Brand Value Assessment - Nurturing for Long Term

1. If you can feel it.. It is there.. Brand Value Assessment – Nurturing for Long Term April 2017

2. Brand Finance A bit about us Founded in 1996, we are the world’s leading independent brand strategy and valuation consultancy. Brand Finance exists to help clients build successful, admired and effective brands. And for 20 years we have helped organisations evaluate marketing programmes, and marketing teams present their case in the Board Room. We combine creative thinking and brand strategy skills, with a clear focus on measuring effectiveness and value. Our team of professionals, from a mixture of backgrounds, use customer insight, market analysis and brand valuation techniques to analyse the impact of brand and marketing decisions on company profitability and growth potential. Every year Brand Finance values over 5,000 brands across all sectors and geographies. The results are tabulated and published in the media to raise awareness of brands as valuable business assets to be carefully managed.

3. Our offices We are headquartered in London and are present in over 20 countries We providing our portfolio of services to clients all over the world. Our flexible approach allows us to bring individuals together from different locations to form integrated teams for client assignments. This approach to building expert teams provides the right blend of functional skills, local market knowledge and sector experience .

4. 1 Some Questions Unanswered

5. Applause is there.. But Profits are Zilch !

6. Packed Fashion Shows.. Limited Sales !

7. Own Manufacturing or Outsource?

8. CFOs forever struggling to bring in Working Capital..

9. Digital & E-commerce OR Brick & Mortar ?

10. Dilemmas are endless.. Questions have no answers..

11. 2 Fashion & Apparel Brands..

12. A True Global Brand.. Swept the Globe with this..

13. Le Alexander McQueen.. The Brand Lives on.. In 2000, the Gucci Group's acquired 51% of his company and McQueen's served as Creative Director.Expansion included opening stores in London, Milan and New York, and the launch of his perfumes Kingdom and, most recently, My Queen. In 2005, McQueen collaborated with Puma to create special line of trainers. In 2006, he launched McQ, a younger, more lower-priced line for men and women. In 2008, Alexander McQueen collaborated with mass market retailer Target as McQ Alexander McQueen for Target.  Alexander McQueen collaborated with Samsonite to produce luggage formed using a mould of a human ribcage and sternum on the front and spine on the back. On 18 February 2010, Robert Polet, the president and chief executive of the Gucci Group, announced that the Alexander McQueen Brand would carry on without its founder and creative director McQueen's death was announced on the afternoon of 11 February 2010. In July 2015, Princess Catherine, Duchess of Cambridge, wore an all-cream Alexander McQueen outfit for Princess Charlotte of Cambridge's christening

14. A brand that continues to reinvent itself will last forever and continue to add value to its owners..

15. Living Legend – Koji Tatsuno 1990 was the year he went on to create his own line of garments which earned him the reputation of a "an un-conventional designer, whose clothes are the complex, intelligent constructions of a disciplined subversive mind" He worked on for an intense 12 years and had a young lad Alexander McQueen as his Intern ! Entirely self taught, he has not had any guidance, where creations are concerned. His work however, is not solely limited to conventional fashion. In the past he has worked on providing threads for films, operas, ballets and interior decoration.

16. Manish Aroraregarded by many as "the John Galliano of India" Brand Finance worked with Manish to ascertain Brand Value of Manish Arora Brand – to help better discuss with potential buyers / collaborators He is known for a rich palette of psychedelic colours and kitsch motifs in garments that combine traditional Indian crafts like embroidery, appliqué and beading with Western silhouettes. In 2008, MAC enlisted designer Manish Arora to collaborate on a new, Raj-inspired beauty range. RBK Fish Fry Collection - colorful, sportswear-styled line was created in association with the athletic apparel manufacturer Reebok "Indian by Manish Arora", a brand designed for the growing Indian market for women's wear, is licensed to another fashion company In 2012, Arora previewed his jewellery line in association with label Amrapali comprising a range of hand jewellery, neckpieces and pendants.

17. prêt can potentially generate multiples of the turnover that designers can hope to get with haute couture

18. Raymond Brand Portfolio Brand Finance worked with Raymond to ascertain which Brands to keep and what to Prune ColorPlus was a jewel in the crown in Raymond Portfolio with the highest Brand Value Creation Potential Zapp was ahead of its time. Recommended to be nurtured for future Notting Hill was fighting a losing Battle.. Among the several Economy range readymades Leadership team of Raymond took cognizance of the Value Potential and took brave decisions Even today ColorPlus continues to hold on to its ultra-loyal customers !

19. 3 Getting to grips with intangibles

20. Intangible assets make up over half of the world’s global enterprise value Intangible assets (53%) Tangible assets (47%) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Source: Brand Finance Global Intangible Finance Tracker (GIFT™) 2015

21. The tangible/intangible value split by sector Industry wise Balance of Tangible & Intangible Tangible Intangible • Source: Brand Finance Global Intangible Finance Tracker (GIFT™) 2015

22. Brands and other intangible assets viewed in the holistic business context Accounting framework for valuing Intangible Assets Creates Brand Value

23. Determining the Royalty Rate Brand Strength Index is combined with the royalty rate range to ascertain Licensing Rate Average industry royalty rate ranges can be seen below

24. How Brands drive Business Value We look at the value that brands add to the business Branded Business • Branded Business • Value of a single branded business operating under the subject brand / trademark • Brand Contribution • Total economic benefit derived by a business from its brand • Brand Value • Proportion of brand contribution which can be legally transferred via sale or licensing, i.e. the trademark. Brand Contribution Brand Value

