Valuation
Estimating the financial value of Samsonite brand in Singapore is easier said than done. As independent evaluators, we know that the value we ascribe to the brand is going to be questionable, but we wanted to ensure any such measure is reasonable and can be subjected to sufficient reliability, validity and objectivity. Despite the multiple valuation methods available, the limited time did not allow the team to verify the outcome of financial value with other reliable valuation methods. The exercise resulted in valuing the Samsonite brand approximately at 4 million SGD. The sections that follow explain the methodology employed and the various insights gained with the process of brand valuation.
Role of Brand
According to chart of role of brand by sectors, the team has estimated the percentage of the effect of the brand to be 40% for Samsonite. The Bags and Luggage category is a functionally-led purchase industry. As a result, the likely place of the role of brand would be to the right side of the chart. Even though luggage is a functional item, the look and the style of the product create some emotional connection with the brand to certain extent when the brand is well-regarded in the market. Compared to other industries which are in the middle of the chart like apparel, consumer electronics, emotional connection to the luggage might be little less significant functional aspect might be little more apparent. Hence, the team has decided to place the luggage sector between automotive and media. Among the people who participated in the travel survey, Samsonite is the most known brand and 65% of the Samsonite owners are unlikely to switch to another cheaper brand in the near future. Moreover, 72% of the Samsonite owners are likely to recommend the brand to others. These survey results influenced our estimation of 40% which is in the middle of both functional and emotional purchases.
Internal Factors
Clarity (8/10)
Samsonite stands for high quality luggage and a faithful travel companion. Samsonite is very clear about its target customers which consists mainly of business and leisure travelers. However, with the introduction of the RED brand extension, Samsonite is trying to target a younger crowd with a product range competing in the high-fashion industry. Even though the core Samsonite brand positioning deserves a 10, its brand extension into younger demographic slides this factor's rank down to 8.
Commitment (6/10)
With the advent of RED, Samsonite will have to divert its resources into developing a new brand that targets a demographic that Samsonite has never successfully targeted in the past. Thus, Samsonite scores a measly 6 on this scale as it may not be able to focus fully on its major target segment.
Responsiveness (8/10)
Samsonite has been the leading brand for luggage in the Singapore market commanding a 33% share of the entire market. It continuously re-invents itself through its product introductions by utilizing innovative technologies to bolster its image as a high quality luggage brand.
Protection (9/10)
With a strong distribution network spanning 110 countries, Samsonite has the capability to span a large market. Samsonite keeps innovating through patented technologies such as Curv® and Firelite® along with design copyrights to provide a stable of products that can be very hard to imitate legally.
Brand Strength
With the various insights gained from the survey findings and publicly available information, the team has evaluated the Samsonite brand stength in Singapore. The result is not a surprise as the earlier findings showed that Samsonite has commaned a premium in the minds of consumers. The strength of the Samsonite brand in Singapore in fact rivals many of the top-line brands in the region.
External Factors
Relevance (8.5/10)
The core customer functional needs of high quality luggage is captured very well by Samsonite as can be seen through the survey results (more than 50% of survey respondents choose Strength, durability, reliability, and light-weight as attributes that resonate with the Samsonite brand). Regarding decision criteria, the survey result shows clearly that 64% of respondents will consider Samsonite for their next purchase. This along with Samsonite's strong presence in its customer's mind makes Samsonite a strong choice for decision criteria for its intended customers.
Authenticity (10/10)
Samsonite's heritage dates back to more than 100 years and it has built its reputation around producing high quality travel luggage. From the Survey, it can be easily inferred that Samsonite's ability of producing high quality travel luggage is still intact as it scores high on attributes such as Strength, durability, reliability, and light-weight.
Differentiation (8/10)
Samsonite's positioning is in the mid to premium range ($200 - $2000) and it has carved a unique position with respect to its competitors such as Tumi and Rimova by providing high quality luggage at a relatively affordable price. Also, from the survey it can be seen that Samsonite is present in a large number of responses when probed through either an unaided or aided brand recall (60% for unaided brand recall and 90% for aided brand recall).
Consistency (9/10)
Samsonite's presence is easily accessible through its various touch-points such as exclusive showrooms, department stores, as well as an online presence.
