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MARKETING: Brand a Company's Most Valuable Asset

 



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Top brands recognise that branding is a continuum – in tough times many companies cut their marketing budgets, but this is when strong brands get going and launch themselves into a stronger position for the upturn.

This is according to Jeremy Sampson, Founder and Group Executive Chairman at Interbrand, who spoke at the UCT Graduate School of Business (UCT GSB) at a UCT GSB Deloitte Lunch Time Chat recently. Sampson presented the results of the Best Global Brands 2008 study, an annual Top 100 Global Brands Scoreboard (by brand value) which Interbrand publishes in co-operation with BusinessWeek magazine.

According to Sampson, Google (up 43%), Apple (up 24%), Amazon.com (up 19%), Zara (up 15%) and Nintendo (up 13%) are among this year's top gainers in Interbrand's annual ranking, and not surprisingly, financial services giants Merrill Lynch (down 21%), Citi (down 14%), and Morgan Stanley (down 16%) are among the companies that have slipped dramatically down the list.

Coca-Cola (No. 1) remains the best global brand for the eighth year in a row. Yet, a notable shift in this year's rankings was made by IBM, which took over the No. 2 position from Microsoft (No. 3). Google also moved into the top 10 brands, at No. 10, after ranking at No. 20 in 2007.

Movement in the Best Global Brands 2008 ranking confirms that the tumultuous credit markets are affecting leading financial services brands, including Merrill Lynch (No. 34) and Citi (No. 19). However, some strong industry leaders have survived such as HSBC (No. 27) and credit card companies Visa (a new entrant to the list at No. 100) and American Express (No. 15), which have all been able to transcend the credit crisis due to their trusted brands.

Other brands that fell significantly on the 2008 list include Ford (No. 49 – down 12%) and Gap (No. 77 – down 20%). While notable newcomers include H&M (No. 22), Thomson Reuters (No. 44), BlackBerry (No. 77), Giorgio Armani (No. 94), Marriott (No. 96), FedEx (No. 99) and Visa (No. 100).

A key lesson from the report is that time and time again a brand remains a far less volatile asset than other business assets - tangible or intangible. A key theme from the 2008 analysis is that strong brands grow in weak economies.

In addition, Sampson explained that luxury brands continue to do well.

“Louis Vuitton is up 6% and has aggressive expansion plans abroad. Cartier, the highest placed South African owned brand, is boosting revenues from China where strong demand helps the brand grow 10%, and Prada has invested heavily in marketing and advertising and has seen a 9% growth this year.”

Emerging market growth in particular is now an important part of brands advancing or staying at the top of the rankings.

“As customers in these markets accumulate wealth and seek to demonstrate it, luxury brands are seen as a clear indication that one belongs to the new elite. Companies like Porsche (No. 75), Ferrari (No. 93) and Prada (No. 91), have experienced great success in the world's emerging markets,” he said.

The opportunities go far beyond just luxury brands in these markets though.

“Africa and to a lesser extent South Africa, are currently largely underbranded and immature markets for many major global brands. But as personal wealth increases and the area becomes more stable it will become a war zone for the major brand owners. Many major groups are structured with an AME's (Africa Middle East) section, and we are already seeing a marked increase in activity and investment.”

He said South African brands are also moving to take hold of these opportunities, with SAB and MTN examples of this.
“In 18 months MTN acquired more subscribers in Iran than they have South Africa – over 13 million – that is phenomenal growth.”

Another important trend is sustainability. Companies are starting to evaluate the “triple bottom line” of their sustainability initiatives.

Sustainability is driving brand value across all sectors – from automotive, to consumer products, to financial services. Auto-makers like Honda (No. 20) and Mercedes (No. 11) are creating new, more fuel efficient car models. Honda was the only car manufacturer to report better U.S. sales this year, in June 2008, than it did last year. Companies like GE (No. 4) and BP (No. 84) increased their brand valuation by investing a substantial amount in sustainable business practices. BP also rose among the ranks as a result of its leadership position in working towards greener energy investing in sustainable energy sources.

Sampson said that if a country has strong brands it can grow and added that South African businesses should rethink the way they view branding.

“It can be a shock for South African companies to learn that the top global brands spend up to 12 percent of annual revenues on marketing support. For a business to be successful today it has to be part of a brand. Business strategy must now be wrapped around brand strategy, not the other way around.”

 
 
 
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