Page 179 - BrandZ Top 50 Most Valuable Indian Brands 2015

TOP 50 MOST VALUABLE INDIAN BRANDS 2015
The Valuation Process
STEP 1: CALCULATING FINANCIAL VALUE
PART A
We start with the corporation. In some cases, a corporation owns only one brand. All Corporate Earnings come from that brand. In other cases, a corporation owns many brands. And we need to apportion the earnings of the corporation across a portfolio
of brands.
To make sure we attribute the correct portion of Corporate Earnings to each brand, we analyze inancial information from annual reports and other sources, such as Kantar Retail. This analysis yields a metric we call the Attribution Rate.
We multiply Corporate Earnings by the Attribution Rate to arrive at Branded Earnings, the amount of Corporate Earnings attributed to a particular brand. If the Attribution Rate of a brand is 50 percent, for example, then half the Corporate Earnings are identiied as coming from that brand.
PART B
What happened in the past – or even what’s happening today – is less important than prospects for future earnings. Predicting future earnings requires adding another component to our BrandZM formula. This component assesses future earnings prospects as a multiple of current earnings. We call this component the Brand Multiple. It’s similar to the
calculation used by inancial analysts to determine the market value of stocks (Example: 6X earnings or 12X earnings). Information supplied by Bloomberg data helps us calculate a Brand Multiple. We take the Branded Earnings and multiply that number by the Brand Multiple to arrive at what we call Financial Value.
STEP 2: CALCULATING BRAND CONTRIBUTION
So now we have got from the total value of the corporation to the part that is the branded value of the business. But this branded business value is still not quite the core that we are after. To arrive at Brand Value, we need to peel away a few more layers, such as the in-market and logistical factors that inluence the value of the branded business, for example: price, availability and distribution.
What we are after is the value of the intangible asset of the brand itself that exists in the minds of consumers. That means we have to assess
the ability of brand associations in consumers’ minds to deliver sales by predisposing consumers to choose the brand or pay more for it.
We focus on the three aspects of brands that we know make people buy more and pay more for brands: being Meaningful (a combination of emotional and rational ainity), being Diferent (or at least feeling that way to consumers), and being Salient
(coming to mind quickly and easily as the answer when people are making category purchases).
We identify the purchase volume and any extra price premium delivered by these brand associations. We call this unique role played by brand, Brand Contribution.
Here’s what makes BrandZM so unique and important. BrandZM is the only brand valuation methodology that obtains this customer viewpoint by conducting worldwide on-going, in- depth quantitative consumer research, online and face-to-face, building up a global picture of brands on a category- by-category and market-by-market basis. Globally, our research now covers over three million consumers and more than 100,000 diferent brands in over 50 markets. In India,
our research includes over 100,000 consumers and more than 1,000 diferent brands.
STEP 3: CALCULATING BRAND VALUE
Now we take the Financial Value and multiply it by Brand Contribution, which is expressed as a percentage
of Financial Value. The result is Brand Value. Brand Value is the dollar amount a brand contributes to the overall
value of a corporation. Isolating and measuring this intangible asset reveals an additional source of shareholder value that otherwise would not exist.
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