Definition Of Tangible And Intangible Marketing Essay

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There are two kinds of resources or each company, tangible and intangible assets, they all play important role in fast paced technology markets. When a company foundation, it most depends on tangible , after this if the company want to be better in the market , at this time intangible become most important. (Buzzle 2012)

Definition of Tangible and Intangible

Tangible assets are some goods of material nature they can be perceived by senses like , the furniture, the money ,the lands and machines. Intangible assets are considered the goods of immaterial nature, The science of knowing what to do , company relations with the clients , operative processes, capacities, abilities and innovations of the employers and service.

Each organization will have an intangible demand function through which it will demand soft source intangibles like knowledge, relationships in order to congeal its knowledge assets and relationships assets into a form that creates value to its customers. So for most companies , intangible resource are more valuable than tangible resource. ( Grant 2009)

Tangible assets are held by individuals or businesses, real, actual, rather than assumed. They were compared with things to individuals or businesses may think that it is not visible. Intangible assets include ideas protected by copyright, patent or intellectual property rights and stuff. While these things may have a chance at some

point in the future, is conducive to the economic, they currently do not have huge profits in most cases, you can sell something.

An intangible asset is one that does not have a physical form but provides value to the firm . Examples of intangible assets include contracts and patents, i.e. assets that cost money to acquire but do not have easily-accessible markets through which to buy and sell them. Unlike tangible assets like machinery and automobiles, the lack of secondary markets increases the risk that the intangible asset can not be liquidated at a reasonable price.¼ˆReilly and Schweihs 1999¼‰

On the other hand, most of the tangible assets can be easily converted to cash or have cash. The amount in your bank account is tangible, you own the property, such as cars, houses, or vessel. These tangible assets, especially if you want to get a loan, usually provide you with the type of loan collateral.(Soto 2007) Most banks will not provide loans to tangible assets, even if they have the potential to make money in the future of intangible assets.

The Roles of Tangible and Intangible

For example, as people know Apple Inc is an American multinational corporation that designs and sells consumer electronics, computer software, and personal computers. The company’s best-known hardware products are the Macintosh line of computers, the iPod, the iPhone and the iPad, this company also is the best sales in the all the world technology company. People all know Samsung company too, but why Samsung always not good enough in sales , people also feel a lot of Samsung Inc products as same as Apple Inc products, because of Apple Inc always creat, Samsung always do the same things .

Under the jurisdiction of the current economic situation and the command of the intangible assets owned by the company. Before 1920, the economy dominated by tangible assets during this period through the effective management of the company’s financial indicators .

A study of Brookings’s institute in 1982 showed the tangible assets represented the 62% of the value in the market of industrial organizations.¼ˆWeb and Macros 2012¼‰ Ten years later, in 1992 the proportion lowered until 38%, Financial indicators are still used to direct and to take decisions, but they just represent less than 10% of our value. The question is why do we still use them? (As the chart shows, chart 1.1)

The intangible assets of the organization is the most important source of competitive advantage granted to other companies. Excellent surgical organization, know their own market segments, and the knowledge to develop unique products and can inspire their employer, there will be a guarantee of success.( Kotler and Shalowitz and Stevens 2008)

Assists the angle described before, we need tools to describe the invisible involving these intangible assets into tangible assets as currency, through the development of the strategy map and balanced scorecard. Through the four years of his point of view, the use of the Balanced Scorecard indicators to describe the intangible assets, so that we can monitor and control the activities of the company of the value of intangible assets.¼ˆMiao 2004¼‰

Tangible Assets VS Intangible Assets

In the fast paced technology markets, when a company foundation, it needs tangible assets to buy machines, to build factories and recruit staff, how big this company and whether this company can found success ,it all depends on how many tangible assets this company have, but after company foundation, intangible assets become most important, we need intangible assets to get more tangible assets.( Bianchi and Labory 2004)

The traditional view attaches great importance to the tangible assets, a lot of people think that the bigger the size of the total assets of the enterprise, on behalf of the more powerful enterprise strength.

