There are numerous books and articles written on the subject of brand valuation. Each book or article offers its perspective on the proper method for valuing a brand. However, there are three general types of calculations: Market-based valuations, cost-based valuations, and income-based valuations. Knowing the approximate value of your company’s brand is nice to know for purposes of your balance sheet, but more important to the number is what factors contribute to achieving a high brand valuation and what that high brand valuation means for your business.
The reason any brand has value is because of its consumer recognition abilities. It is the ability for consumers to readily recognize a particular brand and associate something positive with it that leads to increased conversions at the point of sale. If a brand is easily recognizable and has positive associations with consumers, the company will have more sales, which leads to a high brand valuation regardless of the valuation method employed.
How do you create a readily recognizable brand? You must develop a sound identity and marketing strategy, but any strategy must start with naming. You need to spend the time selecting an interesting name and making sure that name is legally available. Then, you have to develop a reasonable enforcement strategy. It is difficult to be recognizable if you co-exist in the marketplace with companies having similar names. Finally, you need to commit to creating a phenomenal experience for your customers. Working on these factors will help you achieve the goal of having a high brand valuation.