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ANHO_Fm.qxd 13/10/04 8:03 PM Page i Brand New Justice ANHO_Fm.qxd 13/10/04 8:03 PM Page ii For Anna ANHO_Fm.qxd 13/10/04 8:03 PM Page iii Brand New Justice How branding places and products can help the developing world Revised edition Simon Anholt AMSTERDAM G BOSTON G HEIDELBERG G LONDON G NEW YORK G OXFORD PARIS G SAN DIEGO G SAN FRANCISCO G SINGAPORE G SYDNEY G TOKYO ANHO_Fm.qxd 13/10/04 8:03 PM Page iv Elsevier Butterworth-Heinemann Linacre House, Jordan Hill, Oxford OX2 8DP 30 Corporate Drive, Burlington, MA 01803 First published 2003 Revised edition 2005 Copyright © 2003, 2005, Simon Anholt. All rights reserved The right of Simon Anholt to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988 No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1T 4LP. Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone: (ϩ44) 1865 843830, fax: (ϩ44) 1865 853333, e-mail: [email protected]. You may also complete your request on-line via the Elsevier homepage (http://www.elsevier.com), by selecting ‘Customer Support’ and then ‘Obtaining Permissions’ British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book is available from the Library of Congress ISBN 0 7506 6600 5 For information on all Elsevier Butterworth-Heinemann publications visit our website at http://books.elsevier.com Typeset by Newgen Imaging Systems (P) Ltd, Chennai, India Printed and bound in Great Britain ANHO_Fm.qxd 13/10/04 8:03 PM Page v Contents Preface to the revised edition ix 1 Why brands count 1 Value you can’t see 1 How brands create wealth 2 How brands distribute wealth 6 Life on the lower tier 7 Isn’t it the poor world’s turn? 9 Branding the exports, branding the nation 10 Global brands from emerging markets 13 Making it happen 15 Justice being done 15 2 What brands do for countries 17 The first pan-European brands 18 How profit comes from polarization 20 Where this leaves the poorer countries 22 The risky business of being a supplier nation 25 Profiles of emerging market economies 27 Wal-Mart and Ugandan coffee 28 The case of Brazil 30 Japan, Korea and Taiwan: Asian brand champions 31 How the instinct to brand has become global 35 So where are the brands? 36 ‘Brand Leap’ 38 3 Developing markets, emerging brands 43 Deepak Kanegaonkar 43 Kamthorn and Panudda Kamthornthip 47 v ANHO_Fm.qxd 13/10/04 8:03 PM Page vi vi Contents Roustam Tariko 48 David Tang 50 Jiˇrí Kejval 50 Automotive 52 Food and drink 55 Beverages: a cornucopia of global brands 57 Fashion, footwear and accessories 60 Sporting goods 61 White goods and other consumer durables 63 Software, IT services and hardware 67 Other service brands 70 Branded industrial goods 71 Cosmetics and pharmaceuticals 74 Tata 76 4 The challenge of branded exports 78 The challenges and difficulties 81 Raising finance 84 Making do with less 86 Eleven levers for outsmarting the competition 88 Getting distribution and retail presence 92 Overseas marketing and branding 96 Tariffs and other trade barriers 98 Psychological barriers 100 What will become of our emerging market brands? 102 Quality standards and consumer perceptions 102 5 When countries become brands 104 Why countries need brands 104 Countries that change 106 How the nation-brand helps branded exports 108 The case of Brand Brazil 112 What’s wrong with where you’re from? 114 Using ‘country of origin’ more creatively 115 Changing a country’s brand image 116 What’s in a name? 121 You sound like you’re from . 123 Slogans, shorthand and the nature of the country brand 125 Good image, bad image 128 The dilemma of control 130 The importance of objectivity 132 Brands as vectors of national image 133 The importance of representing culture 136 Culture as a revenue earner 138 Why representing culture is central to nation branding 139 Further benefits of a strong national brand 141 ANHO_Fm.qxd 13/10/04 8:03 PM Page vii Contents vii 6 Now is the time 143 Why people want brands to come from somewhere 143 The decline of Brand America and the Top Ten 144 Western consumers and the search for exoticism 146 A taste for ethics 148 The Shared Equity Model 151 The Wild Coffee Project 152 The riddle of sustainability 157 Tourism and sustainability – another challenge 161 Some concluding thoughts 163 References 166 Index 170 ANHO_Fm.qxd 13/10/04 8:03 PM Page viii ANHO_Fm.qxd 13/10/04 8:03 PM Page ix Preface to the revised edition For poor and developing countries trying to compete in the global marketplace, there is no shortage of well-intentioned help and advice on offer – cash and food aid, loans, technology and skills transfer, twin- ning, training and resource sharing . the list is a long one, and it is a credit to the countries and organizations which offer the support that so much valuable help is on offer. Yet one crucial item is missing from the list, a tool which none of the richer countries would be able to operate without, and a primary component of their remarkable economic success during the last cen- tury. This is their ability to brand. Without brand value, capitalism could hardly exist – certainly not in its current form, providing enviable standards of living to hundreds of millions throughout the developed world. For branding is far more than a trick to sell more consumer goods at higher prices: it is part of the very foundations of competitiveness in a free marketplace, and with slight variations is to be found in education, in politics, in industry, in the labour market and throughout the public sector. Wherever an organi- zation of any kind needs to compete and thrive in a busy environment, then brand value – lent by quality, by personality, by product or serv- ice superiority, by strategy – is what makes the difference. The remarkable ability of branding to create, spread and sustain wealth throughout society means that any country which needs to improve its competitive edge should take a closer look at how it works, and the purpose of this book is to provide an introduction to branding as a tool for commercial, cultural and economic development. Simon Anholt ix ANHO_Fm.qxd 13/10/04 8:03 PM Page x Anho_Ch-01.qxd 20/9/04 11:50 AM Page 1 CHAPTER 1 Why brands count What I’m about to tell you is something you have probably heard before, but bear with me. It’s an important introduction to what follows. Here’s how brands work: On my left, a plastic bottle of sweet, fizzy brown fluid bearing the label ‘Cola’. It cost me around 50 cents. On my right, a nearly identical bottle of sweet fluid bearing the label ‘Coca-Cola’. It cost me just over a euro – or just over a dollar, if you prefer. On my left, a good quality plain white tee-shirt. Cost: around ten euros. On my right, an identical white tee-shirt with a small Versace logo printed in black on the front. Cost: around 30 euros. It seems almost criminal, doesn’t it? Well, that rather depends on who is doing it. This book explores the possibility that this phenomenon of branding, and certain other related techniques of wealth creation, could be better distributed around the world than they have been in the past. It shows how branding is, in fact, a powerful tool for economic development, and could make a very worthwhile contribution to the growth of the places which need it most. Value you can’t see The brand value which marketing adds to products and services is not tangible value: unlike sales, products, factories, land, raw materials or workforces, you can’t measure it very easily, but it represents capital because it enables producers and sellers to charge more money for their products and services and maintain a strong, long-term relationship with their customers. It is a multiplier of value, and as such, repre- sents a substantial advantage for its owner: it’s as good as money in 1 Anho_Ch-01.qxd 20/9/04 11:50 AM Page 2 2 Brand New Justice the bank. You can borrow against it, buy it, sell it, invest in it, and increase or decrease it by good or bad management. The concept of intangible value is a well established one in our capitalist system, and doesn’t make brands any more suspect or less valid than any other form of commercial worth. This additional value is not a trivial phenomenon; it forms a substantial part of the assets of the developed world. According to some estimates, brand value could be as much as one-third of the entire value of global wealth.