Buffett early attaches great importance to the tangible assets. Although the first 10 years of excellent performance, but Buffett gradually found more and more learning and imitation Graham, based solely on tangible assets valuation can find cheap stocks fewer.

Under the influence of his partner Munger, he absorbed the thought of Fisher excellent investment enterprises. He gradually realized that the company has a strong sustainable competitive advantage, its excess profitability is not from tangible assets, but mainly from the good management and a great reputation and other intangible assets: “In the years of inflation, accumulation tangible assets from the original investment compared to the unusually high amount of huge corporate wealth, from this enterprise business: the lasting value of intangible assets with relatively requires an investment of a much smaller number combination in this case under nominal dollars profit jumped sharply, and most of these earnings can be used to acquire another business. “

Buffett is not in theory but in investment practice gradually recognize that the first success stories hi poem he acquired confectionery company. He wrote in a 1983 letter to shareholders: “in 1972, relatively speaking, only a few of several companies like hi poetry that sustained 25% of the net tangible assets after tax yield is expected to and conservative accounting policies and financial leverage. inventory, accounts receivable or the fair market value of fixed assets produced high excess yield, but a variety of intangible assets is a combination of special the company’s products and employees give consumers generally agree that a good reputation formed countless times on the basis of a pleasant experience. “

1985, revolutionized Buffett said: “I am now than it was 20 years ago, are more willing to pay a higher price for a good business and good management. Tend Graham just value statistics and I am concerned about the increasingly the number of those intangible things. “¼ˆLiu 2012¼‰

In recent years, many organizations have outsourced noncore functions, such as information technology telecommuncations, finanical transaction and plant maintenances as welll as the production of mature production and services. ( Kaplan and Norton 2004)they focus on creating products , design the shape and function of products.

Like for a restaurant the chef is tangible assets ,but how the chef cooking is intangible assets , and if the restaurant can attract a lot of guests it depends on it. The restaurant decoration is when the restaurant open ,its the basic things people like its good but after a period of time, guests whether like to come this restaurant ,it most depend on the service of this restaurant.

Apple Inc is a company that proved to us intangible is the assets decided if a company can success. Apple was founded in March 1976, the core business of electronic products. Apple products are always subversive pursuit of distinctive, iMac changed personal Computer industry, iPod set off a wave of digital music, the iPhone sparked life the iPad blew the horn of the mobile terminal to replace the personal computer. Apple products begin with “i”Have become ubiquitous, especially by the fashion people Sought after, Apple’s influence far exceeds Out of the field of Electronic Science and Technology. (Grady 2009)

May 26, 2010, Apple surpass Microsoft’s market capitalization of $ 221.36 billion, becoming the world’s most valuable technology company, named “Business Week” the greatest company in the world. In 2011, Apple’s operating results continue to maintain high growth momentum, in the second quarter operating income and net profit to a record high, year-on-year growth of 83% and 95%, respectively. In May 2011, the world’s top brand research firm China brightly lit slightly released 100 of the world’s most valuable brand, Apple topped the list with a brand value of $ 153 billion.

Brands should also be understood from another perspective. Brand are not only trademarks, or consumers ‘perceptions, or sings to distinguish one company’s products or services from its competitors, but they are also the most important intangible assets for many business. The reason is the economic impact that brand have.(Soto 2007)

The company’s most important asset is invisible, these are not capitalized, and will not appear in the balance sheet. Therefore, the maintenance of direct cash flow and short-term profits. However, because they are not depreciated their maintenance is not visible, managers sometimes ignored.

For this reason, the tangible is regarded as a major source of business for a long period of time, to show their value on the balance sheet of the company. The market is invisible, but its value is unclear, and can not be quantified. Increase the increasing importance of intangible assets, the book value of the company’s stock market valuation gap between the 1980s mergers and acquisitions as well as new swing.

