Inter brand valuation

Description
The objective of ppt is inter brand valuation and it explains factors for comparison, S-curve by weighted average

BRAND

VALUATION

BRAND VALUATION BRAND VALUE CAN (ALSO) BE CONSIDERED AS THE MONETARY VALUE OF THE BRAND WHICH IS THE RESULT OF THE BRAND STRENGTH SHOWN IN THE MARKET AND REFLECTED THROUGH ITS EARNINGS. IT ALSO ASSUMES THAT THE BRAND EARNINGS HAS TO BE DISCOUNTED AS THE THE FULL BRAND EARNING IS NOT COMING FROM THE BRAND ONLY.

INTER BRAND METHOD OF VALUATION INTER BRAND APPROACH TO BRAND VALUATION WORKS ON THE PREMISE THAT IT IS BRAND STRENGTH WHICH DETERMINES THE DISCOUNT RATE OR MULTIPLE TO APPLY TO BRAND EARNINGS. BRAND VALUE = F ( BRAND STRENGTH, DISCOUNT RATE/MULTIPLE,BRAND EARNINGS)

1.MEASURING BRAND STRENGTH

BRAND STRENGTH DEPENDS ON SEVEN FACTORS: 1. LEADERSHIP (25)- ABILITY TO INFLUENCE THE MARKET, MARKET SHARE ,PRICE LEADERSHIP ETC. 2. STABILITY (15) –HIGH DEGREE OF CUSTOMER LOYALTY 3. INTERNATIONALITY (25)-GEOGRAPHIC REACH INCLUDING ACCEPTANCE INTERNATIONALLY. 4. SUPPORT (10) –INVESTMENT AND FOCUSED MARKETING SUPPORT.

5. TREND (10)-CONTEMPORARY AND RELEVANT TO CUSTOMERS. 6. MARKET (10) – ATTRACTIVENESS, GROWTH, COMPETITION, ENTRY BARRIERS. 7. PROTECTION (5)- PROTECTED BY LEGAL SYSTEM, PATENTS ETC.

BRA ND STRENGTH SCORE OF BRANDS.

factors

Max.score

Kurlon Duroflex Starlite

leadership stability market internationality Trend support protection Brand strength

25 15 10 25 10 10 5 100

22 12 6 20 6 5 3 74

17 11 8 17 7 6 3 69

15 10 7 15 8 7 3 65

2. FINDING OUT THE BRAND MULTIPLE CALCULATE DISCOUNT RATE/ BRAND MULTIPLE THE BRAND STRENGTH MULTIPLE IS FOUND OUT BY PLOTTING THE BRAND STRENGTH AGAINST THE DISCOUNT RATE / MULTIPLE. THE MULTIPLE/DISCOUNT RATE IS A VALUE BETWEEN 0 AND 20.IT IS A REFLECTION OF THE P/E RATIO OF A FEW SECTORS. THIS VALUE IS SHOWN ON THE Y’ AXIS AND THE BRAND STRENGTH ON THE X AXIS. THE TYPICAL GRAPH SHOWS AN ‘S’ CURVE.

The S-curve that Inter brand Uses

THE VALUE OF THE BRAND STRENGTH AND THE RESPECTIVE MULTIPLE IS PLOTTED ON THE ‘S’ CURVE, FOR THE THREE BRANDS. THIS VALUE ON THE ‘S’ CURVE GIVES THE BRAND (STRENGTH) MULTIPLE.

BRAND STRENGTH SCORE OF BRANDS.

factors

Max.score

Kurlon Duroflex Starlite

leadership stability market internationality Trend support protection Brand strength Brand multiple

25 15 10 25 10 10 5 100

22 12 6 20 6 5 3 74 16.8

17 11 8 17 7 6 3 69 14.5

15 10 7 15 8 7 3 65 13.3

1.

HOW WILL YOU MEASURE BRAND EARNINGS?

A. CONSIDER PROFIT BEFORE TAX. AS FAR AS POSSIBLE ELIMINATE OTHER FACTORS’ ( ANYTHING OTHER THAN WHICH IS DIRECTLY CONTRIBUTED BY THE BRAND) INFLUENCE ON PROFIT.

B.CALCULATING THE BRAND EARNING
a. b. c. d.

ATTACH A WEIGHT OF 3 FOR THE MOST LATEST , 2 FOR THE NEXT AND 1 FOR THE LAST. FIND OUT THE PROFIT OF 3 LATEST YEARS. MULTIPLY THE PROFITS OF EACH YEAR WITH THE RESPECTIVE WEIGHTS FIND THE AVERAGE OF THE ABOVE AND THAT IS THE BRAND EARNING.

WEIGHTED AVERAGE PROFIT (IN MILLIONS)

brands Kurlon Duroflex Starlite

Profit Profit Profit Weight1999(1) 2000(2) 2001(3) ed av. 40.35 25.60 19.40 37.56 29.45 23.80 44.25 32.21 26.70 41.37 30.18 24.90

BRAND VALUE OF THE 3 TOP MATTRESS BRANDS.

brands

Brand strength multiple 16.80

Brand earnings (weighted av) 41.37 30.18 24.90

Brand value (in millions) 695.01 437.61 331.17

Kurlon

Duroflex 14.50 Starlite 13.30



doc_366210645.ppt
 

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