What is the True Financial Value of a Brand?
No matter how great your service or product is, if it isn't accompanied top-notch branding, then you're not going reach your full potential. The basis for a brand's worth is most commonly called brand equity, a well-known bottom-line value that is distinct from product sales revenues.
A brand's equity is the additional value that allows it to demand a higher premium for its product than the less well-known alternatives. The brand equities of companies like Nike, Apple and Samsung are valued in the billions of dollars. Every well-known brand has brand equity.
Brands are Investments
The stock market is almost completely comprised of brands. The truth is that strongly branded companies just perform better than those claiming not to care about branding. The more public that the markets become, the more vital it will be to have a good brand, with a great reputation. Traditionally, a strong brand means a solid and stable market and robust revenues.
A small number of organizations will attempt to calculate the value of their brands in their yearly reports. The financial value of a brand is rarely revealed until it is bought or sold; however, this might change down the road.
Putting a Value to a Brand
If you were to complete an audit of the Top 500 largest corporations in the United States, you would find that massive values are now tied to their brands. Research has found that 30 to 70 percent of the market value of an organization is attributed to its brand or brands-these statistics are based on a selection of companies in varying industries and businesses.
So, it's no wonder that brands are getting greater consideration than ever before. In a quickly changing world, the life cycles of services and products is becoming ever smaller. The primary focus on the product that many businesses had just 10 years ago is now trumped by a focus on the brand.
Products come and go with increasing speed, but the brand is here to stay for good. Most of the classic brands were established alongside a specific product. In those types of relationships, the brand and the product are nearly impossible to separate. Today, most brands exist almost autonomously of their associated products.
People have been forecasting the death of the brand since the advent of the Internet, but it has not happened. Consumers are now expecting quality products at good prices, each and every time. The best brands guide them to the things they want. For that reason, brands are likely to survive through the age of information and beyond, though experts will continue to question why.
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