What is brand equity? For most people that can seem like a nebulous and subjective concept at worst, and at best it seems like a combination of art and science. It doesn’t help that brand valuations and rankings can vary depending on the source and the methodology used.
The first thing to know about a brand’s value is that it’s an intangible asset. A car factory has value in its real estate, buildings, and equipment. But a Ford truck that rolls out of that factory has both a tangible value, shared by all trucks rolling off all production lines, as well as an intangible value added from Ford’s reputation as a truck manufacturer, the loyalty of Ford customers, and the recognizability of the company’s iconic Blue Oval logo. (These are America’s favorite brands and stores.)
A monetary value is assigned to these intangible assets using different proprietary models that can help weigh a company’s future earnings potential relative to other brand heavyweights, including its direct competitors.
Brand equity is computed based on such sources as global consumer-sentiment surveys, company earnings forecasts, the estimated percentage of a company’s earnings attributable to its brand, and the strength of the brand. Brand value can fall in the wake of events like a company scandal, such as Volkswagen’s “dieselgate” emissions-fixing fraud of 2015, and they can rise when a company reveals an innovative and coveted consumer product, as when Apple’s iPhone debuted in 2007. (Sometimes brands don’t recover from problems. These are brands that disappeared in the last decade.)
Click here to see the world’s most valuable brands.
To construct this list of the world’s most valuable brands, 24/7 Wall St. reviewed the 2021 Most Valuable Global Brands report published by Kantar BrandZ, which has ranked brand equity annually since 1998.
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