When the company begins a new branding project, the company pays its employees while they work on the brand, but customers do not know about the brand yet. The company records these brand value development costs, establishing brand value before the brand gains equity.Creating Brand Equity
Trade-mark assessment is easier for a convention to estimate. The corporation can decide the unbiased marketplace appraisal of the Trade-mark by asking other companies what worth they would pament to buy the Trade-mark. The convention can besides add up its costs of hiring marketers, consultants and advertising experts to foster a Trade-mark it already owns, or estimate the valuation for the society to cause a advanced Trade-mark for its products.
Determining Brand Equity
Trade-mark fairness is more difficult to estimate because it relies on customers' beliefs. The company does not know whether a customer makes a purchase because he recognizes the company's brand or whether the customer uses other criteria, such as price and convenience, to make his decision. According to the University of Georgia, the company can attempt to estimate its brand equity by sending surveys to its customers to see if they recognize the brand.
Creating Brand Value
A brand may have a positive value on the company's books and still lack brand equity.Trade-mark fairness and Trade-mark monetary worth are both measures that estimate what a Trade-mark is cost. The deviation between these two measures is that Trade-mark reward refers to the financial asset that the convention records on its balance period, while Trade-mark fairness refers to the concernment of the Trade-mark to a customer of the collection.
Determining Brand Value
A company needs to develop brand equity past a certain point in a customer's mind before it becomes effective. The customer may watch several advertisements on television and radio, see the product in the store and buy the product several times before he recognizes the brand. This threshold effect complicates the valuation of brand equity because the equity suddenly goes from zero value to a high value.
Improving Value
Once the company establishes brand equity, brand equity can increase the value of the brand. If the customer likes a shirt because of its brand name, he might also purchase a pair of pants with that brand name or buy cologne that uses the brand name. The company can use the future revenue it expects To gather by using the brand on these other products because of this equity to calculate the current brand value.
