Income-Based Brand Valuation Methods - Outline Example

? Marketing management Inserts His/Her Inserts Grade Inserts (3, 5, Marketing management Branding in marketing A combination of a name, a symbol or a design is used by the sellers to identify the good and services and to differentiate them from the competitors. Branding is therefore, not just about getting your target market but it is also about making the customers choose you over the others and to make them see it as the only solution to their problem. A good brand always aims to deliver the message clearly, it is credible which helps in motivating the buyer to buy and it eventually develops brand loyalty. It is highly essential to understand the needs and the preferences of the customers and this is done by integrating brand strategies. Having a strong brand is invaluable since it is a promise to the customer and today branding has become a foundation for every company in marketing communication. (Kashani & Turpin 1999). Reasons why companies develop their core products into brands 1. Memorability – a brand name serves as a source of reputation for the company and besides an effective company name it also helps in reinforcing the identity to the customers which further makes them do more business with the company. It comes with a distinctive behavior or a unique color combination. 2. Loyalty – customers are more likely to purchase a brand with which they have positive association and experiences and the customers who are bonded with a brand also purchase other items sold by the same brand. 3. Familiarity – branding also has an impact on the people who are not the customers of the company and familiarity induces liking because of which people often recommend a brand to other people also. 4. Premium price and age - instead of dealing with price-shoppers, there are always buyers available who are willing to pay more for a brand compared to its competitors. 5. Extensions – a brand name which is well known amongst the people can also be used to sell new products. 6. Equity of the company rises – a company that sells branded products is sold at a higher price than the other companies that sell non-branded products and services. 7. Marketing expenses are low – money is always required to create a brand but once it is created, marketing expenses eventually reduce. 8. Lower risk for consumers – people often choose a branded product over a non-branded product when making a purchase decision. Brand valuation methods A number of brand valuation methods are used by the companies and every method has its own advantages and disadvantages. Some of the main brand valuation methods are mentioned below. Income based brand valuation methods 1. Relief from royalty method – this method is based on the amount the owner would have to pay in order to get the brand licensed by a third party. In order to capitalize the future branded cash flows, discounted cash flow analysis is used. 2. Excess-earnings method: earnings above profit are calculated to attract investors on the basis of the value of the assets while the excess amount is attributed towards the brand. 3. Price premium method: this method of brand valuation is based on a capitalization of prospective revenue stream premiums attributable to a trade’ brand over the profits of a general trade, exclusive of a brand. 4. Method for capitalization of historic profits: this method is based on the capitalization of revenues earned by the brand product. Valuation methods based on Market 1. P/E ratios method: price to earnings brand valuation method basically multiplies the brand’s earnings by a multiple drawn from alike business transactions of earnings to price paid bottomed on the cost of brand values reported. 2. Turnover multiples method: brand’s turnover is multiplied by a multiple derived from alike business transactions in this brand valuation method. Valuation methods based on cost 1. Creation costs method: this method of brand valuation helps in estimating the cost that has been invested in forming the brand. 2. Replacement value method: this method of brand valuation helps in estimating the cost needed to create a brand with a like market share and position. By utilizing all of the appropriate brand valuation methods and synthesize the results to arrive at a conclusion is possibly a best approach for brand valuation. The change from analog to electronic technology is known as digital technology that was introduced in 1980 and it is being used till today. Digital marketing Promotion of the brand using various forms of digital advertising channels such as the television, radio, mobile and the social media to reach the consumers, is known as digital marketing. Digital marketing includes various elements such as mobile phones, banner ads and digital outdoor. Previously the marketers used traditional marketing methods for promotion and direct marketing was being done but now the same old method is also being used to communicate with the audience but with the emergence of digital marketing, it is being done in a digital fashion. The idea of digital marketing is to engage the customers. Push and the pull strategy are the two forms of digital marketing used by the marketers today. Pull Technologies such as pull digital marketing engage the client having to search for and select the content directly (or pull), mostly through web search. Some good examples of this are web site/blogs and streaming media (video and audio), users have a defined link (URL) to view the content in each of the examples mentioned. Push Technologies like push digital marketing engages the recipient (the user) as well as the marketer (maker of the message), some good examples of push digital marketing are email, SMS, RSS Email, SMS and RSS. In order for the message to be received by the user the marketer has to send (push) the message to the users. Content is actually pulled on a periodic basis (polling) in the case of RSS, hence suggesting a push. Below the line According to the user needs or preferences BTL promotions are targeted at persons that can actually lead to a sale, this kind of sale promotion is basically an instant or deferred inducement to procure, expressed in hard cash or in any other kind having minimum duration. For targeting a specific and limited group it is really cost efficient, it basically utilizes less conventional ways compared to the usual ATL mediums of marketing, mainly focusing direct mediums of communique, mostly via e-mail or direct mail, mostly utilizing extremely targeted records of names to exploit rates of response. BTL services might contain those for which charges are mutually agreed and charged straightly. It is technique commonly used for ‘feel and touch’ products (user items where the user will be dependent on instant information more willingly than earlier researched items). Such techniques make sure the recall of the brand whereas simultaneously stressing on the characteristics of the item for consumption. An added BTL method engages sales staff positioned at trade stores close to targeted items, this method might be utilized to produce tests of recently commenced items. This indeed assists marketers to build dialogue bond with customers whereas mass promotions, make it complicated to measure user-response, excluding at the point of sales. Road shows, tele-marketing, promotions, shop-front and in-shop activities and display units are examples of this method. (Brady, Goodman, Hansen, Keller & Kotler 2009). Creativity in digital marketing Today, the marketers have come up with various creative ideas in digital marketing. One of the examples of digital marketing is Tony the Tiger who in the ads told the audience that his frosted flakes were great and the children believed him and consumed them. Tony was a character which was created by Leo Burnett who was a famous man from an ad agency and used iconic characters as such as Tony, the Jolly Green Giant and The Marlboro man to position the products. Besides this, there are many other creative campaigns which were created using digital marketing such as Volkswagen’s Think Small (DDB) and Nike’s “Just Do It,” which really worked out in defining these brands in the marketplace. Marketing creativity is breaking the old rules and is coming up with new creative rules. Creativity in digital marketing today means going beyond the messages and including mechanisms in order to interact with the customers. Bibliography: Kashani, K. & Turpin, D. (1999). Marketing Management: An International Perspective. IMD. Brady, M., Goodman, M., Hansen, T., Keller, K. & Kotler, P. (2009). Marketing management. Prentice Hall. Read More