Of course, Apple is not smooth sailing in the development process, and experienced a lot of setbacks and failures.In the 1980s, Apple insists “closed manufacturing”, refused to open its operating system to other hardware manufacturers, active open

Put the Microsoft Windows operating system and advocate combination of manufacturing IBM’s occupation of the PC market, Apple into a valley, the loss amounted to $ 1,000,000,000 in 1997. In 1993, Apple has launched a “Newton handheld computer, the project cost of $ 500,000,000 handwriting recognition often wrong end in abortion., Apple did not give up the face of setbacks and failures, but showed enough patience Apple, with its unique concept, exquisite design, stylish appearance, continuous innovation, treat the failure and continue moving forward into the 21st century, “failed to explore,21st century, Apple, with its unique concept and exquisite design, stylish appearance, continued innovation and closed system and keep creating new products.( Kelley 2004)

How to improve the technology is that most important to Apple company, for Apple they have enough tangible assets if Apple want to be best , they must get intangible better ,Steve Jobs knows this and focus on design. When you have a leader that knows and believes in the impact of design, it makes it easy for everyone else to follow suit. When an entire company focuses on design, the result is a foundation for breathtaking products.

Enterprises have good prospects for faster growth, will generally cause the attention of competitors, and tried to take the patent strategy to suppress suppression; Conversely, these enterprises have generally shown a greater investment in research and development, may wish to layout their own technology patents, both offensive and defensive. (Ehrhardt 1909)

Enterprises have other competitors do not have the core technology, the patent can be effective blocking and protection, to ensure that the advantages to avoid the erosion of market share, or in the form of the use of authorized license fee; Conversely, can also imitate and leaks due to technology, combined and lose the original advantage of the lack of patent protection.

Most economists in the world are willing to be called “world factory”, regardless of China’s industrial enterprises and scientific and technological enterprises, obviously are not willing to just play a simple “maker” role. In fact, with the acceleration of the process of global economic integration, Chinese enterprises have to face a new competitive environment both global enterprise competition has not only to stay in the competition of tangible assets, the brand intangible assets is becoming a winning hand around the business of life and death .( Bounfour 2003)

Not long ago, the Chinese Academy of Social Sciences has launched the H-shares in Hong Kong Business Competitiveness Index rankings, the top 10 enterprises are mainly concentrated oligopoly industry, and electronic communications industry, accounting for 70%, most enterprises are headquartered in Beijing and Shenzhen. Competitiveness Index, including a number of factors, such as sales revenue, net assets, the overall labor efficiency, net assets, profit margins and earnings. Competitiveness Index rankings Mainland 77 H-share companies listed in Hong Kong, one of the leading brands of domestic industrial sectors Shenzhen EVOC occupies the 9th position, which will undoubtedly be people more clearly see the Chinese enterprises to continue enhance the brand intangible assets, the determination and efforts to enter the high value-added business.

The continuous evolution of the modern market economy, to send a new signal new era, it is now the global market has entered a brand intangible assets competition, brand intangible assets play an increasingly important role in today’s marketing and competitive.(Conference Board of Canada 2011) View of the famous American brand strategist Larry Wright vivid interpretation of this trend: “The market is more important than having the factory, but with the market the only way is to have a market share dominance, as intangible as the core brand. “

In the context of the knowledge economy era, tangible assets, intangible assets is unlimited. U.S. “Business Week” published in November last year, 200 of the 2003 global ranking of brand value, the Coca-Cola brand value of up to $ 70.45 billion, the top of the list, which strong intangible assets naturally contributed to. No wonder the powerful boss of the Coca-Cola Company said: Even if all the property of the Coca-Cola burned Net With this brand again dominate the world — this is the intangible assets.(Cheng and Wu 2003) Confident and advantages of this competition is also reflected in other international brand, such as the world famous U.S. Microsoft, intangible assets and tangible assets ratio of 70% vs. 30%. In the country, actively layout of the internationalization strategy of Haier Group attaches equal importance to continuously upgrade their own intangible assets and build speed have always maintained daily to apply for a patent in recent years, standing in the forefront of the domestic asset ownership of column-shaped. In recent years, the rapid development of industrial sector in the 10 into the top of the Business Competitiveness Index of H shares in Hong Kong, Shenzhen EVOC Intelligent Technology the equally devout competition winning concept of intangible assets.

