Brand valuation: an innovative approach based on the risk difference




brand valuation, valuation methods, risk difference, Net Present Value, NPV, IRR


Research background: Among academicians, a growing interest in brand valuation methods can be observed since the 1980s, when it became obvious that firms have off-balance sheet assets which have a significant effect on their value. Moreover, in a number of cases, the need to value the brand arises due to the reporting requirements or transactional and other intrafirm reasons. The existing methods used so far have commonly focused on changes in variables such as sale prices, changes in customer behaviour, or sales volumes and very often lead to different results, even when valuing the same brand. We believe that the risk factor has been neglected in these methods, although having a significant impact on the brand valuation.

Purpose of the article: The aim of this paper is to formulate an alternative brand valuation approach based on the risk difference. This is defined as the difference between the risk to which a producer with a certain brand is exposed and the risk of the producer without a brand.

Methods: Firstly, a set of assumptions was defined concerning the issue what conditions are required to be applied to use the proposed methodological approach. Next, the concept itself is formulated and tested while using the case study approach. Hence, in conditions of a model company, the method was verified with specific data. The results were also compared with the reproduction cost approach.

Findings & value added: This paper presents a novel brand valuation method based on the risk difference. Building on a thought experiment, we compare an incumbent with a brand rather than with an average producer, which is a commonly used approach, with a new entrant to the market. We argue that in comparison to existing methods, our methodological approach reduces the number of unobservable inputs in the brand valuation process, and thus increases the accuracy and reliability of its results. Our method supports both researchers and practitioners to establish a better understanding between the well-established financial theories and new directions in brand valuation research.


Download data is not yet available.


Aaker, D. (1995). Building strong brands. New York: Free Press.

Aaker, D., & Keller, K. (1990). Consumer evaluations of brand extensions. Journal of Marketing, 54(1), 27?41. doi: 10.2307/1252171.

Aaker, D . (2009). Managing brand equity: capitalizing on the value of a brand name. New York: Free Press.

Abratt, R., & Bick, G. (2003). Valuing brands and brand equity: methods and processes. Journal of Applied Management and Entrepreneurship, 8(1), 21?39.

AMA (American Marketing Association) (2019). Brand. Dictionary. Retrieved from


Avery, J., & Keinan, A. (2015). Consuming brands. In M. I. Norton, D. D. Rucker, & C. Lamberton (Eds.). The Cambridge handbook of consumer psychology. Cambridge University Press. 209?232. doi: 10.1017/CBO9781107706552.008.

Bilan, Y., Lyeonov, S., Lyulyov, O., & Pimonenko, T. (2019). Brand management and macroeconomic stability of the country. Polish Journal of Management Studies, 19(2), 61?74. doi: 10.17512/pjms.2019.19.2.05.

Bratu, S. (2019). Can social media influencers shape corporate brand reputation? Online followers? trust, value creation, and purchase intentions. Review of Contemporary Philosophy, 18. 157?163. doi: 10.22381/RCP18201910.

Calder, B. J., & Frigo, M. L. (2019). The financial value of brand: finance and marketing teams can work together on both brand evaluation and valuation to account for the worth of brand in financial terms. Strategic Finance, 101(4).

Crimmins, J. C. (1992). Better measurement and management of brand value. Journal of Advertising Research, 32(4), 11?19.

Damodaran, A. (2006). Damodaran on valuation: security analysis for investment and corporate finance. Hoboken, New Jersey: John Wiley.

Davcik, N. S., Vinhas Da Silva, R., & Hair, J. F. (2015). Towards a unified theory of brand equity: conceptualizations, taxonomy and avenues for future research. Journal of Product & Brand Management, 24(1), 3?17. doi: 10.1108/JP BM-06-2014-0639.

Ferencakova, L., Gajdka, K., Netek, V., & Kapoun, P. (2020). Engaging customers on Facebook coffee shops' brand-fan pages. International Journal of Entrepreneurial Knowledge, 8(1), 65?75. doi: 10.37335/ijek.v8i1.110.

Fernández, P. (2002). Valuation of brands and intellectual capital. IESE Research Papers, D/456.

Fournier, S. (1998). Consumers and their brands: developing relationship theory in consumer research. Journal of Consumer Research, 24(4), 343?353. doi: 10.10 86/209515.

