Tag Archives | brand

Intangible Assets: Protecting Your Brand And Reputation

“In an economy where 70% to 80% of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organizations are especially vulnerable to anything that damages their reputations” (Harvard Business Review). Last week, I had a conversation with one of my coaching participants, Dory. Dory’s company is trying to make a lot of changes. Changes that as a financial leader just doesn’t make sense. It involves repositioning the business. It requires new marketing, new branding, new value, new culture, new staff… It’s an entirely new brand! However, the leadership fails to see how making this large of a shift will not only change the brand, but it will also risk destroying the firm’s reputation. In this week’s blog, we are discussing about protecting your brand and reputation.

With 70-80% of value stemming from intangible assets – such as your brand and reputation – it’s important to know what your company’s strengths and weaknesses are. Start enhancing those strengths (and resolving those weaknesses) with our Internal Analysis whitepaper.

Protecting Your Brand And Reputation

In today’s world, protecting your brand and reputation should be a priority because it can be destroyed with one social media post. In a WSJ article, Keri Calagna, principal at Deloitte & Touche LLP and leader of Deloitte Advisory’s brand and reputation management services, says that, “brand and reputation are complex, difficult to measure, hard to predict—often a result of strategic and operational decisions—and influenced by factors outside of an organization’s direct control.” But there are things that you can do as an organization not to further diminish value potential.

Protecting Your Brand And Reputation, Protecting Your Intangible AssetsFor example, we have a client that recently experienced an incident near their facility. The client’s concern was reputation and responsiveness to the situation even though they were a third party to the incident. But the perception with regulators and potential customers is very important. So, our client went above and beyond to respond and assist in the situation. This was seen in a very positive manner with regulators, neighbors, and customers. As a result, they were building very positive brand equity.

Brand Definition

Business Dictionary defines brand as a “unique design, sign, symbol, words, or a combination of these, employed in creating an image that identifies a product and differentiates it from its competitors.” Over time, a brand becomes the face of the company, something that customers recognize, and conveys the value of the product/service. It is your Image.  For example, Coca-Cola is historically seen as the #1 soda producer over Pepsi. Coca-Cola’s branding efforts have created a culture and a value among consumers.

Brand equity can go either way – positively or negatively. For example, influencers, bloggers, neighbors, friends, and family have recommended Product A to you. As a result, you are most likely going to buy Product A and any other product you need from that company. Then, you come across Product B. Product B has been known for its poor quality and is generally not as effective as Product A.  Product A has positive brand equity, whereas Product B has negative brand equity. As a result, Product A has a lot more wiggle room to make mistakes than Product B.

Take inventory of your company. What does your company do well at? What weaknesses does it struggle with? Click here to access our Internal Analysis to take a complete inventory of your company. 

Reputation Definition

Cambridge defines reputation as “the opinion that people in general have about someone or something, or how much respect or admiration someone or something receives, based on past behavior or character.” In other words, the reputation is how customers perceive your company versus how they recognize your company.

Protecting Your Brand And Reputation, Protecting Your Intangible AssetsAlign Strategic Decisions With Brand

One method to protect your brand and reputation is to align it with strategic decisions and overall strategy. For example, a company makes a decision without factoring in its brand. Customers and potential customers do not agree with the decision make because it changes X, Y, and Z. We have seen companies destroy themselves because they do not consider all factors before making changes to their brand.

Know Where Breakdowns Occur

Generally speaking, any breakdowns in your company will have to do with your human capital. If there is a misalignment with the actual company culture (not just what you perceive) and the brand, then your team will not be able to successfully deliver what the brand promises. Educate your employees on the brand. Fix issues within your team before it’s vastly different than the brand you are putting out there.

Protecting Your Intangible Assets

In the end, brand and reputation are intangible assets that your company needs to care about. It impacts value potential and the bottom line. Instead of managing crises, let’s look at how to manage risks and consequently, protect your intangible assets.

How does a company protect its intangible assets? Protecting your intangible assets starts with knowing what they are. What is your company known for? Why do customers choose you over a competitor?

Then start to identify what could change those answers. Is it government regulations that will change your product? What about material changes?

Finally, package what your intangible assets are and what influences them. Manage any risk threatening those assets.

How Your Brand And Reputation Impacts the Bottom Line

Before you go about making any changes to your brand, look internally at what is reliant on that intangible asset. In my first example, Dory’s leadership was not looking at how the employees, customers, vendors, investors, etc. were tied and attached to the brand. If her company made the change they wanted to, the company would lose its employees, customers, vendors, and investors. Sometimes, the brand is the thing that has made you so successful. If you are protecting your brand and reputation from potential changes, then take a look at our free Internal Analysis whitepaper. This will help you get a high level view of what impacts what.

Protecting Your Brand And Reputation, Protecting Your Intangible Assets, Intangible Assets

Protecting Your Brand And Reputation, Protecting Your Intangible Assets, Intangible Assets

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Market Positioning

See Also:
Company Life Cycle
Pricing Strategies
Marking to Market
Benchmarking
Capitalization

Market Positioning Definition

What is market position? In marketing and business strategy, market position refers to the consumer’s perception of a brand or product in relation to competing brands or products. Market positioning refers to the process of establishing the image or identity of a brand or product so that consumers perceive it in a certain way.

For example, a car maker may position itself as a luxury status symbol. Whereas a battery maker may position its batteries as the most reliable and long-lasting. And a fast-food restaurant chain may position itself as a provider of cheap and quick standardized meals. A coffee company may position itself as a source of premium upscale coffee beverages. Then a retailer might position itself as a place to buy household necessities at low prices. And a computer company may position itself as offering hip, innovative, and use-friendly technology products.

