How to define and measure retail brand value

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How to define and measure retail brand value

Feb 24, 2018 10:19:00 AM by Frode Nortvedt |0 Comment Add Comment

How to define and measure retail brand valueBrand value increases exposure and goodwill toward your company. As brand value builds, the business becomes more valuable due to growth allotted by the improvement in brand value. However, how do you define and measure retail brand value?

The value of your brand, also referred to in some cases as brand equity, is generally identified as the amount of money the business makes when compared to a similar product with a generic brand. In other words, how much more (or less) money does your company make due to branding. Your business needs to determine not only how to define brand value for the company itself, but also how to measure it.

Understanding Retail Brand Value

Brand value allows a business to charge more for the brand name, and it generates more interest as consumers want to be part of the brand. As your own brand grows, so too does your ability to increase profits over the competition. However, as a company, you must first identify and agree upon a way to define your own brand value, in addition to how to measure growth.

Define Your Brand Values

Do not confuse brand value with brand values. The values of your brand is what your company stands for. You may sell printed t-shirts, but is the goal to make quality clothing everyone can afford, or is it to become an exclusive brand afforded by only a higher income level? It is important to have clear brand values established ahead of time. This way, you can define retail brand value while maintaining core values. Customers come to your business initially because of the core values. They like that you provided quality products at affordable prices, or that you donate a portion of proceeds to a local charity, or that everything is made with locally sourced materials. As brand value grows, and you shift your core values, it will affect brand equity. Increasing the prices of your products will affect the customers who saw you as a quality, affordable company.

Brand Valuation Methods

There are several popular brand valuation methods to consider when defining retail brand value and measurement methodology. These methods include cost based brand valuation, marked based brand valuation and income approach brand valuation.

The income approach brand valuation, also known as in-use approach brand valuation, looks at future net earnings and connects it to the brand in order to establish a retail brand value. In other words, it forecasts future sales. You'll look at sales trends within the business and establish this brand value definition. You'll also have your forecast to use as a measuring tool.

Market based brand valuation occurs when you compare your brand against others on the marketplace. As your business likely doesn't sell stock, you will instead compare company transactions, prices for similar products and client growth. You then measure brand value in comparison to the competition.

Cost based brand valuation looks at the costs your business has accumulated since its inception (this includes everything from advertisements and promotions to licensing and registrations). You then directly compare the money coming in to these overall costs. The goal here is to eventually push revenue up to equal historical costs, and then past as historic costs to run the business declines.

In Conclusion

There are multiple ways to define brand value and measure it. Whichever way you decide to define brand value and measure it, you need to make sure it doesn't contradict brand values. Alienating current core brand values may lead to an eventual disruption in brand equity as current customers turn away from the brand.