Brand valuation is not just making a financial overview. Brand valuation is the integration of marketing and financial data of the brand. The financial data concern the brands' market strength while the financial data give insight into the separate income flow from the brand. In addition, the valuation of a brand can take place for different reasons. The aim, for instance, may be to effect a brand takeover. Or to calculate a marketing budget.
There are ten methods for determining the brand value. The INTAA brand valuation model gives clear insight into these various techniques, indicating in advance which of these techniques are best suited to achieving the stated valuation objectives.
The financial module of the INTAA Brand Valuation model offers ten methods for calculating the economic value of the brand. In addition, it is also possible to determine this value on a historical cost basis. The economic valuation methods are arrived at by combining the method of determining the brand's separate income flow (optional: brand profit/brand cashflow, brand royalty or brand price premium) with the applied capitalization technique (optional: multiplier, discounted value or the 'spread'). In total, therefore, the INTAA model applies ten financial methods for the valuation of brands.
The marketing strength of a brand is determined on the basis of scores on predetermined marketing factors. Factors relating to brand awareness, advertising (Share-of-Voice), market penetration, level of distribution, market share, etcetera. Such factors give a consistent and clear picture of the structure of a brands' sales. In the INTAA Brand Valuation model six factors relevant to the brand can be selected each time.
The next step in the valuation procedure is to find out what the 'overall' market performance score of the brand is. This can be found by means of the weighted average score on the predetermined marketing factors. The INTAA model calculates this weighted average through a standard procedure. Additionally, the INTAA model not only generates this 'overall' Brand Performance Score, but also calculates the capitalization factor, i.e. the brand multiplier and/or the brand discount rate. Both parameters are important for calculating the brand value.
By combining the financial result and the marketing result, the INTAA Brand Valuation model then calculates the value of the brand.
The Brand Competence method has been applied in many different markets like food products, drinks, publishing, tobacco, cosmetics and apparel. The valuations consist of international, national and local brands and databases. Their net sales level differ from 0.5 million to 250 million.
The average percentage of brand value to net sales is 48 % (the observations range from -15% to +140%). As said the amount of brand value depends both on financial results and brand strength in the market.
Brand Competence offers the INTAA model on a project basis (see Procedures).
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