Valuation of brands


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Brand Valuation

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Valuation of brands

  1. 1. VALUATION OF BRANDS Presented By: Tapabrata Banerjee(13DM042) Aishik Adhikary(13DM007) Rinki Shaw(13DM024)
  2. 2. OUTLINES • • • • • • Brand Valuation Reason behind Brand valuation Brand Valuation Methodology Inter-Brand valuation Methodology Keller value chain Value stages & Multipliers
  3. 3. BRAND VALUATION • Brand valuation provides a common language for brand performance around which a company can be galvanized and organized. Responsibility for Brand Strength factors can be allocated to functions, building engagement and a sense of responsibility for the brand across the organization.
  4. 4. REASONS OF BRAND VALUATION • Brand health monitoring • Marketing budget allocation • Internal brand licensing • Brand portfolio management • Brand architecture review • Internal brand evaluation
  5. 5. BRAND VALUATION METHODOLOGIES • Cost based approach • Book to market • Discounted cash flow method • Price Premia Model
  6. 6. INTER-BRAND VALUATION METHODOLOGY • Market Segmentation • Financial Analysis • Role of Branding Analysis • Brand Strength Analysis • Competitive Benchmarking • Brand Value Calculation
  7. 7. KELLER • BRAND VALUE CHAIN The Brand Value Chain(BVC) is a structured approach to assessing the sources and outcomes of brand equity and the manner by which marketing activities create brand value. It provides insights to support the various decision makers in the company and stresses that every member of the company contribute to this branding effort. It believes that the value of rand ultimately resides with customers. There are several steps to this when we look at this value creation process.
  8. 8. KELLER VALUE CHAIN(CONT....) • Step I) Firm invests in a marketing program targeting actual or potential customers • Step II) The associated marketing activity then affects the customer mind-set –what the customers know and feel about the brand. • Step III) This produces the brand’s performance in the marketplace – how much and when customers purchase, the price that they pay and so forth. • Step IV) The investors considers this market performance and other factors to arrive at an assessment of shareholder value in general and a value of the brand.
  9. 9. VALUE STAGES Value stages • Marketing Investment • Customer Mind-set • Brand Performance • Shareholder value & MULTIPLIERS Multipliers • Programme Multiplier • Customer Multiplier • Market Multiplier
  10. 10. EXAMPLE OF BRAND VALUATION • Cadbury India was acquired by Kraft Foods in 2010 the balance sheet was not available for 2010-11 &2011-12. • Cadbury India’s 2009-2010 annual report was used to determine the contribution of Cadbury Dairy Milk and Cadbury 5 Star to the overall sales of Cadbury India from the calculation it was found that 22.35% and 10.45% of the overall sales come from Dairy Milk & 5 star respectively • Cadbury’s growth rate was determined 20% • Tax rate for chocolate category in 2010 and 2011 was 30% • Capital charge was determined from a report on ‘Acquisition of Cadbury’, it was considered to be the Industry WACC(5.48%)
  11. 11. ASSUMPTIONS TAKEN INTO CONSIDERATION • • • • • Brand’s sales contribution percentage is the same till 2011 22.3% & 10.45% are the respective brands contribution towards the expenses and capital charge in Cadbury India Gross margin % ,Marketing ,Overheads ,Miscellaneous expenses as a percentage of sales, capital employed as a percentage of sales are constant from 2009-2011 Brand Valuation At the end of the valuation it was found that Cadbury Dairy milk has a brand value of Rs 2630 crores and 5 star has a brand value of Rs 465 crores
  12. 12. THANK YOU