Vietnam Time

1/31/2018 10:03:00 AM

What it’s worth

It’s imperative for Vietnamese business to understand and determine the value of their brand.

Photo: Viet Tuan

Knowing the brand value is a strong indicator of the future success of a business. A value continuously on the rise compared to its competitors and category shows that the future performance of the business is likely to remain stable.

Brand value based on brand management is essential in driving competitiveness, price premium, profitability, and future expansion and growth.

In the Top 50 Vietnamese brands in 2017, Viettel increased its brand value by triple compared to the previous year (from $970 million in 2016 to $2.5 billion in 2017). Viettel’s value is based on the same criteria used for all our other global brand value rankings (over 4,000 rankings) published annually by Brand Finance. We use the royalty relief method of valuation, which examines the overall strength of the brand and then applies a brand-specific charge (royalty) to future earnings based on the strength of the brand. So, a stronger brand will have a higher royalty charge and therefore higher value, and vice-versa.

Most Vietnamese brands are neither structured nor focused on brand management in an organized manner. They feel that advertising is good brand management. No, it is not, because we must clarify the difference between branding and brand management. Brand is not equal to brand management.

There is very little or no in-depth integration between the brand driving the business success at most Vietnamese companies. The brand is not even managed as a focused agenda by management. The majority of Vietnamese companies don’t even know what makes their brand value go up or down. It is not on the agendas of senior management or boards. So, the real challenge is an internal challenge, of having brand management as a management/board level key performance indicator (KPI).

Brand must be a management and board KPI for it to be managed and measured properly. “Inside out” brand management means that Vietnamese companies must manage the brand internally first before hundreds of thousands of dollars are spent externally. Because all that money is wasted if the internal brand management practices, the brand KPIs for senior management, and some of the brand measurement and tracking (economic value) aspects are not managed and monitored on an ongoing basis and the value and rankings, for example, are used only once a year when Brand Finance publishes its annual brand rankings for Vietnam.

The brand rankings are not a “feel good” awards night. The rankings and the calculations can help outline serious business implications that may emerge in the future. They can provide competitive insights, business insights, and overall market growth advantages, and highlight future business and market risks. Sadly, Vietnamese companies see the ranking as only a “feel good” awards ceremony at present.

There are several bargain hunters in the Vietnamese market looking for cheaper deals. Companies that have no sight of their brand value evaluated in a proper and “globally acceptable” and “globally scrutinizable” manner are going to lose out by selling themselves cheaply. So, following these few things would be beneficial: Have a five-year business plan, and know your brand’s strengths and track and monitor its growth. Know the importance and the contribution your brand makes to business success. The BV to EV ratio becomes critical. Do a globally-recognized valuation with a specific focus on the brand and other IP and don’t do a plain vanilla business valuation. Sell the rights for the brand only for the business category and the geography that the buyer is paying for. Preserve the brand rights for other business categories and geographies and do not sell those. Protect the brand across categories and geographies and not just in Vietnam in the current business category. So, a coffee producing company must also trademark the brand for packaged coffee, retail stores, etc.

VNF/Vn Economic Times  
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