Recently, in a meeting, someone asked me

- How can you define the value of a brand?

Well, this questions is of course delicate. You can easily make this complicated, but I prefer to make it easy.

- It’s the profit per each sold item or service, I replied.

And in many ways it is. Like a sneaker from Puma for example. It will cost you X amount of money. If you buy a non-branded shoe, manufactured at the exact same plant, shipped with the same freighter etc. The non-branded will probably cost you 1/3 of the Puma sneaker. You will most likely by the Puma anyway and be happy about it.

The difference between the two in pricing…should be the profit. Sure, there’s a lot of difference in marketing for Puma. But that should be regarded as investment in the brand.

GM were selling cars without profit for a long time. The customers were unwilling to pay to the price a Cadillac, Chevrolet or a Buick actually took to be manufactured. GM made their money on customer support, financing etc. If you come that far, you know what will happen – it will soon be over.

The conclusion is that since they own the brand. They will also tell you what it’s worth. If you don’t make a business out of it you will need to lower your costs, or raise your brand’s value.

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One response to “The value of a brand”

  1. Marcus Hanser says:

    Another thought on the subject, awoken by an email i just got.

    The examples I mention above is for consumer brands. However, my experience with for example Caterpillar, is that the very same formula is applicable for B2B brands as well. Actually, many of the operators decided as kids that they wanted to have an excavator or a wheel-loader and at the very same time they decided that it should be a Cat. Imagine what that does for your business.

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