Brand Valuation of Commercial Banks in Bangladesh: An Application of Marketing Profitability

Abstract

The competitive race of banking sector in the world economy is rapidly enforcing the importance of brand valuation. The acceptance of brand valuation has been questionable in several times due to the subjective measurement that derives from customers’ volatile perceptions. At the same time, financially focused model provides only an assessment of the economic value of brand. It is still a challenging task to compute the brand valuation depending only on financial data. Interbrand technique (2004) is one of the best approaches of calculating brand value within the community of marketing. Our valuation approach followed the A.C. Nielsen valuation model (2006) for valuing brand which is multiple of “Annual sales of representative brand”, “Net operating margin”, “Relative brand strength”, and “Perpetual annuity NPV discount factor”. This paper explores the Brand Valuation (BV) and identifies the relative position of banks based on measuring marketing contribution. Data have been collected from first generation private commercial bank’s annual reports and analyzed by using perpetual NPV continuous discount factor. The objective measure of BV for commercial banks was developed using Net Marketing Contribution (NMC), Relative Brand Strength (RBS) and Perpetual Net Present Value Continuous Discount Factor (PNPVCDF). The measures of brand valuation will ease the understanding regarding marketing profitability, brand performance and relative position in the competitive field.