Study On Valuation And Management Of Brand Value

The origination of brand value, brand valuation and brand management have developed into a cross-disciplinary field related with economics, marketing, accounting and management, etc. Basing on literature reviewing and the exploration of the essence and characteristics of brands, the paper begins with the origination and constitution of brand value. It's known that brand value comes from brand equity or financial value, i.e., excessive income coming from the unique name. Some scholars believe that brand value reflects the favorite, attitude and loyalty of consumers to some brand basing on their needs. Some others argue that brand value consists of cost value, relation value and power value. Basing on the above-mentioned researches, the paper begins with a discussion of leveled land rent of brands. Basing on the two-factor theory about products and consumer residual theory, the paper argues that brand value comes from special labor devotion of manufacturers and the undivided market and society acceptance. Brand value is the result of and determined by the promotion and coordination of both factors. Therefore, a brand value model is presented from the angle of systematic view, i.e., V =f ( x ,y ). Furthermore, the basic curve of brand value and three typical curves are presented to describe the linear or non-linear relationship between the special labor devotion and market or society acceptance. While the special labor devotion of manufacturer (y) changes with market or society acceptance (x) with the same scale, a good growth mode of brand value will be observed. While x changes faster than that of y, the marginal brand value increases and the growth mode is better; while x changes slower, the marginal brand value decreases and the growth mode is a bad one, which should be discarded. Corresponding to the problems such as conceptual confusion and incomplete category of brand valuations in practice, the paper proposes a new concept system for brand valuation including three kinds of valuations, capitalized brand asset valuation, socialized brand valuation and internal brand valuation. Capitalized brand asset valuation aims to calculate the financial value of brands (i.e. brand prices) with the purpose of brand equity deal. Socialized brand valuation is the evaluation to the excessive earning capability of brands. It makes sense while comparing the values of a group of brands. The result of brand valuation cannot directly guide a brand equity deal. Internal brand valuation is the assessment to the internal brand management performance within enterprises. With systematic internal brand valuation, brand owners can scientifically make brand marketing and management strategy and monitor the change of brand value. The paper focuses on capitalized brand asset valuation and socialized brand valuation. Basing on a review of available capitalized brand asset valuation approaches and the discussion about the characteristics of the life cycle and financial value growth of most Chinese brands, the paper argues that the unique experience of many Chinese brands requires methodological improvement in brand asset valuation. Double-factor valuation method, an improved calculation model of net present value of the projected brand earnings, is presented with the introduction of brand cost index and operational risk index. In our model, the purpose of the introduction of brand cost index is to materialize the negative impacts of unreasonable advertising pouring on the real value of brands. The brand risk index reflects the ability of brand holders and the future risk of brand management. It is demonstrate that the improved capitalized brand asset valuation model better suits to the Chinese characteristics. The paper also innovates a new socialized brand valuation method, Sinobrand model. According to the data disclosure level of Chinese enterprises, the model values the brand of corporations instead of that of products. With the method proposed by Financial World Magazine being a referenced framework, the basis formula of the model is: brand value = brand advantage value×brand strength multiplier. At here, brand advantage value that is determined by excessively pricing is a substitution of brand excessive earnings in Financial World method. The determination of brand strength multiplier is somewhat different from that in Financial World method. Considering the characteristics of Chinese brands, the brand strength multiplier in the new model is influenced by 7 factors: nature of industry, brand leadership, brand protection, brand historical trace, brand promotion mode, ability of sustainable development, and market competence. The seven factors can be classified into three aspects: brand history, current situation and brand trend. Because of lowered score in brand historical trace and brand promotion mode, the evaluated result of some brands that heavily depend on advertising pouring will be dramatically shrunk, which illustrate the theoretical and practical significance of the new model. In the last chapter, the paper puts forward an internal brand management and valuation system based on brand life cycle theory. Basing on an innovated concept of brand value management, the paper introduces an internal brand valuation model. By reviewing the rules of evolution of brand life cycle under competence and combining the competence factor into the model, the internal brand valuation model is perfected. Based on the division of high-cultural brands, high-technology brands and elite brands, the paper provides their internal brand valuation models respectively. Finally, a systematic valuation model is presented based on the models having different brand life cycle and attributes. The paper also presents the framework of brand value management throughout brand life cycle that is suited to the law of brand value growth.