Question

briefly discuss the approaches that may be used in brand valuation.what are some of the critical aspects to be considered in computing brand value

Answer 1

There are three main approaches of brand valuation:

i)The cost approach:The fundamental premise of the cost approach is that a potential user of real estate won't or should not pay more for a property than its would cost to build an equivalent.In other words,it is primarily concerned with the cost in creating or replacing the brand.

ii)Market based approach:It basically deals with the amount at which a brand is sold and is related to highest value that a willing buyer and seller are prepared to pay for an asset.This approach is most commonly used when one wishes to sell the brand.

iii)Income based approach:This approach is also known as Economic use appraoch.It is the valuation of future net earnings directly attributable to the brand to determine the value of the brand in its current use.This method is extremely effective as it shows the future potential of a brand that the owner currently enjoys and the value is useful when compared to the open market valuations as the owner can determine the benefit foregone by pursuing the current course of action.

Before evaluating brands ,two essential questions need to be answered that is what is being valued,the trademarks,the brand or the branded business and secondly,the purpose for such valaution.