Gajanova, L., Majerova, J., & Nadanyiova, M. (2020). The impact of influencers on the decision-making process regarding the purchase of the brand product. Business, Management and Economics Engineering, 18(2), 282?293. doi: 10.3846/bme.2020.12608.

Haigh, D. (1997). Accounting and forecasting for brands. In R. Perrier (Ed.). Brand valuation. London: Premier Books, 25?34.

Haskel, J., & Westlake, S. (2018). Capitalism without capital. The rise of the intangible economy. Princeton & Oxford: Princeton University Press.

He, J., & Calder, B. J. (2020). The experimental evaluation of brand strength and brand value. Journal of Business Research, 115, 194?202. doi: 10.1016/j.jbusre s.2020.04.035.

Herremans, I. M., Ryans, J. K., & Aggarwal, R. (2000). Linking advertising and brand value. Business Horizons, 43(3), 19?26. doi: 10.1016/S0007-6813(00)89 197-1.

Holt, D. B. (2002). Why do brands cause trouble? A dialectical theory of consumer culture and branding. Journal of Consumer Research, 29(1), 70?90. doi: 10.108 6/339922.

Holt, D. B. (2004). How brands become icons: the principles of cultural branding. Boston, Mass.: Harvard Business Press.

Holt, D. B., & Cameron, D. (2012). Cultural strategy: using innovative ideologies to build breakthrough brands. Oxford: Oxford University Press.

Hollowell, J. C., Rowland, Z., Kliestik, T., Kliestikova, J., & Dengov, V. V. (2019). Customer loyalty in the sharing economy platforms: how digital personal reputation and feedback systems facilitate interaction and trust between strangers. Journal of Self-Governance and Management Economics, 7(1), 13?18. doi: 10.22 381/JSME7120192.

Hupp, O., & Powaga, K. (2004). Using consumer attitudes to value brands: evaluation of the financial value of brands. Journal of Advertising Research, 44(3), 225?231. doi: 10.1017/S0021849904040267.

Hussain, S., Ahmed, R. R. (2020). Smartphone buying behaviors in a framework of brand experience and brand equity. Transformations in Business & Economics, 19, 2 (50), 220?242.

IVS (International Valuation Committee) (2020). International valuation standards. Retrieved from: ing-professional-standards/sector-standards/valuation/international-valuation-st andards-rics2.pdf (15.10.2020).

Janoskova, K., & Kliestikova, J. (2018). Analysis of the impact of selected determinants on brand value. Journal of International Studies, 11(1), 152?162. doi: 10.14254/2071-8330.2018/11-1/11.

Janoskova, K., & Krizanova, A. (2017). Comparison of selected internationally recognized brand valuation methods. Oeconomia Copernicana, 8(1), 99?110. doi: 10.24136/oc.v8i1.7.

Keller, K., L. (1999). Managing brands for the long run: brand reinforcement and revitalization strategies. California Management Review, 41(33), 102?124. doi: 10.2307/41165999.

Keller, K., L., Apéria, T., & Georgson, M. (2008). Strategic brand management. A European perspective. Edinburgh: Pearson Education Limited.

Kitchenham, B. (2004). Procedures for performing systematic reviews. NICTA technical report 0400011T.1. Eversleigh, Australia: Empirical Software Engineering, National ICT Australia Ltd. Retrieved from: (02.10.2020).

Krabec, T. (2009). Valuation and sale of a dental practice. Prague: Grada.

Lagrost, C., Martin, D., Dubois, C., & Quazzotti, S. (2010). Intellectual property valuation: how to approach the selection of an appropriate valuation method. Journal of Intellectual Capital, 11(4), 481?503. doi: 10.1108/14691931011085 641.

Larkin, Y. (2013). Brand perception, cash flow stability, and financial policy. Journal of Financial Economics, 110(1), 232?253. doi: 10.1016/j.jfineco.20 13.05.002.

Lev, B., & Gu, F. (2016). The end of accounting and the path forward for investors and managers. New York: Wiley.

Lev, B. (2019). Ending the accounting-for-intangibles status quo. European Accounting Review, 28(4), 713?736. doi: 10.1080/09638180.2018.1521614.

