Brand Valuation - Dalda

Topics: Business valuation, Brand, Real estate appraisal Pages: 7 (1875 words) Published: September 3, 2013
Title of the project report
(For example)DETRMINATION OF THE MARKET VALUE OF PQR LIMITED (The exact title may be changed)

The Institute of Cost Accountants of India
(Participant can download The Institute logo and insert here) In partial fulfilment of the Award of Certificate in Business Valuation and Corporate Restructuring

Submitted by
Write your name and class roll no, if allotted

What is BRAND?

Brand is the "name, term, design, symbol, or any other feature that identifies one seller's product distinct from those of other sellers"* Initially, Branding was adopted to differentiate one person's cattle from another's by means of a distinctive symbol burned into the animal's skin with a hot iron stamp, and was subsequently used in business, marketing and advertising. A modern example of a brand is Coca Cola which belongs to the Coca-Cola Company. A brand—an intangible asset—is often the most valuable asset of a corporation. Brand owners manage their brands carefully to create shareholder value, and brand valuation is an important management technique that ascribes a money value to a brand, and allows marketing investment to be managed (e.g.: prioritized across a portfolio of brands) to maximize shareholder value. Although only acquired brands appear on a company's balance sheet, the notion of putting a value on a brand forces marketing leaders to be focused on long term stewardship of the brand and managing for value. The word "brand" is often used as a metonym, referring to the company that is strongly identified with a brand.

Brand Valuation Methods:
Brand valuation is the job of estimating the total financial value of the brand. Like the valuation of any product, of self review, or conflicts if those that value the brand also were involved in its creation.** The ISO 10668 standard sets out the appropriate process of valuing brands and sets out six key requirements, transparency, validity, reliability, sufficiency, objectivity and financial, behavioral and legal parameters.

Valuation Methods;
There are three main types of brand valuation methods:
a. The Cost Approach
The cost approach measures the value of a brand as the cost invested in its creation and development. The idea being that an investor would not pay more for a brand than it would cost to recreate or replace it. However, since this approach is based on retrospective data it does not consider a company's future earnings. b. The Market Approach

The brand is valued based on what others in the market have paid for similar assets. With so few brands being bought and sold, using this method may be as difficult as finding a recent sale of another brand with a similar awareness, strength, or economic and legal situation against which to benchmark. c. The Income Approach

This approach measures the value by reference to the present value of the economic benefits received over the rest of the useful life of the brand. There are 6 recognized methods of the income approach. 1. Price premium method - estimates the value of a brand by the price premium it generates when compared to a similar but unbranded product or service. This must take into account the volume premium method. 2. Volume premium method - estimates the value of a brand by the volume premium it generates when compared to a similar but unbranded product or service. This must take into account the price premium method. 3. Income split method - this values the brand as the present value portion of the economic profit attributable to the brand over the rest of its useful life. This has problems in that profits can sometimes be negative, leading to unrealistic brand value, and also that profits can be manipulated so may misrepresent brand value. This method uses qualitative measures to decide the portion of economic profits to be accredited to the brand. 4. Multi-period excess earnings method - this method requires a valuation of...
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