A Research Of Brand Equity Value Assessment Method Based On Real Options

In 80's of 20th century, the wave of corporate acquisitions raises the concern about brand value. Brand valuation became more and more importance. The Value Evaluation of brand not only conducive to improving the success rate of decision-making, but also provid a price making basis for the acquisition or sale a brand.Besides,it can foster a good and healthy company image to investors and customers.The value of brand equity should be the present value of the potential benefit which is bright by the brand equity to the holders. Its value lies in the holder conducting a lot of business behaves to make consumers willing to pay extra money for the goods with specific brand than those goods without a brand. Therefore, its value not only affected by the relationship between consumers and brands, but also affected by the brand holders' management capacity.There are a lot of brand valuation methods, such as the metheds of Consumers' Loyalty Degree, Interbrand method, and approach to cost assessment. However, some exist brand evaluation methods ignore the affection of brand holders' manage capability or use very subjective index to represent the affection of manage capability, some evaluate the brand only from the financial point and entirely abandon the relationship between consumers and the brand, others evaluate the brand only based on the relationship between consumers and brand but ignore the brand holders. All these disadvantages result in underestimate of brand value.To recover the shortcomings of traditional assessment methods, we built a new brand assessment method based on both sides of consumer and brand holders in order to identify the value of brand equity comprehensively and objective .In this paper, a new index "brand contribution rate" is created to represent the relationship between consumer and brand .We also introduce the real options method to evaluate the brand holders' management capacity. This is because the options method can fully account the benefit that the brand holders can make under the uncertainty.In this paper, what we have done can be divided into three aspects. First part is an analysis of the weekness about existing methods. Second part is about the new brand valuation methods based on real options. The third aspect is the using of the new methods about Haier. We get some conclusions during those works. The conclusions are:(1) After the analyzing of real option characteristics of brand equity thoroughly ,we think the possession of brand equity means that the enterprise has the right to carry out particular investments to earn more money or utilize resources to reduce the damage, which is the characteristic of options.(2) Based on the study of advantages and disadvantages of traditional brand evaluation methods, the value can be underestimated when it comes to the flexible and uncertain brand equity. So, in order to have a comprehensive evaluation of brand equity, it is necessary to supply traditional methods with real option models in the evaluation process to make it more scientifically correct.