Best Global Brands 2008

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Lessons from the Best Global Brands �. IBM ��,�� Million +�% from �� Building brand value Collaborative branding Activating employees Are you acting like a brand leader? �. Coca�Cola Sustainability’s impact ��,�� Million +�% from �� on brand value Marketing and sector performance The Red Thread of brand value

Contents ®

The business purpose for brand valuation p52 p01 Introduction p56 The future of future-proofing brand Sustainability and its impact A letter from Jez Frampton investments by Greg Silverman How will on brand value p12 we measure the unobservable and make p02 Executive summary informed brand investment? Creating and managing brand value p58 Planning your touchpoints to accelerate profit by Rune Gustafson p04 Guest contributor Harvard Business Understanding brand as a central School Professor Nancy Koehn speaks out organizing principle requires the on managing brands management of every touchpoint to build the experience for consumers p08 The six laws of collaborative The Red Thread p16 branding by Jason Baer A guide to p60 Building brands in emerging markets understanding the new era of branding by interbrand’s leaders in Brazil, China, in a consumer driven world India, and Russia Aléjandro Pinedo, Nicola Stanisch, Iain Ellwood, and Jonathan Chajet p12 Sustainability and its impact on brand talk about the challenges and opportunities value by Paula Oliveira and Andrea Sullivan to build brands in developing economies Can organizations structure their green, or sustainability, initiatives to produce value p64 Brands create nations by growth for the brand? JÜrgen Häusler A look at the association between nations and their brands p16 The Red Thread by Jez Frampton Putting the brand at core of the business p66 The luxury kingdom by becomes a uniting force behind everything Manfredi Ricca Understanding the laws you do and say to drive value ruling the luxury market p20 Taking action: acting like a brand p68 It’s what on the inside that counts leader by Graham Hales Practical steps by Stephanie Colton and Carolyn Ray The six laws of collaborative for acting, behaving, and managing like a An employee’s engagement with the brand branding p08 brand leader means the difference between satisfied customers and bottom-line results p24 Interbrand’s method for valuing the p72 The value of creativity by Andy Payne 2008 Best Global Brands Understanding our A creative director’s point of view on the method and approach to looking at brands value of brands through a financial lens p26 Profiles of the 2008 best global brands Appendix and industry insights A snapshot of the top It’s what’s on the inside that counts p20 100 global brands and insight into what’s p74 Commonly asked questions driving growth in each industry p80 About Interbrand and our Best Global Brands study p52 The business purpose for brand valuation by Nik Stucky A look at how p80 Contact us we understand brands as business assets, and how brand value is a barometer for a healthy business p54 The impact of risk on brand value by Jean-Baptiste Danet and Valérie Herdlicka Brands create shareholder value and should be managed to mitigate risk of decreasing value Creating and managing brand value

Each year our study of the world’s most My thanks go out to my friends and valuable brands has generated increasing colleagues who have contributed to amounts of interest from the broad collection this magazine, particularly Nancy Koehn, of companies and practitioners associated Professor of Business Administration with brands. We have enjoyed leading the at Harvard Business School, whose work discussion and joining debates to help we are delighted to have as a contribution organizations recognize, appreciate and in this edition. grow the value of their brands.

This issue is a further progression of Regards, our annual report. It continues to focus on our pre-eminent Best Global Brands study but is now expanded to share the lessons from these leading brands to enable us to give you more practical advice within the opportunities and challenges of today’s market.

We’ve also updated our website, www.interbrand.com, to offer broader and deeper perspectives on creating and managing the value of brands.

We hope you continue to find our Jez Frampton perspective on brands to be helpful, Group Chief Executive stimulating and provocative. Interbrand

Best Global Brands 2008 01 Executive summary Best Global Brands has taught us time and time again that brand remains a far less volatile asset than other business assets – tangible or intangible.

