Global research agency Millward Brown has announced that the BrandZ Top 50 Most Valuable Indian Brands 2014 will launch on August 19, 2014. It is commissioned by WPP and carried out by Millward Brown. Currently in its ninth year, the BrandZ Top 100 Most Valuable Global Brands study aims to create a new milestone with the launch of its first Indian edition, BrandZ Top 50 Most Valuable Indian Brands. The rankings will be unveiled on August 19 in the presence of Sir Martin Sorrell, CEO, WPP, and top executives of leading Indian companies.
The valuation study was introduced globally in 2006, in China in 2011 and Latin America in 2012.
In a conversation with exchange4media, Prasun Basu, MD, South Asia, Millward Brown talks about the key elements of the study and its methodology.
How are BrandZ rankings unique this year?
This is the maiden year of BrandZ’ foray into India. The BrandZ Top 50 Most Valuable Indian Brands ranking will offer insightful, strategic information highly relevant both to local marketers and international brand leaders growing brands in the Indian markets.
The BrandZ ranking combines publicly available financial data from Bloomberg with solid primary consumer research. It combines financial and market data with primary research data about the people that buy brands and it is the only ranking in India that takes into account the financial valuation of a brand. It also considers a brand's growth prospects when calculating brand value.
It takes into account the opinion of people who actually buy the brands, to measure its appeal. Real data from consumer research on how the brand drives financial performance (the brand contribution) is a critical component of valuing brands.
BrandZ includes consumer-facing brands instead of focusing on the value of the corporation as a whole. It includes consumer perceptions of a brand, which allow us to determine its value and future earnings.
For brand database, Millward Brown has interviewed more than two million consumers in over 30 countries about 10,000 brands over the last 17 years. In India, the study has covered more than 500 brands across 37 categories.
What is the main objective of the study and how does it helps marketers, and agencies?
The objective of marketers is to create and grow brands. Today there is enormous pressure on marketing departments to justify the financial returns from their brand and marketing investments. Millward Brown offers an integrated approach to marketing analytics and accountability; our in-depth financial and high level strategic analysis helps marketing teams benchmark their brand and marketing activities and justify brand strategy and investment decisions to the finance department and in the boardroom.
BrandZ is a brand valuation tool that peels away all of the financial and other components of brand value and gets to the core—how much the brand alone contributes to corporate value. This core, what we call Brand Contribution, differentiates BrandZ. The ranking enables brand owners to evaluate and compare brands and make faster and better-informed decisions. It gives a starting point for talking about brands in terms of the value these powerful but intangible corporate assets provide to organisations; highlighting the value of marketing and branding to the business in financial terms (the language commonly used by businesses). As a result, the ranking has become a benchmark for those organisations that leverage their brands to add value to their businesses.
Finance departments should also see this information because brands impact a company's competitive advantage through a number of value drivers like growing shareholder’s value: by reducing overall business risk, reducing the cost of entry into new categories, reducing tax rates through licensing and increasing retention of staff. Strong brands also help businesses create competitive differentiation, command a price premium and become more resilient to crises or economic turbulence.
Are there any changes in the methodology?
The valuation methodology has been developed by Millward Brown’s global brand strategy and financial consultancy. The methodology has been tested over time and has been validated since it was first published in 2006.
The methodology can be outlined in the below mentioned steps.
• Step 1: Calculating Financial Value
We attribute the correct portion of Corporate Earnings to each brand by analysing financial information from annual reports and other sources, such as Kantar Worldpanel and Kantar Retail. This analysis yields a metric we call the Attribution Rate. We multiply Corporate Earnings by the Attribution Rate to arrive at Branded Earnings, the amount of Corporate Earnings attributed to a particular brand. Predicting future earnings requires adding another component, which assesses future earnings prospects as a multiple of current earnings: the Brand Multiple. It’s similar to the calculation used by financial analysts to determine the market value of stocks. Information supplied by Bloomberg data helps us calculate this. We take the Branded Earnings and multiply that number by the Brand Multiple to arrive at what we call Financial Value.
• Step 2: Calculating Brand Contribution
We then peel away the rational factors that influence the value of the branded business, for example price, convenience, availability and distribution. Because a brand exists in the mind of the consumer, we assess its uniqueness and its ability to stand out from the crowd, generate desire and cultivate loyalty: this is the unique role the brand plays in value, its Brand Contribution. We obtain this customer viewpoint by conducting worldwide on-going, in-depth quantitative consumer research, online and face-to-face, building up a global picture of brands on a category-by-category and country-by-country basis.
• Step 3: Calculating Brand Value
We take the Financial Value and multiply it by Brand Contribution, which is expressed as a percentage of Financial Value. The result is Brand Value: the dollar amount a brand contributes to the overall value of a corporation. Isolating and measuring this intangible asset reveals an additional source of shareholder value that otherwise would not exist.