The year 2020 has been rough on businesses as they pivot to account for the pandemic. Yet, strong brands seem to have become even stronger during this time. Consumers view their purchasing choices as a vote for a brand’s value and impact.
But, 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.
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 report:
- 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 region.
- The brand must have a significant presence in at Asia, Europe, and North America, as well as 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 cost of capital.
- 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.
Brands in the top five include Apple, Amazon, Microsoft, Google, and Samsung.
Did you guess these correctly?
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. 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: https://www.interbrand.com/best-brands/
- How many did they get correct? What surprised them?
- Show the video explaining the report: https://www.interbrand.com/best-brands/best-global-brands/methodology/
- Show students several of the sections within the site and view some of the videos 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?
Source: Brandchannel.com, Interbrand.com