This question is widely asked. I think the evaluation method of the most valuable brand

The evaluation formula of the world's most valuable brand can be simply stated (ignoring the details) as:

(Operating profit - capital × 5%) × intensity multiple

In its formula, operating profit is an important base number. To determine the value, the determination of the intensity multiple is very important. This multiple generally ranges from 6 to 20 and is estimated by experts based on certain information or impressions. For the same profit of 1 billion U.S. dollars, if the intensity multiple is 6, the brand value is 6 billion U.S. dollars. If the intensity multiple is 20, the brand value is 20 billion U.S. dollars. As for deducting a 5%, it is considered that companies without brands can also obtain 5% capital gains. Typically a dollar of gain comes from 60 cents of capital. This is equivalent to approximately 3% of the sales profit coming from the average social profit, so 3% of the sales profit or 5% of the total capital needs to be deducted. That is to say, even if a general product does not have a brand, it will receive 3% sales profit or 5% capital gain. The evaluation formula of China's most valuable brand can be simply expressed as: P=M+S+D, where: P is the comprehensive value of the brand; M is the brand's market share; S is the brand's value-added profit-generating ability; D is the brand's development potential.

We believe that there are many indicators that constitute the competitiveness of an enterprise. There is also a difference between intrinsic qualitative indicators and external quantitative indicators. Reliable quality, advanced technology, effective management, personnel quality and other intrinsic quality indicators determine whether a brand has lasting competitiveness. However, having these does not mean that you can occupy the market. Brand value will ultimately be reflected in more consumers willing to spend money to buy your products.

What we emphasize is that qualitative indicators must be converted into quantitative indicators. This is also the difference between brand evaluation and previous evaluation of high-quality products.

In our system, we do not study the enterprise's asset income, capital utilization, investment income, fixed assets, etc. Our index selection and research direction are: whether the brand has: a larger market share; a higher value-added profit-generating ability; a strong export capability; whether the trademark has wider legal effect and continuous investment support, and whether it has a larger Strong ability to transcend geographical and cultural boundaries.

To sum up, in our evaluation formula, the key indicators are sales revenue, profit, and potential coefficient.

This method fully considers the characteristics of our country's enterprises and makes a compromise with other methods.

In part M, we take the company’s sales revenue indicator.

In part S, the income method in general trademark evaluation is borrowed.

Part D draws on the profit multiple method used in the above-mentioned evaluation of the world's most valuable brands.

Calculation of each part

◆ Brand’s market share

The calculation of this part is based on the sales revenue indicator.

In fact, the world's most valuable brand has an indicator that can reflect the relationship between brand value and sales revenue: the ratio of brand value to sales revenue is generally 1:1 on average. But it varies in different industries. In fast-moving consumer goods, it can reach 2 to 4:1, while in high-tech, it is only about 0.5:1.

We believe that brand value is ultimately formed by consumers using their own banknotes as votes. Typically, sales revenue levels best represent consumers' attitudes toward a brand.

At the same time, sales revenue also makes comparisons between various industries and different products comparable. Just like in the past, my country's industrial statistics have always used output value as an important assessment indicator, because under the planned economic system, only by using output value indicators can various incomparable things be converted into comparable ones. Today is a market economy. Only when products are sold can there be income. Therefore, sales income is the most comparable indicator.

Generally speaking, when the total sales volume is similar, the higher the unit price of the product, the smaller its coverage density and consumption frequency, such as the nobles among cars: Cadillac and Lincoln. The lower the unit price of a product, the higher its product coverage density and frequency of repeated consumption, such as Coca-Cola drinks and Marlboro cigarettes.

Therefore, under the same sales situation, the lower the product unit price, the higher the value of the brand.

However, within the same industry, the situation changes, and turnover is directly comparable in brand value comparisons. When your product is sold at a price higher than the average price of similar products in the market, you will gain the benefit of winning more with less. When your product is sold at a lower price or lower than the price of similar products in the market, you need to More people will buy your product.

Therefore, we believe that turnover or sales revenue should be directly used as a weight of brand value.

◆ The brand’s ability to generate value and profit

There is no doubt that profit is an important indicator. It not only reflects the brand's competition in the market, but also reflects the company's operating conditions, indicating the brand's ability to sustain development. Therefore, in our evaluation system, the calculation of two of the three parts is directly related to the profit indicator.

