What is Brand Value and How to Use it Drive Growth

A marketing strategy that drives growth and brand value requires an approach that is akin to thinking about potential investments.

A brand’s sale or replacement value is its brand value.

Seth Godin defined brand value as –

A brand’s value is merely the sum total of how much extra people will pay, or how often they choose, the expectations, memories, stories, and relationships of one brand over the alternatives.

This definition may be useful to investors or others who need to put a “goodwill” term on the balance sheet. Yet as frivolous as the term may seem it is a topic that has been discussed repeatedly and yet is important.

Steve Jobs once said –

To me, marketing is about values. This is a very complicated world, it’s a very noisy world. And we’re not going to get the chance to get people to remember much about us. No company is. So we have to be really clear on what we want them to know about us.

This accounting item quantifies the net present value of long-term value produced by brand asset investments. Having such a balance sheet item also allows managers to see brand-related charges as long-term investments rather than expenses.

Why is brand value important?

Why is it that businesses and entrepreneurs are willing to invest millions of dollars in building brand recognition and sales?

Simply put because the brand value affects particular industries and marketplaces.

Customers who like a brand and buy it frequently have a better return on investment. Furthermore, strong brand loyalty can deter new entrants and enhance established enterprises’ market dominance. New brands gather data and assess their market to decide whether this move is worthwhile.

Brands are intangible assets with monetary worth. That’s why recognizing brand value is critical when discussing investments and stakeholder consideration. To increase brand value, companies must also consider brand equity (what people think of a brand).

What is the distinction between brand equity and brand value?

The two terms are related but are not the same thing. They are informed guesses as to how much a brand is worth. There is sometimes uncertainty about how each differs, so let’s take a closer look at what each means:

Brand equity

Brand equity helped build and maintain the exploding concept that brands are assets that drive corporate success over time in the late 1980s. That concept changed people’s understanding of what marketing is, who executes it, and what function it plays in company strategy.

The concept also changed people’s perceptions of brand value by proving that a brand is more than just a tactical tool for generating short-term sales; it is also strategic support to a business plan that adds long-term value to the company.

Brand equity is the value of your brand for your company. It is founded on the premise that a well-known, well-established, and well-respected brand would outperform a generic version. It refers to the prominence of a brand in the eyes of the consumer, whereas brand value refers to the financial relevance of the brand.

To put it another way, you could say it is a collection of assets and liabilities in the form of consumer perceptions, brand connections, and loyalty that enhance or remove from the value of a present or projected product or service that is driven by the brand. It is an important concept in the administration of both marketing and business strategy as it influences the sales volume of a brand and its profitability.

Here are four steps towards building your brand’s equity,

• Build greater awareness
• Communicate brand meaning and what it stands for
• Foster positive customer feelings and judgments
• Build a strong bond of loyalty with your customers

Brand Value

The financial worth of a brand, on the other hand, is referred to as its brand value. To evaluate the brand value, firms must assess how much the brand is worth in the market – in other words, how much someone willing to buy the brand would pay.

It is crucial to note that brand’s equity being positive does not always imply positive brand value.

How Should Brand Value and Equity Be Calculated?

Measuring brand’s value can be done via the “revenue premium” over non-branded generic alternatives. A non-branded alternative might be a generic or private label brand with no promotion or brand investment. Other factors must be considered while determining the revenue premium. First, determine the market where the premium will be determined. In most circumstances, locating the market is difficult.

Overly wide market definitions undervalue niche brands, while too restrictive market definitions undervalue mainstream brands. The “served market” definition can also be used. In this case, the serviced market may only include loyal clients.

As loyalties shift, such a section may need to be redefined. The corporation will also be blind to peripheral, emergent trends that may endanger product categories, resulting in marketing myopia.

We feel that valuing consumers is a better method to monitor a brand’s value than valuing revenue premiums. Find each customer’s lifetime worth and add them all up. Of course, one must also consider the brand’s pace of new customer acquisition and forecast future client lifetime values.

The aggregate of current and future customers will give a brand value. This method involves estimating factors like margins and defection probability. But, because of technology improvements, this can be done in near real-time with a big data infrastructure.

While calculating brand value is relatively straightforward, measuring a brand’s equity is not. The latter is a collection of assets and liabilities in the form of brand exposure, brand connections, and loyalty that enhance or remove from the value of a present or projected product or service that is driven by the brand. We’ll go through each in detail below.

Brand visibility

This indicates the relevance of the brand in terms of its awareness of and credibility in relation to a certain client need. If a consumer is looking for a purchase option and the brand does not come to mind, or if the brand is seen to be unable to suffice the person’s wants and needs, the brand will be irrelevant and will not be considered.

