ISO 10668
Encyclopedia
In 2007 the International Organization for Standardization
('ISO'), set up a task force to draft an International Standard on monetary brand valuation. After 3 years the ISO 10668 – Monetary Brand Valuation – was released in Autumn 2010. This sets out the principles which should be adopted when valuing any brand
.
ISO 10668 applies to brand valuations commissioned for all purposes, including:
The last of these applications include:
Under ISO 10668 the brand valuer must declare the purpose of the valuation as this affects the premise or basis of value, the valuation assumptions used and the ultimate valuation opinion, all of which need to be transparent to a user of the final brand valuation report.
and intentionally avoids detailed methodological work steps and requirements. As such ISO 10668 applies to all proprietary and non-proprietary brand valuation approaches and methodologies that have been developed over the years, so long as they follow the fundamental principles specified in the meta standard. ISO 10668 specifies that when conducting a brand valuation the brand valuer must conduct 3 types of analysis before passing an opinion on the brand’s value.
These are Legal, Behavioural and Financial analysis. All 3 types of analysis are required to arrive at a thorough brand valuation opinion. This requirement applies to valuations of existing brands, new brands and brand extensions.
International Financial Reporting Standard 3 ('IFRS3'), specifies how all acquired assets should be defined, valued and accounted for post-acquisition. It refers to 5 specific IA types which can be separated from residual Goodwill
arising on acquisition.
behaviour in each of the geographical, product and customer segments in which the subject brand operates.
ISO 10668 specifies three alternative brand valuation approaches - the Market, Cost and Income Approaches. The purpose of the brand valuation, the premise or basis of value and the characteristics of the subject brand dictate which primary approach should be used to calculate its value.
Brand Portfolio reviews consider whether the right number of brands and sub-brands are in the portfolio. Brand Architecture reviews considers whether individual brands are too fragmented and extended.
In both these cases, brand valuation analysis can help to evaluate the most effective value adding strategy. Brand valuation can help companies rationalise and rebuild their brand portfolios and trim their brand architecture to best address current market conditions.
International Organization for Standardization
The International Organization for Standardization , widely known as ISO, is an international standard-setting body composed of representatives from various national standards organizations. Founded on February 23, 1947, the organization promulgates worldwide proprietary, industrial and commercial...
('ISO'), set up a task force to draft an International Standard on monetary brand valuation. After 3 years the ISO 10668 – Monetary Brand Valuation – was released in Autumn 2010. This sets out the principles which should be adopted when valuing any brand
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
.
ISO 10668 applies to brand valuations commissioned for all purposes, including:
- AccountingAccountancyAccountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
and financial reportingFinancial statementA financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by... - InsolvencyInsolvencyInsolvency means the inability to pay one's debts as they fall due. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.Business insolvency is defined in two different ways:...
and liquidationLiquidationIn law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation... - Tax planning and complianceRegulatory complianceIn general, compliance means conforming to a rule, such as a specification, policy, standard or law. Regulatory compliance describes the goal that corporations or public agencies aspire to in their efforts to ensure that personnel are aware of and take steps to comply with relevant laws and...
- Litigation support and dispute resolution
- Corporate finance and fundraising
- Licensing and joint ventureJoint ventureA joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...
negotiation - Internal management information and reporting
- Strategic planning and brand managementBrand managementBrand management is the application of marketing techniques to a specific product, product line, or brand.The discipline of brand management was started at Procter & Gamble as a result of a famous memo by Neil H...
The last of these applications include:
- Brand and marketing budget determination
- Brand portfolio review
- Brand architecture analysis
- Brand extension planning
Under ISO 10668 the brand valuer must declare the purpose of the valuation as this affects the premise or basis of value, the valuation assumptions used and the ultimate valuation opinion, all of which need to be transparent to a user of the final brand valuation report.
Requirements of an ISO compliant brand valuation
ISO 10668 is a 'meta standard' which succinctly specifies the principles to be followed and the types of work to be conducted in any brand valuation. It is a summary of existing best practiceBest practice
A best practice is a method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark...
and intentionally avoids detailed methodological work steps and requirements. As such ISO 10668 applies to all proprietary and non-proprietary brand valuation approaches and methodologies that have been developed over the years, so long as they follow the fundamental principles specified in the meta standard. ISO 10668 specifies that when conducting a brand valuation the brand valuer must conduct 3 types of analysis before passing an opinion on the brand’s value.
These are Legal, Behavioural and Financial analysis. All 3 types of analysis are required to arrive at a thorough brand valuation opinion. This requirement applies to valuations of existing brands, new brands and brand extensions.
ISO 10668: Module 1 Legal analysis
The first requirement is to define what is meant by 'brand' and which intangible assets should be included in the brand valuation opinion. ISO 10668 begins by defining Trademarks in conventional terms but it also refers to other Intangible Assets (‘IA’) including Intellectual Property Rights (‘IPR’) which are often included in broader definitions of ‘brand’.International Financial Reporting Standard 3 ('IFRS3'), specifies how all acquired assets should be defined, valued and accounted for post-acquisition. It refers to 5 specific IA types which can be separated from residual Goodwill
Goodwill (accounting)
Goodwill is an accounting concept meaning the value of an entity over and above the value of its assets. The term was originally used in accounting to express the intangible but quantifiable "prudent value" of an ongoing business beyond its assets, resulting perhaps because the reputation the firm...
arising on acquisition.
ISO 10668: Module 2 Behavioural analysis
The second requirement when valuing brands under ISO 10668 is a thorough behavioural analysis. The brand valuer must understand and form an opinion on likely stakeholderStakeholder
The term stakeholder, as traditionally used in the English language in law and notably gambling, is a third party who temporarily holds money or property while its owner is still being determined....
behaviour in each of the geographical, product and customer segments in which the subject brand operates.
ISO 10668: Module 3 Financial analysis
The third requirement when valuing brands under ISO 10668 is a thorough financial analysis.ISO 10668 specifies three alternative brand valuation approaches - the Market, Cost and Income Approaches. The purpose of the brand valuation, the premise or basis of value and the characteristics of the subject brand dictate which primary approach should be used to calculate its value.
Application of brand valuations
ISO 10668 was developed to provide a consistent framework for the valuation of local, national and international brands both large and small. The primary concern was to create an approach to brand valuation which was transparent, reconcilable and repeatable. In the wake of the standard’s launch it is expected that many companies will either value their brands for the first time or revalue them compliant with the standard.Brand Valuations and Brand Strategy
Common commercial applications of brand valuation are brand portfolio and brand architecture reviews.Brand Portfolio reviews consider whether the right number of brands and sub-brands are in the portfolio. Brand Architecture reviews considers whether individual brands are too fragmented and extended.
In both these cases, brand valuation analysis can help to evaluate the most effective value adding strategy. Brand valuation can help companies rationalise and rebuild their brand portfolios and trim their brand architecture to best address current market conditions.