Introduction

This annual report on brand valuation represents Interbrand’s integrated approach to brand management. It gives full consideration to the human truths a brand must address, how the brand designs experiences, and the way it engineers financial performance. Brand’s that follow the Interbrand framework have outperformed their peers.  As a group, their total shareholder returns are higher than any other index with a similar risk profile.

To be included in on the Best Global Brands list, brands must meet these criteria:

• There must be sufficient publicly available data on the brand’s financial performance.
• At least 30 percent of revenue must come from outside of the brand’s home region.
• The brand must geographic coverage in emerging markets.
• Economic profit must be expected to be positive over the longer term.
• The brand must have sufficient global awareness.
• The brand’s ‘Brand Strength Score’ must be equal to 50 or above.

These requirements—that a brand be global, profitable, visible, and relatively transparent with financial results—explains the exclusion of some well-known brands that might otherwise be expected to appear in the ranking. As a leader in brand measurement and valuation, Interbrand periodically reviews its frameworks and methodologies to ensure they continue to reflect how valuable brands are built and managed.

All brands are valued using the Interbrand Brand Valuation Framework.

Methodology

Having pioneered brand valuation in 1988, we have a deep understanding of the impact a strong brand has on key stakeholder groups that influence the growth of your business, namely (current and prospective) customers, employees, and investors. Strong brands influence customer choice and create loyalty; attract, retain, and motivate talent; and lower the cost of financing. Our brand valuation methodology has been specifically designed to take all of these factors into account. Interbrand was the first company to have its methodology certified as compliant with the requirements of ISO 10668 (requirements for monetary brand valuation) and played a key role in the development of the standard itself.

There are three key components to all valuations: an analysis of the financial performance of the branded products or services, of the role the brand plays in purchase decisions, and of the brand’s competitive strength.

1. Financial Analysis

This measures the overall financial return to an organization’s investors, or its economic profit. Economic profit is the after-tax operating profit of the brand, minus a charge for the capital used to generate the brand’s revenue and margins.

2. Role of Brand

This measures the portion of the purchase decision attributable to the brand as opposed to other factors (for example, purchase drivers such as price, convenience, or product features). The Role of Brand Index (RBI) quantifies this as a percentage. RBI determinations for Best Global Brands derive, depending on the brand, from one of three methods: commissioned market research, benchmarking against Role of Brand scores from client projects with brands in the same industry, or expert panel assessment.

3. Brand Strength

Brand Strength measures the ability of the brand to create loyalty and, therefore, sustainable demand and profit into the future. Brand Strength analysis is based on an evaluation across 10 factors that Interbrand believes constitute a strong brand. Performance in these areas is judged relative to other brands in the industry and relative to other world-class brands. The Brand Strength analysis delivers an insightful snapshot of the strengths and weaknesses of the brand and is used to generate a road map of activities to grow the brand’s strength and value into the future.

Interbrand’s brand valuation framework is used in the following ways:

Measurement system
Generate and organize brand performance data consistently year-over-year

Diagnostic tool
Pinpoint key challenges around the brand and business

Business Outcomes
Quantify the financial significance of the brand to the business

Prescriptive framework
Address problems, guide strategy and correct course