Frequently Asked Questions
How does Tenet Partners determine the Top 100 Most Powerful Brands?
The starting point for determining the Top 100 Most Powerful Brands is the CoreBrand® Index (CBI) – a quantitative database based on a continuous benchmark tracking survey of nearly 1,000 companies across 50 industries. The study has been in the field continuously since 1990.
The Top 100 Most Powerful Brands are ranked in corresponding order by a measure of BrandPower, a single metric that represents both the awareness (Familiarity) and perception (Favorability) of a brand. In one metric, we capture a brand’s reputation in the marketplace as well as its ability to impact business performance.
Familiarity – We ask survey respondents how familiar they are with a brand. Their answers reflect their awareness beyond just the company name.
Favorability – We ask those whose familiarity with brands goes beyond just name recognition to rate brands based on three factors:
- Overall Reputation: Do you have a favorable impression of the corporate brand? What is your view of the corporate brand’s ability to drive growth over time?
- Perception of Management: What is your perception of the company’s management? How would you assess the way senior leadership leads the enterprise and engages stakeholders? Does leadership have a future-forward outlook on the competition and the market in which it operates?
- Investment Potential: Would you invest in this company? What do you think of the organization’s ability to secure future earnings and increase brand value over time?
BrandPower is calculated as a function of Familiarity and Favorability, and then calculated on a 100-point scale. Both Familiarity and Favorability must be strong to place in the Top 100 Most Powerful Brands ranking, meaning the company has both high awareness and is favorably perceived. If a corporate brand has high Familiarity but low Favorability, it will not show up in the Top 100 rankings. The same holds true for niche players who have low Familiarity but high Favorability – they will not appear either.
We use a full calendar year of data to support our rankings, which includes over 10,000 phone interviews with business-decision makers (typically Vice President level or above) at the top 20 percent of corporations in the United States based on revenue.
How is Tenet’s ranking of Top 100 Most Powerful Brands unique compared to other brand rankings?
Our approach is market research based. By understanding the true strength of a brand, not just its monetary value, business decision-makers can gain important intelligence for creating and maintaining advantage in all the areas that define business success. Unlike traditional brand value measurements, BrandPower is based on quantitative measures across a significant number of data points, as opposed to a subjective industry-panel assessment. Our method allows brands to be evaluated objectively, providing new and useful information for investors and brand stewards as they determine a brand’s ability to impact business results.
Why is understanding BrandPower important?
The corporate brand is one of a company’s most precious assets. It can be one of the greatest levers in building corporate value. To many outsiders, the powerfulness of a brand (a distillation of factors such as name recognition, reputation, and economic value) determines whether people will buy its products, invest in the company, consider it as a place to work and support it in a time of crisis.
A high BrandPower score means that a company’s brand management practices have placed it in good standing – people know it; people like it. That means they’re more likely to do business with the company and invest in it.
Having a single score (e.g. BrandPower) is incredibly helpful in evaluating the performance of a corporate brand. It allows companies to see the affects of their brand investment by tracking their own score over time. It enables easy comparison among competitors, against industry averages and against world-class brands. It also allows us to contrast multiple industries to better understand the market dynamics that impact brand.
Brand valuation is becoming more common practice among many brand consulting firms. Does Tenet Partners have an established methodology for valuing brands?
Yes. Our methodology is completely transparent and involves no “black-box” set of judgments. Instead, we leverage reliable, stable market research, BrandPower data and marry it with financial data from widely accepted business sources. With 25 years of proven research data, we can ensure consistent input to our model. This statistical model identifies the contribution of the brand based on market research and through regression models evaluates it in the context of financial impact to determine brand dollar value.
Brand Equity Valuation is expressed in two ways:
**The percent that the brand contributes to market cap** tells how much value can be directly attributed to the corporate brand. It measures the overall impact a company’s brand-building efforts. In turn, senior leadership can build a business case and evaluate the return-on-brand investments, in a way that is easily understood. (i.e. how hard the brand is working to create value for the company).
**The dollar value of the brand** is a result of multiplying the percentage impact of the brand by the company’s market capitalization. This number can change day-to-day as the company’s overall enterprise value fluctuates. It is used to help senior leadership understand the brand’s asset value and is also a measure of the value that the market places on the brand.
These two measures are useful to different audiences. The percentage of contribution of the brand is important to brand stewards because it reveals objectively, how hard the brand is working to create value. The dollar value of the brand is important to senior management, as it identifies the asset value of the brand. As a result, leadership can better understand a brand’s worth to the company, and communicate effectively, its value to shareholders and to other critical audiences.
The Coca-Cola Company is the #1 Most Powerful Brand of 2015. Why does it continue to the hold the top position, despite not being the most valuable brand?
The Coca-Cola Company is the uncontested leader in terms of its BrandPower score. In our view, BrandPower is a measure of brand strength, based on successful brand management, and independent of brand value. Brand valuation is simply the output of a statistical model, measuring the impact of a company’s brand in the context of its financial performance. As brand value is based largely on a company’s financial performance – its revenue and stock price, it offers little in terms of measuring the drivers that actually create a strong brand.
BrandPower is a lever that a company can manage – through increased communication, product innovation, service development and so forth, to ultimately increase its brand value over time. It is for this reason, that The Top 100 Most Powerful Brands are ranked by an objective BrandPower score, and not on the basis of brand value.
However, as previously mentioned, we have a proven Brand Equity Valuation model. While it functions independently of our Top 100 rankings (i.e. doesn’t inform the ranking order of the Top 100) it is used as a pivotal model (along with BrandPower insights) to provide a broader, more holistic perspective of how companies can measure the overall impact of their brand building efforts.
Lastly, it is worth noting that while we have determined that Apple leads as the most valuable brand amongst the Top 100, with a brand value of $113.7 billion, its brand contribution to market capitalization is 17.3%, which lags behind The Coca-Cola Company, with a brand contribution to market cap of 20.1%. This lower percentage score suggests that Apple can create additional value by continuing to grow its brand.
Well-known brands such as Facebook and LinkedIn are not part of the Top 100 Most Powerful Brands 2015. Why?
The brands listed on the Tenet Top 100 Most Powerful Brands ranking must meet several criteria to be considered. They must be: A corporate brand (not a product or divisional brand), publicly traded in the U.S. for 5+ years, and tracked by the CoreBrand® Index (CBI) for 5+ years. Brands such as Facebook and LinkedIn have not been tracked in the CoreBrand Index for five years or longer. As a result, they did not qualify to make it onto the Top 100 ranking this year, but we look forward to seeing their position in the future.