02 Best Global Brands 2008 The past year has been one of the more retreat from evolving your brand or dramatic and turbulent that global Is my brand a leader? your offering to maximize your ability economies have endured. In some regions to create demand. Your competitors of the world, the anticipation of a troubled To understand your brand’s ability to lead are experiencing the same climate; economy ahead will undoubtedly make in these times, consider these questions. maintaining the status quo is rarely it more challenging for marketers to a winner’s strategy. make effective plans. Patience wanes Is my brand truly in sync with in a results-oriented, nervous economy. my market? How is my competitive set likely to Brand management needs to constantly Consumers’ attitudes are constantly change when I’m competing harder demonstrate value. And in regions with evolving. But when the economic for a smaller share of wallet? markets opening to the global stage for the climate shifts, these changes quickly When there’s less money to go around, very first time, a new and unknown set of become more evident. As consumers’ discretionary spending habits change. challenges awaits. perceptions of value change, your Competitors start to cross market business model should adapt to segments. Brands stop competing in As the world becomes one global economy, meet this new criterion. The value of category and start to compete beyond it becomes an increasingly complex place. every purchase will count for more in category. It’s no longer the choice Will the economic woes of developed consumers’ pockets. Instinctively, they between Nike or Adidas shoes. The markets pollute emerging markets, or will will take fewer risks and turn to brands question becomes, “Do I buy shoes or developing markets provide the medicine they know and trust. A valued brand will an iPod?” that the established world needs? Charting need to discount less and can even find the course for successful brand management their consumers willing to spend more if Do I fully understand how my brand requires a multifaceted perspective, they believe they’re getting more value makes money for my business? even if it’s delivered through one brand. for their dollar, euro, pound, rupee or yen. Your brand plays a significant role in A connected and holistic approach to your supply chain. It is an assurance brand management is a prerequisite. Are my employees prepared to meet of quality on the supply side and greater service and quality demands a revenue source on the demand Best Global Brands has taught us time and from customers? side. You need to understand its time again that brand remains a far less The uncertainty of a downturn drives intricacies if you’re to maximize its volatile asset than other business assets – consumers to want more for their role and value to your business. tangible or intangible. money and demand a more emotionally rewarding experience for their hard- In troubled economies, we know that earned and limited cash. Consumer business doesn’t cease. Companies may expectation grows and your employees ... And remember that downturns struggle, but the practice of buying and must be ready to deliver against these are followed by upturns. Moods and selling continues no matter what. Leading demands. Your people, and their sense of appetites of the business may change, Brands know this and come through difficult engagement to your brand, have never but organizations that understand times stronger and readied to compete, been more important. Connecting your and respect their brands as assets will rather than hibernating in the comforts of employees to the brand experience they prosper. While it may be tempting to business-as-usual. provide is crucial. slash and burn, brands – like other business assets – don’t thrive in a start, In developing markets, we know there is a Is innovation a necessity at this time? stop, pick-me-up, and put-me-down world of possibilities opening to consumers. If Henry Ford listened to customers mentality. Growing the value of a brand The idea of buying and selling is not new to he’d have made a faster horse! Don’t is a constant and cyclical process. them - greater choice is the novel concept. Wealth is no longer an exciting idea, but a reality. The marketer’s challenge is showing people where and how to spend. Many of the Best Global Brands have seen the opportunities emerging and are bullish in establishing themselves.

Regardless of your view of the world, in good times and bad, your brand is your company’s most valuable asset. Understanding how your brand creates value for you is key to maintaining market leadership or establishing it in the first place. We continue to see an increasingly sophisticated outlook on managing brands, and a growing importance on understanding the drivers of brand value.

Best Global Brands 2008 03 1980-1995 (1999); Creating Modern Capitalism: She is a frequent commentator on National How Entrepreneurs, Companies, and Countries Public Radio. Nancy F. Koehn Triumphed in Three Industrial Revolutions (1997); Harvard Business and Management Past and Present: A Casebook Before coming to HBS in 1991, Koehn was on American Business History (1995). She has a member of Harvard University’s Faculty School written and supervised cases on Oprah of Arts and Sciences for seven years, first Winfrey, Starbucks Coffee Company, Ernest as a graduate student in history and then Shackleton, Wedgwood, Williams-Sonoma, as a lecturer in the History and Literature Estée Lauder, Henry Heinz, Milton Hershey, concentration and the Department of

Celeste Walker, Marshall Field, Dell Computer, Economics. During the years, she received

and other leaders and organizations. the Allyn Young prize in 1989 and numerous Nancy F. Koehn, an authority on business Danforth commendations for excellence history, is the James E. Robison Professor At the Harvard Business School, she teaches in teaching. of Business Administration at Harvard the MBA elective, Entrepreneurial Leadership: Business School. Koehn’s research focuses Past, Present, and Future. For many years, A Phi Beta Kappa graduate of Stanford on entrepreneurship, leadership, and she taught, The Coming of Managerial University, Koehn earned a Master of Public connecting with customers in the Capitalism, one of the School’s most Policy from Harvard’s Kennedy School of Information Revolution. She is currently popular courses. Government in 1983. She worked as a working on a book about the most important congressional aide before receiving her leadership lessons from Abraham Lincoln and Koehn consults with many companies and M.A. and Ph.D. in European history from another on social entrepreneurs. Her most speaks frequently before business leaders Harvard University. recent book, Brand New: How Entrepreneurs on a range of issues including leading in Earned Consumers’ Trust from Wedgwood to turbulent times, the power of strong brands, Dell (Harvard Business School Press, 2001) visionary entrepreneurs, and learning from examines six entrepreneurial visionaries who history. In 2001, Business 2.0 named Koehn have created powerful brands and best-of- one of 19 leading business gurus in the class companies in moments of great change. United States. She has appeared on “Good Morning America,” CNBC’s “Moneywheel,” Koehn is also the author of The Power of “Nightly Business Report,” and “Street Signs,” Commerce: Economy and Governance in the First “The NewsHour with Jim Lehrer,” A&E’s British Empire (1994), as well as a contributor “Biography,” CNN’s “Money Line” and many to Remember Who You Are: Life Stories That other television programs. Inspire the Heart and Mind (2004); The Intellectual Venture Capitalist: John H. McArthur and the Work of the Harvard Business School,

