"A Review of Brand Asset Value Assessment Methods" Author: Lu Juan "Statistical Research" (Issue 9, 2001)

1. Overview of Brand Asset Value Assessment Methods

The value assessment of brand assets is a complex and cumbersome task. Because of this, there are many controversies in the brand equity value assessment method in both theoretical and practical circles. However, if we summarize based on the basic characteristics of various evaluation methods, the evaluation methods of brand equity value can basically be divided into the following five categories.

First, the replacement cost method. That is, the brand value is determined based on the current cost of resources actually invested in the brand being evaluated. In other words, brand value depends on the cost of re-developing the same brand based on existing market and technical conditions.

Second, direct evaluation method. That is, the value of brand equity is calculated directly based on the concept of brand. Taking the American Appraisal Company as an example, the company believes that intangible assets include the following: promotional assets (Marketing Assets), tradenames/trademarks, customer lists (CustomerLists), packaging (Packaging), orders (Backlog), Advertising Materials, Franchises, ShelfSpace, Licenses, Distribution Network, and Manufacturing Assets. Patents, Formulas, Trade Secrets, Know-How, Unpatented Technology, Drawings, Supply Contracts, New Product Development (NewProductDevelopment), financial assets (FincialAssets), preferential financing (FavorableFinancing). Assembled Workforce, Software, Copyrights, Core Deposits, Covenants-Not-TO-Compet, Leasehold In-terests, Employment Interests, Database (DataBase), excess annuity plan (OverfundedPensionplan), dismissal rate (UnemploymentRatings), goodwill (Goodwill).

According to the brand concept, the trademark, customer list and part of the goodwill among the above-mentioned intangible assets should belong to brand assets, that is: brand asset value - trademark value + customer list value - part of the goodwill value ①.

Third, market/customer influence assessment method. That is, the value of brand assets is evaluated based on the impact of the brand on the market, that is, customers.

The market influence of a brand comes from the impact of a company's past marketing efforts on customer psychology and behavior. Based on this, we can reveal the reasons that lead customers to purchase, understand the customer's purchase decision-making process, and determine the value that customers attach to the brand when purchasing a specific brand of product. Specifically, the evaluation is carried out by examining customers' brand awareness, brand loyalty, brand image, etc. The evaluation model and specific evaluation elements in this area are shown in Table 1②.

It can be seen that some model evaluation contents are relatively simple, while others are more comprehensive. The factors evaluated by the "Brand Equity Monitor" include both psychological and behavioral factors of customers, as well as economic factors (the trade-off between price and quality), while other models mainly evaluate customers' psychological and behavioral factors.

Although the specific evaluation methods of each model are different, the evaluation focus of the relevant elements is basically the same. When evaluating customers' awareness of a brand, it is mainly done from two angles: one is whether customers will think of a certain brand given clues such as product categories and needs to be met; second, given the brand name, At the same time, customers understand the brand and products, including brand logo, typical advertisements, brand personality, product range covered by the brand, characteristics of brand products, etc. To evaluate the customer's attitude towards the brand, we should mainly examine: the degree to which the brand is respected by others, that is, the brand's reputation; the degree to which customers like the brand; the customer's perceived quality of the brand; and brand image, etc. Examining customer behavior mainly focuses on: customers' past purchasing patterns; customers' future purchasing intentions; and the possibility of changing brands, etc. The focus here is to examine customer loyalty to the brand. In addition to these individual evaluations, it is also necessary to comprehensively examine the overall situation of the brand and analyze its relative position compared with competing brands.

Fourth, Interbrand company evaluation method. The British company Interbyan proposed the Inter-brand evaluation method. This method estimates and determines the value of brand assets based on the company's market share, product sales volume and profit status, combined with subjective judgment of brand strength ③. The calculation formula is:

E=IXG

In the formula, E: brand value; the average annual profit that brand I brings to the enterprise; G: brand factor.

First of all, it is necessary to separate the profits of the enterprise and isolate the profits brought to the enterprise by the brand1. Specifically, it is carried out in two steps: (1) Estimate the excess income of a certain product or a certain business, that is, the balance of the future income of the product or the business after deducting the income created by tangible assets. This balance reflects the extent to which all intangible assets work together in generating revenue from a product or business. (2) Estimate how much of the trend revenue of this product or service should be attributed to the brand, and how much should be attributed to non-brand intangible assets, and then deduct the excess revenue attributed to non-brand intangible assets, then, The remaining excess income is the excess income that the brand will generate. When determining the proportion of excess income created by non-brand intangible assets to all excess income, Intelligent Brand Company adopts the "Brand Function Index Method". The basic idea is to examine which factors affect the excess income of products from multiple levels. , and the extent to which brands contribute to the formation of excess returns. Although the "Brand Effect Index" contains subjective and empirical components, Intel Brand Company believes that it is a more systematic method of evaluating brand effect.

