value from two aspects: one is the assets converted from the sum of the attention of various media in the entire process of brand building; the other is the value-added income of the enterprise assets after the brand conversion.

(I) Brand Cumulative Value (V1): Also known as brand media attention value, it is the sum of the attention of various media obtained by the brand in a monetary form. The sum of media attention is not the amount of media advertising and soft text, but the measurable brand traces on the media resources accumulated in a certain period of time. It is the projection value of the public's impression of the brand on the media. The calculation of a brand's cumulative value is divided into five steps:

The first step: obtain brand media attention value (A). Brand media attention value is a value greater than 0 and less than 1.

Step 2: Measure industry maturity (M1). In a fully competitive industry field, brands can invest great enthusiasm and resources in brand building, and the value of the brand can be reflected to the maximum. Therefore, the higher the industry maturity in an industry, the higher the proportion of the industry maturity obtained by the brand. Maturity is a value greater than 0 and less than 100. Industry maturity actually indicates how much media resources within an industry are effectively used by brands.

Step 3: Calculate the value of all media resources (R) in the industry within a unit time period. This value is based on actual advertising prices, media advertising and soft text prices, market activity prices, and exhibition participation prices.

Step 4: Measure its brand maturity value (M2). Brand maturity can be used to evaluate the growth stage of a brand. According to different brand maturities, different brand maturity coefficients (X) can be obtained. This system refers to the ratio of the total contact points of a brand to other contacts of the brand. Represents the proportional relationship between the cumulative value of the brand and the value of the brand's media resources.

Step 5: Calculate: Brand cumulative value (V1) = value of all media resources (R) * industry maturity (M1) * brand media attention value (A) / brand maturity value (M2).

The cumulative value of a brand is time-dependent and can be calculated according to a certain time period, such as monthly, quarterly, and annual. Therefore, the cumulative value of the brand can be expressed in terms of "monthly brand value" and "annual brand value". The cumulative value of the brand according to the timetable can be calculated cumulatively. Similarly, since the value of all media resources (R) in the industry can be subdivided by region, the cumulative value of the brand can be expressed in the form of "** region ** brand brand value", and the cumulative value of the brand by region can be performed Cumulative calculation; based on the above, it can also be combined to calculate and express according to time and region, such as "** time ** region ** brand value of the brand", which is a complex expression method of brand cumulative value. This kind of comparative subdivision calculation and expression method will provide great convenience for brand value evaluation and brand analysis.

(2) Brand transformation value. There is also a second type of brand value evaluation method, which is the Brand Transformation Value method. Brand conversion value refers to the increase in value of the expected total revenue brought by the brand due to the existence of the brand. This expected total revenue includes two parts: the added value of the industry's sales (S1) and the individual brand's added value (S2).

Industry sales value added (S1) obtained by the brand = industry sales value added (S) * industry maturity (M1) * brand index score (D1) of the brand / total industry brand index score (D0).

Brand individual sales value-added (S2) = industry annual sales (S0) * [brand's brand index score (D1)-industry brand index average score (D2)] / industry brand index total score (D0).

Expected total return period (Y). The expected total income period varies from 6-20 years depending on the actual situation.

Finally, we obtain the formula for calculating brand conversion value: Brand conversion value (T) = [Incremental sales value of the brand (S1) + Individual sales value of the brand (S2)] * Expected total revenue years (Y). For example, in 2008, the industry-wide sales of an industry were 10 billion yuan, the industry sales appreciation coefficient was 20%, the industry maturity was 0.68, the individual brand index score was 900 points, the industry brand index was averaged 600 points, and the industry brand The total score of the index is 18000 points, and the expected total return period is 2 years. The brand conversion value of the brand = [100 * 0.2 * 0.68 * (600/18000) + 100 * (900-600) / 18000] * 2 = ( 0.3 + 1.67) * 6 = 1.97 * 6 = 1182 million yuan. We can say that the brand conversion value of this brand is 1.182 billion yuan. Brand conversion value can also be used as a reference price for brand equity transactions.

Quantitative formula for brand value

At present, there are two most convincing and quantifying equations of brand value in the world, one is universal and the other is the quantifying equation of brand value with Chinese characteristics.

I. The world adopts the quantitative formula of brand value: brand value = (operating profit-capital × 5%) × strength multiple.

In this equation, the operating profit is the most valuable calculation base, and it determines the value. The 5% reduction in capital is because companies without a brand in the market can also obtain a 5% capital gain. About 3% of operating profit comes from social average profits, so 5% of total capital needs to be reduced. That is to say, even if the general product does not have a brand, it will receive a 5% capital gain. The intensity multiples are estimated by experts based on certain information or impressions. The value is between 6 and 20. It is the same profit of 2 billion US dollars. If the strength multiple is 6, the brand value is 12 billion dollars. If the strength multiple is 20, the brand value is 40 billion dollars.

2. Quantitative formula of brand value with Chinese characteristics: brand value = brand's market occupancy + brand's value-added profitability + brand development potential.

Because this formula takes full account of the characteristics of Chinese enterprises, it is called a formula for quantifying brand value with Chinese characteristics. There are many indicators that constitute the competitiveness of enterprises. There are two kinds of indicators: intrinsic indicators and external indicators. Reliable quality, advanced technology, effective management, personnel quality and other intrinsic quality indicators determine whether the brand has a basis for lasting competitiveness. However, having these foundations does not mean that a brand can occupy the market. Ultimately, brand value must be reflected in the fact that more consumers are willing to pay for this brand's products. That is, it is emphasized that the qualitative indicators should be transformed into quantitative indicators. Therefore, the formula does not study the asset income, capital utilization, investment income, and fixed assets of the enterprise. It is concerned about whether the brand has: a larger market share; a higher value-for-money profitability; a stronger export ability; whether the trademark has a broader legal effect and continuous investment support, whether it has a strong geographic and cultural transcendence The ability to border. In summary, the most important indicators of this formula are sales revenue, profit, and potential coefficient.

The market share of a brand can be based on sales revenue indicators, which means that the turnover or sales revenue is directly taken as a weight of the brand value.

The value-for-money profitability of a brand takes profit as an important indicator.

The potential coefficient is calculated by quantifying the index and analyzing it. Its important indicators include: (1) the number and scope of trademark registrations at home and abroad, that is, the status of legal protection; (2) the number of years that the brand has been used, that is, the history of stable use of the brand; Overseas operation status is the brand's ability to transcend geographic and cultural boundaries; 4) Advertising investment is the strength of the brand's support; technology leadership such as patent development capabilities.

Differences between the two quantitative formulas

The quantitative formula of brand value with Chinese characteristics puts more emphasis on sales revenue indicators, and the evaluation of the world's most valuable brands puts more emphasis on profit indicators. This is because if the quantification formula of brand value with Chinese characteristics places too much emphasis on profit indicators, it is tantamount to leaving out some companies that have great potential for development. Because since the reform and opening up, in order to compete with international brands, Chinese industry leaders often adopt the strategy of sacrificing profits to protect the market. In addition, due to insufficient brand concentration and non-market factors such as local protection and industry protection, the market will increase competition costs, which will directly affect profits.

Therefore, the Chinese brand value quantification formula proposes that when quantifying brand value, sales revenue, an indicator that directly reflects consumer attitudes, cannot be ignored.