Score Rating 91- 100 AAA 81-90 AA 71-80 A 61-70 BBB 51-60 BB 41-50 In 31-40 CCC 21-30 CC 11-20 C 0-10 D

A brand with a rating of 50 points will receive an average discount rate. A brand with a rating of 100 points is discounted at a risk-free rate. In this case, there is a discount rate with a doubling of the premium that was made to the risk-free rate of borrowing. The existence of such a brand on the market is almost impossible.

A graph illustrating the method brendbeta, is shown in Fig. 9.1.

Brendbeta is determined by the following formula:

2 - 0.02 • score of the trademark significance index.

Thus, a risk premium calculated by multiplying the risk premium by the coefficient brendbeta, corresponding to the rating of the brand is added to the risk-free discount rate.

3.4. The method of evaluating the brand value of Interbrand. This company is one of the leaders in the valuation of brands. Together with Citigroup Interbrand annually prepares and publishes a rating of 100 most "expensive"

Fig. 9.1. Method brendbeta

brands of the world. The method of the British company Interbrand exists in two versions: Interbrand/Citigrou and Interbrand/Financial World. In the first case, Citigroup only provides information, and Interbrand prepares calculations. Financial World independently calculates the value of brands using the brand multiplier provided by Interbrand. In fact, the methods are very similar to each other.

Let's analyze the method Interbrand/Financial World. An obligatory condition for getting into the rating is the world scale of the company's actions and a sufficient amount of information about it.

This method consists of several steps:

1) the cash flow generated by all intangible assets is predicted: the projected total revenues are reduced by operating expenses. From the received operational profit the product of the size of the capital which would be necessary for manufacture of the unbranded goods similar in properties, and a risk-free rate of return is subtracted.

(9.3)

where Eamings lntA - added profit of intangible assets; IntA - Intangible Assets - intangible assets;

Operating Profit After Tax - operating profit after tax; Capital Employed - the involved capital; Risk Free Rate - risk-free rate of return;

2) the amount of capital invested is calculated using the industry-wide index of the ratio of the capital involved in the industry to some indicator of income. Multiplying this ratio by the sales volume of the company being valued, you can get the desired value, which is recognized as "natural" for the production of non-branded products.

For the level of profitableness of the work of material factors, the risk-free rate of yield on state treasury bonds is taken, what kind of yield these tangible assets will bring if they work without using any kind of intangible capital;

3) the share created by the brand is allocated. Therefore, the degree to which the brand impacts the key demand factors is first determined (Table 9.9);

Table 9.9

Example of calculating the brand ratio in the UK retail gasoline market

 Strategic source of value Weighting factor Relative significance,% Dependence on brand, % Brand role,% Location 100 31 0 0 Network of gas stations 40 12 80 10 Price 80 25 0 0 Design of the gas station 10 3 60 2 Cleanliness of the gas station 10 3 40 1 Car service 10 3 20 1 Other Services 20 6 20 1 Sales promotion 20 6 20 1 Advertising 15 5 100 5 Product Quality 10 3 100 3 Credit Card Acceptance 5 2 40 1 High-grade gasoline 5 2 40 1 Brand Code 325 100 26

Source: The World's Greatest Brands. Interbrand.

4) the definition of the brand-multiplier. Its value is calculated on the basis of the analysis of brand strength ( brand strength), which is characterized by seven special indicators, which are given in Table. 9.10.

Table 9.10

Criteria for calculating the brand strength index

 Brand Strength Index Maximum score 1. Market 10 2. Stability 15 3. Leadership 25 4. Internationality 25 5. Trends 10 6. Support 10 7. Protection 5

Source: Interbrand.

All the presented criteria form the brand strength index, the maximum value of which reaches 100 points. Then, using a certain 5-shaped curve (its equation is the intellectual property of Interbrand ), which reflects the relationship between the brand multiplier and the brand strength index, the rate corresponding to the received index is determined. At the same time, the brand-multiplier of the strong brand is 20, and the weak one is 0.

