"Brands do not command any value unless they are able to bring cash flows to the company that has adopted the same. In order to sustain the value of the brand, there must a constant effort by the company on various aspec
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · December 2016
"Brands do not command any value unless they are able to bring cash flows to the company that has adopted the same. In order to sustain the value of the brand, there must a constant effort by the company on various aspects." Comment.
Answer & Explanation:
With incremental cash flows increasing, value of brand also increases proportionately. Brands have to be constantly associated with good quality goods and services; they require proper show casing and servicing and they should remain active in appropriate markets. In order to sustain the valuation of the brand, there must be a constant attempt from the company on the following aspects: To secure registration of the Brand in all relevant classes. To secure registration of the Brand in all countries where there are opportunities to sell Branded Products of the Company. To set up a "surveillance team" within the Marketing Department of the Company so as to ensure that there is no dilution to the value of the Brand. To ensure that attempts to use fake brands that are similar or deceptively similar are challenged with full force so as to spread the message that the Company is conscious of the value of its brand and it will be aggressive in taking steps not only to put an end to such illegal, dishonest and unauthorized use but also to punish such users and claim exemplary damages from those who had passed off their goods to people and those who are found to be guilty of infringement. To ensure that there is always a budget allocation for promoting the brand and the Company should devise a continuous process for being present in the existing markets and prospective markets. To ensure that there is a conspicuous distinction in the description of the brand when it is used to sell premium products as opposed to use of the same brand for selling goods to the masses. To ensure that the extent of growth in the value of the brand every year is always higher than the depreciation or dent that existing or new competition may cause. To adopt a proper policy with regard to slogans and catchy phrases so that the Company does not knowingly cause any infringement of the industrial and intellectual property rights of any other person in any country or territory. To adopt a proper policy with regard to statements made in advertisements carrying the brand in order to ensure that those statements are not mere attractive words and they would stand the test of the market. To adopt a proper policy to augment IP profile of the Company and constantly update and upgrade the same.
Topics: Valuation
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