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Brand valuation a board issued?

by Clive Webster

Few would argue against the notion that ‘Brand Value’ exists. Indeed it is widely acknowledged that not all brands are equal, yet there is no general agreement as to how one might quantify this value. Far from keeping them awake at night though, the issue is one that most seem happy to leave unresolved.

Perhaps it’s time that the Board gets involved.

We look at the issued from the perspectives of both the marketing and accounting disciplines.

The marketer is the custodian of the brand and therefore responsible for ensuring that it retains or, better still, increases its value. The chief financial officer in turn should be responsible for quantifying that value. Two different skill sets; two different responsibilities. The Board’s responsibility then is to motivate this issue and ensure that the Brand Value is quantified.

We maintain that successful brands are satisfiers of the needs/wants of consumers, while a brand’s life span is dependent on its ability to continue to satisfy in the quantity that makes it viable to continue its production.

The value of a brand lies in its ability to satisfy in the future in a competitive market. This has little to do with its past, its history.

If you need proof of this, look at the examples of such well known but defunct brands as Trust Bank, UBS, Lion Lager and Saambou. To have placed a value on these brands based on their history would certainly have produced numbers, but what kind of numbers?

That said, older brands do have a certain momentum which propels them into the future and this factor must be taken into account when measuring brand value.

So, at any given time, seven key factors have an impact on the value of a Rand. They are:

  1. The supplier’s ability to continue to supply the brand at a competitive price;
  2. The supplier’s attitude/desire to support the brand, i.e. its allocation of real resources to this task;
  3. The continuing existence of consumers for the brand in question;
  4. Consumers’ perceptions of the brand’s ability to satisfy their needs/wants relative to their alternative options in a changing environment;
  5. The influence of the economy on disposable income;
  6. The momentum of the brand; and
  7. Competition.

When valuing a brand, all of these factors must be investigated. Current realities must be quantified, whether they are physical resources or human perceptions, and the future realities projected. The measurement done, the result can be quantified.

Aside from the obvious business benefit of valuing a brand for balance sheet purposes, there is another advantage:

The additional significance of establishing a value for a brand is that it is necessary thereafter to continue to measure the effect on brand value of all future marketing efforts. This ability to measure the return on your investments into marketing, advertising and PR efforts, is a priceless means to keeping your marketing on track.

  • Clive Webster is founder and senior partner of Objectivity, a leading perception measurement and management firm. He can be contacted by telephone on +27 (011) 465-7160

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Posted in the category: Strategy

Corporate Names and Googlization

Naseem JavedAlthough it may be too late in the game for Google to change its name, other startups certainly can learn from the search company’s name struggles. Here are seven pitfalls to avoid when considering a new name.

By NASEEM JAVED

Ever heard, “Did you google today?” or, “Go try googling, and you will find it?” Watch out for this sort of lingo. To most people it may sound like free advertising for Google , but in reality it could be a nightmare for the corporation. When a company’s name brand lends itself to “verbing” – such as xeroxing, fedexing or rollerblading – a code-red alert strikes the boardroom. Legal SWAT teams swing into action to protect their successful global brand, and an aggressive policing of corporate name usage kicks in.

Of course, everyday use of a corporate name is somewhat of a happy problem, because it likely means the company has acquired significant profits, recognition and success. However, legal teams’ powers are limited. If a company name becomes a verb or a popular dictionary word, it enters the public domain and the company loses its intellectual property rights – witness Kleenex, Fridge and Hoover, to name just a few. Then there are only a few things the company can do.

For example, lawyers can issue fancy memos designed to force people and media to always refer to a brand name as a registered trademark of the company. They also can ask advertising and branding agencies to avoid making creative uses and plays on the corporate name when it is used in commercials or general promotional copies of ads. However, this is a long and a painful process.

