LBS216-PDF-ENG.docx - Nader T Tavassoli LBS Ref CS-19-02 HBP LBS216 January 2019 Brand Valuation What How and Why Introduction As Chief Marketing

LBS216-PDF-ENG.docx - Nader T Tavassoli LBS Ref CS-19-02...

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This document is authorized for use only in Dr Smitha Ranganathan's SG MSEP19/Marketing Management II at S P Jain School of Global Management - Dubai from Oct 2019 to Apr 2020. Nader T. Tavassoli LBS Ref: CS-19-02 HBP: LBS216 January 2019 Brand Valuation: What, How and Why? Introduction As Chief Marketing Officer of a privately held Swiss luxury goods company, Lena Müller was tasked with valuing the company’s brand, whose products traded under the same name as the company itself. The reason her CEO gave for the valuation exercise was to better understand “this strange animal called brand” one that over the last decade kept cropping up as a formidable intangible asset on post-M&A balance sheets, 1 such as in the G-III Apparel Group’s recent acquisition of Donna Karan International. 2 “It might be useful to know our own brand’s value”, the CEO had added, “in case we get acquired, but also to better manage and leverage the brand, how we handle our taxes internationally and, frankly, so I can assess your performance!” Lena too was interested in putting a number on the value of their brand, as she was evaluating a co-branding arrangement for a new bag collection, as well as negotiating a licensing agreement for a range of fragrances. Valuing the brand In order to figure out what exactly was to be valued, Lena started with ISO 10668, 3 the requirements for monetary brand valuation. This defines a brand as “a marketing related intangible asset including, but not limited to, names, terms, signs, symbols, logos and designs, or a combination of these, intended to identify goods, services or entities, or a combination of these, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits/value.” So far, so good. She next looked at two of the leading league tables by Brand Finance (Exhibit 1) and Interbrand (Exhibit 2). Reassuringly, even though these did not include all of the same brands due to the use of different brand selection criteria, many of the top brands listed were the same. Amazon topped the Brand Finance ranking at nearly $151bn, up a whopping 46% from the year before, with Apple in second place at $146bn. The same two brands topped the Interbrand table, but the values themselves deviated significantly. Interbrand valued Apple as the top brand at a massive $214bn, with Amazon coming second at a comparably paltry $100bn.
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