Positioning of a Brand

The positioning of a brand or product is a strategic process that involves marketing the brand or product in a certain way to create and establish an image or identity within the minds of the consumers in the target market. Market positioning of a brand or product must be maintained over the life of the brand or product. Doing this requires ongoing marketing initiatives intended to reinforce the target market’s perceptions of the product or brand.

Repositioning Definition

Repositioning a brand or product means altering its place in the minds of the consumer, or essentially changing the brand’s or product’s image or identity. When you are repositioning, or trying to change the consumers’ perception of a brand or product after it has already been solidified, may confuse or alienate consumers in the target market.

For example, if a premium luxury car maker suddenly slashed the prices of its vehicles and began selling them at the same prices as cheaper brand-name vehicles, consumers would no longer perceive the vehicles made by the luxury car maker as prestigious status symbols, even though the car features may remain unchanged.

Cost Leadership and Differentiation

There are two broad categories of market position: cost leadership and differentiation. Cost leadership and differentiation market positioning strategies are applicable to any business and any industry. A business can choose to position itself using a cost leader strategy or a differentiation business strategy.

Cost Leader Strategy

A company using a cost leader strategy attempts to position itself in the minds of the consumers as a company that provides products the consumers want at a price that is lower than competing products available in the marketplace. Consumers expect basic products with no bells and whistles from a company using a cost leader strategy. Instead, consumers just expect the products to meet their needs and nothing more or less.

Differentiation Business Strategy

A company using a differentiation business strategy attempts to position itself in the minds of the consumers as a company that provides unique products that consumers will pay more for because they cannot find comparable products or product features anywhere else in the marketplace. Consumers expect more from a differentiated product and therefore are willing to pay a premium for a differentiated product. This is true as long as the unique features of the product add some value to the product that makes it more valuable to the consumer, whether a functional feature or an aspect of image or prestige that enhances the perception of the product.

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market positioning

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Brand Equity

See Also:
Market Positioning
Market Dynamics
Marketing Mix (4 P’s of Marketing)
Porter’s Five Forces of Competition
Value Chain

Brand Equity Definition

The brand equity definition is the marketing effects that occur or gather over time in a product because of the brand name or company name associated with that product. At times, this brand equity can extend into other products if the name has been established with a good enough reputation. Best explain the brand equity definition as the reputation associated with a company name or product.

Brand Equity Meaning

Brand equity means that a company has established a brand or product that is associated with a certain product. There are forms of positive brand equity and negative brand equity. If a product is generally in good standing with consumers, then the company’s brand equity value is much higher. This of course is in comparison to a company who is responsible for an oil spill like the recent British Petroleum (BP) spill in the Gulf of Mexico. Brand equity marketing can at times be a fine art. In addition, brand equity valuation can be essential in determining how far a company can extend its brand equity to other products to boost sales in that area.

Brand Equity Example

Some Brand Equity examples are as follows:

Jack Daniels

The Jack Daniels brand name has been associated with Tennessee Whiskey for a number of years. However, the brand name extended into barbecue sauces and other condiments. The use of the name Jack Daniels is meant to boost sales in the area of the market. The company must be careful because every product that they extend the brand name to can result in brand equity dilution or an overuse of the name.

Gucci

Companies like Gucci and other designer firms work hard to establish their brand equity as it is essential in their line of business. The idea here is exclusivity as these companies operate in a niche market. Here they reduce the amount of stores, and drive prices higher. The brand equity established is of a luxurious and exclusive brand only a few can afford to be apart of.

Toyota

The company in the past was known for high quality and low to mid-priced cars, but as of recent the company has had several hits on its brand equity. This has been due to the company’s braking problems in its cars. To restore brand equity and bring sales back to normal, the company has been forced to launch various ad campaigns. In addition, they have had to recall all of the faulty cars.

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brand equity definition

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Amortization

In accounting, amortization refers to the periodic expensing of the value of an intangible asset. Similar to depreciation of tangible assets, intangible assets are typically expensed over the course of the asset’s useful life. It represents reduction in value of the intangible asset due to usage or obsolescence. Basically, intangible assets decrease in value over time, and amortization is the method of accounting for that decrease in value over the course of the asset’s useful life. A company’s long-term capital expenditures can also be amortized over time.

Amortization Treatment

Intangible assets are recorded on the balance sheet. But over time, as you amortize these assets, the amortized amount accumulates in a contra-asset account. Therefore, it diminishes the net value of the intangible assets. The periodic amortization amounts are expensed on the income statement as incurred. Whereas on the cash flow statement, these expenses are added back to net income in the operating section. This is because they represent non-cash expenses.

Intangible Asset Amortization

Examples of intangible assets that a company may amortize include the following:

Depending on the circumstances, some brand names or goodwill items may not decrease in value over time. Therefore, you may not amortize them.

Regulations

In International Financial Reporting Standards (IFRS), the rules and standards for intangible asset amortization are described in International Accounting Standard 38: Intangible Assets. In the United States, according to General Accepted Accounting Principles (GAAP), the rules and standards for intangible asset amortization are described in Statement of Financial Accounting Standards No. 142: Goodwill and Other Intangible Assets.

Amortization of Loans

Amortizing a loan consists of spreading out the principal and interest payments over the life of the loan. Spread out the amortized loan and pay it down based on an amortization schedule or table. There are different types of this schedule, such as straight line, declining balance, annuity, and increasing balance amortization tables. Amortizing mortgages is common.

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amortization

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amortization

See Also:
Straight-Line Depreciation
Accelerated Method of Depreciation
Double Declining Method of Depreciation
Goodwill Accounting Term

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