Just do it! Brand Name Lessons from Nike's Troubles!

Reading "Shoe Dog", Phil Knight's memoir that describes how he went from an Oregon track team to creating one of the great brand names in the world, provides insights into the perspiration involved in building a business and the mysteries of brand name value. In this session, I start by defining a brand name as something that changes how customers, employees and capital providers interact with a company, and then lay out a framework for valuing a brand name (with both the layup example with Coca Cola, a more complex one with Birkenstock and a Nike update). I also look at how great brand names get built and the role of fortuitous choices (Nike's name, symbol and slogan) on value, and what caused great brand names to dissipate over time.
Slides: pages.stern.ny...
Blog post: aswathdamodara...
Valuations/Data links:
1. Coca Cola in 2024: pages.stern.ny...
2. Nike in 2024: pages.stern.ny...
3. Industry distributions for revenue growth and margins: pages.stern.ny...

[@trainingwood]

Always a masterclass with Mr. Aswath, amazing content. This is why I feel grateful that I live in this day and age when I can access all this gems just like that. Thank you professor for all of your wisdom and knowledge that you share with us, it is really inspiring.

[@alexchoplin]

Great presentation professor! Thank you so much!

[@samyueldanyo8679]

The prof was cheeky in this one with the jabs at Coke a d Kraft Heinz. Also a great recommendation with Mad Men

[@rigs54321]

Thanks Professor! I didn’t receive an MBA or private school education, so appreciate the knowledge sharing your provide on KZbin!

[@Heliz08]

Great video!

[@surani1948]

Great presentation once again. Thank you.

[@raptorvicius]

Thank you professor!

[@citizendan6390]

thank you professor for a great lecture!

[@Xmahina]

Very educational!thank you very much!

[@nicholaspanagiotis8157]

You spoil us with great contents on here! You give the very best and spot on advice and ask thought provoking and unbiased questions that help listeners like myself become better. More importantly, thank you for recommending Stephanie Janis Stiefel my investment portfolio with her has been quite sustaining.

[@richardwagner6359]

Aswath really is something special. Please think of supporting him (if you don't already, which maybe you do).

[@paulseebeck6586]

I know this lady, Stephanie Janis Stiefel but only by her reputation at Goldman Sachs; even though she's now involved in managing portfolios and providing investmnt guidance to clients. I have been trying to get in contact since I watched her interview last month.

[@brandonw.clinton8918]

@@paulseebeck6586 Well her name is 'Stephanie Janis Stiefel'. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.

[@BrianWMoore]

I went from no money to Invest with to working so hard on Uber eats for four months to raise about $20k to start trading with Stephanie Janis Stiefel. I am at $128k right now and LOVING that you have to bring this up here.

[@ArataHaru-n1t]

Thanks to Aswath. Following his recommendation, I started researching into Stephanie Janis Stiefel. Thankfully it was a little over a year ago now, I started an Investment with Stephanie's Services and that allowed me to be on much MUCH more stable ground in the face of global financial upheaval. For what it's worth, it made a difference for me and my little family.

[@elenifolerou3973]

Thank you so much!

[@allbackiceland]

You could have included Abercrombie & Fitch as one of the companies that has reincarnated itself. It's only been the last year or so that people seem to have noticed.

[@WigglyCoop007]

Truly. An insane performance from ANF

[@Pizza-gb1ch]

I share your pain: wide feet. Saucony were better fit for me. I read "Shoe Dog" last month. It was worth the read.

[@wm6549]

Thank you!

[@SebaTarth]

Brilliant video, thank you. What's surprising is that Donohoe's argument was that cutting off chain stores and selling direct through the app was going to drastically increase margins. Maybe it did in the general sense but they could still lose ground on the Brand Name Effect margin?

[@Antonio-dp9tf]

I dont know Donaugh but Nike is different.... otherways im not going to spend my time and money buying nothing Nike online. If its in the shop at good price is ok, if not nothing... is commodity bcause their products are worse than the no-branded

[@12345idiotsluggage]

Yes! Wide feet people of the world unite! As a kid, i bought Nike all the time. When I grew older Nike sneakers didn't fit anymore. Apparently, AD and I are not in Nike's demo that it cares about.