The calculation of the brand’s value-added profit-generating ability actually draws on the income method in general trademark evaluation.

The formula for the income method of general trademark evaluation is:

In the formula: P - Appraisal value

F - Brand in the tth future income period Revenue

i - Discount rate

Fn+1 - Based on n periods, brand revenue in the next several periods

We are different from general trademarks The difference between the income method of evaluation is that, first, our profits use the actual realized indicators in the last year, while general trademark evaluation uses the expected indicators for the next 3 to 5 years.

Second, general trademark evaluation uses 3 to 5 years of expected discount plus perpetuity. We only consider a limited 3 years.

In this way, the value of this part can have a more appropriate weight in the total value.

In fact, the evaluation formula of this part can be simply expressed as: the portion of your profit that exceeds the average profit level of the industry is discounted based on a certain number of years.

If your profit margin is lower than the industry average, the value of this segment will be zero.

When we first conducted brand evaluation, the proportion of brand value in this part could reach about 30%. However, in recent years, the competition in the entire market has become more and more cruel, and profits have become increasingly low. Some brands will have zero value in this segment.

◆ Brand development potential

In this part of the calculation, the basic indicator is also profit.

The development potential of the brand actually draws on the profit multiple method used in the evaluation of the world's most valuable brands. The profit is multiplied by the multiple.

We believe that part of the brand value has already been revealed, that is, through various past efforts and investments, it has been transferred to the product's market share and value-added profit-generating capabilities. However, due to different brand management conditions and different maintenance efforts, future sustainable operations will be very different. The brands that are operating well now may not be entirely due to good brand management and maintenance. A good brand should also have a deep foundation of investment to continuously support the potential for future development.

Therefore, the focus of this part is to study the development potential of corporate brands. Based on our research on the basic laws of brand development, we quantify the potential indicators and calculate the potential coefficient.

Our potential coefficient is similar to the intensity multiple used in the evaluation of the world's most valuable brands.

Brand strength multiples mainly focus on the following seven aspects:

(1) The brand’s market leadership;

(2) The stability of the brand;< /p>

(3) The brand’s sales status;

(4) The brand’s internationalization capabilities;

(5) The brand’s development trend;

(7) Legal protection of the brand.

These intensity multiples are generally between 6 and 20 times, which are estimated and determined by experts based on the information or impressions they have.

Unlike their strength multiples, our potential coefficients are calculated through indicator quantification supplemented by analysis.

Mainly based on the following aspects:

The number and scope of corporate trademark registrations at home and abroad, which is the legal protection status;

The number of years the brand has been used, which is the stable use history of the brand;

Product exports or overseas operations are the brand’s ability to transcend geographical and cultural boundaries;

Advertising investment is the strength of support the brand receives;

Technology leadership such as patent development capabilities, etc.

Finally, the calculation results of the three parts are added to obtain the final brand value.

P=M+S+D

About the industry adjustment coefficient

The biggest difficulty in uniformly quantifying brand value is the comparison between different industries.

Especially in our country, this is even more difficult:

Some industries are actually formed in scale under the planning system and are dominated by raw material industries, such as crude oil, steel, and mining. Therefore, they do not create brands;

Some industries rely entirely on economies of scale, and the scale becomes very large as soon as they start, such as automobile manufacturing. Some small industries, even if they occupy half of the national market, have only a few hundred million yuan in sales;

Also, due to underdeveloped capital or property rights markets, profit levels vary greatly between different industries. Tobacco can reach 20% to 30%, while computers can only account for 2% to 3%;

Also, products can be divided into consumer goods and means of production, and consumer goods can be divided into durable consumer goods and fast-moving consumer goods. Upstream, midstream, downstream products, durable and disposable products have different degrees of direct contact with consumers, different consumption frequencies, and different brand awareness and influence.

If a set of comparable coefficients is not established between industries, the evaluation results will be almost completely occupied by tobacco cars, and a considerable number of consumer products will not be included. This is also inconsistent with the brand's real life of influence.

Therefore, our evaluation system has also established industry correction coefficients, one is to correct the industry scale, and the other is to correct the influence of upstream, midstream and downstream product brands. Otherwise, how can a bottle of water be compared with a car? A large bottle of Coke only costs a few RMB, and a car costs at least 50,000 to 100,000 RMB.

