Product Branding

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

1 http://appleinsider.com/articles/14/05/20/google-usurps-apple-as-worlds-most-valuable-brand-name-report-says

2 http://www.cnn.com/2014/05/21/tech/innovation/google-apple-brand-value/index.html

 

"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)