The use of brands in the products/services of a company provides broad benefits in business activities and sustainability. The brand, acting as a powerful asset, is a sign or characteristic that distinguishes each product/service offered to the public. Moreover, the brand serves as a vital element for brand awareness, making it effortlessly recognizable and memorable to the public. By incorporating a distinctive sign or feature, such as an image, name, word, letter, number, color pattern, or a combination thereof, the Brand Value Asset is further strengthened.
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The importance of the role of the brand encourages companies to constantly increase brand value, which is calculated taking into account the amount that consumers are willing to pay for a particular brand compared to other brands. Aspects that influence in brand value include product quality, competitive advantage, the role of technology and other aspects that play a role in increasing consumer satisfaction and brand reputation in society.
The 100 Best Brand Value Asset of Indonesian Brands (2021)
In 2021, the Brand Finance Institute (BFI) published a report on the 100 most valuable brands in Indonesia. The top 10 brands are presented in the table below:
Ranking | Brand Name | Sector | Brand Value (in million USD) | Previous Ranking | Changes | |
2020 | 2021 | |||||
1 | Telkom Indonesia | Telecommunication | 4,762 | 3,854 | 1 | - |
2 | BRI | Banking | 3,531 | 3,098 | 2 | - |
3 | BCA | Banking | 2,918 | 2,493 | 4 | +1 |
4 | Bank Mandiri | Banking | 2,708 | 2,415 | 5 | -1 |
5 | Sampoerna | Tobacco | 3,252 | 2,403 | 3 | -2 |
6 | Pertamina | Oil & Gas | 2,599 | 2,397 | 6 | - |
7 | Gudang Garam | Tobacco | 2,480 | 2,215 | 7 | - |
8 | BNI | Banking | 1,580 | 1,325 | 8 | - |
9 | PLN | Utilities | 780 | 746 | 9 | - |
10 | Indosat Ooredoo | Telecommunication | 544 | 715 | 15 | +5 |
Methodology for Assessing Brand Value
The methodology used by BFI is the concept of an income-based brand assessment methodology, such as relief from royalty method. This method considers the contribution of specific earnings to a particular brand in the company’s overall future income, taking into account the analysis of historical earnings, analysis of future equities and economic growth. The income is then calculated using a royalty rate and discounted according to the concept of Discounted Cash Flow (DCF) analysis to generate brand value.
Brand Value and Initial Public Offering (IPO)
One of the factors driving brand value is through an Initial Public Offering (IPO). Based on the table above, it can be seen that most of the companies that are ranked in the ranking of the 10 most valuable brands are companies that have listed shares on the Indonesia Stock Exchange (IDX). There are 8 out of 10 companies above are companies with a large market capitalization and are an investment choice for investors in Indonesia.
This is in line with the benefits of the IPO, which is to increase the value and image of the company. Through IPO, the company gains introductory exposure through actual information related to finances, as well as the company’s activities to increase consumer confidence and new market segment opportunities for the company. Thus, the value of the brand becomes an intangible asset for a public company.
SW Solution, a business unit of SW Indonesia to provide business service outsourcing and business advisory experienced in assisting companies for the IPO process and other corporate actions. As a business advisor, we assist clients starting from the preparation stage, including investment prospects and company restructuring plans, to the stage of listing shares on the stock exchange after carrying out public exposes and roadshows to potential investors. Contact us today at +62 2993 2132 or email us at [email protected] to learn more and get in touch with our knowledgeable experts today.
