Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors.
Brand Finance quantifies Brand Strength using a 'Brand Strength Index (BSI)' - which is a competitive benchmarking tool that identifies the strength of each brand in question.
This can be done as a standalone exercise in a brand evaluation, or as part of the brand valuation methodology when placing a monetary value on the brand. The Brand Strength Index in this use case forms part of the Royalty Relief methodology. For more information check out the methodology page here.
The Brand Strength Index is a framework that aims to consider the position of a potential licensee or acquirer of the brand. As such we split the Index into three sections:
- Brand Investment - to ensure brand building exercises are being conducted for future success of the brand.
- Brand Equity - to ensure the brand is currently perceived well across a balanced scorecard of stakeholders.
- Brand Performance - to ensure the brand is delivering the economic benefits that one would hope.
Brands may score very highly on the Brand Strength Index while not necessarily being the largest brands by monetary value.