Brand Valuation

Group no 7
Roll nos
13,21,51,62,77,95

What is a Brand?
A

brand is a name, term, sign, symbol, or

design which is intended to identify the goods
or services of one seller or group of sellers
and to differentiate them from those of
competitors.

Brand Characteristics

A Brand is a Promise
A Brand is different from the Product
A Brand is a Perception
A Brand cannot be measured in absolute terms
A Brand is symbolic , it signifies the consumers dreams.
A Brand differentiates one product or company from another.
A Brand identifies the product and its source or maker.
A Brand often has a certain association and image.
A Brand is an Asset to the company
A Brand can be valued even though it is intangible.
A Brand can be traded , Bought , Sold , acquired.

The Making of a Brand

Select a name and symbol.

Create awareness and brand identity.
Position the brand.
Create a brand image.
Enhance the image by creating trust.
Sustain the Image by constant delivery.

Brand Equity

Brand-name awareness
Brand associations
Perceived quality
Proprietary brand assets
Brand loyalty

CASE Hero Honda The Company

Established in 1984 , Headed by the Munjal Brothers , under

their flagship company Hero Cycles.
3000 strong dealer network countrywide
Sales 3.28 million bikes in 2008-09 , with net profit of Rs.
1281.7 Cr.
Named the Worlds biggest motorcycle company in 2001 when
it produced 1.3 million bikes in a year.
Labour Friendly Organization - The philosophy with regard to
labour management is "Hero is growing, grow with Hero.
Successful Implementation of Japanese Lean Manufacturing
techniques.

CASE Hero Honda The Brand

An effective logo:
Communicates a
brands image and
positioning.
Is simple,
distinctive, and
relevant.

H from Hondas logo

Name of flagship company
Hero Cycles

Collaboration with
Honda motors Japan
Partial symbol of Honda IC engine
Cylinder head

Brand Image

Hero cycles have established themselves as reliable

and trustworthy manufacturers of Bicycles.
Honda is the manufacturer of the worlds best 4
stroke IC engines for motorbikes
The amalgamation implies Reliability of Hero and
Quality of Honda.
Hero Honda is the worlds biggest motorcycle
manufacturing company.
Brand Loyalty is the highest in the world with 3
million subscribers to the Hero Honda Passport
loyalty program.

Brand Asset Valuator

STRENGTH
PERCIEVED
DISTINCTNESS
OF
THE
BRAND
PERCIEVED
DISTINCTNESS
OF
THE
BRAND

DIFFERENTIATION

BAV
BAV
REGARD
FOR
THE
BRAND
REGARD
FOR
THE
BRAND APPROACH
APPROACH

PERSONAL
PERSONAL
APPROPRIATENESS
APPROPRIATENESS
OF
THE
PRODUCT
OF
THE
PRODUCT

ESTEEM

RELEVANCE

UNDERSTANDING
OF
THE
BRAND
UNDERSTANDING
OF
THE
BRAND

KNOWLEDGE
STATUS

Hero Honda - Financials

Brand Valuation Calculations

Sales (cr)
Gross Margin
Sales Exp.
Dist. Exp.
Admin. Exp.
Capital Employed
Cost of Capital (%age)
Cost Of Capital
Net Margin post Cost of Capital
Inflation Adj. rate @ 10%
Inflation adjusted Net Profit
Weightage (A)
Aggregate Wtd. Profit (B)
Weighted Average Profit
Tax @ 33%
Tax adjusted Profit

STEP: I
2004-05 2005-06 2006-07 2007-08 2008-09 Remarks
8596
10086
11542
12038
13543 Values Given
1217
1412
1246
1410
1781 Values Given
157
198 250.06 266.75
316 Values Given
157
212 254.37
276.7
324 Values Given
147.4
191.8 241.43 221.78
249.6 Values Given
1504
1945
2415
2877
3499 Values Given
16.40%
246.66
508.94
1.46
745.14
1
745.14

17.16%
333.76
476.44
1.33
634.14
2
1268.28

15.40%
371.91
128.23
1.21
155.16
3
465.47

13.60%
391.27
253.50
1.10
278.85
4
1115.39

12.80% Values Given

447.87 Capital Employed x Cost of Capital (%age)
443.53 Gross Margin - Sales,Dist,Admin Exp. - Cost of Capital
1.00 Inflation rate of the last year (08-09) is given
443.53 Net margin post CoC x Inflation Adj. Rate
5 Given
2217.64 Inflation Adj. Net Profit x Weightage
387.46 Sum of B / Sum of A
127.86 33% of Weighted Average Profit
259.60 Weighted Average Profit - Tax

Brand Valuation Calculations

Step: II
Brand Value =Tax Adjusted Profit x Profit per earnings
Profit Per Earnings =Share Price Quoted in the Market / Profit per share
Now,
Profit per Share given in Financials are =Rs. 64/Thus, Profit Per Earnings =
1103.85
=
17.24cr
64
Thus, Brand Value =
259.60cr x 17.24cr = 4476cr

Rs. 4476 Cr.