As marketers, we know that brands influence consumer purchasing decisions. But really, what is a brand? Does a brand have a financial value? Does it drive growth?
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 in 2022 include Apple (number one for the 10th consecutive year), Microsoft (moving up a spot to number 2), Amazon, Google, and Samsung. Indeed, the top 10 brands have a cumulative brand value greater than the combined value of the 90 brands.
The fastest risers from 2022 in terms of brand value percentage change are Microsoft, Tesla, Chanel, Ferrari, Lego, Google, Hermes, and Dior. New entrants to the list in 2022 include Airbnb (#54), Red Bull (#64), and Xiaomi (#84).
How many did you correctly guess?
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 think are the top 10 most valuable brands in the world.
- Then show the top 10 list from the Global Brand report: https://interbrand.com/best-global-brands/
- How many did they get correct? What surprised them?
- Show a video on the methodology used to evaluate brand value: https://youtu.be/tK2ozWQ0HA4
- Show students several of the sections within the site and view 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: Interbrand.com; PR Newswire