Brand associations

Anything that has resulted in a favorable or bad relationship with or sentiments towards the brand is considered a brand association. It might be founded on functional advantages, but it can also be founded on brand personality, corporate ideals, self-expression benefits, emotional benefits, or social benefits.

Loyalty to a brand

Customer loyalty generates a steady flow of revenue for existing and upcoming products from customers who trust in the value of the brand’s offerings and will not waste time exploring lower-priced alternatives. Incorporating the idea of loyalty into the mix enables marketers to justify prioritizing loyalty in the brand creation budget.

How to measure brand value

You may quantify brand value in several ways, depending on your company’s identity, position, and goals.

Market-based valuation.

This strategy helps you to establish your brand’s worth based on market conditions. The simplest technique is to compare similar firms. Other market measures might help you understand your brand’s worth (for example, stock performance).

Cost-based valuation

Calculate the expenditures of founding and developing your firm to discover a necessary measure. Add up all the costs from the start to today to get an idea. Include marketing expenses, staff pay, branding agency contracts, trademarks, and other costs. So you’ll know how much you’ve put in your company. But it can’t represent your current brand worth.

Income-based valuation

This method focuses on your company’s revenue. Evaluate your brand’s financial streams, such as income, cash flow, cost reductions, and future revenues.

Net promoter score (NPS) valuation

NPS shows if customers can promote your brand. To calculate your NPS, ask consumers if they would suggest your firm to friends and family, and let them score it from 0 to 10. This will tell you how many people know, trust, and enjoy your brand.

Due to the intangible nature of brand value, each of these techniques has advantages and disadvantages. Each technique allows you to get data that will help you improve your brand strategy and grow your business.

How can brand value be useful for day-to-day operations?

One major use of such a brand-value indicator is to track directional changes. In other words, distinguishing between brands increasing and or losing value. Further research may reveal aspects like churn rates, effective marketing, or market-based changes. Brand value modifications may be justified by breaking down market and customer insights.

Ultimately, campaign ROI on brands is the most important measure. Marketing managers are under increasing pressure to explain brand-related spending and future campaigns using responsible budgeting (e.g., Zero-Based Budgeting).

Driving brand value in the short term

A brand’s value reflects its effect on the short- and long-term flow of earnings that it may produce. Concerning short-term profitability, the issue is that programs that are excellent at promoting short-run items – such as price discounts – may harm brands.

While there is truth to this brand value in the short term is really about the experiences with the brand. Examining how a brand may assist generate short-term financial performance might help to counteract this tendency:

Increased loyalty

• Reduced marketing costs
• Leverage with stakeholders
• Makes it easier to attract new customers
• More time to respond to competitive threats

Increased visibility

• It creates an anchor to which other associations can be made
• Familiarity leads to potentially having future customers know and like your offerings
• Helps gain consideration with future customers
• It signals a certain level of substance and commitment

Brand associations

• Helps communicate information
• Positioning in the minds of customers and prospects
• Provides a reason/s to buy
• Evokes positive emotions and attitudes
• provides a basis for extensions

Improving brand value over time

One of the main issues for proponents of a brand’s equity is demonstrating the long-term advantages. The fundamental issues are that the brand is only one driver of profitability because competitive activities intrude and that strategic decisions cannot be postponed for years.

However, there are other viewpoints that may be used to analyze and quantify the long-term brand worth:

Estimate the brand’s role in business

One method is to estimate the brand’s role in a company. The worth of a company in a product market, such as the Ford Fiesta in the United Kingdom market, is calculated by discounting future earnings. A group of experienced individuals identifies the tangible and intangible assets, and the relative function of the brand is subjectively appraised, taking into consideration the business model and any information about the brand in terms of its relative visibility, associations, and consumer loyalty.

The worth of the brand is then aggregated across goods and geographies to obtain a brand value. It may range from 10% for B2B businesses to more than 60% for names such as Jack Daniel’s or Coca-Cola.

Track investments in brand equity

A second method is to note that investments in brand equity, on average, enhance stock return, which is the ultimate measure of long-term return on assets. Evidence comes from a series of experiments I did with Professor Robert Jacobson of the University of Washington, which used time-series data with accounting-based return-on-investment (ROI) information and models that determined the direction of causality.

The conclusion was that raising a brand’s equity has a substantially equal influence on stock return as a change in ROI, almost 70% as much. In contrast, advertising, which was also studied, had no effect on stock return other than that reflected by a brand’s equity.

Consider other valuable brands

A third strategy is to examine case studies of brands that have produced huge value. Consider the impact of Apple’s personality and innovative reputation, BMW’s self-expressive perks associated with the “ultimate driving machine,” and Whole Foods Market’s capacity to define an entire subcategory.

