What Is Brand Valuation?

Brand valuation is a type of assessment that aids a company in determining what type of name value is associated with the brands it markets to the public, and how this type of intangible asset benefits the ongoing success of the business. The idea behind this type of valuation is to get an idea of how closely consumers associated the brand name with positive qualities such as honesty, integrity, and quality. A high valuation means that the name provides considerable benefit to the business in terms of revenue generation and public acceptance. If the brand valuation is somewhat low, this tells the company that the brand is doing very little to enhance the reputation of the company and may in fact be more of a liability.

The importance of brand valuation has become more accepted over time. As early as the latter part of the 19th century, corporations began to notice that consumers were associating certain qualities with certain brand names, sometimes even to the point of using the brand as a generic name for a product. Companies who were able to see the relevance of brand valuation to consumer buying habits have often made it a point to relate that brand name to new products they introduce, effectively creating a family of products that consumers assume are of a certain quality until proven otherwise.

Assessing brand valuation often requires research into what people think of a given brand. The idea is to determine if the brand is recognized by a significant number of consumers within an identified market. From there, the goal is to identify what consumers think when they hear that name. In the best of circumstances, the brand is immediately recognizable to the target audience, and conjures up images of being a trusted product that provides all the benefits it claims to provide. The more positive the recognition and acceptance of a brand name, the greater the financial value of the brand to the business.

Properly determining brand valuation will provide direction in the structuring of marketing and sales campaigns for any products carrying the brand. Drawing on the degree of positive recognition associated with the brand, a company may launch a line of products that are related to older product lines and marketed under the same general brand name. For example, a company that produces a well-known brand of yellow mustard may take the brand valuation into consideration when launching a new line of flavored brown mustards, effectively associating the new product with a product that consumers already know well and trust.