What’s your brand worth?
Most of us don’t think about the value of our brand, we just know that we damage it if we get something wrong, and building it can seem like something of a black art.
The Coca Cola Company is often seen as the forefather of brand management, fiercely protecting its trademark, its designs and even use of the word Coke – they’ll try to sue an establishment that sells another product when asked for Coke!
Likewise Coca Cola was probably the first company to include its brand value on its balance sheet.
What this is saying is that the brand itself is making a contribution to the success of the business and then putting a value onto the attributable success.
And it makes sense doesn’t it?
Any brand that can charge a premium has an intrinsic value.
We’ll stick with Coke for an example, and compare it to another brand, say Panda Cola. If Panda sat side by side in the same fridge, even if it was half the price of Coke it’s doubtful whether Panda would out sell Coke.
Now consider the vast economies of scale that Coke enjoys as market leader and you can quickly see how it wins every way – it costs less to produce, less to distribute, and sells higher volume at a higher price.
And yet once it’s out of its distinctive bottle it’s just a brown sugary drink – like any other cola.
Anything that can be measured will be measured, and someone will be happy to charge you for the privilege. For the last decade the leading measure of brand value has been the Brand Z study by Millward Brown.
Given the incredible and consistent effort that has gone onto managing the Coke brand over many decades it should come as no surprise that Coca Cola has topped the brand value charts for many years, occasionally being troubled by McDonald’s.
So what happens when the markets panic and we slip into a recession?
Interestingly in a recession, strong brands tend to do better than the less well known. As consumers we take less risk, and often make a ‘flight to value’ – see Waitrose’s success as the other major supermarkets have suffered over recent years.
Similarly throwing completely new technology at a nervous market isn’t wise – over the past couple of years technology brands have tended to make small steps forward, rather than introduce anything radically different.ee Waitrose’s success as the other major supermarkets have suffered over recent years.
It’s those cunning tech guys that lead the value charts these days, and Apple has topped the Brand Z study for several years now.
Few would be surprised to see Google as the second most valuable brand, but who would have guessed that the original IT business, IBM, would be third? It’s IBM’s massive value to big business that helps them retain such power.
The more traditional McDonald’s and Coca Cola still have respectable fourth and fifth place, with Visa taking the highest place for a financial brand.
Most of us running our own businesses probably wouldn’t even have thought of brand value as a business asset until recently.
What has brought it to mind isn’t the potential rewards of a powerful brand, instead it’s the ever more complex tax arrangements of some of the world’s biggest companies.
Suddenly we all know how a business like Starbucks may charge a premium internally to use its own brand and so reduce its profits in particular countries.
That’s a whole different issue and I don’t intend to go there now, but the situation has served to heighten people’s awareness of brand value, and how reputation can be damaged in areas far removed from the actual product or service being delivered.
While big business may spend enormous sums simply measuring the value of their brands, most of us just need to make a conscious effort to build ours.
Our brands are owned by our businesses, the people who work for us, and most importantly, by our customers.
If we can understand and satisfy all three we are well on the way to building something good.
That’s straightforward business sense – but let’s just think a little like those guys did at Coca Cola, and more recently Apple, and remember just how valuable the name above the door can be.