Is it enough to invest money in a brand to create value?
Author: Dana Ababei, Executive director, CMF Consulting
According to Brand Finance market report Romania 50 of 2017, the most valuable ten Romanian brands amount to about 2.6 billion euros. This top includes companies from various fields such as auto, retail, banks, IT or telecom.
Therefore, is it enough to invest money in a brand to create value? It depends from which perspective you look at the answer. The word value has different meanings: promising and fulfilling an experience (from a marketing perspective), securing future gains (from a management perspective), or being a distinct component of a company’s intellectual property (from a legal perspective).
Even though the explanatory dictionary of the Romanian language very laconically defines the term brand as: BRAND2, brands, n. Trademark of a famous company.
In fact, this word, which got imported and entered the current speech in our country means much more, as follows: an ensemble of tangible and intangible attributes, symbolized by a trademark (name, logo, etc.) which, when correctly used, creates influence and value.
Thus, a very important factor in creating the value of a brand is to value it. It is not enough to own a brand in which you have invested time and money to have value. The brand needs to generate benefits to have value. Of course, it’s a quantifiable value in money, not a symbolic value.
In some industries such as IT, business consulting and financial services, the brand value may be higher than the value of all the other assets, but the brand is first losing the value if the customers trust is lost.
The main sources of brand value creation are consumers’ loyalty to brand and consumer perceived quality, which facilitates higher sales prices and profitability. As a result, for a brand to create value, it is important that the investment is made to create value for the consumer, customer centricity being the winning approach. Any other approaches may incur opportunity costs.
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About the author
DANA ABABEI is the executive director of CMF CONSULTING S.A. valuation company that provide valuation services in Romania and abroad. Dana Ababei has over 20 years of experience in business, intangible assets, real estate and movable goods valuation, being certified as the valuation report reviewer. She is an authorized valuer, Recognized European Valuer and 2018-2019 Elected President of the National Association of Authorized Valuers in Romania – ANEVAR.