What is the Concept of Brand Value & Valuation of Brand ?
Concept of Brand :
According to American Marketing Association, Brand means a name , term , sign , symbol or design or a combination of these intended to identify the goods or services of one seller or group of Sellers and to differentiate them from those of competitors .
Valuation of Acquired Brand :
Following are the Method that can be adopted for Brad valuation :
Method 1 : Brand value = price paid for accusation
Method 2: Brand Value = purchase consideration paid for accusation – net asset taken over .
Valuation of Self-Generated Brand:
Historical cost model: This approach of valuation determine brand value by taking into the account the actual expenses incurred on creation, maintenance and growth of corporate brand.
Method 1: Brand Value = Brand Development cost + Brand Marketing and Distribution cost + Brand promotion cost including advertising and other cost.
Method 2: Political earning model, Brand Value = Net Brand revenue / Capitalization rate.
Where, Net Brand Revenue = ( Brand unit X Price ) – (Brand Unit X Cost Price ) – Marketing/ R&D Cost – Tax
Among the various Valuation method, following is the popularly used method in the industry where for determining the brand value:
1. Determine the Brand Profits by eliminating non Brand Profit from Total profits
2. Restate the Historical profit at present day value
3. Provide for remuneration of capital to be used for purposes other than promotion of brand
4. Adjust for Tax
5. Determine the Brand strength and Brand Earning multiple