Week 10: Brand Valuation

This week I read the course pack articles, watched the recorded videos, and listened to a couple iTunes U marketing lectures (while driving). 


Here are the learning journal considerations for this week. 

1. What makes a brand valuable?
1. Brand value is all about customer perception and feelings. The Coke brand is so valuable because customers perceive it to be quality, refreshing, cool, and happy.  All of the Coke ads are trying to convey feelings to people...feelings that you should feel when you participate with the brand.  A brand is valuable when it effectively conveys the intended message to consumers at the buying decision moment and results in sales over a competitive product. 
2. What do brands do.  How do they create value?
1. Brands communicate perception and influence purchase decisions.  You can't have all the information about competing products when making a decision, so people use heuristics or shortcuts in making purchase decisions.  Brands help convey the basis of those heuristics.  For example, when I show my resume to someone or someone looks at my LinkedIn page and they see "Kelley MBA" they don't know every detail about my education.  All they know is what they perceive about the Kelley brand.  Maybe they know some Kelley grads or they know that it is a top ranked school and that is what they have to base decisions on. 
3. What are some of your most favorite brands?  Why?
1. I really like Google.  Google products to me represent sophistication and simplicity that I can trust.  I can trust signing in to all the Google products I use and letting them track my internet behavior because I see the benefits of it.  I know they could use that information to invade my privacy, but I trust that they wont "be evil" or jeopardize anything that could result in tarnishing their "don't be evil" brand in the public eye. 
2. I also like Mazda.  I own a Mazda 3 because they are about quality, design and driving fun.  The design of my car, the smooth manual shifting, and functional space (hatchback) provide me with positive feelings when I drive it.  I probably wont always own a Mazda, but I definitively have positive feelings about the car because of the brand. 
4. Should Brands be on the balance sheet?  Why?  Why not?
1. Brands absolutely add value to businesses by having a major influence on sales.  This can influence sales more than anything else about the product so they should be quantified and valued as an asset.  Valuing a brand as an asset would take a lot of work and may be difficult to scale at all levels, but it is an asset that should have visibility when analysts value a firm.  Right now stock value and P/E ratios seem to be a good indicator of brand value perception for US traded firms.