Brand value

Companies spend millions of dollars annually on building a powerful brand. Why is it so? Why is brand value significant for companies? Does brand value help increase revenue? What's the benefit of having a high brand value?

You'll find out the answer to these questions and much more by reading through this explanation!

Brand Value Definition

If you were to sell your brand, its brand value would be the amount of money you could get from selling it.

Another method to consider a brand's value is its replacement cost (cost-based brand value). In this context, the value of a brand refers to the amount of money required to create, implement, market, and magnify a whole new brand to the same level as the existing one.

Brand value is considered an intangible asset, as it does have monetary value but is not a physical good.

A brand's value is evaluated during mergers and acquisitions (M&A). Having a positive brand reputation will increase the monetary value of a firm, giving it more leverage in negotiations to merge with or be purchased by a larger company.

How is Brand Value Measured?

A wide range of factors may contribute to a brand's success, including how brands interact with the psychology of consumers.

It should not come as a surprise that determining the worth of a brand may be challenging and perplexing in the absence of a well-defined plan.

The most basic means of determining the value of a brand are still relatively straightforward. One of the simplest strategies includes inquiring other businesses about how much they would be willing to pay for the rights to use your brand.

In doing so, you would have a range of values that you could then take the average of to determine the brand's true worth in the market.

Similarly, you may figure out how much it would cost to establish a brand comparable to your existing one by soliciting estimates from other service providers or by making estimations on your own.

Brand Value Examples

Let's now take a look at some examples of brand value.

In addition to high product quality, brand value may also be influenced by convenience (lots of locations, easy to purchase) and the product's compatibility with many complementary goods (the brand offers a wide range of products that can work together).

Brand Value Proposition

A brand value proposition clearly states what a company's product offers to customers. The brand value proposition is a type of commitment made to target customers that includes a reason as to why consumers should buy the brand.

It outlines what the product can deliver (brand promise) and what problem it solves for its target audience.

Offering a warranty is also common in the auto industry, where most manufacturers provide guarantees for the first few years of new vehicle ownership. Consumers may value a brand because of its impressive warranty compared to rivals.

Some brands may try to attract more customers by offering to pick up the warrantied product to repair it and deliver it back to the customer quickly, promising additional convenience.

Brand Value vs Brand Equity

While brand value refers to the monetary worth of a brand, brand equity refers to the brand's ability to capture customer attention and preference. Brand equity also refers to consumers' impressions of the brand. Customers who choose a brand above others and remain loyal to it over time create substantial brand equity since they demonstrate brand loyalty.

When a brand establishes brand equity, it contributes to the attributes that will make it valuable.

These qualities include brand recognition, favourable connotations with quality and service, or aspirational values. Brand equity may be considered a component that influences brand value. All of these elements contribute to an increase in revenue by encouraging repeat purchases and customer loyalty.

However, brand value may exist even if a brand doesn't have brand equity.

When compared to brand value, brand equity is a more vague term that is also more difficult to evaluate. This is because brand equity is more closely related to customer motivation, opinion, and behaviour than monetary statistics.

Brand Value Importance

Brand value is important for businesses as it aligns their values with their target customers. This helps the brand build and expand its customer base. As more customers recognise the brand, it increases the chances for repeat purchases which adds to the firm's revenue expansion.

A brand needs to communicate its brand values and brand mission. This is because it allows them to target customers who share the same values as the brand, building loyalty and fostering trust. Trust and loyalty are some of a company's most crucial marketing weapons. It helps companies have a reliable customer base to which they can also market new product lines. Additionally, it provides leverage over competitors.

Iconic brands with high levels of customer loyalty can also maintain firms' profitability (or simply survival) during an economic crisis.

Branding is more than advertising or giving a firm or product a catchy name. Brand value is crucial because it has the potential to sway clients to buy your goods rather than the product of a competitor. This gives high-value brands a competitive advantage over their competitors.

By pursuing more significant profit through higher brand value, firms also improve society by delivering better goods and services.

Without branding and only the existence of standardised goods, firms would have little incentive to improve their quality.