Or, from 1989 to 1997, two automobiles were manufactured in the same facility using the same design and materials and marketed under two different brand names, Toyota Corolla and Chevrolet (GEO) Prism. The Corolla brand was 10% more expensive, had less depreciation over time, and sold several times more than the Prizm. And both customers and professionals awarded it better marks. It’s the same automobile! The only difference was the brand.

Consider the conceptual model

It is critical to analyze the conceptual model surrounding a company plan by posing questions like:

• What is the company’s business strategy?
• How important is the brand’s strategic role in supporting that strategy?
• Is price competition an acceptable substitute for building out a brand’s equity?
• What effect will this have on future earnings streams?

Management guru Tom Peters put it succinctly:

In an increasingly crowded marketplace, fools will compete on price. Winners will find a way to create lasting value in the customer’s mind.

What makes a brand valuable?

Brands are valuable because they provide a solution to an issue that most people face in their daily lives. In the case of McDonald’s, we have affordable food at the end of the day. In the case of Disney, we get a break from reality.

Brands are valuable because they provide solutions for problems that many people face in their daily lives. McDonald’s is an affordable place to eat. Disney is a break from reality.

How do you integrate core brand values?

Make sure that your values are consistent

Make sure your brand values are integrated with a customer engagement strategy

Values are a company’s guiding principle.

Whenever you’re debating an option, ask yourself and the other decision-makers in your company how well it aligns with your values as a company.

Brand values shape a strong brand and provide structure to companies.

Lead by example for others to follow. Leaders are constantly scrutinized. Setting fundamental values and then failing to follow through on them is worse than not setting core values at all.

In challenging circumstances, a strong values system is extremely crucial. When things are going well, it’s quite easy to stick to established preferred habits. When a company encounters a stumbling block, it is critical to hold firm in what you believe at your heart.

Orientation/training should be used to instill the ideals. It’s ridiculous to expect that just sending out an email or a booklet outlining fundamental principles, or engraving them on coasters, would result in everyone adopting them. Formal education teaches the importance of values.

David Darminian CEO of Hotjar and Jeff Wald ex-CEO of Work Market personally conducted a key values training sessions for all new workers, stressing the training over HR training.

The training expresses the organization’s dedication while also taking the time to explain how the principles came to be and what they mean to the company.

Every communication, including all-hands meetings, newsletters, and so on should reinforce the values. We have changed the structure of all-hands meetings for several of my client businesses, and we have established internal newsletters. Every employee interaction should serve to reinforce the principles.

Recognize and reward behaviors that are centered on values. Spot-bonuses, peer-voting options that allow employees to nominate coworkers for effectively living the values, and textual acknowledgment in newsletters or on the website are all ways to recognize and reward values-centric activities.

Integrate the values into your selling process. We’ve included the key principles into the proposal message as I’ve worked with customers to redesign their proposal process and papers. This extends beyond merely listing the values in the first paragraph. The language emphasizes how the fundamental principles influence a customer’s experience.

Integrate your beliefs into the recruiting process. It is just as vital to identify people who are culturally compatible with your business as it is to find candidates who match your desired experience level and skill set.

In addition to rewriting job descriptions to attract applicants, my involvement in screening and assessing individuals for my client’s businesses is purely focused on cultural fit. I put applicants through a rigorous questioning process to see who can actually take their company to the next level and who will be around in the long run.

Integrate the values into your performance evaluation procedure. Once you’ve acquired workers who share your values and taught them how to live them, you’re ready to include these values into the performance assessment process. The performance review process is where you check to see whether you are getting what you anticipate.

People who violate the essential principles should be fired. Firing staff is typically one of the most difficult elements of running a business. However, when an individual frequently participates in behavior that contradicts an organization’s desirable and necessary behaviors, it has an influence on both their own performance and the company’s performance.

Every employee is a representative of the brand. As the company’s representative, every employee is held accountable for the organization’s values, mission, and vision.

Ensure that internal and external message is consistent. Finally, businesses must ensure that internal and external messaging is consistent. How do workers convey the brand’s and the company’s attributes? Does the corporate messaging in marketing materials, on the website, in Linked In profiles, and so on correctly represent the internal values messages?

How do you define your brand core values, why are they so important, and where can you look for inspiration?

Did you know that 80% of consumers forget branded content after 3 days?

We know that brand awareness is difficult to quantify.

But ask yourself two questions as a litmus test:

• Does your brand consistently express its values via graphics, statements, and behaviors?
• Does your organization have clear fundamental brand values?

Your fundamental brand values are your company’s convictions. They govern your brand story, activities, behaviors, and decision-making.

