Behind the brand valuation metrics: A case study of Brand Finance

Abstract

In the area of globalization and fierce competition there is no doubt that brands play a crucial role in distinguishing firms from each other. Brand is the first “contact” and “impression” that connects the customer with the product and the company. A strong brand, like Apple, Samsung, Coca-Cola, Starbucks or Google can clearly guarantee the business’ success. Since the 1980s, the increasing importance of brand awareness for businesses led to the development of methodologies on brand valuation, and the industry of suppliers (agencies), specialist in brand valuation. In the research field there is a growing interest on the methodologies used to evaluate brands. Many agencies and institutions are trying to find an adequate model to measure brand equity. The problems with brand valuation are related to a number of reasons. Firstly, brands itself are complex. Brand awareness can be associated with different aspects in the mind of customers like: trademarks, trade names, style guides, websites, and product formulations, just to mention some. Secondly, brands are representative of two values: the economic and the social value. The economic value is related to the firm strategies, Research & Development expenses, marketing expenses to position their products and gain market share and this way profitability for the shareholders. On the other hand, the social value relates to the Corporate Social Responsibility and the long-term market value creation. This is the starting point of this thesis. The aim is to explore the criteria taken into the consideration from the agencies to evaluate the brand awareness. Are these criteria appropriate to reflect the brand real worth? Which are the most important criteria for the brand awareness?