Brand Value
Brand value involves actually placing a dollar or rupee value on a brand name. The
reasons for doing this are usually to set a price when the brand is sold and also to
include the brand as an intangible asset on a balance sheet (a practice which is not
used in some countries). While there are many methods for making this measurement,
some of which will be described shortly, it is important to note that there is a
significant difference between an “objective” valuation created for balance sheet
purposes, and the actual price that a brand may get when sold?
A brand is likely to have a much greater value to one purchaser than another
depending on the synergy that exists. For acquisitions, the value of a brand to a
certain purchaser is often estimated through scenario planning. This involves
determining what future cash flows the company could achieve if it owned and took
advantage of the brand.
What this means is that there is no such thing as an absolute value for a brand, and
brand value needs to be considered as only one component of the overall equity of a
brand.
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