(1) Cost method

For a brand, the cost of its assets occupies an irreplaceable and important position. Therefore, brand evaluation should be considered from two aspects: the full original value of the brand asset acquisition or development, as well as the cost of brand redevelopment and the value of various losses. The former method is called the original cost method, and the latter method is called the replacement cost method.

1. Original cost method

Brand value is the result of long-term investment accumulation by an enterprise. Nestlé can be traced back to 1867, Coca-Cola can be traced back to 1886, Zhang Xiaoquan can be traced back to 1663, Huzhou Laojiao started in 1475, and Dukang goes even further. The original cost method is to value the corporate brand assets based on the entire original value of the acquisition or development. The direct way is to calculate the investment in the brand, including a series of expenditures such as design, advertising, promotion, research, development and even trademark registration, patent application, etc. The most important one is advertising expenditure. Advertising is considered a long-term investment in a brand. For a brand, advertising can increase its popularity, strengthen consumers' brand awareness, and establish a brand image.

The biggest problem with the original cost method is that it cannot reflect the current value of the brand. Because it does not take into account the quality and effectiveness of past investments, and because past investments are different from current investments, past investments have lost or partially lost their significance, so all original costs cannot be simply accumulated. For brands with a long history, their original cost information is incomplete and cannot be traced. Primitive costing fails to capture a brand's future profitability and can also overestimate failed or less successful brands. Due to various drawbacks, it has attracted criticism from many aspects.

2. Replacement cost method

In order to overcome the serious shortcomings of the original cost method, some people have proposed that the brand value can be estimated based on the replacement cost of the brand. In other words, we do not consider the past costs of the brand, but only consider how much investment is needed to re-create such a brand in today's market environment. If the cost and time required to create such a brand can be determined, then this value is the value of the brand today.

The biggest drawback of the replacement cost method is that estimating the replacement cost must consider many factors such as the brand sales network, brand image, brand recognition, brand market share, brand extension, etc., which is very complicated. The possibility of re-simulating a brand that is the same or similar to the brand being evaluated is too small to be feasible. Some brands, such as Coca-Cola, Tongrentang, Moutai, etc., cannot be reset at all. Like the original cost method, the replacement cost method cannot know the future economic benefits of the brand.

(2) Market price method

The market price method is the most convenient method in asset evaluation, and now some people also use it in brand evaluation. It is evaluated based on the value of similar brands. Assume there is a brand trading market, and use several similar brands as a reference to estimate the value of the brand.

The difficulty with this approach is execution. There is currently no brand trading market. Even if a transaction occurs, it is only a contract between the brand owner and the buyer. The price is often lower than the value and cannot truly reflect the value of the brand. Siemens acquired the Yangzi brand for 90 million yuan just to occupy Yangzi's market channels and quickly cover the market. The Yangzi brand disappeared, and its actual value may be much higher than the acquisition price.

(3) Income method

The income method, also known as the income present value method, estimates future expected income (usually the "after-tax profit" indicator) and uses appropriate A method of determining brand value by converting the discount rate into a present value and then adding it up. The main influencing factors are: excess profits; ② discount coefficient or principalization rate; ③ income period. It is currently the most widely used method because for brand owners, future profitability is the real value, thus trying to calculate the future earnings or cash flows of the cost brand. There are two independent processes for evaluating a brand's future earnings: one is to isolate the brand's net earnings, and the other is to predict the brand's future earnings.