Branding and corporate identity (pt 3)

2.3 How to choose the right agency
 Realistically, smaller organizations or startup companies are best served looking for an in-between solution. Try to find an agency that is experienced in creating brands for smaller businesses; one that understands your need for swift and inexpensive results. Ask about their branding practices and examine their portfolio. Make sure they can adapt to different styles and aesthetic demands.

2.4 How to know if you’re getting your money’s worth
It is not uncommon for established design agencies to charge anywhere from $20,000 and up for a name and logo. You should demand great results from a agency in this range.

But is this worth the investment? How does one know?

Well, there actually are formulas for calculating brand value. An established formula goes like this: 

Value of brand name ={(V/S)b-(V/S)g }* Sales

    (V/S)b = Value of Firm/Sales ratio of the firm with the benefit of the brand name 

    (V/S)g = Value of Firm/Sales ratio of the firm with the generic product

    Acknowledging that the value of any company is tied to its sales, by comparing an established brand with a generic one using this formula, it can be established that as much as 67-70% of the value of the company can be traced to brand name value.

    In the specific case of Coca Cola, one of the most recognizable brands on the planet, the value of the brand name has actually (pre-recession) been estimated at $102 billion, or 88,69% of the total value of the company. Post-recession, the value was estimated to be $68 billion. Comparing the value of the Coca Cola brand to a generic cola, it has been established that the value of the Coca Cola brand is 6,1 times the value of sales. 

    To put this in terms of profitability, it can be expressed like this: 

    • Water is free. Water + Brand costs $1.50 per 16 oz bottle.
    • A pound of coffee costs roughly $4/lb . That same amount of coffee, plus the Starbucks brand, costs $9.95.
    • A can of generic cola costs 25 cents. A can of cola plus brand costs $1.00.

    Clearly, if one is serious about building value in ones company, branding is a great way of doing it!

    Next: Part 2.5. Brand value matters for all sizes of businesses

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