Brand has value which can be quantified

by R. Krishnaswamy on April 11, 2010

From the foregoing it is clear that the brand has a value and it can be quantified.  The ACTUARIAL BRAND VALUATION advocated above is ideally suitable for Indian conditions.  It will be also be clear from the above that this valuation is going to be of immense help to companies in so many areas.  It brings out the value of a real asset, which has remained hidden so far.  Reporting of the value of this invisible asset will immensely enhance the company’s image and push up its stock market value leading to more sales which in turn will lead to economies of the scale which in turn again will bring down the cost of production.  It is also very useful in cases of acquisition/ merger/ takeover/ licensing/ franchising/ joint venture etc.  Particularly for the Banks which lend money to the companies against its assets, the brand valuation is a boon as the Bank can now be more aware of the additional security that is available. Also in the software industry there has been a lot of acquisitions not only of companies and brand but also of “Intellectual Property” traits such as trade marks, patents, copyrights and designs, know-how, technology, software and databases.  These intangible assets also have the same valuation issues as Brand and can be valued by the methodology described above.

We would like to close this paper with a quote from Pemberton (1998).

“Actuarial Science has a distinctive method which is well-suited to operating within realities in which there are limited regularities.  It uses local empirical knowledge to grasp low-level generalisations, has respect for the pattern of local causal influences, and builds bottom-up models for the purpose of establishing approximations.  It recognises the role of skill in applied modelling and treats it as central to the method.   It is focussed on financial realities”.

Spurred by this quote, we have made a modest attempt to extend the Methodology of Actuarial Science to an area of contemporary concern in Corporate Finance.

In fine, it is no exaggeration to say that a brand revolution is now on and its importance is next only to IT revolution.  We can very well say that B(G)rand days are ahead.

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