Corporate Brands as Assets

Minicase: The Best Global Brands

1

Interbrand, a leading international brand consultancy specializing in brand services and activities, has developed a method for valuing (global) brands. It examines brands through the lens of financial strength, the importance of the brand in driving consumer selection, and the likelihood of ongoing revenue generated by the brand.

Each year, Interbrand compiles a list of global brands for analysis based on five criteria:

1. There must be substantial publicly available financial data for the brand.

2. One-third of the brand’s revenues must come from outside its country of origin.

3. The brand must be positioned to play a significant role in the consumers’ purchase decision.

4. The Economic Value Added (EVA) must be positive, showing that there is revenue above the company’s operating and financing costs.

5. The brand must have a broad public profile and awareness.

The use of these criteria excludes a number of brands one might expect to be included. The Mars and BBC brands, for example, are privately held and do not have financial data publicly available. Wal-Mart, although it does business in international markets, does not do so under the Wal-Mart brand and is therefore not sufficiently global. Certain industry sectors are also not included in Interbrand’s study. An example is provided by telecommunication brands, which tend to have strong national roots and have faced awareness challenges due to numerous mergers and acquisitions. The major pharmaceutical companies, while very valuable businesses, are also excluded since their consumers tend to build a relationship with the product brands rather than the corporate brand.

For brands that meet the Interbrand criteria, the company next looks at the current financial health of the business and brand, the brand’s role in creating demand, and the future strength of the brand as an asset to the business.