Brand Valuation Methodology Top 100 Brands

Introduction
The brands that appear in this report are the most valuable in the world.
They were selected for inclusion in the BrandZ Most Valuable Global Brands Top
100 and category rankings based on the unique and objective BrandZ brand
valuation methodology that combines extensive and ongoing consumer research
with rigorous financial analysis.
The BrandZ valuation methodology can be uniquely distinguished from its
competitors by the way we obtain consumer viewpoints. We conduct worldwide,
ongoing, in-depth quantitative consumer research, and build up a global picture of
brands on a category-by-category and market-by-market basis.
Our research covers three million consumers and more than 100,000 different
brands in over 50 markets. This intensive, inmarket consumer research
differentiates the BrandZ methodology from competitors that rely only on a panel
of experts or purely financial and market desktop research.
Before reviewing the details of this methodology, consider these three fundamental
questions: Why is brand important; Why is brand valuation important; What makes
BrandZ the definitive brand valuation tool?
Importance of Brand
Brands embody a core promise of values and benefits consistently delivered. Brands
provide clarity and guidance for choices made by companies, consumers, investors
and other stakeholders. Brands provide the signposts we need to navigate the
consumer and B2B landscapes.
At the heart of a brands value is its ability to appeal to relevant customers and
potential customers. BrandZ uniquely measures this appeal and validates it
against actual sales performance. Brands that succeed in creating the greatest
attraction power are those that are:
MEANINGFUL
In any category, these brands appeal more, generate greater love and meet the
individuals expectations and needs.
DIFFERENT
These brands are unique in a positive way and set the trends, staying ahead of
the curve for the benefit of the consumer.
SALIENT
These brands come spontaneously to mind as the brand of choice for key needs.
Importance of brand valuation

Brand valuation is a metric that quantifies the worth of these powerful but
intangible corporate assets. It enables brand owners, the investment community
and others to evaluate and compare brands and make faster and better-informed
decisions.
Distinction of BrandZ
BrandZ is the only brand valuation tool that peels away all of the financial and
other components of brand value and gets to the core how much brand alone
contributes to corporate value. This core, which we call Brand Contribution,
differentiates BrandZ.
The Valuation Process
Step 1: Calculating Financial Value
Part A
We start with the corporation. In some cases, a corporation owns only one brand. All
Corporate Earnings come from that brand. In other cases, a corporation owns many
brands, and we need to apportion the earnings of the corporation across a portfolio
of brands.
To make sure we attribute the correct portion of Corporate Earnings to each brand,
we analyze financial information from annual reports and other sources, such as
Kantar Retail. This analysis yields a metric we call the Attribution Rate.
We multiply Corporate Earnings by the Attribution Rate to arrive at Branded
Earnings, the amount of Corporate Earnings attributed to a particular brand. If the
Attribution Rate of a brand is 50 percent, for example, then half the Corporate
Earnings are identified as coming from that brand.
Part B
What happened in the past or even whats happening today is less important than
the prospects for future earnings. Predicting future earnings requires adding another
component to our BrandZ formula. This component assesses future earnings
prospects as a multiple of current earnings. We call this component the Brand
Multiple. Its similar to the calculation used by financial analysts to determine the
market value of stocks (for example: 6x earnings or 12x earnings). Information
supplied by Bloomberg data helps us calculate a Brand Multiple. We take the
Branded Earnings and multiply that number by the Brand Multiple to arrive at what
we call Financial Value.
Step 2: Calculating Brand Contribution
So now we have got from the total value of the corporation to the part that is the
branded value of the business. But this branded business value is still not quite the
core that we are after. To arrive at Brand Value, we need to peel away a few more

layers, such as the in-market and logistical factors that influence the value of the
branded business for example: price, availability and distribution.
What we are after is the value of the intangible asset of the brand itself, which
exists in the minds of consumers. That means we have to assess the ability of brand
associations in consumers minds to deliver sales by predisposing consumers to
choose the brand or to pay more for it.
We focus on the three aspects of brands that we know make people buy more and
pay more for brands: being Meaningful (a combination of emotional and rational
affinity), being Different (or at least feeling that way to consumers), and being
Salient (coming to mind quickly and easily as the answer when people are making
category purchases).
We identify the purchase volume and any extra price premium delivered by these
brand associations. We call this unique role played by brand the Brand Contribution.
Heres what makes BrandZ so unique and important. BrandZ is the only brand
valuation methodology that obtains this customer viewpoint by conducting
worldwide ongoing, in-depth quantitative consumer research, both online and facetoface, building up a global picture of brands on a category-by-category and marketbymarket basis. Our research now covers over three million consumers and more
than 100,000 different brands in over 50 markets.
Step 3: Calculating Brand Value
Now we take the Financial Value and multiply it by Brand Contribution, which is
expressed as a percentage of Financial Value. The result is Brand Value. Brand Value
is the dollar amount a brand contributes to the overall value of a corporation.
Isolating and measuring this intangible asset reveals an additional source of
shareholder value that otherwise would not exist.
Why BrandZ is the definitive Brand Valuation Methodology
All brand valuation methodologies are similar up to a point.
All methodologies use financial research and sophisticated mathematical formulas
to calculate current and future earnings that can be attributed directly to a brand
rather than to the corporation. This exercise produces an important but incomplete
picture.
Whats missing? The picture of the brand at this point lacks input from the people
whose opinions are most important - the consumers. This is where the BrandZ
methodology and the methodologies of our competitors part company.
How does the competition determine the consumer view?
Interbrand derives the consumer point of view from panels of experts who
contribute their opinions. The Brand Finance methodology employs a complicated
accounting method called Royalty Relief Valuation.

Why is the BrandZ methodology superior?

BrandZ goes much further and is more relevant. Once we have the important, but
incomplete, financial picture of the brand, we communicate with consumers, people
who are actually paying for brands every day. Our ongoing, in-depth quantitative
research includes three million consumers and more than 100,000 brands in over 50
markets worldwide.
Whats the BrandZ benefit?
The BrandZ methodology produces important benefits for two broad audiences.
Members of the financial community - including analysts, shareholders, investors
and C-suite, who depend on BrandZ for the most reliable and accurate brand
value information available.
Brand owners, who turn to BrandZ to more deeply understand the causal links
between brand strength, sales, and profits and to translate those insights into
strategies for building brand equity.
- See more at: http://www.millwardbrown.com/mb-global/brand-strategy/brandequity/brandz/top-global-brands/2015/methodology#sthash.4tUQXymm.dpuf