In business, you will have to make difficult decisions. Making the proper decision becomes easy when you have core principles that consistently remind you of what matters to your organization and the people you serve. Plus, you can rest easy knowing that your selections are guided by principles that support your brand’s goal and vision.

Why do brands need key values?

Strong core principles help companies connect with consumers and staff in various ways. Just as crucial as offering exceptional products and services is developing a brand’s values.

Even if you make the finest enchiladas in town, it won’t guarantee your target audience’s devotion. You may have the most user-friendly B2B SaaS solution, but that doesn’t mean your subscribers will renew.

If you want consumers to remember you, you must connect with them deeply. According to Harvard professor Gerald Zaltman’s seminal book How Customers Think: Essential Insights into the Mind of the Market, 95% of purchase choices are unconscious – exactly where core values work.

What are examples of brand values

American Express

American Express is an excellent example of a firm that proudly displays its principles. The credit card firm keeps loyal to its brand objective by continually providing exceptional customer service on all fronts. Its mission says –

“Provide the world’s best customer experience every day.” It lists its values as: – We back our customers – We make it great – We do what’s right – We respect people – We embrace diversity – We stand for inclusion – We win as a team – We support our communities.

3M

3M is a multinational enterprise with over 88,000 workers dedicated to improving the world. Their principles reflect their tremendous respect for their investors, the environment, and their employees.

3M maintains these ideals through investing in educational opportunities for future 3M workers. They sponsor WorldSkills, DonorsChoice, Frontline Sales, the Young Scientist Challenge, and 3M Visiting Wizards. With each endeavor, the objective is to inspire the next generation of scientists.

Their guiding values include:

• Act with uncompromising honesty and integrity in everything we do.
• Satisfy our customers with innovative technology and superior quality, value and service.
• Provide our investors an attractive return through sustainable, global growth.
• Respect our social and physical environment around the world.
• Value and develop our employees’ diverse talents, initiative, and leadership.
• Earn the admiration of all those associated with 3M worldwide.

While 3M’s principles are admirable, the company’s workforce was diverse, with employees ranging in age from young professionals to retirees. 3M launched an all-in-one recognition system in 2009 that increased engagement by 7% with 99% of employees actively utilizing it. It was a favorite among 3M’s offline personnel who were out and about serving clients.

Google

Google has the following values:

• Focus on the user and all else will follow.
• It’s best to do one thing really, really well.
• Fast is better than slow.
• Democracy on the web works.
• You don’t need to be at your desk to need an answer.
• You can make money without doing evil.
• There’s always more information out there.
• The need for information crosses all borders.
• You can be serious without a suit.
• Great just isn’t good enough.

Why does Apple dominate?

Apple is a company that has always been associated with innovation and forward-thinking. The company was born in Steve Jobs’s garage and has since dominated the smartphone market not just because of its large user-base, but also due to Apple’s focus on quality, design, and marketability.

In the 1990s, it was struggling to earn its share of the marketplace. Today, things are different. Apple employees are more united than ever, and This is likely due to the fact that Apple focuses on values rather than just sales figures.

What makes a Porsche or a Tesla so revered with avid fans?

The fact that these brands have little to do with the technology or how long they have been available. Rather what makes them so revered is the fact that they are scarce.

It really boils down to scarcity, a product or service with unique attributes not found anyplace else. Every brand must pursue that as their benchmark; their hallmark.

Like the high school girlfriend, you couldn’t have. The less available she was, the more she eclipsed other females who could have been equally worthy but were neglected because they were more accessible.

This “valued thing” is rare. Rare. Only a handful have it. From gold to Elon Musk, it’s that unique item we all value. Clearly, anything has more worth if we believe we have the freedoms, joys, or conveniences that object provides.

Here is a simple example.

Have you ever read about someone who was prominent, wealthy, or successful beyond where you are currently? What did you think about them? Imagine what you could accomplish with their connections or assets!

Consider also the whole venture capital paradigm. It is founded on having and not having. And the ‘haves’ are valued.

Takeaways to drive growth

A company’s brand value is greater than the items or services it sells. It’s what they’re all about. A company’s brand value can help it form strong ties with its target audience. It is the reason why a client prefers Coca-Cola to Pepsi, Mercedes-Benz to Nissan, and so forth.

A company’s user experience must be improved in order for it to generate or acquire brand value. This entails making interactions between their brand and their customers as simple as possible. Big firms, such as Amazon, recognized this approach and made it simple for clients to purchase on their websites, propelling them to their current position.

Building brand value also necessitates a company’s ability to remain distinct. This may imply that a corporation will go where its competitors cannot or will not. This will assist the brand in remaining distinct from its competitors. Customer loyalty and business growth are both dependent on brand loyalty.