Analysis of the Ecuadorian government's proposed methodology of brand valuation: application in agricultural sector brands

PurposeThe purpose of this work is to analyze a brand valuation methodology proposed by the current Ecuadorian National Service for Intellectual Rights, assessing the relevance of the proposed marketing variables: awareness, associations and evaluation of purchase determinants, and their relationship within the proposed methodology.Design/methodology/approachThe authors used data from surveys of 482 consumers of two agricultural brands in Ecuador (supplies, equipment and services). The authors applied linear multiple regressions estimated by generalized least squares with heteroskedasticity-robust standard errors. “Intention to repurchase” and “recommend” the brands were selected as dependent variables due to their relationship with brand value.FindingsBrand awareness and associations positively influence the two dependent variables. However, the interaction between brand awareness and associations is negative, suggesting that, for the upper level of awareness, associations have no effect over intentions. This result holds for both brands. Brand evaluation of purchase determinants was a significant predictor of intentions only for the brand which belongs to a product category in which the purchase decision process is more extensive and with more effort.Research limitations/implicationsThis study is focused only on agricultural brands, which limits the generalization of the findings.Originality/valueThe agricultural sector is very important in Ecuador due to its contribution to GDP and employment, and the country's position as the fifth exporter of bananas worldwide. Understanding consumer behavior is important for brands and firms' managers in order to preserve or increase brand value, for which a reliable valuation model is useful.

Brand valuation: an innovative approach based on the risk difference

Research background: Among academicians, a growing interest in brand valuation methods can be observed since the 1980s, when it became obvious that firms have off-balance sheet assets which have a significant effect on their value. Moreover, in a number of cases, the need to value the brand arises due to the reporting requirements or transactional and other intrafirm reasons. The existing methods used so far have commonly focused on changes in variables such as sale prices, changes in customer behaviour, or sales volumes and very often lead to different results, even when valuing the same brand. We believe that the risk factor has been neglected in these methods, although having a significant impact on the brand valuation. Purpose of the article: The aim of this paper is to formulate an alternative brand valuation approach based on the risk difference. This is defined as the difference between the risk to which a producer with a certain brand is exposed and the risk of the producer without a brand. Methods: Firstly, a set of assumptions was defined concerning the issue what conditions are required to be applied to use the proposed methodological approach. Next, the concept itself is formulated and tested while using the case study approach. Hence, in conditions of a model company, the method was verified with specific data. The results were also compared with the reproduction cost approach. Findings & value added: This paper presents a novel brand valuation method based on the risk difference. Building on a thought experiment, we compare an incumbent with a brand rather than with an average producer, which is a commonly used approach, with a new entrant to the market. We argue that in comparison to existing methods, our methodological approach reduces the number of unobservable inputs in the brand valuation process, and thus increases the accuracy and reliability of its results. Our method supports both researchers and practitioners to establish a better understanding between the well-established financial theories and new directions in brand valuation research.

Are Brand Value and Firm Value Related? An Empirical Examination

This study aims to explore the influence of brand value on firm performance and shareholder wealth creation. This study is based on the top 100 brands ranked by Interbrand. This research article analyses the impact of brand value on firm performance both in terms of stock market performance and operating performance. This study uses panel regression data to understand valuation effects of brands. The results suggest that firms with superior operating performance have higher brand valuation effects. Higher brand valuation is a significant determinant of profitability. Brand quality leads to improved cash flow on account of the likelihood of repurchase. This study establishes the negative relationship between agency conflicts and brand value. The results support the belief that a marketer’s efforts on brand investments are a significant source of value-creating activity.