Listen to this article
BrandZ uses a mixture of financial information and customer surveys to come up with its ranking for the top 100 most valuable global brands. The research covers 3m consumers and 100,000 brands in more than 50 markets.
Three characteristics of a brand are subject to measurement. First, how “meaningful” it is; the brand’s appeal, its ability to generate “love” and meet the consumer’s expectations and needs.
Second, how “different” it is; its unique features and its ability to “set the trends” for consumers.
Third, the research measures how “salient” the brand is; that is whether it springs to mind as the consumer’s brand of choice.
The financial information used as an input to the valuation is based on what each company earns. If the company owns only one brand, all its earnings are attributed to that brand.
For banks and insurance companies, the earnings metric used is net income. For all other companies it is operating profit. Otherwise, earnings are attributed across the company’s portfolio of brands using information from annual reports and other sources.
The next step is to predict “brand earnings” using inputs, including market capitalisation, taken from Bloomberg, to derive a ratio similar to a current price/earnings ratio. Current “brand earnings” are then multiplied by this number to arrive at the brand’s “financial value”.
BrandZ then uses customer surveys, either online or face to face, to assess a brand’s ability to stand out from the crowd, generate desire and cultivate loyalty.
The output from this research is then multiplied by the financial value to arrive at the brand value. Brand value is the dollar amount BrandZ estimates a brand contributes to the overall value of a company.