SchmidPreissler Strategy Consultants at The Lion's House
D-83703 Gmund am Tegernsee. Represented in Berlin, Istanbul, Mumbai, New York, Shanghai and Tokyo
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Our philosophy: Successful corporate strategies are market strategies and market strategies are always brand strategies.

 

SchmidPreissler is the avant-garde among strategy consultants. We serve business leaders worldwide.

 

With this site we present our brand equity and performance program in the scope of the
subject-matter 'turn of an era and paradigm shift in brand marketing' as a key to safeguarding
brand marketing investments and expenditures. This program is a new norm.
We regard this program to be a milestone in brand marketing already today.

 

 

 
 

SchmidPreissler Brand Equity+Performance©  Programm

 
 

Issue: 3/2005 

Next Issue: Week 22/2005

 

 

Excerpt of further issues topics: Brand Equity and Brand Strategy, Brand Equity and Brand Diffusion, Brand Equity and Company Success, Brand Equity and Sales and Acquisition of Brands or Companies, Brand Equity and Marketing Investment

 

 

 

 

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Brand Equity and Brand Utilization Fees
SchmidPreissler Market Research Berlin

Lately, traditional licensing marketing has been under a lot of pressure. Most likely, there are more contracts being terminated prematurely or not being extended than new contracts being signed, due to the successes that had been hoped for but not realized. Ergo, does the diversification of the scope of activities of a brand have to be dismissed? We think not.

It is surely necessary to thoroughly inspect every single case where the desired success did not materialize. Due to our experience of many years, we know that it is possible to make full use of the brand with products suitable to this brand.

It deserves a system where, aside from evaluation of suitability in regards to the scope of activities of a brand and the choice of the correct partner with whom one would like to realize a diversification of said scope of activities, the knowledge of the brand equity, the immaterial and material brand equity, are deciding factors. This essay addresses the role of brand equity.

If a company deals with the topic of diversification of the scope of activities of a brand or, as we call it, with brand diffusion, then we suggest to first establish the monetary value of the brand. Because everyone involved has to be able to assess the performance of the brand which could be expected, what it is going to need in investments in order to live, and the costs that arise as well as the return-on-investment that will be generated through diffusion; and how high the brand utilization fees have to be as a result.

Nowadays, it is often the case that licensing fees are determined by conditions usual in that line of business, by the profitability of that branch, the negotiating skills of the brand owner or something similar, and less by the fact of what is economically feasible for the calculation of the sales price, namely an adequate, value oriented brand utilization fee.

If we take a closer look at the classic definition of the price, namely price = equivalent value expressed in monetary units, which is rendered for goods (or services), than we should not see the term “equivalent value” solely as the sum of all costs for resources, production, distribution, profit margin, etc., rather we should see the price as a package of values, consisting of a material and immaterial value.

The material value is obvious: Material and processing, production costs, marketing costs, as well as the cost of capital and so on. The immaterial value, which we could also call the added value, is formed from the appreciation a product enjoys and is expressed through the brand which stands for this product. The consumer is prepared to pay a fair price for this value.

Brands with a weak immaterial value possess only marginal appreciation. In general, they are not suited for brand diffusion.

Businesses used to list their property with a remaining net value amongst asset values. They used to be in the truest sense of the word “undisclosed reserves” Today that is different. Property has to “work” its share, as measured by their actual value. They have to add to the corporate performance. Expedient basic conditions have been created all the way to outsourcing or sale and leasebacks.

We suggest to view brands in the same manner. In the past, the monetary brand equity was only discussed in connection with the sale of a business, which owned one or several brands. Even in cases where the monetary brand equity was taken into account, brands where hardly ever seen as an adequate (monetary) portion of property, however for machinery, property and other assets it is taken for granted. The consequence being, that the revenue of a brand results solely from the fact that those products behind a brand allow for a higher added value. Only in very few cases are companies able to concretely state how brands really perform.

Our appreciation for brands is assuming different circumstances and thus we treat brands differently. For us, a brand is an asset which is expressed as a monetary value and thus it has to generate a return-on-investment. Only then it will be possible to cultivate and support a brand accordingly and gain access in a diffusion strategy.

It is our considered opinion, that the traditional licensing marketing is outdated. Already the terms of licensor and licensee indicate that this form of marketing is about give and take, about brand for money and money for brand. A principle which can be categorized without exaggeration as ‘discontinued model’.

In our opinion, brand diffusion, with partners teaming up through the concept of a strategic alliance, is going to be carried by brand strategy, whose center is the monetary brand equity. This monetary brand equity supplies the parameters for the evaluation of the success of diffusion.

 

 

Corporate Strategies

 

Market Strategies

 

Brand Strategies

 

Brand Development

 

Brand Diffusion

 

Brand Leadership

 

Brand Equity + Performance

 

Brand Positioning

 

Brand Protection

 

Brand Rating

 

Brand Rules

 

Brand Net-Added Value

 

Brand Driven Selective Distribution

 

The Waisted Rectangle©- The new picture of the consumer goods markets

 

Global Branding

 

Knowledge Society as Target Group

 

 

Editor: Dipl. Vw. Christina Schmid-Preissler - Assistant Editor: Regina Seago

Copyright © 2005 SchmidPreissler Strategy Consultants. All rights reserved.

© 2005 SchmidPreissler

 

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