Organisations invest millions in brand equity. The brand equity is the way that buyers perceive the products of an organization. Brand equity refers to how consumers view a firm’s goods. It is defined by brand recognition and consumer loyalty. To build brand equity, organizations use rankings and awards from well-respected organisations. Interbrand, Forbes, Brand Finance, and Millward Brown W classify brands in various ways (Janoskova & Krizanova, 2017). The rating is used by organizations to increase market share and attract new clients.
Interbrand uses three key factors to categorize worldwide brands: function of branding and financial forecasting. Rankings are heavily influenced by consumer perception and financial factors. Interbrand’s revenue forecasting is done by using the brand’s product-based revenues. Add operating costs, taxes, capital expenditures, and intangible profits to determine the brand revenue. The approach prioritizes profits derived from the company’s patents, branding, managerial experience, and R&D. Intangible profit are prioritized according to financial analysis reports. This organization assesses the reliability of its business forecasts for the past six years.
Function of branding is second in importance. It focuses on distinctive characteristics. The function of the branding factor is studied using a unique approach that entails assessing the brand’s intangible revenues (Serna & Blinova, 2022). Higher branding functions indicate that customers are influenced by the brand. B2B deals are given special attention when the brand is the sole purchasing motivation. Because of their accessibility, brick and mortar establishments might play a less important role in branding. This core branding area was developed to help in the analysis of each major business to determine their contribution to company brand equity.
Interbrand also considers brand strength. Interbrand employs a discount rates to show the earnings risks. Interbrand can calculate the brand’s net present value using this method. It provides an accurate risk rate, which facilitates earnings forecasting. The brand strength assessment provides a method of evaluating certain risks. Interbrand uses brand strengths to measure brand strength by comparing the brand’s ideal with typical brand equity factors like market position, customer satisfaction, loyalty, marketing support and advertising. The perfect brand is risk-free and discounted at a lower risk rate than government bonds or risk-free investments (Terzi & ali, 2019). The risk rate increases and the net present value decreases if the brand’s strength is lower. Interbrand looks beyond the fundamental variables. Interbrand takes into consideration brand differentiation, brand success, market control, current market position and brand consistency in an effort to defeat industrial competition.