Dodging the Problem

Fortunately, studies have shown that certain alpha-structures do not easily lend themselves to verbing. Despite their fame and popularity in daily language, these types of names survive over time and remain powerful corporate brands while enjoying a proprietary status. Some examples are Yahoo, Apple, Netscape, Telus, Microsoft, Sony, Rolex and Nintendo. Have you ever heard, “I Rolexed and realized I was late?” or, “Leave me alone, I’m Appling”? How about, “I just Nintendozed off,” or, “I was depressed and very Microsoftish”?

As a result, finding great brand names has become a very scientific process and is no longer a creative exercise. Under the proper Laws of Naming, all issues are explored in advance so that a brand name will be engineered for durability. The days of accidental naming are over.

Google has a big battle ahead of it, and the fights will take place on two fronts. Firstly, the company still has the best search engine to date and as a result acquired too much global attention too quickly. Secondly, as a borrowed word from the mathematical section of the English dictionary, the word “google” does have an alpha-structure that easily lends itself to cute verbalization. Right now, Sir Isaac Newton is simply googlified.

Change Now or Later

Although it may be too late in the game for Google to change its name, other startups certainly can learn from the search company’s name struggles. Here are seven pitfalls to avoid when considering a new name.

One: The name is similar or identical to thousands of others.

When a corporate name is heavily diluted and shared by hundreds or thousands of others in all kinds of businesses, it simply gets lost in the crowd. Also, when a name is a borrowed word from a dictionary, making it a part of everyday lingo, it never achieves any distinction. Despite extraordinary spending on advertising and promotion, it may simply die from exhaustion. Open any old business magazine, and it will unfold like a cemetery of dead corporate names.

Two: The name is too old to convey today’s dynamics.

Sometimes a name crawls out of history, reflecting the great human toil of the founding fathers, but is somehow not suitable for present-day, technology-savvy culture.

Three: The spelling of the name requires a relatively high IQ.

A large majority of corporate names are spelled creatively to fit a logo or avoid a serious trademark problem. In such situations, both common sense and the science of corporate nomenclature are abused. Twisted spelling ensures obscurity. The human mind continually rejects the corruption of a familiar word and refuses to remember specific alpha structures. After all, if a name can be spelled in four different ways, the company will only end up with 25 percent of Web site hits and profits.

Four: Money must be spent to explain the origin of the name.

If a name does not simply relate to the business and requires constant explanation of its obscure, yet cute, origin, it becomes standard practice for advertising agencies to educate the universe about this dysfunctionality. The poor consumer simply suffers. Corporations and ad agencies thrive on receiving awards for their creative advertising gimmicks, while customers simply shut off.

Five: The corporation does not own a trademark on its name or have an identical dot-com domain.

When a corporation does not legally own a corporate name, what’s the point of the exercise? Why bother at all? Today, a large majority of corporate names are not trademarkable globally, and most do not have an identical dot-com domain.

Six: The name is embarrassing in certain countries.

Globalization is a fact of life. A name must work like a marketing weapon not only in its own country, but also around the globe. There should be no need to hide under the desk because the name is embarrassing or profane in a foreign language. However, a large majority of names today do not work efficiently on the international scene; in fact, they cause ongoing stress when it comes to gaining worldwide recognition.

Seven: The name is too long, difficult, confusing, complicated or boring.

When a name is too long, it often gets initialized. This unwanted process changes the entire meaning of the name and can result in it being listed in strange categories. Meanwhile, when a name is too difficult, confusing or boring, it becomes a different animal to different people. Strange name combinations, often due to M&A, end up telling more than one story and cause confusion in the marketplace. Odd terminologies or alphanumeric structures in a name, such as using upper- or lower-case letters in nontraditional places or including dashes, slashes and other dingbat characters, will only ensure the name’s self-destruction.

  • Naseem Javed is a world-renowned authority on corporate nomenclature, and author of two major books. He has offices in New York and Toronto. He can be reached by e-mail.

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Posted in the category: Insight

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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