India: Everything Has A Price Tag: An Insight Into The World Of Brand Valuation

Last Updated: 18 June 2018
Article by Samridh Ahuja

I. INTRODUCTION

Brand Finance1, a leading brand valuation company, has helped in setting ISO 10668, an internationally recognized standard for brand valuation. It lays down the definition of 'Brand' as "a marketing related intangible asset including but not limited to names, symbols, logos and designs or a combination of these, intended to identify goods, services or entities, or a combination of these, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits/value."2

In layman's language, brand valuation is the process of calculating the value of a brand or the amount of money another party is willing to pay for the brand or the financial value of the brand. Before evaluating any brand, two questions must be considered, first, what is being valued - the trademarks, the brand or the branded business and second, what is the purpose of this valuation.

Trademark plays an important role in brand valuation

A trademark in its essence acts as one of the identifiers of the brand but does not reflect the entirety of the brand itself. A layperson may find it hard to distinguish between the two terms i.e. a trademark and a brand, particularly when the trademark represents the entire business like in the case of Google; but the amalgamation of the two terms is generally not advisable. For example- a business with a good reputation in the marketplace may enjoy an advantage over its competitor(s), even if it employs no trademark.3

Registered trademark has value

A registered trademark is an intangible asset for any business. A registered trademark can be pledged, sold, franchised or can earn royalty income. Hence, in the case of a business spending money and effort on brand development, it is important to apply for trademark registration at the earliest and obtain a trademark registration certificate.

Purpose of a strong brand

One may ask, what is the purpose for having a strong brand? The answer is simple, at least in the case of commercial brands - to earn money/profits. A strong brand attracts more customers, builds loyalty and also motivates the staff, and ultimately all of it helps in generating more revenues and profits, which is the ultimate goal for any business.

There are various methods for calculating the value of the brand, but this paper shall focus on the one – "Royalty-Relief Approach."

Royalty-Relief Approach

Leading brand valuation companies calculate the value of a brand by finding the present value of the estimated future cash flows attributable to a brand based on what the company without a trademark would have to pay to license it through a third-party broker.

Brand Strength

"Brand strength is the efficacy of a brand's performance on intangible measures, relative to its competitors."4 Each brand is allotted a Brand Strength Index (BSI), which is a score out of 100 to help in the calculation of brand value. On the basis of this score, each brand is allotted a rating up to AAA+. The format for calculating brand strength rating is similar to the credit rating format. Three brand strength measures are indicative of brand's future successes, namely, a) marketing investment, b) stakeholder equity and c) business performance.

II. GOOGLE IT

It is important for a business not to underestimate its brand's value. The example of Google sums up this analogy. There was a lot of apprehension during the initial public offering that the term "Google" might become synonymous with "search", which would have in turn resulted in loss of trademark protection.5 According to a recent study done in the year 2018, Google as a Brand is worth $120.9 billion, which is a marked increase of 10% since last year6.

III. FAIRYTALES, THEY DO COME TRUE! - THE CASE OF DISNEY

The entertainment giant, Disney takes the lead spot as one of the largest media brands in the world.7 Disney currently has a brand value of $32.6 billion, which is a 5% decrease since 2017. Disney maintains its brand's appeal with an AAA+ brand rating by focusing on brand loyalty, investments in new technologies and expansion of its valued partnerships and divisions. The company operates in five segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive Media. With a brand strength index (BSI) score of 92.3, up from 91.3 last year; Disney is the one of the strongest brands and one of the most interesting to watch in the coming years.

Disney's expansion plan

Disney purchased a majority stake in 21st Century Fox, thus expanding its reach to consumers worldwide. Acquiring companies like Star India – which reaches hundreds of millions of viewers on the subcontinent, and Sky – with presence across the UK, Ireland, Germany, Austria, and Italy, as well as a 60% stake in Hulu –one of Netflix's biggest competitors; Disney can now leverage its greater international reach to establish its brand as much more than just a children's favorite.

Disney's recent trademarks8

Looking at the trademarks that Disney has recently got registered, we see just how vast the company's trademark holdings in the entertainment industry really are.

