1. L2 INNOVATION FORUM 2010
Presented by: Nima Rahnemoon
WHAT’S THE VALUE
IN BRAND NAME?

2. Value
Dell Laptop 15”
$800
Macbook Pro 15”
$1200

3. Value
Honda Acura
$70,000
Ferrari
$250,000

4. Value
Rolex Oyster
$10,000
Fake Rolex Oyster
$10

5. Value Conclusion
• Having a well-known/respected brand -> selling
products at a higher price = higher profit margins
• Logically people should attribute value to product
quality, styling, service and reliability instead of
brand
• Brand name value is easy to compute

6. Value Of Brand Name
Coca Cola
$4/6 pack
RC Cola
$2/6 pack

7. Example Cont.
Margins Coca Cola RC Cola
Current Revenue $21,962,000 $21,962,000
Operating Margin 15.57% 5.28%
Sales/Capital
(Turnover Ratio)
1.34 1.34
Return on Capital 20.84% 7.06%
Growth rate during
period (g)
10.42% 3.53%
Cost of Capital during
period
7.65% 7.65%
Value of firm $79,611,000 $15,371,000
Value of brand name = $29,611,000 – 15,371,000 = $64,240,000

8. Proposition 1
•Brand is the most
sustainable competitive
advantage

9. Proposition 2
•Luck and serendipity are
just as important as
advertising

10. Proposition 3
•Brand Value is an Illusion

11. Proposition 4
•Even Valuable Brand
Names Lose Value

12. Personal Application
•Understanding the
importance of brand
•Making a sustainable
company
•Not being a smarter
consumer

13. Classroom Application
•Fustec
•Documents on LMES
•Entrepreneurship