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

11 July 2016
This article is more than 4 years old.

· 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.

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Florina Cormack-Loyd
Florina Cormack-Loyd
Senior Communications Manager
Brand Finance

About Brand Finance

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.

Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.

Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.

Methodology

Definition of Brand

Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength

Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach

Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI 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 by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast 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 Discount post-tax brand revenues to a net present value which equals the brand value.

Disclaimer

Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.

The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.