Presence (7/10)
Samsonite has a strong presence in traditional media which has captured a significant space in the minds of its customers and it is also one of the first brands that comes to mind when our survey respondents think of travel luggage. However, on the social media front, Samsonite has a limited presence with a rather low (~few thousands) number of fans.
Understanding (8/10)
The survey results show an excellent match between the desired attributes and Samsonite specific attributes regarding travel luggage. Also, the survey results show that there is considerable knowledge about Samsonite's attributes with the survey respondents (more than 50% of survey respondents choose Strength, durability, reliability, and light-weight as attributes that resonate with the Samsonite brand). The results are similar irrespective of whether the survey respondent is a Samsonite user or not.
Brand Strength :81.5
Discount Rate :6.55%
Valuation
Using the Interbrand valuation method and the discount rate derived from various insights gained from the analysis above, Samsonite brand value in Singapore has been estimated to be approximately close to 4 million SGD.
Financial Forecasting
Financial forecasting is perhaps the most accurate finding in the brand valuation as data from both primary and secondary sources is available in abundant. With the available information of customer segmentation, the team has employed EUROMONITOR report on "Bags and Luggage in Singapore (March 2014)". The team has worked out the numbers discounting for handbags and other fashion accessories and found out that Samsonite brand has accounted for 1.5% of total industry sales in Singapore and the ratio has remained constant in the last 5 years. That means, Samsonite has been successful in retaining its market share.
An assumption has been made that earnings of both leisure and business travel segments are same as the projected growth rate of luggage category during 2014-2018. The projected growth rate is obtained from the report titled, “Bags and luggage in Singapore (March 2014)" provided by EUROMONITOR International.
Leisure and business travel growth rates are also based on projected growth rates from the industry report titled, “Tourism flows outbound in Singapore (September 2013)" provided by EUROMONITOR International. The projected growth in leisure and business travel for the period from 2013 to 2018 is 2.6% according to the report. The primary drivers behind these projections are availability of low cost carriers, proliferation of online deal websites, bragain air travel prices, and an increase in the number of new routes. The team has also made another assumption that Samsonite’s growth rate in Singapore is closely tied to the growth rate of leisure and business travel.
With the reasonable estimates on projected growth rates for both the customer segments, forecast has been made for next 5 years for Samsonite brand in Singapore.
Customer Segmentation
The first step in brand valuation is to clearly identify the major customer segments from which the brand currently earns most of its revenue. However, such segmentation for any brand is perhaps one of the challenging tasks when enough information is not available in the public domain. The primary information available to the group is the survey findings, which are by far the most unbiased resposes as the survey is intelligently designed to understand what respondents really want and expect of their travel needs. The secondary information is scarce in the region and not sufficient to corroborate the findings. To understand the dynamics and get proper customer segmentation, the team has chosen to employ the most widely respected industry reports from EUROMONITOR. These industry reports have been proven extremely useful to not only segment the market, but also forecast the expected sales in next 5 years.
Business Travelers
As Singapore is home to many MNCs and a regional headquarter for many companies operating in Asia, business travelers, who travel mainly for work related events, represent a considerable share of Samsonite users. From our survey findings, the business travelers constituted approximately 30% of total Samsonite customers.
Leisure Travelers
The proliferation of budget airlines and the new routes in APAC region has filliped leisure travel greatly in the last decade. Leisure travelers, who mostly travel for holiday in the neighbourhood, accounted for 70% of total Samsonite the consumers.
The industry report shows a split of 79-21% between leisure and business travelers. The survey findings (80-20%) are very close and testimony to the choice of respondents survey has chosen.
Analyzing the survey results, the team has selected Samsonite’s two major customer segments as Leisure and Business travelers. The survey findings show that leisure travelers consisted of almost 70% of total respondents whereas the rest is attributed to business travelers. In fact, the survey findings are very close to the data seen in EUROMONITOR report on “Tourism Flows Outbound in Singapore (September 2013)", which shows a split of 79% to 21% between Leisure and Business travelers, respectively. Such close relation between industry estimates and the survey findings give credence to the validity of survey findings.
The annual sales of Samsonite Brand in Singapore are also obtained through the EUROMONITOR industry report on "Bags and Luggage in Singapore (March 2014)". The table below shows the Net Operating Profit after taxes (NOPAT) calculations for Samsonite brand in Singapore for FY 2013. The NPAT of 2.29 million ascribed to Samsonite brand salesis further split into individual customer segments' share later in the analysis.