Insight

How is brand equity created and measured?

Researchers find out that best metric to assess brand equity is actually shareholder value, stocks and share value.

Though firms talk ad nauseam about the importance of brands in the corporate world, to the extent that the idea of branding has now seeped into the personal sphere as well, analysts and experts are yet to demonstrate the quantifiable financial benefits from this exercise. Researchers Shuba Srinivasan, Liwu Hsu and Susan M Fournier set out to analyse the brand-finance link by exploring previous research on the subject and drawing up their own inferences. They found that the best metric to assess brand equity is actually shareholder value, measured through stocks and shares. They also found out that there are three major ways by which brand equity is created: by corporate name changes and mergers and acquisitions; by extending the brand through product launches; and by advertising.

 

Title: Branding and Firm Value.

Source: Social Science Research Network

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