Question

Topic: Branding

Quantifying The Brand: Roi

Posted by Anonymous on 1/3/2007 at 4:27 PM ET 125 Points
I know that there is no real way to give a concrete R.O.I. number associated to a brand (i.e.: Spending $X on brand development will increase profits by Y%) and I know that is not even the way to express the true meaning/returns a brand can bring to an organization, but has anyone ever come across numbers that compare, when all else is equal, branded versus non branded products in the same category? Or, I recall seeing numbers that valued Coke with and without the Brand and the difference was staggering. Does anyone have an opinion on what a Brand means in general terms to a company's value expressed in numbers?
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RESPONSES

  • Posted on 1/3/2007 at 5:03 PM Accepted
    The branding value equations get very complex and differ quite a bit by industry and category. There's in theory a positive effect on revenue, on profitability, and are share price, all of which overlap but are not identical.

    But perhaps the easiest way to get a sense of it in a quantifiable way is to compare the average price paid for a branded consumer good to the average price for a top comparable non-branded item.

    It the consumer is willing to pay $3.00 for the top branded peanut butter and the non-branded competitor sells for $2.10, that's a 90 cent premium per unit that some segment of the market is willing to pay as the result of brand awareness.
  • Posted on 1/3/2007 at 5:04 PM Member
    The branding value equations get very complex and differ quite a bit by industry and category. There's in theory a positive effect on revenue, on profitability, and are share price, all of which overlap but are not identical.

    But perhaps the easiest way to get a sense of it in a quantifiable way is to compare the average price paid for a branded consumer good to the average price for a top comparable non-branded item.

    It the consumer is willing to pay $3.00 for the top branded peanut butter and the non-branded competitor sells for $2.10, that's a 90 cent premium per unit that some segment of the market is willing to pay as the result of brand awareness.
  • Posted on 1/4/2007 at 8:51 AM Author
    Good information, especially the links.
    What about on a local level? Could you make a case for brand development of a local store or shop, using brand valuations of larger companies with the argument that "Coke was small once too"? I would imagine its all relative and even though the major corporations develop their brands on a global level, the local brand could be just as powerful.
  • Posted on 1/6/2007 at 2:22 PM Accepted
    Of course, you could make a case for brand development on a local level and use the argument that coca cola was once small. it is a question of identifying your long term brand strategic objectives. do you want to be a small local brand with small local target market...or do you want to see your brand developing into a global brand in next ten years? Positioning would be, i think, different in two instances.

    I think that you can actually brand anything, big or small, local or global. Branding is about adding that extra value to the core product, the set of values that make up a brand equity. It is impossible to meassure the financial value of these values but branding a product gives you so much more leverage in competing withing the market that it is undoubtedly strategically important and wise process.

    Can local brands be just as powerful as global ones? Hm...look around and see if you can find some local brands where you live that are as powerful as the big global ones! I think this will answer your question. Powerful in what sense and what does it mean to be powerful? It is a relative notion. Powerful with regards to sales and profits, customers (does a brand have relationship leverage with the customer), competitor, other local or global brands?

    There are so many brands in the market today but how many of them are really the ones worthy of our attention...how many of them are really in our inner top three brand catalogue? Those that are, those are the ones that have the power and others, it is only a matter of time when they completely dissapear.

    Emi xxxx

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