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Brand Valuation Techniques
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Cost-Based Valuation
Calculates a brand's value based on the costs incurred to build the brand until the valuation date. Useful for new brands or when the cost information is readily available.
Market-Based Valuation
Determines brand value using market comparisons. Suitable when there are enough comparable brand transactions in the market.
Income-Based Valuation
Estimates brand value based on the future income streams attributable to the brand. Commonly used, especially for well-established brands with steady income.
Royalty Relief Method
Assesses brand value by estimating the royalty rate that would be charged for its use, then applying it to forecast future sales. Suitable for licensing scenarios.
Price Premium Method
Calculates additional value a company gains by selling its products under a particular brand name compared to a generic product. Best for consumer goods.
Economic Use Method
Estimates brand value based on the economic benefit received from its use in the business, including price premium and volume premium. Applicable to brands with significant market influence.
Interbrand Methodology
Combines financial forecasting with an analysis of the brand's role in purchase decisions and the strength of the brand, referred to as Brand Strength Score. Used by top global brands.
Brand Finance Method
Integrates the royalty relief approach with brand strength represented by the Brand Strength Index. Focus is on the brand's potential earnings.
Conjoint Analysis
Evaluates brand value by understanding consumer preferences and the value they place on brand attributes. Ideal for market research scenarios.
Multiplier Method
Applies a multiplier (often an industry standard) to a certain financial baseline, such as revenue, to estimate brand value. Quick and useful for ballpark figures.
Excess Earnings Method
Calculates brand value by determining the excess earnings that can be attributed to the brand over a reasonable rate of return for tangible assets. Suitable for profit-centric analyses.
Historical Cost Method
Values the brand based on the historical costs associated with creating and maintaining the brand. More relevant for internal accounting purposes.
Replacement Cost Method
Evaluates a brand's value by estimating the cost of creating an entirely new but similar brand. Useful for insurance claims.
Relief-from-Royalty Method
Quantifies the value of brand ownership as the present value of hypothetical royalty payments avoided by owning the brand instead of licensing it. Ideal for IP-heavy businesses.
Greenfield Method
Values a brand by assessing the investment needed to develop a brand with equivalent market position and reach from scratch. Applicable when benchmarking against startups.
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