Strategic Marketing: Planning and Control, Third Edition

balance sheets separately from goodwill. Accountants have largely been

at the forefront of this approach and have developed a range of factors

seen as indicators of a brand’s value. All are linked to the ability of the

brand to sustain higher returns than competitors. These factors include:

● Market type: Brands operating in high margin, high volume and stable

markets will carry higher valuation than brands in less profitable or

stable sectors. The confectionery or beer markets have traditionally

been seen as less liable to changes in technology or fashion. Deciding

on the potential of a market type, however, is full of difficulties. Even

the drinks industry now shows signs of more regular changes in con-

sumers’ behaviour. It should also be borne in mind that one of the aims

of developing a strong brand is to allow a company to compete on

other factors than price allowing them to make strong margins even

in what could be seen as commodity markets. The Andrex brand of

toilet roll has consistently made strong margins in the UK market.

More importantly it has gained higher margins than any of its com-

petitors over the last 30 years from what is essentially a commodity

product.

● Market share: Brands that are market leaders are deemed to command a

premium because competitors will find it difficult to overcome con-

sumers’ tendency to buy the dominant brand. In effect holding the mar-

ket leadership position is seen as a barrier to entry for other brands.

● Global presence: Brands that either do, or carry the potential to be,

exploited internationally obviously carry more value than brands

within a purely domestic market. Development in e-commerce may

lower barriers to establishing a global brand name and therefore do set

196 Strategic Marketing: Planning and Control

Brand extension

equity

Perceived

quality

Brand stretching

awareness

Brand revitalisation

identity

Brand repositioning

loyalty

Figure 9.9
The constituents of

Creating brand equity

(Source: Aaker,

1995)