A Brand Is an Asset
Professor David A. Aaker, a leading authority in brand studies, introduced the concept of brand equity. He defines it as “a set of brand assets and liabilities linked to a brand, its name and symbol” (David A. Aaker, Managing Brand Equity, translated by Keisuke Suyama et al., Diamond Inc., 1994). In essence, brand equity refers to the added value that is conferred on a product or company as a result of past investments in the brand. It represents the idea that a brand itself can be considered a business asset.
The Shift towards Shareholder-Oriented Management — Maximising Corporate Value
In recent years, this concept of brand equity has gained increasing attention in Japan, driven by a growing shift in corporate governance towards a shareholder-oriented model. This shift is largely a result of greater participation by foreign investors in the Japanese stock market, as well as cross-border mergers, acquisitions, and capital investments. Japanese firms have had to become more conscious of shareholder evaluations rooted in Western business practice.
For instance, Hitachi’s shareholder composition demonstrates this trend. In 1988, Japanese banks held 57.2% of shares while foreign investors accounted for only 10.1%. By 2001, these figures had shifted to 40.1% and 29.8% respectively, marking a significant transformation.
Brand Value as an Intangible Asset
According to a report by Interbrand UK, the sources of corporate value in the 1970s were split evenly between tangible and intangible assets (50% each). By the 1990s, this had shifted to 25% tangible and 75% intangible assets. The trend continued into the 2010s, with projections indicating a further shift to 20% tangible and 80% intangible. Within the category of intangible assets, brands were estimated to account for approximately 64%, with that figure expected to rise to 75% by 2010.
The Nihon Keizai Shimbun (Japan Economic Newspaper) has published a “Corporate Brand Score Ranking Survey” of leading Japanese companies. Based on this survey, the newspaper also analysed the correlation between brand value and corporate value using the PBR (Price-to-Book Ratio) as an indicator. PBR measures the ratio between the market valuation of a company and the value shown on its balance sheet. While the average PBR for the First Section of the Tokyo Stock Exchange at the time of the survey was 1.658, the top 27 companies in the brand ranking showed an average PBR of 2.932 (Nihon Sangyo Shimbun, 14 February 2001). This demonstrates a clear positive correlation between brand score and corporate value.
This phenomenon is not unique to Japan; similar findings have been reported across Europe and the United States. This supports the widely accepted notion that “companies with strong brands enjoy higher stock valuations.” For example, Sony ranked first, with a brand score of 81 and a PBR of 4.4. In the food sector, Ajinomoto and Nissin Foods both ranked eighth with brand scores of 71. Their PBRs were 2.1 and 1.5, respectively.
Amid this global trend, branding is not only a means of communication between companies and consumers, but is also evolving into a core element of corporate management—beyond the realms of advertising and marketing. Strengthening the brand has become a critical issue that should be led by top management and promoted and managed across the entire organization.
Measuring Brand Value
There are two primary approaches to measuring brand value.
The first is a financial-based evaluation, which seeks to assign a monetary value to the brand using accounting and financial data.
This method draws upon figures derived from a company’s financial statements and management accounting to quantify the brand as a financial asset.
The second is a marketing-based evaluation, which aims to assess the brand’s impact through consumer response. This approach evaluates how the brand generates positive reactions among customers and the resulting effectiveness in the marketplace.
In Japan, the Ministry of Economy, Trade and Industry (METI) initiated a research committee with the goal of enabling companies to disclose brand value as a monetary figure in their financial statements by 2003. However, measuring brand value presents considerable challenges.
One key issue is that, unlike traditional corporate assets — such as people, products, and capital — a brand is shaped by the perceptions and evaluations of external stakeholders, such as customers and employees. As a result, it cannot be fully controlled or managed unilaterally from the corporate side.
Another challenge is that these perceptions and evaluations are cognitive constructs formed in the minds of individuals. Converting such intangible and subjective images into objective numerical values is inherently difficult.
In the following section, we will explore the key components that constitute brand value and examine effective management strategies for enhancing it.
Key Drivers of Brand Value
According to Professor David A. Aaker, brand value consists of the following five categories:
- ・Brand Loyalty
The extent to which customers are committed to a brand and consistently choose it over competitors.
