Brandz Global Report 2018 on most valuable brands is compiled by the marketing firm Millward Brown. It holds data from over 650,000 consumers and professionals across 31 countries, comparing over 23,000 brands. The database is used to estimate brand valuations, and each year since 2006, has been used to generate a list of the top 100 global brands.
What are Brand Equity and Brand Valuation?
Brand Equity : 'Brand equity' is a phrase used in the marketing industry which describes the value of having a well-known brand name, based on the idea that the owner of a well-known brand name can generate more revenue simply from brand recognition; that is from products with that brand name than from products with a less well known name, as consumers believe that a product with a well-known name is better than products with less well-known names.
Brand equity lies in consumer’s awareness of brand features and associations, which drive attribute perceptions. A strong brand name works as a signal of product quality for buyers and generates price premiums. It has been demonstrated that brand equity plays an important role in the determination of price and firms are able to charge price premiums that derive from brand equity after controlling for observed product differentiation.
Elements that can be included in the valuation of brand equity include (but not limited to): changing market share, profit margins, consumer recognition of logos and other visual elements, brand language associations made by consumers, consumers' perceptions of quality and other relevant brand values.
Brand Valuation : Brand valuation is the process used to calculate the value of brands. Since 1988, brand valuation methods have improved and consolidated, thanks in part to their acceptance in 2005 under International Financial Reporting Standards (IFRS). IFRS stated that, for the first time, brands and other acquired intangible assets could be reported on a company’s balance sheet.
Brands are valued for many different reasons, such as for legal disputes, strategic management, internal communications, business management, and in Mergers & Aquisitions. Brand valuation models follow standard guidelines. Models for valuing brands follow the same principles of valuation that are used for valuing other tangible assets – economic income approach, market approach and cost approach.
BRANDZ GLOBAL 100
Value of best 100 global brands is valued at US$ 4.4 trillion. That is 4400 billion US Dollars.
Most Valuable Global Brands
Out of the most valuable top ten brands, we have 5 technology companies including Tencent which is a Chinese tech giant. On the remaining five, both Amazon and Alibaba (China) are technology driven online retailers.
Top American and Japanese companies like WalMart, Coca Cola, Toyota, Marlboro, General Electric and City Bank which used to dominate the top ten list of most valuable global brands have been replace due to the massive growth of technology companies. The most valuable brands list is dominated by American and Chinese companies confirming that America still retains the leadership in the first decade of the 21 century and China is rapidly rising to take the number two spot.
Top 20 Risers
When we analyse the Top 20 risers or companies rapidly advancing in brand value, once again Chinise companies such as JD.com, Alibaba, Tencent and Chinese brewer Moutai leads the group. Netflix and Tesla are break-out American brands who's innovative products and disruptive business models are winning millions of adoring customers. Traditional technology companies like PayPal (online payments), Adobe (creative and document management) are making a comeback as well. Amidst technology heavy brand value landscape, it is good to see traditional manufacturers such as apparel and footwear maker Adidas making significant brand value gains.
Top 20 Business to Business (B2B) Brands
Unlike consumer (B2C) buying, business to business (B2B) can be considered as more rational and less emotional buying. Companies consider reliability, value for money and long-term partnerships when considering business to business transactions. In the B2B scenario, American B2B brands dominate. The non-American entrants in the list are two German companies; SAP (enterprise software), and DHL (logistics and courier), HSBC the British banking giant and Shell petroleum company. China is represented by telecommunications equipment maker Huawei.
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