Measuring Your Corporate Brand Value

There are many ways brands can be valued - ranging from “consumer brand equity” to hard-nosed financial methods. All are generally relevant, depending on what the brand manager is trying to measure. But they’re relevant only so far as they help senior management understand the brand as one of the organization’s key assets.

Most valuation work has focused on product brands, at least in the United States and Canada. That has come from the historical brand management methodologies developed by academicians, researchers, and brand managers for consumer product brands. This might include individual product offerings in a broader product category, such as Tide and Cheer in detergents and Chevrolet and Ford in automobiles. Of course, several service-driven organizations in transportation also have been successful in building solid brands, including FedEx, UPS, Amtrak, and Schneider.

Learning from Product-Driven Brands
Emphasis on product brand value has been driven by product brand management systems developed by such consumer leaders as Procter & Gamble, Colgate-Palmolive, and Kraft. The goal of those management systems has been to develop a range of product brands to compete within the same product category. This approach was designed to give the corporate group brand domination or even monopoly power in chosen categories.

In a product-driven system, identifying the brand’s corporate owner had little value. In fact, visibly attaching the corporate name could be detrimental. Having consumers realize several or possibly all the category brands came from the same source could well reduce the value of each of them. It’s similar to publicizing that a half-dozen gasoline brands all come from the same spigot in the same refinery. The only difference then is the brand name on the retail pump. There’s little added value that could provide a competitive advantage to any brand, ultimately forcing them to compete only on price.

Given this product focus, understanding the corporate brand’s value has not been of great concern in North America. Interest has come primarily from organizations that are basically product brands on their own. For example, Dell, as a corporate brand, doesn’t stray too far from its computer roots. It’s both a corporate brand and a product brand. So determining Dell’s brand value isn’t much different from doing the same for Evian or Perrier. The same is true for IBM, Intel, Starbucks, and a host of other single-brand, single-product, or single-category brands.

In North America, we’ve tended to focus on understanding and valuing product brands, assuming the corporate brand value is negligible. And we’ve probably been right. Knowing a product originates from P&G adds little to the value of Pampers or Charmin and even less to Max Factor cosmetics.

The Growing Importance of Corporate Brands
But the world is changing. As the movement of brand value increasingly shifts from North America and Western Europe to other areas of the world, the branding question changes considerably. For example, typical branding approaches used by organizations in Japan, Korea, and Taiwan are to market under a common corporate brand. Prime examples are Sony, Honda, Mitsubishi, and Samsung. The corporate brand and the product brand are the same. Differentiation comes only by product category (such as Honda automobiles, Honda motorcycles, Honda lawnmowers, Honda scooters). This is where brand valuation becomes extremely interesting.

The challenge is that most valuation methodologies (developed to understand, evaluate, and measure product brands) simply don’t work in the corporate brand arena. For example, often the corporate brand serves as a product brand endorser. That’s what Nestlé, Kraft, and others do for many of their products. Hence, the question becomes: What does Nestlé contribute to the value of the Wall’s ice cream brand? Or Kraft to Miracle Whip?

Yet the corporate brand problem becomes even more complex. Most brand valuation methodologies are centered on measuring the increased financial returns that the brand generates for the organization. Commonly, such things as price premiums, customer retention, and trade-offs against competitor offerings are used to define product brand value. In other words, most product brand valuation approaches assume some short-term incremental financial return will come to the company by owning the brand.

But what happens with a corporate brand? What if corporate brand value is bound up in the firm’s reputation and occurs among people, groups, or units that have an indirect, rather than direct, impact on the brand’s measurable value? For example, what if the brand is held in high regard by non-governmental organizations, government officials, and regulatory groups in certain areas? What if, by their actions, they enable or allow less trade restrictions and thus permit the organization to operate more efficiently or effectively in their areas? Those actions don’t necessarily create immediate changes in corporate income flows but they do provide the opportunity for future corporate value.

Measuring the Brand Value
There are a number of steps you can take to help measure your brand value.

1. Separate corporate and product brand value. That means valuing the corporate brand and separately valuing the various product brands.

2. Build some type of tracking or scorecard system. If you don’t know whether corporate brand value is being added to or subtracted as a result of your marketing and communication programs, you simply can’t manage corporate brand value.

3. Recognize people or firms that have a direct impact on the financial value of your corporate brand. Audiences or groups that directly affect the financial success of your organization commonly are customers, distributors, and dealers that create income flows. Suppliers who, by their prices, terms, and conditions, influence the operating costs of the firm also have a direct impact, as does the financial or investment community that controls resources and access to capital. Employees also directly affect the value of the corporate brand by improving their outputs or reducing their costs.

4. Recognize people or organizations that have an indirect impact. Other groups indirectly affect corporate brand value, including governments, NGOs, and regulatory commissions. These groups make it possible to manufacture, source, and market to environmental and social groups that can influence costs, but also restrict organizational capabilities. While these groups don’t directly affect the your cash flows, they have an impact on how efficiently the organization can manage its business - which ultimately influences the value of the brand.

To manage corporate brand value, consider how various forms of marketing and communication can affect the behaviors of these various groups. All too often, marketeers have focused their efforts on attitude changes when it's clear that the behaviors of both the direct and indirect influencers are what really matter. So if you’re struggling with corporate brand value, you might give some thought to these new concepts. If you start first with a financial value for the corporate brand by whatever means, you’ve taken a big step in the direction of corporate brand management.

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