- ・Brand Awareness
The degree to which a brand is recognised and recalled by consumers.
- ・Perceived Quality
The customer’s perception of the overall quality or superiority of a product or service relative to alternatives.
- ・Brand Associations
The mental connections and imagery that consumers link with the brand, including emotional, cultural, or functional attributes.
- ・Other Proprietary Brand Assets
Additional brand-related assets such as trademarks, patents, and channel relationships that contribute to a company’s competitive advantage.
The Five Categories of Brand Value
- ・Brand Loyalty
The extent to which customers are committed to a brand and consistently choose it over competitors.
- According to Professor David A. Aaker, brand value is composed of the following five key elements:
This refers to the degree of consumer commitment to a brand. Since acquiring new customers is typically more costly than retaining existing ones, high brand loyalty helps to establish a stable and resilient customer base, reinforcing the brand’s foundation.
- ・Brand Awareness
The degree to which a brand is recognised and recalled by consumers.
- Brand recognition is another critical component of brand equity. Consumers are more likely to choose brands they are familiar with, as familiarity tends to foster trust. Therefore, brands with high awareness enjoy greater market opportunities than those with limited recognition.
- ・Perceived Quality
The customer’s perception of the overall quality or superiority of a product or service relative to alternatives.
- Perceived quality is the customer’s evaluation of a product’s overall quality. This perception may differ significantly from the manufacturer’s intended level of quality. What matters is the value attributed by consumers to the brand’s perceived quality, which plays a pivotal role in purchase decisions.
- ・Brand Associations
The mental connections and imagery that consumers link with the brand, including emotional, cultural, or functional attributes.
- Every brand is linked with certain associations in the minds of consumers. For example, Coca-Cola may evoke associations with American culture, while McDonald’s may be linked with children. These associations help to establish and reinforce a brand’s positioning in the market.
- ・Other Proprietary Brand Assets
Additional brand-related assets such as trademarks, patents, and channel relationships that contribute to a company’s competitive advantage.
- These include legal and relational assets such as patents, trademarks, and customer relationships. Such assets provide a competitive defence, helping to protect the brand from imitation or encroachment by competitors. For instance, trademark rights prevent others from using similar names or symbols that might confuse consumers.
By strengthening these five categories, companies can achieve the following:
- Greater efficiency and effectiveness in marketing programmes
- Enhanced brand loyalty
- Improved pricing power and profit margins
- Opportunities for brand extension
- Increased leverage in business negotiations
- Sustainable competitive advantage
Ultimately, these outcomes contribute to a significant increase in overall brand value.
Challenges in Brand Management
At Sony, which ranked No.1 in brand score in 2001, the various elements of brand value are centrally managed by a dedicated unit known as the Brand Management Office.
As part of its active initiatives, Sony has clearly defined its core brand values (core promise) and undertaken company-wide efforts to embed them across all departments. Internal guidelines and promotional activities ensure that the essence of the Sony brand is consistently reflected — from product development and logistics to marketing and communication.
For instance, Sony has implemented strict brand governance across its vast online presence — encompassing over 500 million pages operated by approximately 300 group companies. Unified guidelines for tone and manner, interactivity, and usability are enforced, with server monitoring conducted on an hourly basis and main page design updates carried out weekly.
In terms of passive initiatives, Sony conducts regular brand audits worldwide and carries out perception surveys among stakeholders.
Brand audits assess whether the “SONY” brand is being represented correctly in signage and advertising across countries and whether communication materials convey the brand’s essence in a culturally appropriate manner.
Perception surveys target consumers in each market, measuring indicators such as
Brand awareness and associations
Brand image across different target segments
Brand strength by product category
These insights inform strategic adjustments and guide the brand extension process — evaluating whether, and how, the SONY brand should be applied to new products or business lines.
Brand extension decisions are made based on consumer research, assessing the relevance and expectations of the SONY brand within each product category and region. This process ensures careful management of the brand’s image and identity across a diverse global portfolio.
Ultimately, brand management must be both proactive and reactive — internally and externally. To achieve this, clearly defined brand guidelines and a cross-functional organisational structure are essential for effective enterprise-wide brand governance.
