India 2015: Resources | BrandZ Brand Valuation Methodology
Why BrandZTM is the definitive Brand valuation methodology
All brand valuation methodologies are similar – up to a point.
All methodologies use financial research and sophisticated mathematical formulas to calculate current and future earnings that can be attributed directly to a brand rather than to the corporation. This exercise produces an important but incomplete picture.
What’s missing? The picture of the brand at this point lacks input from the people whose opinions are most important – the consumer. This is where the BrandZTM methodology and the methodologies of our competitors part company.
HOW DOES THE COMPETITION DETERMINE THE CONSUMER VIEW?
Interbrand derives the consumer point of view from panels of experts who contribute their opinions. The Brand Finance methodology employees a complicated accounting method called Royalty Relief Valuation.
WHY IS THE BRANDZ METHODOLOGY SUPERIOR?
BrandZTM goes much further and is more relevant. Once we have the important, but incomplete, financial picture of the brand, we communicate with consumers, people who are actually paying for brands every day, constantly. Globally, our on- going, in-depth quantitative research includes three million consumers and more than 100,000 brands in over 50 markets worldwide. In India, our research covers over 100,000 consumers and more than 1,000 different brands.
WHAT’S THE BENEFIT OF BRANDZ?
The BrandZTM methodology produces important benefits for two broad audiences.
- Members of the financial community, including analysts, shareholders, investors and C-suite, depend on BrandZTM for the most reliable and accurate brand value information available.
- Brand owners turn to BrandZTM to more deeply understand the causal links between brand strength, sales and profits, and to translate those insights into strategies for building brand equity.
Eligibility criteria and definitions
The brands included in the BrandZTM Top 50 Most Valuable Indian Brands 2015 report meet two eligibility criteria:
- Brands are owned by an enterprise listed on a stock exchange in India.
- Bank brands derived at least 25 percent of earnings from retail business.
Brand Contribution is a BrandZTM measurement of a brand’s uniqueness in the mind of the consumer and the impact of brand alone, without any other factors, on future earnings. Brand Contribution is expressed on a scale of one to five, with five being the highest.
Brand Power is a BrandZTM measurement of a brand’s competitive position in its category. It roughly correlates with volume share. Brand Power is a BrandZTM component of brand equity, which is the consumer predisposition to choose one brand over another.
MEANINGFUL, DIFFERENT, SALIENT
These are the three BrandZTM components of brand equity: Meaningful, Different and Salient. Success on these components predisposes consumers to choose a brand and pay a premium for it.
- Meaningful - Consumers feel an affinity for the brand or think it meets their needs.
- Different - The brand feels different to other brands in the category, or sets trends for the category.
- Salient -The brand comes to mind quickly and readily when activated by ideas related to category purchase.