Using the industry brand coefficient, this idea is the same as the evaluation of the world's most valuable brands. For example, they believe that for service industries such as Hilton, income mainly depends on location, and Intel mainly depends on technology. Therefore, the "brand coefficient" is applied to solve this problem (comparison of brand value in different industries).

Therefore, the world's most valuable brand evaluation, the ratio of brand value to sales revenue, reaches about 2.5 in the beverage category, and Coca-Cola reaches about 3.5. In other words, its brand value is higher than 3.5 of sales revenue. times, while the average for high-tech industries is only 0.5. Assumptions There is an important assumption in our evaluation of China's most valuable brands that the company's ability to continue operating has been formed now, that is, the sales scale and profit level in the most recent year. For the expectations of future development, no special considerations or future assumptions are made, and all the data have been realized. This is the fundamental difference between our evaluation of China's most valuable brands and the evaluation methods of general trademarks and other intangible assets. Only looking at the realized data avoids the influence of untested factors such as "hypotheses" or "future expectations", making the comparison of brand value more realistic in the market and ensuring that different brands are more comparable over the same period.

We believe that because brand value is an annual process, if there is extraordinary development in the future, it will be reflected in the year that should be reflected in the future, without the need to predict in advance.

The artificially high brand value currently seen in individual assessments in society actually uses the important parameter design in the present value method of future income to calculate the growth ratio and the consequences it will bring in the next 3 to 5 years. Earnings are overestimated to meet the expected value.

According to this method, in order to meet the requirements of the client, on the basis of setting the estimated value, the growth rate and profit in the next 3 to 5 years can be calculated backwards. Estimating brand value becomes a numbers game.

Differences from the world’s most valuable brand evaluation system

We believe that the essence of science is to respect reality. The ranking of the world's most valuable brands can only be used as a reference for us in China and cannot be copied.

If they follow their methods, some of the brands that are very influential and prestigious in our country may have negative brand values.

The differences between us and the world's most valuable brand evaluation system: First, we pay more attention to sales revenue indicators, while the world's most valuable brand evaluation pays more attention to profit indicators. We do this entirely based on the actual situation in our country.

If we place too much emphasis on profit indicators in our evaluation, it will be equivalent to leaving out some companies that actually have great potential for development. Because since the reform and opening up, in order to compete with international brands, my country's industry leaders have often adopted a strategy of sacrificing profits to protect the market. In addition, due to insufficient brand concentration and the existence of non-market factors such as local protection and industry protection, competition costs will increase, which will directly affect profits.

In fact, relying solely on profit indicators is not in line with market reality. Sales revenue is consumers' direct vote for the company, which objectively demonstrates their trust in the brand. Profit reflects more of the company's internal operating conditions, and is also subject to direct control by corporate managers.

For example, the brand IBM ranked last among the 282 brands in 1994 due to low corporate profits, with a value of zero. And by the second year, it jumped to third place in the world.

This is inconsistent with the law of brand development. In fact, in 1994, although its profit was only a pitiful 293 million, its sales revenue reached 62.216 billion, indicating that consumers still favor its brand. In the following two years, although its brand value rose to third and fourth places, its sales revenue only increased slightly. See the table below: Therefore, we believe that brand value cannot ignore sales revenue, an important indicator that directly reflects consumer attitudes. Of course, when we discuss this, we are building under normal market competition conditions and under the condition that the brand is leading the industry in the market.

Secondly, the evaluation of the world's most valuable brand may be negative, but our evaluation results will not be negative.

The world's most valuable brand evaluation system uses operating profit as the basic indicator. If a company loses money, the brand value will be negative. As mentioned earlier, IBM ranked first from the bottom with the largest negative number in 1994. In 1995, it jumped up again to third place. We believe that using this method to evaluate Chinese brands is not realistic. Competition in foreign markets is relatively strong, and the flow of profits between industries tends to be even. Therefore, the profit indicator can be used as a basic indicator. In my country, due to the great influence of factors such as industrial policies, Chinese and foreign enterprise policies, different enterprise system policies, and policies in different regions, the profit levels of different industries vary greatly. It is not possible to rely entirely on profit indicators. For example, among our evaluation objects, several companies have suffered losses in the past, but their market shares are still relatively large.