Question

Topic: Branding

Band Equity : Marketing / Finance Term?

Posted by Anonymous on 8/9/2004 at 9:58 AM ET 25 Points
BRAND EQUITY: Marketing / Finance term? & how?
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  • Posted by Mushfique Manzoor on 8/9/2004 at 2:16 PM Accepted
    Hi milind

    Brand Equity is the value consumers assign to a brand above and beyond a functional characteristics of the product. Usually, it is based on the image consumers have on the brand.

    Brand Equity is nearly synonymouns with reputation/goodwill of the brand. so the brand with good reputation will have the potential for high level brand equity.

    in short, Brand Equity is a Marketing term. Brand Equity tranforms into Goodwill/Brand Reputation as a Finance term which is amortized in accounting process.

    For example, Novartis sold the brand Ovaltine for US$ 480 million to ABF in 2003. thats the value of the (trade mark and) goodwill of the brand which is derived from the brand equity of Ovaltine.

    hope this helps.

    Cheers!!!

    Mushfique
  • Posted by SteveByrneMarketing on 8/9/2004 at 7:32 PM Member
    Hi Milind,

    This link helps explain brand equity. The report is from Interbrand “here’s how we calculate the power in a name". Interbrand provides the data for BusinessWeek’s annual “Global Brand Scoreboard.

    https://www.businessweek.com/pdfs/2003/0331_globalbrands.pdf

    ”Brand equity” has in many cases replaced “goodwill” in financial reporting. It can be many millions of dollars in assets to large companies.

    Hope this helps.

    - Steve


  • Posted by Peter (henna gaijin) on 8/10/2004 at 12:36 AM Member
    Good answers above.

    Also, one reason that brand equity is NOT a finance term is that it does not show up on balance sheets, income statements, etc. (though it does partially fall under "goodwil").
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