Brand Valuation & Why It Matters

Brand rating and evaluation is like giving a report card to a brand. It involves assessing how well a brand is perceived by its target audience. This considers factors like customer satisfaction, brand awareness, brand loyalty, and how well the brand delivers on its promises. It’s basically measuring a brand’s health and effectiveness.

Brands are far more than just company logos or fonts; it’s even beyond the products or services a company offers. It’s the powerful entities that evoke emotions, influence purchasing decisions, and the driver of customer loyalty. The brand is the rationalization behind consumer’s choice.

The annual Top Brands League Table helped in giving perspective into this by a recognising brand that excel in building strong connections with consumers.

But what exactly determines a brand’s true value?

This is where brand valuation comes in.

Understanding Brand Valuation: More Than Monetary

Brand valuation goes beyond a simple price tag. It’s a comprehensive evaluation of the worth of a brand as an intangible asset and its perception in the mind of the target audience. The TOP 50 BRANDS NIGERIA® evaluation and ranking is a non-financial valuation, it highlights brands that demonstrate exceptional strength across various dimensions.

And why it matter

For brands aspiring to reach the coveted Top 50 League list, understanding brand valuation is crucial.

Here are some of the reasons:

• Strategic Decision-Making: A brand valuation exercise provides valuable insights into a brand’s strengths, weaknesses, and its competitiveness. This empowers companies to make informed decisions regarding marketing investments, brand extensions, and in cases of merger and acquisitions. That is why leading brands, like Globacom, MTN Nigeria, First Bank of Nigeria and many more, will always conduct brand valuation to assess their position in the market and identify areas for strategic investment in network infrastructure, consumer engagement and various innovations, based on user’s experiences and feedbacks or customer service initiatives to solidify its position.
• Building Brand Equity: Brand valuation sheds light on brand equity, which refers to the added value a brand provides to a product or service. Strong brand, like Dangote Cement, Coca-Cola will consistently rank high on the TOP 50 list, commanding a premium price due to their established reputation for quality, availability and reliability. Understanding brand equity allows companies to focus on strategies that enhance the perceived value of their offerings.
• Negotiation Power: A data-driven brand valuation empowers companies during negotiations. Imagine a brand like GTBank, known for its innovative digital banking solutions, using its strong brand valuation to negotiate favorable partnerships or secure better loan terms.

Various Brand Valuation Methods:

There are various methods and metrics to measure brand value, depending on the objective of the particular valuation and the expected result. Value could be measured in monetary term, goodwill, position etc.  Here are some of the brand valuation methodologies being used for various purposes around the world.

• Market-Based Approach:

This approach looks at recent market transactions involving similar brands. Imagine a company considering acquiring a beverage brand similar to Coca-Cola, a consistent TOP 50 contender. The market-based approach would analyse recent acquisitions of comparable beverage brands to estimate the target brand’s value.

• Income-Based Approach:

This method focuses on the future profitability of a brand. It estimates the future cash flow a brand is expected to generate and then discounts it to arrive at a present value. For instance, a financial institution like Zenith Bank, a prominent name on the TOP 50 list, could utilize this approach to assess the present value of its projected future earnings based on its strong customer base and brand loyalty.

• Brand Strength Measurement (BSM) Approach:

This approach evaluates a brand based on how strong it is in the minds and lives of consumers, rather than on financial transactions or projected earnings. The Brand Strength Measurement (BSM) Index assesses non-financial drivers of brand value such as awareness, consumer engagement, sentiment, category leadership, service quality, national presence, and societal relevance.

• Cost-Based Approach:

This approach estimates the cost of replicating a brand’s current position in the market. Imagine a leading retail chain like Shoprite, often recognized for its brand experience. The cost-based approach would consider the expenses involved in establishing a similar brand presence, including marketing costs, store infrastructure development, and brand building activities.

Choosing the Right Method:

There’s no single “one-size-fits-all” method for brand valuation. The most appropriate approach depends on various factors, including the purpose of the valuation and availability of relevant data.

For the annual TOP 50 BRANDS NIGERIA, the Brand Strength Measurement (BSM) model is used.

What is the BSM Model? 

The TOP 50 BRANDS NIGERIA® ranking utilizes the Brand Strength Measurement (BSM) model. Understanding this model is crucial as it reflects the very essence of what makes a Top-Rated Brand in Nigeria. The BSM model assess brands across seven key variables, that tests consumer’s knowledge and affinity, also most importantly. factors that mostly influence their buying decisions.

