Did you see the BusinessWeek issue last month on global brands? It had a fascinating cover story on how businesses become more valuable by building strong brands.
Each year BusinessWeek teams up with Interbrand and a small army of Wall Street analysts to assign a financial value to the world’s Top 100 brands. The number crunchers predict each company’s five year earnings and sales. Then they take out operating costs, taxes and interest charges for the capital being used. They even deduct the value of intangible items like management strength and patents. After the final deductions are made, the remaining number is the amount of each company’s revenues that come from its brand alone.
The King of Global Brands
Not surprisingly, Coca-Cola is once again the king of global brands. It topped the list this year with a brand value of $67 billion. The Coke name alone, because it is known to billions of people worldwide and is generally well regarded, is worth $67 billion.
Rounding out the Top 10 are the three most influential players in computer software, services and microchips; a pair of conglomerates, one best known for its role in all things electrical, the other for its cell phones; two automobile manufacturers; an entertainment and theme park icon; and a fast food mega chain that sells a lot of Coca-Cola. By name, the rest of the Top 10 in order are: Microsoft, IBM, GE, Intel, Nokia, Toyota, Disney, McDonald’s and Mercedes-Benz.
Google the Biggest Winner
The biggest gainer on this year’s list is Google. The value of the Google brand increased an unprecedented 46% in value from 2005, making it the world’s 24th most valuable brand name. Now pegged at $12.4 billion, Google has surpassed Sony, Ford, Nike and Apple. The dominant search engine’s brand worth is now double the value of Yahoo!
How Much Is Your Brand Worth?
While the article crunches the numbers on the world’s biggest brands, it raises an interesting question for every business: How much is your brand worth?
If someone walked through the front door of your office this afternoon with checkbook in hand, what price would you fetch for your business? How much of the total price tag could be attributed to your brand?
What Makes a Brand Valuable
While you would have to borrow some of the Wall Street analysts to put a hard number on your brand’s value, there are some straightforward factors you can ponder to determine your brand’s strength.
Is Your Brand a Known Entity?
Is your company a known entity in its industry? Does its reputation extend into the broader business community?
Better known is better valued. All things being equal, established brands that regularly get their name in front of clients are more valuable than newcomers or companies that may have been around for a while, but do little to get on the radar.
Smart, strategic advertising is an investment in your brand’s value. What are you doing to become better known?
What Are You Known For?
It’s good for a brand to be known, as long as it is known for the right things. Ford’s Edsel got lots of attention, but only as a design disaster.
If a research company called up a dozen of your customers and asked them to describe your company, what kind of story would they tell? Would it be positive? Would it accurately reflect your range of services?
Do you have the reputation among your customers that you want the broader market to know about? If the brand story your customers tell is different than the story you want to present to the marketplace, spend some time to create a new brand promise and then deliver on it.
Don’t rush into being famous if the spotlight will only expose a spotty reputation.
Where Do You Rank in Your Industry?
Are you a conqueror, a contender or a commodity? Do you dominate your segment the way Heinz rules ketchup or the iPod defines MP3 players? Or, are you a contender, one of a half dozen players vying for market share? Or are you an indistinct entity always forced to compete on price?
If your brand is on the commodity or even the contender section of the scale, create a plan to move up. With successful execution, higher profits await. If you’re in a conqueror position, continue to advance. You’re the target everyone has their eyes on. Make your brand impossible to surpass.
How’s Your Brand’s Momentum?
Is your brand a rising star or a sitting duck? Is the value of your brand growing like gangbusters or stuck in a rut? What are your plans to be more valuable a year from now?
Get a Boost From a Sub-Brand
Sometimes the most effective way to boost momentum is to introduce a new sub-brand. Motorola has redefined itself in the last year or so, bringing in a new head of global marketing from Apple. Instead of viewing itself as a technical product seller, the company has been thinking about the experience its products provide for consumers. The new focus on the customer’s experience led to the RAZR, which is arguably the coolest and hottest selling mobile phone on the market.
Motorola increased the value of its brand by 18% last year, due largely to its sub-brand investment in RAZR.
What sub-brand potential is lurking in your business?
What Will Your Story Be In 5 Years?
If these quick brand value assessment factors have exposed some growth areas, what action will you take to be a more valuable brand five years from now? If you want to develop a professional game plan for increasing your brand’s value, contact Identicor for a complimentary 1 hour assessment.