Can Brand Value Be Measured?

No where in marketing do you see the collision between art and science than in estimating a brand's value. The metrics are often subjective and rely on sometimes tenuous assumptions.

But brand value is not insignificant. Interbrand conducts an annual survey for Business Week magazine on brand value. For 2005, the top five brands and their valuations were:

1. Coca-Cola $67.53B
2. Microsoft $59.94B
3. IBM $53.38B
4. GE $47.00B
5. Intel $35.59B

But how should a firm estimate its brand value and, more importantly, how does that impact the way they run their business on a daily basis? Two of the gurus in brand valuation have just published a book that provides gives companies a clear road map on how to measure a brand's components so that they can make data-based decisions. Value Creation: The Power of Brand Equity is the new book by William Neal, Past Chairman of the American Marketing Association and founder of SDR Consulting, and Ron Strauss, founder and senior executive of Brandzone, LLC. In the book, they present a common sense approach to brand measurement:

"By taking a representative sample of purchasers in a category through a
specially designed trade-off exercise, we can determine the value of each of
those four major components and their individual sub-components. The model is built at the individual respondent level.

Then, we can manipulate the price in the model so that any one respondent would be ambivalent as to which branded product they would purchase in the category. That, then allows us to calculate the relative price premium that a buyer or potential buyer would be willing to pay for the brand, INDEPENDENT OF the branded product's performance attributes and channel attributes. Given that we have a representative sample, and unit sales volume, we can calculate the total value of the brand in the marketplace.

Furthermore, the output from the model provides very rich diagnostics that identify specific performance and equity issues that are both supporting and detracting from brand performance.

The implications of this Brand Value Model are far reaching - encompassing
firm financial management, new product development, human resources hiring & training, and of course brand management."

Bill's and Ron's approach is applicable to any sized firm. I highly recommend you check out their book and get to know these two practitioners of the art and science of brand valuation. For more information, go to their site: http://www.newvaluecreation.com/