Why Build Brand Value?

There’s been an increasing amount of industry chatter around brand value, but what is it, how do we measure it and where is its place in the overall business strategy?

If you think about a well-known brand, their offerings are generally more highly valued than those of a lesser one due to the familiarity, trust and connection they’ve built with consumers. A strong brand not only influences customer choice and loyalty, but also helps to attract and retain employees, and gain the attention of investors, who empower the future growth of your brand. 

Marketing’s role is to drive the value of brands. We build brand equity in how our customers perceive and experience our offering, and when this is positive, loyalty results. Building brand equity increases the financial value of our brand; the two are symbiotic. 

Measuring Brand Value
Whilst there’s no single universally accepted way to measure brand value, there are a number of possible approaches:

Market-based valuations define brand value through comparison to recent sale prices of equivalent publicly traded brands. Understanding the value of brands in your sector, helps bring understanding to the value of your own. This approach is commonly applied to acquisitions of businesses with unique qualities. A useful illustration would be valuing a painting based on the artist’s previous work.

Cost-based valuations are commonly used in acquisition processes. They are based on consideration of what it would cost to build a brand of equivalent market awareness, quality perception and loyalty from scratch. To estimate the value of a brand’s role in a business, the tangible and intangible assets are identified and then the contribution of the brand is assessed based on visibility, association and customer loyalty. Where relevant, this can then be aggregated across markets and products. This approach demonstrates the significance of the brand, which can be as high as 60% for brands like Coca-Cola, or as low as 10% for some B2B brands. 

Income-based valuations are usually used internally as a benchmark. They’re based on current and projected turnover, considering the value of customer loyalty over the cost of customer acquisition. Sometimes this approach involves averaging the return on brand equity investment. 

Understanding the Role of your Brand in Supporting the Business Strategy
Research undertaken by David Aaker and Professor Robert Jacobson (University of Washington) indicates that increasing brand equity impacts stock return by as much as 70%. Essentially, the world’s most valuable brands are also the most prominent. A quick look at Statista’s ‘Most Valuable Brands Worldwide’ research, confirms this thinking.

So how do we go about building brand equity to increase brand value?

1. Understand who your brand is for, then you can build something unique that matters to them. 
2. Bring your brand to life by creating a distinctive visual identity, an origin story (with values and beliefs to forge an emotive connection), and a way of communicating that embodies a personality that your audience wants to keep engaging with.
3. To build mutual and reciprocal value, exceed expectations and ensure that every customer experience is a positive one. 
4. Build your community and increase how often your audience thinks of you. Do this through brand awareness campaigns that tell your story and theirs. Tell these stories consistently across social media, content marketing and advertising.
5. Build alliances with aligned brands, groups and individuals that embody your audience and act as ambassadors.
6. Keep getting better. Value feedback and act on it to evolve into the best, most relevant and responsive brand you can be.
7. When you’ve earned your place in one market, explore your right to expand into another.

StrategiQ combine the art of brand storytelling with the science of marketing performance to create New Future Value™ for ambitious businesses.
We’re looking to partner with CMOs who are looking to drive sustainable growth and prove the value of marketing in the boardroom.
To find out more about how we could collaborate, get in touch.