Rapidly changing world economic development, opportunities and challenges all the time not a test of the sensitive nerve of each enterprise, today, more and more enterprises begin to be convinced that the intangible assets will be the key to the success of the brand competition.( Cohen 2005)

Intangible assets and corporate profits

Intangible assets is the company’s core capital, is also an important source of corporate profits. Technical standards is the most valuable intangible assets, Fortune 500 companies it is through the control of the rules of the game achieved a dominant position and reap super profits. Gained market share by selling products around the industry’s strength. Compared to the rules monopoly market monopoly is a qualitative leap. The market share of the Microsoft operating system is very high. Account for almost all the non-professional computer operating system software market, so that the other companies in order to meet the needs of computer users, only in Microsoft’s operating system based on the development of new applications, or Microsoft operating system on the computer The company’s application software can not be used. If Microsoft to change some important parts of the operating system does not support the original version, the upgrading of software, and to make their products fully followed Microsoft’s strategic plan is to go completely to become a pawn of Microsoft. And operating system software competitors with its own system due to a large number of application software is not compatible with simply no longer marketable in the market, therefore, the final operating system software market either Microsoft’s mercy and long-term monopoly.

Another example is the Intel computer chip manufacturers, each introduced a new CPU, with a high market share in the world of computer peripherals supporting plants immediately according to the shape, size, size of the new CPU to modify their own supporting peripherals shape, size and dimensions, if not change, the enterprise will die within a few months, this is no exaggeration. Intel Corporation and Microsoft’s strategy with nature, can violence camel before competitors catch up to make a big to be about to catch up with rivals launch new a product in a timely manner, so the opponent never followed , and then in the field of exclusive profiteering. The intangible asset is a source of strength of the world’s top 500 enterprises development.

Development potential and strong growth in corporate world have intangible assets than tangible assets several times. Manifestation of the overall strength of the intangible assets of both enterprises, but also the survival and development of the world’s top 500 enterprises. Intellectual property rights as the core of intangible assets in the greater share of the assets of the entire enterprise, the vigor and vitality of the enterprise market, the stronger. The modern enterprise competition from price to intangible assets contest. Intangible assets is a modern enterprise survival, the basis for the development of modern enterprise competitiveness comes from intangible assets. The competitiveness of the Fortune 500 companies first performance in intangible assets. Fortune 500 companies to invest in expansion. Especially overseas investment, expansion, in addition to the investment and human capital, equipment and other tangible assets, pay more attention to investment in technology, brand, management methods, goodwill and other intangible assets of intellectual property rights as the core and main content. Proved intangible assets has become a valuable resource for the survival and development of the modern enterprise, more and more important position in the production and operation of enterprises.(Chen 2008)

A brand does not have its own core values, and not be able to rely on their own technical strength, factors such as product quality, branding and service system to build and enhance their intangible assets, then this brand is bound to gradually lose eligibility to participate in market competition. This development of the market is particularly reflected in technology-based industries. Proved in a particular industry, who can lead in technological innovation, who intangible assets have an advantage, who will take the initiative in the final competition.


Like Microsoft, the plant is not large, the device is not much, but the value of the assets was as high as 600 billion U.S. dollars; while its book value of only $ 45 billion. General Motors Corp, USA is the world’s automotive industry giant, plant large, equipment and new facilities, a wholly-tops in the forefront of the world’s enterprises, but only $ 40 billion of its total assets.(Greene 2004)

Overall, the intangible asset is the enterprise survival and development of the soul, is a source of corporate profits. If tangible assets reflected in the provisions of the enterprise amount, so intangible asset performance enterprise-quality provisions.


(chart 1.1)

Source: Web and Macros (2012)

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