Unleashing the financial power of brands

by R. Krishnaswamy on April 11, 2010

An Actuarial Approach

(Presented to the 3rd Global Conference of Actuaries held on 15th and 16th February, 2001 at New Delhi) and Published in THE HINDU

ABSTRACT

Consumers are becoming increasingly brand conscious.  Most of the consumer’s purchase decisions are now brand driven.  This has created a growing awareness among Corporates about the Financial Power of the Brands they own.  There has been a growing investor interest in companies with strong Brand Portfolios.  Accordingly the need has arisen to evolve suitable methodologies for proper evaluation and quantification of thes most valuable of all the intangible assets viz. BRAND.  As a result of continuous research, several methods have been evolved during the past 5 years to properly value the Brand.  After making an intensive study of the Market conditions and realizing the need for Actuarial, Econometric, Financial and Marketing inputs, the authors have evolved a method which is most appropriate to Indian Conditions.  This methodology which can aptly be described as Actuarial Brand Valuation follows the International conventions and practices in this regard.  Recent experience has shown that Brand Value has been extremely useful in such areas as  Securitised borrowing/ Brand Licensing and Franchising/Stock  Exchange Valuation/impact of Gearing/Acquisitions, Disposal and Mergers/ Marketing budget allocation/Tax-Planning Techniques/Fair Trading Investigations/ Litigation support/ Internal  Communication/Global expansion/Joint ventures/Reporting in Accounts.

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