Frequently Asked Questions
How does Tenet Partners determine the Top 100 Most Powerful Brands?
Tenet derives its annual Top 100 Most Powerful Brands from its quantitative database – the CoreBrand Index (CBI) – the results from continuous benchmark tracking via surveys of nearly 1,000 different companies across 50 industries for over 25 years.
Each year, we survey approximately ten thousand influential decision makers on two key metrics: Familiarity and Favorability. Familiarity measures awareness of the brand. Favorability measures the perception of the brand, based on how it performs on various attributes.
**Familiarity** – This component is a weighted percentage of survey respondents who are familiar with the brand being evaluated. Familiarity is rated on a five-point scale. Respondents are considered to be familiar with a brand if they state that they know more than just the company name. Familiarity scores can range from 0 to 100.
**Favorability** – Those respondents familiar with the corporation are then asked about three attributes that together, form a Favorability score, also on a scale of 0 to 100.
- *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?
These quantitative metrics, Familiarity and Favorability, are then combined into a composite score we call BrandPower – a standardized measure that can be used to objectively to compare brands both within and across industries. BrandPower is calculated as a function of Familiarity and Favorability, and then reported on a 100-point scale.
Why is measuring BrandPower important?
It is widely accepted that brands play a key role in financial performance. But how? Tenet Partners believes this relationship has much to do with overall business strategy as it does with the brand itself. For example, a company’s brand becomes more powerful when a company invests time and money into finding innovative ways to invest in and manage both its business and its brand.
Good management of the brand and of the company – results in two outcomes that have a measureable impact on brand reputation: Familiarity and Favorability. Measuring each of these objectively can be meaningful indicator of management effectiveness and often, financial performance.
A high BrandPower score means that a company’s brand management practices have placed it in good standing – people know it, and people like it. That means they are more likely to do business with the company, and invest in it.
Having a single score BrandPower is tremendously helpful in evaluating the performance of a company’s brand – allowing it 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 continue to impact brands.
How is Tenet’s ranking of the Top 100 Most Powerful Brands unique compared to the way other companies rank brands?
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 an advantage in the many areas that define business success. Unlike other brand value measurements, Tenet’s BrandPower is based on quantitative measurements across a significant number of data points – as opposed to subjective industry-panel assessment traditionally used to determine a brand’s monetary value. Our method allows brands to be evaluated objectively, providing new and valuable information for investors and brand stewards as they determine a brand’s ability to impact business results.
Brand Valuation is becoming a more common practice among many brand-consulting firms. Is Tenet Partners able to conduct specific brand valuations for companies?
Yes. Our methodology is completely transparent and free of ‘black-box’ judgments. Instead, we leverage reliable, stable market research and BrandPower data and couple 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, and then evaluates it in the context of financial impact to determine brand dollar value.
Tenet’s Brand Equity Valuation is expressed in two ways:
- **Market Value**: A brand’s market value rises and falls depending upon a company’s ability to achieve its key business objectives. This number tells the executives responsible for building the brand how hard that brand is working to build value for the company. As this measure rises and falls, the brand becomes more or less of a contributor to a company’s success. This is an ideal number for a company’s KPI dashboard and a reliable measure of brand performance in the context of a company’s overall financial health.
- **Dollar Value**: The dollar value of a brand is a result of multiplying the percentage impact of the brand by the company’s market capitalization. As the company’s overall enterprise value fluctuates, this number can change day-to-day. It helps to communicate the brand’s asset value to senor leadership and other constituencies, ensuring that the brand is properly accounted for in M&A activity, royalty and licensing cases, along with additional reporting vehicles.
Understanding the market value and the dollar value of a brand can be useful in many ways. The percentage a brand contributes to a company’s success 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.
Apple is the most ‘valuable’ brand in this year’s Top 100 brands, but Coke takes the lead as the #1 most ‘powerful’ brand. Why?
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. By contrast, brand valuation is the output of a time-tested statistical model, measuring the impact of a company’s brand in the context of its financial performance. BrandPower is a predictive driver 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 Tenet’s Top 100 Most Powerful Brands are ranked by an objective BrandPower score, and not on the basis of brand value.
Tenet has developed a proven Brand Equity Valuation model. While it functions independently of our Top 100 rankings (it does not inform the ranking order of the Top 100), it is used as an important benchmark along BrandPower insights, to provide a broader, more holistic perspective of how companies can measure their brand-building efforts.
It is worth noting that while Apple leads as the most valuable brand, boasting a brand value of $102.5 billion, their brand contribution to market capitalization is 17.3% – lagging behind Coke – whose brand contribution to market capitalization of $19.5%. Apple’s lower percentage numbers suggests that they have room to create additional value by continuing to strengthen its brand.
Well-known brands such as Facebook and LinkedIn are not part of the Top 100 Most Powerful Brands of 2016. 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. and tracked in the CoreBrand Index for 5+ years. Brands such as Facebook and LinkedIn have not met these criteria, and have not yet been tracked in the CoreBrand Index for five years or longer. As a result, they did not qualify to make it onto our Top 100 ranking this year, but we look forward to seeing their positions in the future.