Highly Recognizable Brands Can Still Be Weak: A study by CoreBrand examined three companies that have highly recognized brands but low market capitalization values. Outside factors such as a lack of product diversity, weak financials or a poor economic environment all play a part in decreased market cap values.
CoreBrand ratings are derived from annual surveys of more than 10,000 senior business decision makers. The companies studied were La-Z-Boy, Chiquita Brands International and Ruby Tuesday. Findings for each, interpreted by James Gregory, CEO of CoreBrand, are as follows:
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La-Z-Boy: With a CoreBrand power score of 54.7 and a CoreBrand equity of 16.5% of market capitalization, La-Z-Boy’s brand is comparable to megabrands like GE and Microsoft, says Gregory. However, La-Z-Boy’s image makes it difficult to expand into other product markets. So while GE’s equity of 16.5% translates to $31.1 billion of market capitalization value, La-Z-Boy’s equity only translates to $100 million of market capitalization. “Product diversification is necessary for this brand to experience any long-term growth,” he says.
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Chiquita Brands International: Although Chiquita has a high power rating of 49.9 and a high CoreBrand Equity of 13.9% of its market capitalization, this only translates to a brand value of $50 million. Already well-known as a producer and distributor of bananas, Chiquita, says Gregory, could benefit from efforts to broaden its brand identity to focus on its other products.
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Ruby Tuesday: With a power rating of 35.0 and a equity of 12.1%, Ruby Tuesday’s corporate brand is only valued at $50 million. “The company has made numerous attempts to move into the higher-quality menu dining segment,” says Gregory. Still one of the largest casual dining chains in the U.S., the company needs to create an advertising and communications campaign that stands out from the competition, “and it needs enough media spend behind it to convince customers of the changes that have taken place,” says Gregory.
Source: CoreBrand