Secondly, it is necessary to estimate the brand’s G. Brand factor, also known as brand strength multiple, refers to the expected profit-making years of the brand. When examining brand strength, Intelligent Brand Company mainly focuses on the following seven aspects: (l) Market characteristics. Generally speaking, brands in mature, stable industries with high market barriers have high strength scores. (2) Stability. Brands that enter the market earlier tend to have more loyal consumers than newly entered brands, so their brand strength scores are high. (3) The brand’s position in the industry. A brand in a leading position will have a higher intensity score than a brand in other positions because it has greater influence on the market. (4) Marketing scope. The broader the brand's marketing scope, the stronger its ability to resist competitors and expand the market, so the higher the brand's strength score. (5) Brand trends. That is, the influence of the brand on the development direction of the industry. The more modern it is in the minds of consumers and the more consistent it is with consumer needs, the higher the strength score of the brand. (6) Brand support. Brands that receive sustained investment and focused support are generally more valuable. (7) Brand protection. Brands that are registered and enjoy exclusive rights to trademarks and thus are protected by trademark law have higher intensity scores than unregistered brands or brands whose registration status has been challenged. In addition, brands protected by special laws have higher strength scores than brands protected by general laws; the wider the geographical scope of registration, the higher the brand strength score.

The higher a brand scores in the above seven factors, the stronger the brand's competitiveness and the longer the brand's expected profit life. According to a large number of surveys, Interbrand's valuation method determines the lowest expected profit period of a brand as 6 years and the highest expected profit period as 20 years, which means that the value range of G is 6G20.

Fifth, Beijing famous brand asset appraisal firm appraisal method. Beijing Famous Brand Asset Appraisal Firm has established an evaluation system for Chinese brands by referring to the evaluation system of Intelligent Brand Company and combining it with China's actual situation. The main factors considered in this evaluation system are: the brand's market share ability (M), the brand's value-added profit-generating ability (S) and the brand's development potential (D)①. ~The comprehensive value (P) of a brand can be simply expressed as:

P＝M＋S＋D

The representative indicator of the brand’s market share is the sales revenue of the product; the brand’s value-added profit creation Capability, that is, the ability to exceed the average profit-making level of the same industry, its representative indicators are operating profit and sales profit margin; the representative indicators of the brand's development potential are more complicated, but all indicators are related to profit, mainly including: domestic and foreign trademark registration status, Usage time and history, product export status, advertising investment status, etc.

Under the conditions of market economy, the more complete the competition, the more the profit levels between industries tend to be equalized. Since it is too early for my country to develop a market economy, and the significant profit margin differences between industries caused by the planned economic system still exist, this evaluation method has industry adjustment coefficients for the above three parts of indicators, and the coefficients are 3 to 5. Calculated using the annual moving average method. Through industry adjustment, the average composition ratio of the three parts is 4:3:3. Specific to different industries, there will be differences. For example, in the first part of value, if the industry itself is large, such as the automobile industry, the weight of this aspect will be small, and for small industries with smaller industry scale, this part will have a larger proportion. The sum of the three parts is the brand value.

2. Evaluation of brand equity value assessment methods

In fact, each of the above-mentioned brand equity value assessment methods has its own characteristics and applicable purposes, and each also has its shortcomings. . The replacement cost method actually evaluates the external value of the brand. Therefore, the evaluation results using this method are often low or even far from the actual value of the brand. However, in the process of independent brand transfer, the results of this evaluation are more easily accepted by both parties to the transaction. In fact, it is difficult to say that brand transfer transfers all the intrinsic value of the brand. At the same time, we should also note that an implicit assumption of using the replacement cost method to assess brand value is that the brand value will not depreciate over time, that is, the brand cost does not need to be amortized year by year.

The direct evaluation method is unique and logical only in terms of the basic idea of ??the method itself. This method attempts to directly add up the components of brand assets to obtain the total value of brand assets based on separate valuations. The implicit premise is that brand equity is identifiable. The actual situation is not so simple and pure. It should be said that it is undisputed that the law considers trademarks and customer lists as components of brand assets. However, there are two issues that are difficult to solve in fact. First, there is a strong uncertainty in determining the value of the customer list; second, how much of the goodwill value should be attributed to brand assets lacks theoretical basis and is even more difficult to operate in practice. Therefore, the biggest problem with the direct assessment method is that it lacks operability. Furthermore, even if the part of the goodwill value that should be attributed to brand assets can be determined, the value assessment of brand assets still relies on the assessment of goodwill value, and the value of goodwill cannot be directly assessed. Therefore, it seems unrealistic to try to "directly" assess the value of brand equity, although this approach to assessment is reasonable. The idea of ??the market/customer influence evaluation method is "different": it is neither evaluated based on the investment required to create the brand like the replacement cost method, nor is it based or mainly based on the expected future effects of brand equity like other evaluation methods. Evaluate excess returns. This method is based on the influence of the brand on customers in the market.

(3) The choice of brand asset value assessment method should be based on the purpose of the assessment. The author believes that brand value determined based on market/customer influence is the direct goal of brand development strategy. For this reason, brand asset value assessment should use the market/customer influence assessment method; it is determined based on the present value of future earnings. The brand value is the highest goal of the brand development strategy and an indicator of the company's future profitability. To this end, future income present value methods such as the Intel Brand Valuation Method and the Beijing Famous Brand Asset Appraisal Firm Valuation Method should be used. .