Creating bridges between marketing and financing
Hiran H. SENEWIRATNE
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. |