25. Directors Potential Customers Middle Managers All Other Employees Existing Customers Production Influencers e.g. Media Sales Trade Channels Debt providers Strategic Allies & Suppliers Investors Brand affects a wide range of stakeholders Each can have a direct or indirect impact on the business • Customer • Brand Perceptions affect • Price • Volume • Repeat • Share of wallet • Cross sell • Staff • Brand Perceptions affect • Recruitment • Retention • Recommendation • Morale • Staff costs • External • Audiences • Brand Perceptions affect • Distribution terms • Channel access • Strategic alliances • Deal completion • Licensing • CSR • Financial • Audiences • Brand Perceptions affect • Interest spread • Share price • Debt/ Equity ratio • Risk appetite • Cost of borrowing

26. How Does Brand Equity Impact Business Value? Financial impact maximised through a consideration of all brand stakeholders Direct Brand & Business value Indirect

27. Brand Strength Analysis Score card across a variety of stakeholders to determine the overall strength of the brand relative to its competitors • Proven key factors in creating a strong brand • Brand equity exists across multiple stakeholders with consumers being the most important Functional and emotional measures derived from detailed analysis of micro level attributes • Brand equity accounts for 50% to reflect primary importance of stakeholder perception Higher weighting given to more brand related financial metrics • Financial metrics directly linked to the strength of a brand • *Illustrative BSI

28. How Brand Value is Calculated Brand Finance uses the ‘Royalty Relief’ methodology, based on commercial reality and widely used in legal cases and tax disputes 1 2 3 4 Brand Strength Index (BSI) Brand Royalty Rate Forecast Revenues Brand Value A brand strength benchmarking process with a score expressed out of 100. The BSI score is applied to a sector royalty rate range to identify an appropriate rate The royalty rate is applied to forecast revenues to derive brand revenues Post-tax brand revenues are discounted to a net present value which equals the brand value

29. 4 Understanding Brand Value Creation

30. “You can spend £100 million on advertising, go bankrupt and your name can still mean nothing to people. Your brand is created out of customer contact and the experience your customers have of you.” Phil Knight, CEO, Nike

31. Tom Ford 80% of Gucci is sold through its own outlets “That’s the only way I can control consumer experience”

32. A brand that continues to reinvent itself will last forever

33. No sight on Brand Value creation means no future

34. Having a Grip on the Customer Experience is the Key

35. Especially when we’re talking Premium/luxury retail brands

36. Reference Licensing Rates

37. 5 Brand Finance work with Indian Fashion & Luxury brands

38. Case Study : Client Speak – Manish Arora • “ Brand Finance helped me understand what Manish Arora brand is. I was muddled up by several advisors and friends on what my brand is worth. I was being lured by figures from investors and I didn’t understand if all my lifelong work was worth just this much! Big worry for me was whether I could continue to create my work with same freedom after investors came in. Wanted an objective evaluation of my brand to tell investors – what must remain and not be changed in Manish Arora brand. The Brand Finance team has been able to cover various aspects of my business, clearly tell me what are the important building blocks of brand Manish Aroraand how to care for it in the long term. Nice part was they explained which dimension of my brand will provide significant stimulus to Brand Value. I would like to thank the Brand Finance team for their passion, handholding & sincerity. • ” • Brand Uplift – Scenario analysis & Brand Value creation / leverage Mr. Manish Arora Iconic Indian Fashion Designer

39. Case Study - Ministry of Sound

40. Case Study – Gitanjali Gems – MehulChoksi A value based rationale for aligning Brand Value Growth “ We undertook a major brand valuation exercise during the last quarter. Brand Finance, was commissioned to value four of our major Gitanjali brands. We had our major brands Nakashtra, Gili, D’Damas and Asmivalued by them. The objective was to understand what the valuation of these brands are and the multiplication potential in near future. Several suggestions were made as to how we could carefully improve value of these brands. If implemented, then the valuation of these brands would go up substantially ” MehulChoksi, CMD Gitanjali Gems Limited

41. Helping you drive business performance in an age of marketing accountability 2. Analytics: How can I improve marketing effectiveness? Analytical services help to uncover drivers of demand and insights. Identifying the factors which drive consumer behaviour allow an understanding of how brands create bottom-line impact. 1. Valuation: What are my intangible assets worth? Valuations may be conducted for technical purposes and to set a baseline against which potential strategic brand scenarios can be evaluated. • Branded Business Valuation • Brand Contribution • Brand Audits • Market Research Analytics • M&A Due Diligence • Franchising & Licensing • Brand Governance • Brand Transition • Brand Architecture & Portfolio Mang • Brand Positioning & Extension • Brand Scorecard Tracking • Return on Marketing Investment • Trademark Valuation • Intangible Asset Valuation • Tax & Transfer Pricing • Expert Witness 4. Transactions: Is it a good deal? Can I leverage my intangible assets? Transaction services help buyers, sellers and owners of branded businesses get a better deal by leveraging the value of their intangibles. 3. Strategy: How can I increase the value of my branded business? Strategic marketing services enable brands to be leveraged to grow businesses. Scenario modelling will identify the best opportunities, ensuring resources are allocated to those activities which have the most impact on brand and business value.

42. Ajimon Francis Country Head Brand Finance India E. a.francis@brandfinance.com T. +91 989 208 5951 Savio D’Souza Associate Director Brand Finance Plc. E. s.dsouza@brandfinance.com T. +44 (0)2073899400 Brand Exchange 3 Birchin Lane London, EC3V 9BW United Kingdom G/10, Parel Shiv Smruti Manjrekar Lane, E Moses Road Worli, Mumbai 400 018 India