Destroying and creating equity value through brand management : positive and negative brand impact assessment by using the VIM modelling approach

For the time being the importance of understanding a firm´s equity value creation becomes essential. The corporate brand and the related brand portfolio of product brands have become the value driving assets of increasing importance. In this paper, we present a newly developed integrated brand valuation modeling approach (the proprietary VIM – Verifiable Interdependent Model) which is also applicable to private (unlisted) companies where the market capitalization of equity is unknown. After explaining the basic model mechanics and theoretical spillovers with the pricing and marketing strategy of the firm, we elaborate the importance of the positive or negative impact of the brand equity for equity value creation of the firm based on the firm´s specific value drivers. To demonstrate the application of the model and to evaluate the informative value of the obtained results we also present a case study of the XYZ Brand valuation. Apart from the brand valuation, we demonstrate the positive and negative impacts of the brand on the value of the firm. Furthermore, we outline the applicability of this approach for the use within the IFRS 13.