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

The Determination of the Monetary Brand Equity is Setting Standards in Corporate Management
Christina Schmid-Preissler, SchmidPreissler International Strategy Consultants

Brands are often the most valuable asset of a business today and thus require an equally efficient leadership, same as material values. Most businesses no longer doubt this, however, most of the time the value proposition is not known.

This often originates in the classic separation of marketing and finance resorts. Either the brand is viewed from the marketing side, which in general neglects the monetary brand equity and concentrates more on immaterial values such as awareness, customer loyalty, market share et cetera. The financial side on the other hand can only partially assess the monetary value, because it does not really incorporate the contribution of single assets into the cash flow.

Today in many branches expenses for marketing and communications, especially where brands play an important role, lie at 10 to 15% of sales. When monetary brand equity is established and it is known which contribution the brand has made to the corporate success the person responsible is not only in charge of a cost center but fulfils an important prerequisite for expanding brand management into a strategically significant profit center and can thus utilize the brand in a value-added manner and optimize investments. Platitudes or desired attitudes such as an increase in desirability or awareness are not very meaningful in times where a brand is often the decisive success factor. It is only going to get informative if those in charge of the brand are able to decisively answer the question if an increase in monetary brand equity has been achieved.

With the knowledge that success in brand leadership and the efficient use of marketing tools is going to be reflected long-term in the performance of the brand, marketing and those responsible in marketing are consequently moving into the center of corporate management.

What is taking place today is a paradigm shift and the perception of this aspect cannot be valued high enough. Today, many are convinced that monetary brand equity is already contained in business profits. Of course, this is the case, but one also has to understand that how this profit is generated by the brand and that this has to be supported. We have to establish that connection today and in the future.

The determination used to cut back a lively, visionary picture tied to a brand to mere numbers may seem displeasing. But the time has come where there is no true alternative.

For instance, we have observed for quite some time that in times of an economic slump marketing budgets are cut drastically. No doubt with great risks to the brand equity. Or we see that there are plenty of occasions to break out of the rigid discipline required by a consequent brand leadership. Sometimes, because licensing promises ‘quick money’ or inexpensive production alternative are luring. Or maybe, because the temptation is too big to follow the trends of communication, to open up new points-of-sale or to increase sales volume through reduced prices.

With the SchmidPreissler Brand Equity+Performance Program we have developed a program, which calculates monetary brand equity in terms of a working capital and aims at putting monetary brand equity in the center of corporate activities. If you do have further questions, we are at your disposal at +49/8022/9178-22, Dipl. Vw. Christina Schmid-Preissler.