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A brand re-positioning

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An ASX listed multinational was considering a brand repositioning that included refreshing the visual identity of a B2B industrial brand. Conceptual approval was provided by group executive, but stalled once the cost of the exercise was estimated. High costs stemmed from physical rebranding of multiple locations and equipment around the world. Glasshouse Advisory’s Brand Evaluations team was asked to assess the value implications of the brand repositioning.

The first step of the evaluation was to quantify the value of the brand and determine a brand rating in each regional and product category.

Key findings were:

  • The base case brand value was in the region of $425m, representing only 3% of enterprise value.
  • The strength of the brand varied considerably in different markets, ranging from a Brand Rating of C- (below average) to C+ (above average). This was the result of the historic absence of a consistent brand positioning and strategy.
  • The brand’s strength and contribution to enterprise value was less than industrial benchmarks.

The first valuation scenario was not ambitious. It represented an unambitious uplift in brand strength so that after three years a brand rating of C+ was achieved in all regions and product categories. We were confident that smoothing the brand performance would be a natural result of consistent brand management, even if the brand reposition did not yield improvements beyond current best practice. Even this conservative scenario resulted in the brand investment being recovered and an addition $40m being added.

Our best estimates of the likely impact of the reposition on brand equity and market performance were based on analysis of quantitative customer research and benchmarking of strong comparable brands. A five year time horizon was used to reach a targeted brand rating of B to B+. This resulted in the generation of incremental value of more than $100m. Although this scenario implied a significant uplift in brand value, this resulted from a modest uplift in revenue over the forecast period. This was sense checked against customer behaviour and contract periods. The resulting ratio of brand value to enterprise value remained lower than benchmarks, providing a further cross check of the findings.

In the words of the client’s Group Manager Strategy & Planning: 

Griffith Hack’s valuation played a critical role in educating the executive leadership team on the importance of brands as assets and articulated the economic consequences of a change in brand strategy.

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