Excerpt of further issues topics: Brand Equity and Brand Strategy, Brand Equity and Brand Diffusion, Brand Equity and Company Success, Brand Equity and Sales and Acquisition of Brands or Companies, Brand Equity and Marketing Investment

Future Oriented Marketing Calls for Monetary Brand Equity

In the future, planning, operating and controlling the manifold and complex activities in connection with the manufacturing and marketing of brands requires a handling of these brands that ensures a high degree of rationality within brand leadership.

Markets nowadays are characterized by the implemented change from seller’s market to the intensely competitive buyer’s market. And every business faces changing economical factors in a competitive environment: Stagnating and oversaturated markets, growing world-economic integration and international competition on the European domestic market, critical buyers and users, barely distinguishable products. The technological progress is taking place at an ever increasing speed. Product life cycles are decreasing and innovational leads are often of a limited duration.

Rapid developments and innovational dynamics, just to name a few developments taking place, are characteristic attributes of our time challenging businesses today to rethink their previous concepts of brand leadership.

To generate enough knowledge in regard to one’s brand is the quintessential basis for the successful advance of established brands: Early detection of deficits, expediently development of new potentials, help the brand to further successes, all of this is only possible if the brand manager and the executive management of the company have enough information at hand on the basis of which they can make meaningful and efficient brand decisions.

The knowledge that successful brand leadership and the efficient application of marketing instruments are going to be reflected in the growth of the brand long-term, turns a financial brand evaluation nearly into a ‘must’. A lot of brand equity and company value can be destroyed through bad decisions, there are many examples to prove it.

However, the tide is turning. Previously, it was often even chic to dispose of established brands and introduce new ones, instead of adapting established brands to the spirit of the age continuously. Since these ventures often failed – let’s just think of Karstadt and Arcandor – many companies today are remembering the brand value they created over the course of decades.

The true value represented by brand equity one can only see if one knows the value of the brand in dollars and cents and if working with the brand is designed in a way that an adequate return-on-investment can be achieved, the performance.

The knowledge of business volume and profit margins – as a whole or in regard to products and brands – is no longer enough to ensure investments and expenditures for brands in the future and to lead them successfully. A paradigm shift is required. So far the success of brands has been measured solely in sales volume and earnings, brand equity and return-on-investment have to be included in the calculations of brand leadership and the marketing process. Yet, monetary value of brands is usually only mentioned in yearly published brand equity lists and during the sale or acquisition of a company. However, in those yearly publications the figures published by different institutions partly diverge considerably.

However, experience shows that a well developed and managed brand whose monetary value has been established, represents a value for this company that ensures long-term profitability.