Brands -
What makes them valuable?
In current global economy, with changing
market dynamics and heightened competition, the need for highly valued brand
has become increasingly important. Brand creates a distinct identity and
differentiates a product from the competition. The stronger the brand, the more
it encourages customer loyalty, attracts new customers, and boosts customer
lifetime value (CLV), the total amount a customer spends on a brand.
The latest results from research agency
Millward Brown's 20141
100
Top BrandZ report says Google out-innovated Apple with its various
"Google X" initiatives like Project
Loon and contacts that measure
glucose levels for diabetics. This year's Top BrandZ report was first
spotted by Business Insider.
Apple, meanwhile, was criticized by some for failing to keep breaking new
ground, settling instead for incremental upgrades to its breakthrough products
like the iPhone and iPad.
The result, Apple’s brand value dipped by 20% 10
$147.88 billion dollars, whereas Google’s brand value got a jumped by 40% to $158.84
billion dollars.
Source: Millward Brown
A
study by Interbrand in association with JP Morgan (see Table 2.1) concluded
that on average brands account for more than one-third of shareholder value.
Though, this is against the Generally
Accepted Accounting Principles (GAAP) rules, I believe that brands belongs in
the balance sheet since brand provide enhanced stream of continuous future cash
flows.
References
"If
this business were split up, I would give you the land and bricks and mortar,
and I would take the brands and trade marks, and I would fare better than you."
— John Stuart, Chairman of Quaker (ca. 1900)
— John Stuart, Chairman of Quaker (ca. 1900)