What is a brand? Does a brand have a financial value? These are critical questions that drive the strategic marketing decisions of corporations around the world.
In general, marketers define brand as the position that a company/product holds in the minds of the consumers. It follows then that if the brand holds a position in consumers’ minds, then it would definitely translate into a financial value for companies.
Translating companies’ brands into hard dollars is a job taken on by company Interbrand. Each year, Interbrand does a financial analysis that seeks to define, in dollars, the value of a company’s brand – the result is the annual Best Global Brands ranking. In order to be included in the analysis the brand must be global – it must have successfully crossed geographic and cultural boundaries:
- At least 30% of revenue must come from outside the brand’s home country.
- It must have presence in at least three continents as well as broad geographic coverage in emerging markets.
- There must be sufficient publicly available data on the brand’s financial performance.
- Economic profit must be expected to be positive over the longer term, delivering a return above the brand’s operating and financing costs.
- The brand must have a public profile and awareness above and beyond its own marketplace.
Interbrand’s brand valuation methodology seeks to determine, in customer and financial terms, the contribution of the brand to the company’s business results. There are three key components in the methodology for the valuations: analyses of the financial performance of the branded products or services, of the role the brand plays in the purchase decision, and of the competitive strength of the brand.
The results – well, see for yourself by viewing the interactive report at http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx. The top global brands may surprise you.
Group Activities and Discussion Questions:
- Ask students to define “brand.” What is it? Does it have value to a company?
- Have students take out a piece of paper (or write answer on laptops). Ask them to choose what they thing are the top 10 most valuable brands in the world. Then show the top 10 list from the Global Brand report.
- Bring up the Web site: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx. Show students several of the sections within the site and view some of the videos as a class. Discuss the overall findings as a class.
- Divide students into teams and assign each team an industry category to examine: automotive, apparel, beverage, electronics, energy, etc.
- Have each team present key findings from the industry sector they examined.
- How can these findings be applied in marketing strategies?