Does brand affect stock price?

 

by Tony Fannin, president, BE Branded

Most marketers know that brand is important. Most know that it’s the emotional quality of who your are or what you stand for. So, does brand have any affect to the bottom line? The answer is yes. Brand does have true monetary value. Most corporations list the value on their annual report balance sheets. In Nike’s 2008 annual report, their brand is listed at a value of $659 mil. A company’s brand makes up about 20% of their stock value. That’s significant. How many of us would love to earn 20% just because our brand is out there? 

Brandings black box

There are four components that branding efforts affect. This in turn affect’s the stock price:

1. Perceived Value: This is made up of familiarity and favorability. A great brand allows a company or product to ask for more money and customers still feel like they are getting value.

2. Contribution: Margins and incentives. A successful brand position allows corporations to increase their profit margins by adding an emotional incentive to select one brand over another. This is how a brand contributes real dollars.

3. Cash flow: Great brands provides excess cash flow by enabling companies to dominate their niche or industry

4. Shareholder value: Great brands brings emotional benefits to shareholders in the form of pride of ownership and association. These emotional issues, along with tangible revenue make up the total value for shareholders.

Brands have value. Great brands not only have enormous value, but provide powerful leverage in both good times and down times. In bad economic times, people tend to go to brands they trust. There’s less experimenting and less risk taking with an unknown product or service. It is during these times, progressive brands make their greatest increases in both market share and awareness. Because most marketers tend to cut back in slow economic times, the bold ones make their move and advertise more. For example, Dr Pepper and Geico have increased their ad budgets over the last year and have reported gains in market share and revenue. When the good times roll in, these companies who have advertised and established their brands while everyone else went “dark”, are now set to accelerate their growth. They’ve build a great foundation of awareness and trust. When the economy is good and everyone begins to advertise again, there’s more competition for share of mind and wallet. The brands who never went “dark” are already ahead of the game because they have the awareness and share of mind they’ve gained.

Even if your company doesn’t sell stock, you can still take these ideas and apply them to your business. A great brand, as well as a bad one or none at all, will still affect your bottom line. The biggest advantages of a great brand is that it will give you credibility and it makes you money on it’s own.

http://www.bebranded.net

317-797-7226 

by Tony Fannin, president, BE Branded

Most marketers know that brand is important. Most know that it’s the emotional quality of who your are or what you stand for. So, does brand have any affect to the bottom line? The answer is yes. Brand does have true monetary value. Most corporations list the value on their annual report balance sheets. In Nike’s 2008 annual report, their brand is listed at a value of $659 mil. A company’s brand makes up about 20% of their stock value. That’s significant. How many of us would love to earn 20% just because our brand is out there? 

Brandings’ black box

There are four components that branding efforts affect. This in turn affect’s the stock price:

1. Perceived Value: This is made up of familiarity and favorability. A great brand allows a company or product to ask for more money and customers still feel like they are getting value.

2. Contribution: Margins and incentives. A successful brand position allows corporations to increase their profit margins by adding an emotional incentive to select one brand over another. This is how a brand contributes real dollars.

3. Cash flow: Great brands provides excess cash flow by enabling companies to dominate their niche or industry

4. Shareholder value: Great brands brings emotional benefits to shareholders in the form of pride of ownership and association. These emotional issues, along with tangible revenue make up the total value for shareholders.

Brands have value. Great brands not only have enormous value, but provide powerful leverage in both good times and down times. In bad economic times, people tend to go to brands they trust. There’s less experimenting and less risk taking with an unknown product or service. It is during these times, progressive brands make their greatest increases in both market share and awareness. Because most marketers tend to cut back in slow economic times, the bold ones make their move and advertise more. For example, Dr Pepper and Geico have increased their ad budgets over the last year and have reported gains in market share and revenue. When the good times roll in, these companies who have advertised and established their brands while everyone else went “dark”, are now set to accelerate their growth. They’ve build a great foundation of awareness and trust. When the economy is good and everyone begins to advertise again, there’s more competition for share of mind and wallet. The brands who never went “dark” are already ahead of the game because they have the awareness and share of mind they’ve gained.

Even if your company doesn’t sell stock, you can still take these ideas and apply them to your business. A great brand, as well as a bad one or none at all, will still affect your bottom line. The biggest advantages of a great brand is that it will give you credibility and it makes you money on it’s own.

www.bebranded.net
317-797-7226