Meilhan, D. (2019). Customer value co-creation behavior in the online platform economy. Journal of Self-Governance and Management Economics, 7(1), 19?24. doi: 10.22381/JSME7120193.

Mick, D. G., & Buhl, C. (1992). A meaning-based model of advertising experiences. Journal of Consumer Research, 19(3), 317?338. doi: 10.1086/209305.

Mičík, M., & Mičudová, K. (2018). Employer brand building: using social media and career websites to attract generation Y. Economics and Sociology, 11(3), 171?189. doi: 10.14254/2071-789X.2018/11-3/11.

Paugam, L., André, P., Philippe, H., & Harfouche, R. (2016). Brand valuation. New York: Routledge. doi: 10.4324/9781315677347.

Pepall, L., Richards, D. J., & Norman, G. (2010). Contemporary industrial organization: a quantitative approach. Hoboken: Wiley.

Pinto, J. E., Henry, E., Robinsons, T. R., & Stowe, J. D. (2015). Equity asset valuation. Hoboken: Wiley.

Reyneke, J., Abratt, R., & Bick, G. (2014). What is your corporate brand worth? A guide to brand valuation approaches. South African Journal of Business Management, 45(4), 1?10. doi: 10.4102/sajbm.v45i4.136.

Salinas, G. (2013). The international brand valuation manual. Chichester, United Kingdom: John Wiley & Sons.

Salinas, G., & Ambler, T. (2009). A taxonomy of brand valuation practice: methodologies and purposes. Journal of Brand Management, 17(1), 39?61. doi: 10.1 057/bm.2009.14

Sander, M. (1994). Der Wert internationaler Marken: Ein Ansatz zu seiner Bestimmung auf Basis der hedonischen Theorie. Tübingen: University of Tübingen, School of Business and Economics.

Schauten, M., Stegink, R., & de Graaff, G. (2010). The discount rate for discounted cash flow valuations of intangible assets. Managerial Finance, 36(9), 799?811. doi: 10.1108/03074351011064663.

Servera-Francés, D., & Piqueras-Tomás, L. (2019). The effects of corporate social responsibility on consumer loyalty through consumer perceived value. Economic Research-Ekonomska Istraživanja, 32(1), 66?84. doi: 10.1080/1331677X.20 18.1547202

Sicard, M. (2013). Brand revolution: rethinking brand identity Basingstoke. Hampshire, United Kingdom: Macmillan.

Simon, C., J, & Sullivan, M., W. (1993). The measurement and determinants of brand equity: a financial approach. Marketing Science, 12(1), 28?52. doi: 10.1287/mksc.12.1.28.

Sinclair, R., N., & Keller, K., L. (2014). A case for brands as assets: acquired and internally developed. Journal of Brand Management, 21(4), 286?302. doi: 10.1057/bm.2014.8.

Smith, G., V., & Richey, S., M. (2013). Trademark valuation. A tool for brand management. Hoboken, New Jersey: John Wiley & Sons.

Sudolska, A., & Łapińska, J. (2020). Exploring determinants of innovation capability in manufacturing companies operating in Poland. Sustainability, 12(7101), 1?20. doi: 10.3390/su12177101.

Uskokovic, L. (2020). Creating a city brand as a tourist destination in the selected countries of Adriatic region. Transformations in Business & Economics, 19, 1 (49), 155?165.

Worimegbe , P. M., Worimegbe, T. M., Abiola-Oke, E. (2020). Gamification and customers experience in the hospitality industry. Journal of Tourism and Services, 21(11), 71?87. doi: 10.29036/jots.v11i21.165.

Yasin, M., Porcu, L., Abusharbeh, M.T. & Liébana-Cabanillas, F. (2020). The impact of customer personality and online brand community engagement on intention to forward company and users generated content: palestinian banking industry a case. Economic Research-Ekonomska Istraživanja, 33(1), 1985?2006. doi: 10.1080/1331677X.2020.1752277.

Yuan, D., & Shaw, R. (2014). The concept of brand insecurity & its measurement for ISO 10668 valuations. Journal of Financial Risk Management, 3(4), 177?184. doi: 10.4236/jfrm.2014.34015.




How to Cite

Skalický , R., Meluzín, T., & Zinecker, M. (2021). Brand valuation: an innovative approach based on the risk difference. Oeconomia Copernicana, 12(1), 159–191.