Dunn's Den of Knowledge.

A blog about advertising, marketing, social media and how they affect your business!

Archive for June 17th, 2008

What Is Your Brand and Company Worth?

Posted by Scott Dunn on June 17, 2008

Are you thinking about an exit strategy?  Is your biggest asset—your nest egg—wrapped up in your brand and your company?  (For most small and medium sized companies, the company has become the brand.)

Your Brand Equity is simply what it could sell for. Look at it from the other side of the table.  If you were considering two brands to buy—each competes in the same field and has about equal sales.   How would you choose?

My measure of Brand Equity is how much the brand will be worth in the future, not what it could be liquidated for now. So you would choose the one that you could bank on (!) to produce the most growing profits for a long time. Here are some things you should compare: 

  1. What are their trends on sales and profits, and other assets and debts?
  2.  How strong are their products?  Any differences, any patents?
  3.  How strong are their organizations?  Hirable?
  4.  Most important—what is each of their Brand Franchises?  And that is–    

                       —How loyal are their customers?

                       —How enthusiastic are they? Would they care if the brand disappears?

                       —What is their Brand Positioning? Is it unique and sustainable?

A brand is nothing more than a promise. It’s what you expect when you buy it, based on previous consistent performance. What is your promise?

 So what is your brand worth?   Is it as much as your competitors? If this was a horse race, who would you bet on?

 The key to increasing Brand Equity is not just bigger sales.  It’s building a stronger brand. That is your greatest asset, the one you should nurture, the “family jewels” that will give your nest egg the most value.

George Lemmond

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The Black Hole of Marketing is in the Middle

Posted by Scott Dunn on June 17, 2008

A perceptual map of any category will include a few dominant players, some specialty niche entries, and a lot of losers who are destined for oblivion. Some of the latter will go silently in the night, but a lot will expire violently, with a big bang as they get sucked into that black celestial hole. 

Just as a star system expands too fast and collapses into itself with such gravitational attraction that not even light can escape, a swirling, whirling vortex of a seemingly liquid business can suddenly spiral down the drain.

The poet Yeats said, “Things fall apart; the center cannot hold.”  The center is untenable. The biggest brands usually have a big enough base to straddle the middle. The specialists cling to the edge. The rest have one of these characteristics—

  1. They try to appeal to all sides, but they don’t have the wherewithal to stretch that far.
  2. They have a niche, but no exclusivity.
  3. They strangle themselves by hiring poor employees.
  4. They fall easy prey to stronger players who delight to under-price and out-service them.

The drown-ees are stuck in the middle of the pool, can’t swim, have no life-preserver and no paddle. 

 Here’s what they need to do:  

  1. A Persian proverb says, “No matter how far you’ve traveled down the wrong path, turn back.
  2. Cut your losses and begin again. You’ve already stopped to smell the roses, so act.
  3. Get back to basics and create a useful brand. Pick an edge to the perceptual map and latch on to it with a strong product and appealing positioning.

There’s a big enough place for you.  But it’s not in the middle.

George Lemmond

 

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