Diana Conconi
Taking a step back from the implications of a valuable brand, this B2B International article takes a look at the intangible factors that can give brands their value.
The very real, albeit seemingly superficial, differences in brand equity perceptions among consumers are best illustrated in brand value case studies.
In one particular study, people were given several pictures of cars and were told to list the car’s price. However, the same car was used and a different logo was superimposed in all the photos to make it seem like each car had a unique brand. Mercedes was routinely valued the highest, while Volkswagen was consistently worth more than Ford.
So what influences the perception of each brand’s valuation?
Beyond the material effects companies have, intangible assets have a massive impact on brand equity. These include:
- Customer loyalty (or goodwill) to the brand
- Public trust in the product
- The “cool” factor
- Corporate-social responsibility practices
- Skilled labour and patents
- Effective company procedures and distribution agreements
While all of these immaterial assets have value, it is extremely difficult to easily quantify them. During a sale of a company however, these intangibles are typically represented in the difference between the price paid for the business and the value of its fixed assets at that time.
However valuable immaterial assets like customer loyalty and public perception may be to a brand, they are also the most insecure – they can quickly dissipate following a company meltdown or breach of trust with consumers.