Concepts - Brand value

Brand equity or brand value measures the total value of the brand to the brand owner, and reflects the extent of brand franchise.

A brand can be an intangible asset, used by analysts to rationalize the difference between a company's "book value" and market value. For example, the market value of a company can far exceed its tangible assets (physical assets owned by the company, such as stock or machinery), and its brand value can account for some of the difference. Up to 85 percent of a company’s market value might be intangible (for example know-how, existing client relationships), and Interbrand, a brand consultancy, states that tangible assets may account for less than five percent of a company’s market value, for example in the case of Coca-Cola or Microsoft.

Brand value, especially in the case of consumer product brands, may arise out of customer loyalty. Brand value may also arise in terms of staff retention benefits (e.g. the ability of the company to attract and retain skilled and/or talented employees offering competitive salaries).

Brand value can be negatively influenced. For example, in 1999 Nike's brand value was estimated at 8 billion US$. Facing media exposure and consumer boycotts over supply chain issues, Nike's brand value declined in following two years to 7.6 billion US$, and rose back to 9.26 billion US$ in 2004 after Nike addressed its supply chain issues.

Campaigning groups may deliberately target a company’s brand value to force a company into adopting a certain position or practices. Some campaign groups have thought to do this by deliberately subverting a brand’s image, logo or message, creating a negative association among consumers. This attack may be visual, as pioneered by groups such as Adbusters, or focusing on the message. For example, BP’s “Beyond Petroleum” branding is subverted by campaigners into headline such as “BP: Beyond Petroleum or Beyond Preposterous?” or “BP must move beyond petroleum as profits soar“.

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