The S-shaped curve of Interbrand is shown in Fig. 9.2 (Source: V-RATIO ) ;

5) the calculation of the value of the brand: the product of the added value of the brand and the brand multiplier.

The advantage of this method is the financial evaluation of the brand value. The disadvantage is that the method reflects the past (in revenue) and current (in revenue and expenditure) results of the company's activities, while the value must assess the future, as well as inaccuracies in the structure of the assessment and subjectivity.

The results of the evaluation of global brands by this method are presented in Table. 9.11.

Fig. 9.2. Company's S-curve Interbrand

Table 9.11

Rating of brands in 2011

 Brand position Country Industry Brand value, \$ million US Drinks 71,861 US Computer Services 69,905 US Computer Programs 59,087 US Internet Ser visas 55,317 US Diversified 42,808 US Restaurants 35,593 US Computers, accessories 35,217 US Computers, accessories 33,492 US Media 29,018 US Computers, accessories 28,479 Japan Cars 27,764 Germany Cars 27,445 US Computer Services 25,309 Finland Household appliances and electronics 25,071 Germany Cars 24,554 US Care products 23.997 South Korea Household appliances and electronics 23,430 France Luxury 23,172 Japan Cars 19,431 US Computer programs 17,262

3.5. V-RATIO brand valuation method. This company is the leader in estimating the brand value in the domestic market.

This method consists of the following steps:

1) the definition of the flow of income that is created directly by the brand, due to a qualitative study of demand. First determine the amount of sales created by brand factors: advertising, promotions and other promotional activities, as well as the brand itself. Also determine non-brand factors of sales growth (merchandising);

2) determine from the group of brand factors the sales provided by the current brand communications, and sales received under the influence of the brand itself.

An example of the influence of the three factors considered is presented in Table. 9.12.

Table 9.12

Sales Factor Ratios

 Brand The share of sales under the influence of non-brand factors, % Share of sales under the influence of current communications,% The share of sales under the influence of the brand's own strength, % The beer market Baltika 20.8 14.4 64.8 Ochakovo 39.3 20.2 40.6 Malt 19.2 23.1 57.7 Bochkarev 17.6 16.0 66.3 Market of toothpaste Colgate 8.7 4.0 87.3 32 Normal 22.2 14.6 63.2 Aquafresh 11.9 4.4 83.7 New pearls 14.4 6.9 78.7 Market of instant coffee Nescafe 13.6 9.2 76.7 Cibo 5.9 3.8 89.9 Moscow coffeehouse on shares 15.4 27.9 56.7 Grand 19.1 10.1 70.9

If the indicator of non-brand sales is high, then it characterizes the weakness of the brand, its unstable position in the market. If the indicator of current communications is high, this indicates that revenues will decrease with a decrease in the funding of PR shares. If the indicator of the result of the work of the factor of the brand is high, then this indicates the effectiveness of investments;

3) Forecast of revenue generated by brands, based on three indicators, which are the intellectual property of the company. After all, if you do not support and develop the brand, then it loses its impact on demand and the value of this flow is reduced.

The graph (Figure 9.3) graphically shows the drop in revenues generated by beer brands "Baltika" and Ochakovo & quot ;. Differences in the rate of decline are due to the strength of the brand at the moment: the larger it is, the slower the consumer's commitment to the brand will decline;

Fig. 9.3. The drop in income generated by the brands "Baltika" and Ochakovo

4) the brand's cash flows for the forecast period are discounted at the corporate rate, they are added together and the extended value that the brand will create beyond the forecast period will be added to them.

This method of valuation of the brand provides an opportunity to obtain a financial assessment of brand strength, evaluate the brand factor, combine past results and future revenues, and not use expert judgment. However, the method does not take into account the market and legal risks of the brand and is rather opaque.

The last two methods are complementary, so using the results of the first are needed for end use (sales) and comparison, the results of the second are for brand management.

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