Why is brand history important in proposing an IBP idea?
Cash generating unit arw define as the smallest identifiable group of assets that generates cash inflow that are largely independent of cash inflow from other assets and group of assets enterprise draw their value from all the cash generating unit the business has developed cash generating unit can be physically (e.g machine building and vehicle fleets ) and intangible (e.g brand internet domain names customer list and contract royalty and licensing agreement and software program).
If brand are seen as cash Henry unit are indeed they are contribute directly to enterprise value for many years this has been acknowledged by investors who factors brand into the prise they are willing to pay for a company whether as a stock price or to buy the business.
Single brand
Companies such as motor vehicle manufacturers might have a single brand name under which all its models are marketed . In this case the value is the total of all the models sub model that fall under the parent name this total portfolio value contribute to enterprise value.
Category brand
A company such as proctor gamble does not use its corporate name to market brand but has a variety of brand with different names that are collectively sold in category protfolio.
Benefits of brand valuation to marketer's
Marketing effectiveness brand valuation can be used as benchmarks for measuring the effectiveness of marketing orogprog and tracking progess over time it can relate an improvement brouth about by planned marketing action to either short term cash flow acceleration it enhancement of long term cash flow through the strengthening of consumer bonds with the brand.
Portfolio optimisation it can be used strategies to evaluate the number of brand or product in a portfolio and aid in pruning rationalization and portfolio optimisation.
Positioning strategy it can provide guidance in selecting the most economic attractive positioning from a set of alternatives.
Investment justification it can be used to evaluate and justify expenditure request by using the NPV rule since the valuation methodology is based on the time value of money.
Communications tools it can be used to communicate the outcomes of marketing programs to financial and general management since brand valuation is a financial management tools.