The seven variables are:

1. 1. Popularity (Top of the Mind Awareness)

   This measures spontaneous brand recall through a Top of the Mind (TOM) survey, where respondents were asked to mention brands without prompts. The survey includes both consumers and senior marketing leaders such as CMOs and Heads of Corporate Communications, ensuring balance between market perception and industry insight.

   It’s important to note that Popularity carries the highest weight in the BSM model, as brands that are not recalled are rarely considered. Empirical observations overtime shows that consumers most often recall brands they trust, engage with, patronize consistently.

   2. Online Engagement

   This evaluates a brand’s digital footprint, including the quality of its corporate website, its search visibility, media mentions, and social media engagement. In our world that is now digital-first, online credibility plays a critical role in shaping trust and choice.

   3. Sentiment Analysis

   Sentiment Analysis measures how people talk about a brand across the media and public discourse over a defined period of time. It assesses the overall tone of the coverage as positive, neutral, or negative.

   4. Category Leadership

   This pillar evaluates a brand’s influence and standing within its primary industry, based on market share and leadership perception in comparison with competitors. Top brands often have larger market share and influence in their industry.

   5. Customer Service, Innovation & Quality

   This important pillar assesses delivery excellence across products, services, and communications, including service quality, innovation, and relevant regulatory or quality certifications.

   6. National Presence

   National Presence measures a brand’s operational reach and penetration across the country. Brands are expected to have substantial national footprints, with operational presence in a minimum of half of the country’s states or across four of the six geopolitical zones to be considered a truly strong national brand.

   7. Corporate Social Responsibility (CSR)

   CSR evaluates how brands connect with the society through sustainability initiatives, social impact, and community development efforts. Strong CSR performance strengthens emotional affinity and deepens consumer connection with the brand.

These seven pillars formed the foundation for a Top-Rated Brand in Nigeria

Beyond the Numbers: The Intangible Value of a Top Brand

While brand valuation methods may provide some estimations in terms of monetary, positional ranking or other metrics, the true value of a Top-Rated Brand in Nigeria extends beyond numbers.

• Brand Loyalty: Top brands cultivate a loyal customer base that consistently chooses their products or services over competitors. This loyalty translates into reliable revenue streams and a strong market position.
• Customer Advocacy: Loyal customers become brand advocates, promoting the brand organically through word-of-mouth recommendations and positive online reviews. This “earned media” is invaluable for building brand trust and attracting new customers. Imagine a telecommunications company like Globacom, recognized for its strong network coverage, inspiring its satisfied customers to recommend their services to friends and family.
• Brand Differentiation: Top brands stand out from the crowd with a unique brand identity and a compelling brand story. This differentiation allows them to command premium prices and attract a premium customer segment. Think of a luxury fashion brand like Mai Atafo, known for its exquisite designs and commitment to ethical production practices, differentiating itself in the competitive fashion industry.

Building a Brand Worthy of the Top 50 List:

Here are some key takeaways for brands aspiring to earned the coveted TOP 50 ranking and achieve exceptional brand value:

• Focus on Customer Centricity: Obsess about understanding your customers’ needs and exceeding their expectations. Prioritize customer feedback, actively address concerns, and personalize your communication and offerings.
• Embrace Innovation: Don’t be afraid to disrupt the status quo! Invest in research and development, stay updated on industry trends, and continuously explore new ideas to keep your brand relevant and exciting.
• Craft a Compelling Brand Narrative: A powerful brand story resonates with your target audience. Communicate your brand values, mission, and purpose authentically and consistently across all touchpoints.
• Leverage the Power of Digital: Create a user-friendly and engaging online presence. Optimize your website for mobile responsiveness and utilize social media effectively to connect with your audience and build a strong online community.
• Champion Corporate Social Responsibility: Develop a robust CSR strategy aligned with your brand values. Support local communities, contribute to social causes you care about, and promote environmental sustainability. This fosters brand loyalty and positions your brand as a responsible entity.

While a coveted spot on the TOP 50 Brands Nigeria® list brings prestige and recognition, the ultimate goal is to build a brand that resonates with consumers on a deeper level. By understanding brand valuation, implementing effective strategies, and fostering a strong connection with your audience, you can pave the way for lasting brand success. Remember, the true reward is not just a ranking, but the trust, loyalty, and admiration of your Nigerian consumers.