Valuing The Brand

A recent study made the claim that Google has surpassed Microsoft and Coke in terms of brand value.  I don't t really care to debate this too much, though it sounds reasonable to me. 

That being said, I've never understood why Coke's brand was considered to be so valuable.  It seems to me that the way to measure is strong brand is to see if you can slap it on something and turn it into a hit product.  So, for example, Google can slap its brand on an online spreadsheet or a new video conferencing system, and people will adopt it.  Coke has never been able to do this.  Just think of the big list of failed Coke products.  The only hits that the company Coca-Cola has had, outside of Coca-Cola itself (and Diet Coke) are non-Coke drinks.  If the Coke brand were so strong, we'd be seeing a lot more people drinking Coca-Cola Blak right now, but we're not.

On a similar note, Felix Salmon points to a recent BW article about some creative stuff that Sears is doing to extract more value out of its brands, like Kenmore and Craftsman.   Definitely worth a read.

More: Thinking about this question some more, there's another obvious way to determine if a brand is valuable.  If a brand name allow a company to extract an abnormally high margin on the sale of a good, then it's a valuable brand.  By this measure, Coke fails again, since a can of Coke is about the same price as a can of RC Cola.  Also by this measure, a company like Cisco, which extracts very high margins on its hardware has much more brand value.

Comments

[Mr Juggles]

Your ability-to-extract-margins analysis only applies for commodity (or close) products. Cisco's margins probably have more to do with its IP than Coke's premium over store-brand cola has to do with its brand.

[Maalarkh]

"It seems to me that the way to measure is strong brand is to see if you can slap it on something and turn it into a hit product"

But that is exactly what Coca Cola does. They sell some syrup to local franchises, who bottle and distribute the product. That product could be Coca Cola, could be Fanta. They are entirely Brand, and that brand has leveraged distribution networks. That is the value.

Also, the value of the brand is worldwide, and may lie more in Africa, SE Asia and so on, than you might expect. You buy Coke, you know you are getting a product that at the very least came from clean water.

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[Nathan]

But Google already has slapped its name on a spreadsheet program and no one uses it.

Isn't the knock against Google that it's a one trick pony using a spaghetti-against-the-wall approach, throwing a bunch of new products out there to see what sticks (and almost nothing has)? If the brand was so powerful, why haven't they renamed YouTube? I doubt that will happen.

The one difference that seems hugely obvious is that I've never seen any type of Google ad on TV or radio and clearly Coke spends a ton to market its brand... but on the other hand the Google logo is everywhere on the net, where it's relevant.

At any rate, not that it matters, but I drink Cherry Coke or Diet Cherry Coke almost exclusively (or Coca-Cola Zero when I'm somewhere that doesn't have Cherry Coke).

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Essentially, there are four approaches to valuing a Brand, and one or more of them may be applicable in any individual instance.

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