A brand new form of equity
Coke, Hoover, Filofax, Nike - all culture-shaping brands. It's not just down to advertising, writes Roger Trapp
Sunday 07 December 1997
The problem is especially difficult for people like accountants, who are more used to dealing with traditional assets such as plant and buildings. And there is a sense in which the rules set out last week seek to impose a structure and rationality on an area of business that is unsuited to such an approach. Far from being a cold, analytical activity, putting a value on brands can be a highly subjective exercise.
But that does not stop certain organisations having a go at it. Indeed, the Accounting Standards Board's introduction of impairment tests, which companies seeking to demonstrate that their brands have indefinite lives under the new standard will have to go through, is likely to create greater interest in this area. Moreover, having brands on full view in the balance sheet could well focus corporate minds on - so to speak - making the most of their assets.
Some encouragement of this view is to be found in the latest book from Interbrand, the branding consultancy, called Brands: The New Wealth Creators (Macmillan, pounds 45 hardback, pounds l5.99 paperback). Partly a history of brand management, partly a guide to best practice, it also looks at what the future holds for this field, which is increasingly regarded as one of the most important facets of business.
Susannah Hart, an Interbrand director and one of the editors of the book, writes in it that "brands have a strong social influence on a society's sense of purpose, direction and economic growth". Arguing that it is possible to see brands, like politicians and religious leaders, as among the influences that help people find their way through life, she adds: "Moreover, from the Shell human rights issues to the Co-operative Bank's ethical policy, we can see that brand owners are becoming the new messiahs or pariahs of modern society."
And though some brands, notably Coca-Cola, can be seen to transcend fashion, others are very much of certain times. The book includes a table showing how Hoover and Persil are very much of the 1950s, Mary Quant and the Mini belong to the 1960s, Adidas and the Ford Capri to the 1970s, BMW and Filofax to the 1980s, and Virgin and Nike to the 1990s.
But this close identification of brands names with certain periods of history or, come to that, the ability to transcend them, do not happen just by accident. Interbrand believes it is the responsibility of brand owners to begin to ask themselves more wide-ranging and searching questions, such as: "Will it make a contribution to our customers' success?" rather than just: "Will it sell?"
This is why there is so much emphasis now on developing "brand reputation" and "brand integrity". Companies and their marketing advisers want the images being projected of a company or its products to be more than skin- deep; they want them to reflect truly-held values and the like.
But achieving such aims involves careful management. As consultants from Mercer Management Consulting pointed out in a recent paper: "Given its importance in the marketplace, a company's brand should be analysed and managed every bit as rigorously as any other major corporate asset. Unfortunately, that is not generally happening today ... Few have a clear brand strategy or an effective brand management process."
Unsurprisingly, Mercer believes in "brand equity". The Mercer team says: "This is the total value of all qualities and attributes implied by the brand name that impact actual customer choices. It translates into monetary terms a brand's power in convincing a customer to purchase the company's product instead of competing offerings."
And, just as the ASB reckons its treatment of accounting for brands and intangibles puts responsibility for them squarely on the shoulders of executives, so Mercer adds that "improving and maintaining brand equity is a job for management".
The consultants claim that too many executives entrust the task to their advertising agency or a brand expert. "Brands are built from the myriad interactions that customers have with a product or service provider, not just through communications. In fact, in most cases advertising has only a minor impact on the development and maintenance of a brand."
Oscar Pistorius trial: Paralympian sick again after photographs of Reeva Steenkamp's body are shown in court
Tony Benn dead: Veteran Labour politician passes away at 88
Arrest made after man is found by the side of the road with his penis cut off
Malaysia flight MH370: Pitbull song lyrics bear uncanny resemblance to missing plane mystery, according to YouTubers
Missing Malaysia Airlines Flight MH370: Focus shifts west as Indian Ocean becomes latest search area for the aircraft and its passengers
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
Europeans have ‘got whiter’ due to natural selection in past 5,000 years, scientists say
Fracking is turning the US into a bigger oil producer than Saudi Arabia
How climate change helped Genghis Khan: Scientists believe a sudden period of warmer weather allowed the Mongols to invade with such success
- 1 Tony Benn dead: Veteran Labour politician passes away at 88
- 2 Arrest made after man is found by the side of the road with his penis cut off
- 3 Tim Berners-Lee on creating the web: 'I never expected all these cats'
- 4 Gauthier Soho has ranted against 'food blaggers' - so can we really trust online reviews?
- 5 Malaysia flight MH370: Pitbull song lyrics bear uncanny resemblance to missing plane mystery, according to YouTubers
iJobs Money & Business
£35000 - £43000 per annum + Bonus and Benefits: Harrington Starr: A global lea...
£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...