[@Blazzde]

How is it still the case? 30 years I couldn't have them because of wide feet. My Mom knew the score.. '*sigh* not the Nike, they're always too narrow'. 'But Mom maybe this pair will be different?'. It never was..

[@athorne003]

I have two teenagers and they refuse to eat any other brand of ketchup. They can tell the difference between Heinz and other brands that try to sneak by them 😅

[@shauryabishnoi28]

We talk about brand value in B2C segment, however in B2B segment too we have brand names. This comes more from word of mouth, duration of relations with clients (Longer the duration, higher the brand name). Serving most of the players in an industry. (If you provide a crucial raw material to an oligopoly industry and you serve most the big players. Then it is possible that 3-4 players will account to 50% share in revenue, but if those players are competitors amongst themselves then you have pricing power)

[@totalhorse6987]

Appreciated

[@Blazzde]

I think we shouldn't underestimate how much of $10.49 for CVS Health Acetaminpohen is brand pricing too. Difficult to do an ideal comparison because the more premium brands synergise their brand value by making the tablets shinier and more perfect, but commodity 500mg tablets can be had for $2-3 per 100. Paying over $10 for them is kinda nuts.

[@sirzatyenen3200]

Professor Damodaran, thank you so much for this post; as always it has made me question how I value companies. Just a quick question; in the Birkenstock example, how do you differentiate between management acumen and brand name value when it comes to unpacking the effects upon operating margins? Why shouldn't we think that it was managerial choices that kept opex down, and was a significant contributor to high operating margins? How do you gauge the relative contribution of managerial/brand name effects in that context? Thank you.

[@madn93]

This is simpy great!

[@Pizza-gb1ch]

Walmart has a brand name. 1. They have pricing power with their suppliers. They had suppliers jumping through hoops to get onto shelves. 2. I shop at Walmart first because I know they have the lowest price. Therefore I spent more.

[@VarunGandhi-wi8qg]

You misunderstood the pricing power attached to a brand name. In the case of Walmart, they have bargaining power with suppliers because of their scale, not because of their brand name. Their economies of scale translate into a significant cost advantage. They pass these cost advantages to their customers, allowing for their cost proposition. As a customer you wouldn't pay a higher price for something because it's from Walmart. On the other end, you would pay a higher price for Nike or Birkenstock because they have a brand value.

[@abbyhose7311]

Any update on damodaran bot and its performance ???

[@some_20s_guy]

How about the quality of product for a given brand name? 13:55 While I agree that coca cola might be a bit more overvalued than the median brand, the quality of coca cola is certainly expected to be more better than the generic one. This might also explain the difference in valuation?

[@AudreasDeroose]

12:33 what makes you use operational margin and not gross margin, which might reflect in a way more the pricing power. Operational margin might be influenced by operational efficiencies, which have nothing to do with the brand name and its pricing power. Any feedback is welcome :) Thanks for your time.

[@mohammedkhalifa-wh1cl]

hey professor whats your opinion on your rival yt channel Accounting stuff

[@magalengo]

Not considering the value of Coke’s entrenched distribution system is an oversight.

[@tmarx99]

Its in the margin mate. No double counting!

[@magalengo]

@@tmarx99 I was referring to his explanation of the competitive advantage, not the valuation.

[@tmarx99]

Could you clarify what you mean? I assume you are talking about the slide starting 12:33?

[@sidhavgupta1122]

I think it refers to attaching whole of the premium in coke value to brand value, and not considering its distribution system. Margin aside, it is able to have higher revenue, due to its presence length and breath of markets, and therefore distribution, alongside brand is what justifies higher value.

[@magalengo]

@@sidhavgupta1122 Thank you, better said than I.

[@zainshahzad]

What about luxury brands like Gucci (Kering)?

[@IRISHninjaCOW]

Wide feet gang

[@deinbleiz]

“Nuclear waste …” lol

[@anuragatmakuri6282]

Give me aramco gas 😅

[@deepchowdhury-q7j]

@aswath Lego sales partially boosted as David Beckham talked abt it on a talk show !!