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Creating bridges between marketing and financing

In today’s business environment factors that contribute to the financial performance of a firm, shareholder value demand a deep understanding of the marketing-finance relationship, said Director, BrandScience UK, Sam Dias.

“It is not enough anymore to be proficient in either marketing or finance as companies need people who can form a bridge between their marketing and finance departments”, Dias said at a seminar last Friday on Marketing Finance measuring the impact of your brand drivers in tough times organized by the Institute of Chartered Accountants of Sri Lanka and the Chartered Institute of Marketing, Sri Lanka region.


Sam Dias

Measuring and maximizing commercial value in entities created by marketers is important. Therefore it is necessary to have a measurement framework to maximize business activities of any business organization between finance and marketing.

Under these circumstances we have understood the impact on the bottom line of business, which requires knowledge of both marketing and financial areas to survive in this competitive business environment, he said.

The entities could do so by quantifying business drivers depending on the business one involved in and by isolating and quantifying each driver influence the business.

Normally asset resources are controlled by enterprises as a result of those past events on which future economic benefits are expected to follow by the business organisations.

Hence, the brand equity is an asset to any organization and duty of marketers is to maximizing the value of it, he said. With these developments we could adopt econometrics methods where it isolates and quantifying drivers of business is a very useful starting point to manage marketing and financial aspects.

Dias said that brand valuation and intangible asset valuation can be approached in a number of possible ways.

Intangible business draws on all available approaches to brand valuation so that decisions can be made on a more informed basis.

General brand valuation approach is to look at intangible asset valuations on a number of different bases. There are generally three different approaches to brand valuation, the income brand valuation approach, the market brand valuation approach and the cost approach to brand valuation. Other brand valuation methodologies are also used on a needs specific basis.

Generally we find that an income basis (relief from royalty) drives the brand valuation with the other approaches to brand valuation used in support or as sense checks, Dias said.

Director PIM Dr Uditha Liyange said carry out in depth analysis into consumer/customer perception compared with competitors, market mapping and analysis, size share and growth, royalty analysis, supply chain price points and profitability analysis, important factor.

Further, effective financial analysis and meaningful benchmarking are important to brand valuation.

This resulting useful information can be used in a number of ways including on-going brand management and development, a benchmark of return on investment (ROI), compliance with US GAAP, IAS and IFRS and negotiating with licenses or joint venture partners. Information from a brand valuation is also useful in brand transactions, dispute resolution and for investor relations, he said.

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