Assets, revenue, and expenditure can easily be valued on a balance sheet, but sometimes an organization’s biggest asset can be the hardest to put a price tag on. When weighing investment opportunities, a brand’s value should always be a major consideration.
From an investor’s perspective, a company’s annual report is typically the single most important piece of information.
But for Gary Channon, co-founder of Phoenix Asset Management Partners, a real life interaction with a brand can also provide important information on where to invest.
“Most money is invested by institutions and, in our experience, they don’t spend much time in the field,” says Channon. “If they do, they look at the world through the eyes of a wealthy fund manager, not those of actual customers.”
The value of real world research
By placing yourself in the shoes of customers, you can experience the brand first-hand and genuinely understand how it compares against competitors.
“We’re looking at consumer-facing brands, many of them with physical shops,” says Channon, “so we can put ourselves in the shoes of a customer and experience the business that way. We’re trying to judge the competitive landscape, what a customer’s alternative options are and what drives them to choose a particular business over another that may be in the same street.”
According to Channon, this should not be a one-off experiment. To get a real feel for a brand’s market position you need a more in-depth assessment of the customer experience through repeated purchases, both of the brand you are interested in and its key competitors. By studying the competitive landscape on several occasions, Channon argues that investors can lower the error rate of investment decisions. This is why “It usually takes us a few years to understand a business well enough to commit to invest in it, and often much longer,” he says.