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Skechers runs up the ranks after 93% growth in brand value

 

·         The total brand value of the table is $2.8 trillion

·         Skechers, the US’ fastest growing brand, nearly doubles in brand value

·         Apple retains its status as the nation and the world’s most valuable brand

·         Disney is the US’ 14th most valuable brand and the world’s most powerful brand

·         Health concerns create conflict with the Coca-Cola brand

Every year, leading brand valuation and strategy consultancy, Brand Finance, puts thousands of the world’s top brands to the test. They are evaluated to determine which are the most powerful and the most valuable by country, by industry and against all other brands worldwide. America’s 500 most valuable brands, which have a total value of US$2.8 trillion, are ranked in the Brand Finance US 500.

37 states are home to brands large enough to make the table. California is the state with the most brands in the table, suppling 72 brands. The state with the second most brands is New York, supplying marginally less than California with 68 brands. Despite the slight difference, Californian brands have a total value of $638 billion, far higher than New York’s total of $452 billion. Silicon Valley’s status as the home of vast tech brands such as Apple, Google and Facebook is largely responsible for California’s dominance.

Skechers is the fastest growing brand this year, nearly doubling in value from 2015 to 2016. Skechers’ is seen as more easy-going and inclusive than Nike and Adidas, which in contrast focus on technical performance and competitiveness. Its shoes are also more diverse, with lines for work, sport, casual fashion, kids and casual fashion. However the key to Skechers’ recent success has been its recognition of the importance of brand value and marketing investment. Marketrealist.com has commented that Skechers “competes on the basis of comfort, quality, and the creation of brand value for its products.” It is clearly achieving that aim; brand value is up 93% from 2015 to $2.6 billion. Investment has been key to delivering this impressive growth; marketing expenditure rose at an annual rate of 12.1% from 2011 to 2015, growing from $119 million to $188 million. A mix of media have been employed including print, TV, outdoor and promotional events as part of a strategy that is slightly more traditional than competitors in its relative sparing use of digital and social media.  Endorsement deals with celebrities such Demi Lovato and Megan Trainor have reinforced its down to earth image, resonating particularly with younger, female consumers in particular.

Apple maintains its dominance at the summit of the Brand Finance US 500. Despite annual predictions of a plateau or fall from grace, it has proved a continuous source of success with 2015/16 proving no exception and it remains the most valuable brand in both the US and the world.

Disney is the country’s 14th most valuable brand this year, with a brand value of $32 billion, however it is the most powerful brand worldwide, with a brand value of US$32 billion. Brand Power (also known as brand strength) is the initial part of Brand Finance’s analysis that measures factors such as preference, satisfaction, recommendation, awareness and future potential before revenues are applied in the brand value calculation. Disney’s strength is founded on its rich history and original creations, however its now dominant position is the result of its many acquisitions and the powerful brands it has brought under its control. Perhaps Disney’s most important acquisition of all has been Lucasfilm, and thus, Star Wars. Brand Finance has estimated the value of the Star Wars brand to be US$10 billion, dwarfing the US$4.05 billion Disney paid for Lucasfilm in 2012.

Brand Finance CEO David Haigh comments, “The growth of Skechers’ brand this year demonstrates that tech isn’t the only sector where rapid economic gains can be made. Skechers’ focus on brand shows that with the right strategy and investment, even firms in well-established, competitive industries can grow brand value to boost revenues and most importantly profitability.”

Coca-Cola is another iconic brand that is beginning to falter; its brand value is down 5% (by US$1.6 billion) to US$34.2 billion, dropping to 11th place this year. Coca-Cola was America and the world’s most valuable brand across all industries in 2007, with a brand value of $43.1bn. Increasing concerns over the links between carbonated drinks and obesity have begun to undermine what the Coca-Cola brand has represented for over one hundred years.

 

ENDS

Media Contacts

Robert Haigh, Marketing and Communications Director

T: +44 (0)2073899400            M: +44 (0)7762211167           r.haigh@brandfinance.com 

 

Bryn Anderson, Valuation Director

T: +44 (0)2073899400            b.anderson@brandfinance.com

 

Ken Runkel, Managing Director, Brand Finance USA

T: +1 (203) 858 9647              k.runkel@brandfinance.com

 

Joslyn Pannu, Communications Manager

T: +44 (0)2073899400            M: +44 (0)7885666236           j.pannu@brandfinance.com 

 

Note to Editors

2016 brand values are calculated in USD with a valuation date of 1/1/16.

 

About Brand Finance

Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 15 countries. We provide clarity to marketers, brand owners and investors by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax and intellectual property, Brand Finance helps clients make the right decisions to maximise brand and business value and bridges the gap between marketing and finance.

 

Methodology

Definition of Brand

In the very broadest sense, a brand is the focus for all the expectations and opinions held by customers, staff and other stakeholders about an organisation and its products and services. However when looking at brands as business assets that can be bought, sold and licensed, a more technical definition is required. Brand Finance helped to craft the internationally recognised standard on Brand Valuation, ISO 10668. That defines a brand as “a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos and designs, or a combination of these, intended to identify goods, services or entities, or a combination of these, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits/value.”

However, a brand makes a contribution to a company beyond that which can be sold to a third party. ‘Brand Contribution’ refers to the total economic benefit that a business derives from its brand, from volume and price premiums over generic products to cost savings over less well-branded competitors.

 

Brand Strength

Brand Strength is the part of our analysis most directly and easily influenced by those responsible for marketing and brand management. In order to determine the strength of a brand we have developed the Brand Strength Index (BSI). We analyse marketing investment, brand equity (the goodwill accumulated with customers, staff and other stakeholders) and finally the impact of those on business performance. Following this analysis, each brand is assigned a BSI score out of 100, which is fed into the brand value calculation. Based on the score, each brand in the league table is assigned a rating between AAA+ and D in a format similar to a credit rating. AAA+ brands are exceptionally strong and well managed while a failing brand would be assigned a D grade.

Approach

Brand Finance calculates the values of the brands in its league tables using the ‘Royalty Relief approach’. This approach involves estimating the likely future sales that are attributable to a brand and calculating a royalty rate that would be charged for the use of the brand, i.e. what the owner would have to pay for the use of the brand—assuming it were not already owned.

The steps in this process are as follows:

1 Calculate brand strength on a scale of 0 to 100 based on a number of attributes such as emotional connection, financial performance and sustainability, among others. This score is known as the Brand Strength Index.

2 Determine the royalty rate range for the respective brand sectors. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database of license agreements and other online databases.

3 Calculate royalty rate. The brand strength score is applied to the royalty rate range to arrive at a royalty rate. For example, if the royalty rate range in a brand’s sector is 0-5% and a brand has a brand strength score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand specific revenues estimating a proportion of parent company revenues attributable to a specific brand.

5 Determine forecast brand specific revenues using a function of historic revenues, equity analyst forecasts and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Brand revenues are discounted post tax to a net present value which equals the brand value.

 

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