market value versus brand value

The market value of a company consists in part of brand value. But how much is a brand worth? In his 'Brand question blog series', Merkstratega Ingmar de Lange refers to research by Jonathan Knowles (type 2 consulting). Knowles bundled various brand investigations from 2010 to 2015 and this resulted in figures for three hundred different brands. He concluded that on average 20 percent of the market value of a company consists of brand value. So if a company is sold for 1,000,000 euros, then an average of 200,000 euros will be paid for the brand.

strong brands work

Yet Merkbouw is not the first investment that you as an entrepreneur think of. But the value of this can quickly become clear with this example of Ronald Faas (Sustrain Support). During a workshop he asked his students: "How much would you like to pay for this product?"

Both T-shirts have exactly the same technical specifications, but shirt 1 is a 'unbranded' and shirt 2 is from the Nike brand. For shirt 1 they were prepared to pay 5 to 8 euros and for shirt 2 even 18 to 25 euros. The question is therefore not why a strong brand is important, but how you can build a strong brand.

How do you make a stronger brand?

Now that we know that a strong brand can be of great value, the question is: how do you make a brand stronger and therefore more valuable? Researchers Les Binet and Peter Field have combined the promotional activities of all kinds of brands in recent decades and analyzed patterns. Their research shows that a correct balance in sales activation and brand buildings is the best approach.

Budget distribution activation and brand construction

But how much budget do you put on sale and how much in brand construction? This is a difference between consumer brands and business brands. According to Binet and Field, it is wise for consumer brands to put 60 percent of the budget in brand construction and 40 percent on sale. For business brands this is 46 percent brand construction and 54 percent sales. Sales ensure the impulse (short term), but brand construction provides growth (long term).

The brand strategists of Vandeez advise both B2C and B2B companies in the field of brand construction and brand activation . Depending on your goals and budget, we can advise you with regard to the right efforts at the right time. Contact us for free advice.