Brand Finance

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Connecting Brand Value, 'Brand Equity' and Brand Economics.

Published on 12.08.2010

In financial terms a brand represents the pact between a consumer and a supplier, promising a secure flow of future revenues and profits to the supplier. Ultimately, what gives a brand its value is that it is a specifically defensible piece of legal property with an incremental stream of revenue attached to it.

The supplier’s earnings are secure because strong brands create both functional and emotional barriers to competition for the consumer’s loyalty. On the functional side, brands simplify recognition and selection; they facilitate split-second purchase decisions at point-of-purchase. Brands provide a guarantee of origin and quality; reliable consumer choices can be made in safety. On the emotional side, brands provide reassurance; ‘I am a good mother because I use Pampers’. Brands satisfy associative desires; ‘I am one of the in-crowd because I wear Versace’. They are aspirational; ‘I am an up-and-coming executive because I drive BMW’. Finally, they fulfill self-expressive needs; ‘I am manly because I smoke Marlboro.’ and so on.

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