A conceptual study on brand valuation
| Published date | 01 July 2001 |
| Pages | 243-256 |
| Date | 01 July 2001 |
| DOI | https://doi.org/10.1108/EUM0000000005674 |
| Author | A. Seetharaman,Zainal Azlan Bin Mohd Nadzir,S. Gunalan |
| Subject Matter | Marketing |
A conceptual study on brand
valuation
A. Seetharaman
Associate Dean, Faculty of Management, Multimedia University,
Cyberjaya, Malaysia
Zainal Azlan Bin Mohd Nadzir
Postgraduate Scholar, Faculty of Management, Multimedia University,
Cyberjaya, Malaysia
S. Gunalan
Postgraduate Scholar, Faculty of Management, Multimedia University,
Cyberjaya, Malaysia
Keywords Brand valuation, Methods, Problem solving, Accounting
Abstract Recognizing brands on the company's financial statement as an identifiable
intangible asset is a relatively recent development in financial reporting, which only
became a focus of attention in the late 1980s. Accounting bodies throughout the world
have appeared uncertain as to how to treat the issue of placing a brand in the financial
statement as there is little guidance and less understanding over accounting treatment of
brand valuation. The debate over procedures for valuing brands and including them as a
fixed asset to the corporate financial statement has become a great controversy. As a
descriptive study, the present conceptual study highlights the problems associated with
brand valuation. Many corporate companies support the fact that valuing and hence
capitalizing their brand bring a lot of advantages to the organization. The present study
examines four main methods of valuing brands, namely the cost-based method, market-
based method, income-based method and formulary method. The method used in every
valuation is subject to the suitability of the brand condition determined on their existing
uses. A few recommendations based on the conceptual study are made in order to meet
the needs of organizations and the business community as well.
Introduction
Definition of brand
A brand can be defined as an asset that does not have physical existence and
the value of which cannot be determined exactly unless it becomes the
subject of a specific business transaction of sale and acquisition.
The other definition that can be used is a name or a symbol ± and its
associated tangible and emotional attributes ± that is intended to identify the
goods or services of one seller in order to differentiate them from those of
competitors.
Difference between a product and a brand
There are lots of differences between a brand and a product. Stephen King
from WPP Group, London has differentiated a brand from a product:
A product is something that is made in a factory; a brand is something that is
bought by a customer. A product can be copied by a competitor; a brand is unique.
A product can be quickly outdated; a successful brand is timeless.
A product, either tangible or intangible is just merely the generic term
whereas a brand has personality and also characteristics that possess certain
associations. A brand can conjure a lot of meaning to a person, depending on
the experience of that person.
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Intended to identify goods
or services
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 10 NO. 4 2001, pp. 243-256, #MCB UNIVERSITY PRESS, 1061-0421 243
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