Abstract:

The paper is divided into 3 parts. The first part asserts that value creation for both the consumer and the share holder is the overriding objective of commercial organisations and that brand value is a critical bench mark in measuring a company's successful exploitation and development of its brands. Increasing competition and recession in many markets has put marketing departments under severe pressure to become more performance accountable for their activities and to demonstrate the very worth of the marketing department itself. Whilst the various stakeholders in the value creation process, from share holders through to the advertising agency, all share the common goal of maximising brand value, each have their own individual objectives. There exist many organisational and personal constraints to prevent companies from maximising the free flow of information across functional boundaries to enable the organisation to fully understand how to maximise brand value. The second part of the paper traces the growing acceptability of brand valuation in the financial world. The process of undertaking brand valuation is described and shows how the key components of brand value, called the brand drivers, are precisely those factors which the marketing department and advertising agencies seek to manage. These range from brand positioning through to pricing and assessments of the risk of current and future brand strategies. The final part of the paper describes the transition from brand valuation to brand evaluation and calls for a strong cross functional approach, primarily between marketing and finance, to identify key brand attributes and understand the inter relationships between the strengths of these and the activities that drive the brand's operating costs. The bland evaluation process is described, starting with the valuation of the current brand portfolio and moving through a number of phases. A change in organisational behaviour is required to ensure that objectives, performance measures and ultimately personal reward all become related to the creation of brand value.