1. Firm Level Branding
Establishing a brand is a necessary part of creating a successful company. However, assigning a monetary value to a brand and determining ROI for brand initiatives can be very difficult.
Firm level branding is one way of assigning a monetary value to a brand. When using the firm level branding method, brand equity is an intangible asset. Other intangible assets – sometimes referred to as intellectual property- include trade secrets, copyrights, patents, and structural activities. At the firm level, brand value is determined by measuring the difference of a company’s value before the creation of the brand and after a brand is established. If all other things remain the same as before the brand was invested in, the difference between the two numbers is the value of the brand. For example, a company is valued at 37 million dollars, and then invests for 3 years into developing its brand. They do not spend any money on new products, equipment, or office space. After 3 years, the company is valued at 47 million dollars. The brand development is worth 10 million dollars.
Determining the value of a brand using the firm level allows firms to define value of the brand if they are contemplating mergers or acquisitions. It also allows firms to account for expenses associated with brand development initiatives.
2. Product level branding
Product level branding is another method companies use to assign a monetary value to a brand. In the product level method, the value of the brand equals the price of a popular product minus the price of a generic product. For example, if a 12 pack of Coca-Cola is $4.50 at the local grocery store, and the store brand is $2.50 for a 12 pack at the same store, the brand Coca-Cola at the product level is worth $2.00. The consumer is paying for a branded product, and their reasons for purchasing the specific brand are usually emotionally based – they drink Coke because their parents drank Coke, or it reminds them of summers on the beach.
The term “negative brand equity” is colloquially associated with product level branding (although there are different schools of thought on what negative brand equity actually is) when a name brand is priced at a lower point than a generic brand, resulting in a negative dollar amount as the difference between the two products.
3. Consumer level branding
Measuring branding at the consumer level is the most difficult of the three ways to assign value. Consumer level branding seeks to measure brand recognition, awareness, and public perception. Marketers assign value to a brand based on how the consumer feels about the brand – a very difficult metric to measure and monitor.
Abacus marketing develop unique insights, present the proposed brand proposition and agree a way forward. Our job is to make sure design is fit for purpose and matches the needs of the business.