  • U.S. Trademark No. 862075578; Trademark - "Flavors of Africa"
    This recently registered character mark reflects a decision to increase the food items made available through the Boma Flavors of Africa marketplace, situated in Walt Disney World's Animal Kingdom. This trademark was registered specifically in relation to coffee products.
  • U.S. Trademark No. 86337829
    This design mark consists of an illustration drawing, featuring a tilted Mickey Mouse head outline with a large checkmark sign running through it. The trademark was developed for use on a website featuring and providing information on health and nutrition.
  • U.S. Trademark No. 86121929; Trademark - "Radio Disney"
    Disney's operations over the radio airwaves can be more effectively licensed to broadcasters, owing to the registration of this trademark.
  • U.S. Trademark No. 86261266; Trademark - "ScoreCenter"
    This trademark is used in relation to electronic scoreboard service for athletic events which is distributed to computers and wireless devices by means of a global computer network. ESPN, the owner of this trademark, is a Disney subsidiary.

IV. MOST VALUABLE INDIAN BRANDS

Even though US brands lead the lists of most valuable brands, Indian brands are making sure they are rising to the competition. With a billion-strong population, India caters to one of the largest consumer groups, and Disney's acquisition of Star India is a sign that Indian brands are a force to be reckoned with.

Fastest growing IT brand in the world9 Tata Consultancy Services (TCS) with a brand value of $10.391 billion, a 14.4% growth since 2017, has become the world's fastest growing IT brand and is one of the top three most valuable brands in the global IT services sector along with IBM and Accenture.

V. CONCLUSION

In a world that is obsessed with innovation, technology and rights, brand valuation plays a major role in the growth of businesses. Trademarks form the very basis of brand-building, while contributing to the goodwill/reputation of the business/company; they also contribute immensely in terms of profits/revenues. Companies expand their businesses in unchartered territories by leveraging their reputation in other market sectors. Disney is a significant example of a company that has leveraged its reputation in numerous sectors and has become one of the largest media brands with a brand value of $32.6 billion in the year 2018. With technological advancements in place, internet has also played a vital role in the growth of brands.

The founder of "Amazon", Jeff Bezos, had once said that the brands are more important online than they are in the physical world; and the success story of Amazon speaks for itself. The ecommerce giant, Amazon, has become the world's largest internet business and is currently the world's most valuable brand ahead of Apple and Google with a brand value of a whopping US$150.8 billion, with a year on year increase of 42%.10 Also, Amazon has moved beyond digital space, by leveraging its brand reputation to other sectors, which is evident through its takeover of Whole Foods for US$13.7 billion11. Brand, hence, plays a major role in business expansion and revenue generation.

Footnotes

1. Brand Finance, See http://brandfinance.com/ (last assessed on May 24th 2018).

2. Brand Finance, "The annual report on the world's most valuable media brands", February 2017.

3. John E. Elmore, "The Valuation of Trademark- Related Intangible Property", See www.willamette.com.

4. Brand Finance, "The annual report on the world's most valuable media brands", February 2018.

5. P.T. Shravani, "Trademark valuation: The vital importance of knowing what your mark is worth", YourStory.com, See https://yourstory.com/mystory/4320d8211f-trademark-valuation-the-vital-importance-of-knowing-what-your-mark-is-worth (last assessed on May 19th 2018).

6. Jessica Tyler, "The 10 Most Valuable Brands in 2018", inc.com, See https://www.inc.com/business-insider/amazon-google-most-valuable-brands-brand-finance-2018.html (last assessed on May 19th 2018).

7. Supra Note 4.

8. Steve Brachmann, "Disney leverages entertainment IP for business success", IPWatchdog, See http://www.ipwatchdog.com/2015/05/22/Disney-leverages-ip/id=57608/ (last assessed on 29th May2018).

9. Brand Finance, "TCS ranked as the fastest growing IT services brand in 2018", Tata Consultancy Services Ltd., See https://www.tcs.com/tcs-fastest-growing-it-services-brand-finance-2018 .

10. Brand Finance, "The annual report on the world's most valuable brands", February 2018.

11. Id.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions