Thursday, 6 February 2014

Does -- or should -- expensive rebranding add value to the brand?

According to recent news pieces here and here, United Biscuits is relaunching its McVitie’s biscuit brand in what is a £12 million marketing project. The campaign “aims to evoke ‘the emotional role biscuits play in our lives” and means that all United Biscuits sweet products (with the exception of Go Ahead!) will be brought under the McVitie’s brand. This will include Penguin Bars and Jaffa Cakes.

An interesting aspect of this is that 90% of UK households purchased the company’s branded biscuits in 2012 and it currently holds 40% of the market.

So, what we have is the expensive rebranding of an already hugely successful brand. From a trade mark valuation perspective, a thought-provoking (it is hoped) question pops up: Does or can such rebranding add monetary value to the trade mark?

Readers of this blog are well aware that IP valuation is very much a subjective exercise, dependent significantly on the purposes of the valuation. While most of the valuation methods rely significantly on the market performance of the branded goods, some others attach significant importance on the investment placed on the brand, i.e, entail a cost approach. Within this prism, a significant investment on the brand should inevitably add to its value.

Truth be told, the cost approach is not typically relied upon when determining a brand’s value, but it is mostly regarded as a tool to inform or even validate other approaches. But even then, the amount of money poured in to freshen up the brand will still be part of the equation leading to its value determination. Therefore, expensive rebranding does add value to the brand, from an IP valuation perspective. But should it really? Isn’t investing a risk? And what if loyal consumers of the McVitie’s brand don’t ‘bite’? After all, they are already loyal and the brand does extremely well in the UK. Could this be an example “exposing” the artificial nature of IP valuation?

A big thank-you goes to our friend Nikos Prentoulis for preparing this item for IP Finance.

1 comment:

Janal Kalis said...

A better use of resources might be to improve the quality of the product being re-branded: http://m.nakedcapitalism.com/nakedcapitalism/#!/entry/james-surowiecki-promotes-myth-of-consumer-empowerment-in-the-face,52f8bc26b7d8d24162c9942d/1