04 Best Global Brands 2008 Guest Contributor: Respected Harvard Business School professor and author Nancy Koehn speaks out on managing brands

Employee Satisfaction

01 The difference Employee Loyalty Employee Productivity between the brand and the business Quality of Customer experience

Customer Satisfaction In companies with powerful brands, the brand and the business are all bound up together, and finding hard, fast lines of Customer Loyalty demarcation between the two is difficult. Source -The Service Profit Chain, In such organizations, like Google or Apple or Heskett, Sasser, Schlesinger Starbucks, there is a collective understanding Revenue/Profit Growth that the business would simply not exist without the brand. It shapes the idea of what the company is, at its core; where it is going in the larger market; and the end problematic than it would in a company in consumers are increasingly evaluating brands toward which it is traveling. I have seen the which the brand was a discreet attribute by their own experience with them. And this force of this understanding at work – in some and managed as such. In truth, the brand experience is broader and richer than buying companies, it evokes the passion of a person remains the central, animating aspect of a given product or service, as important as serving a higher purpose. I have seen its reach the organization and its most important a given transaction is. Customer experience and depth in virtually every aspect of the tool for weathering market turbulence. includes how a consumer feels during a company, from financial reporting to supply- But in confusing times, it will not always be call to a help desk, how he or she reacts to chain management to product innovation. understood as such. It is the task of company learning about a company’s offshore labor leaders to carry the brand standard high, to practices, and what happens when he or All these “ties that bind” carry important frame the stakes of the moment and to keep she asks for advice from an employee but benefits, including engaged employees; the relevant stakeholders on the path of does not purchase the offering. In each of profitable differentiation in the marketplace; effective brand stewardship. these examples, customer experience (and collective (often unspoken) agreement on thus brand assessment) is dependent on the the criteria by which most decisions are engagement, satisfaction, and competence made; significant competitive advantages of company employees. And these are, in

(the more bound up the brand and the turn, a function of the service profit chain, of business are, the harder they are for rivals to 02 The brand and the how management perceives the relationship emulate); high levels of customer interest between employee satisfaction and its and loyalty; and the perception – both inside service profit chain financial performance in the marketplace. and out – of organizational consistency For companies that honor the service profit and coherence. But this intertwining of chain (and benefit accordingly), the growing brand and business is also fraught with key sophistication and confidence of consumers risks: if the brand or the business suffers who rely so heavily on their experience is good a blow, particularly an unexpected one, news. For others, particularly those led by many aspects of the company and its path Every firm has a brand and every firm has a executives who view employees primarily as may become vulnerable. For example, if the service profit chain, whether management large cost centers and who talk a lot about external market changes swiftly – as it did for recognizes such attributes or not. These great service while delivering poor experiences Starbucks in the last 18 months – then the two aspects are part and parcel of each to people inside and out of the business, brand may be perceived as weaker or more other, and becoming more so. Why? Because the day of reckoning is fast approaching.

Best Global Brands 2008 05 In all this turbulence and seeking, brands offer direction and clarity. For consumers, 03 The significance 05 Harvard Business strong brands stake out a defined identity of brand value: Brand School and brands and value proposition, advantages that become even more important when value is an important households are re-evaluating their spending measure patterns. For companies, powerful brands act as a kind of touchstone or ballast in the storm, telling employees what the The Harvard Business School lives, indeed organization stands for, where it came from, Brand value is used most frequently in the thrives, at a curious junction between theory and why what the organization does in the accounting context, as a means of measuring and practice. Between the rigors of scholarly marketplace is distinctive. the asset that a brand represents. We hear research with its explanatory models and a lot about the financial value of a brand the everyday reality of starting, running, Unfortunately, many executives overlook the when a company is bought or sold. But this and sustaining a business. How and what importance of brands in times of uncertainty. is not the only, or even the most important, we teach reflects the institution’s position In the rush to cut costs, top managers often application of brand value. Having an at this crossroads. We want our students to slash investments in brand, seeing these as accurate measure of brand value is extremely see how world-class scholars have thought (suddenly) too expensive. Such reaction is constructive day to day as managers make about brands, how various companies understandable. But it can be shortsighted. decisions about allocating resources across create and manage brands, and how these Like important relationships, brands offer time and projects. It’s interesting that most two perspectives relate to one another. So key benefits – especially in times of trouble. executives know the value of their plant, it is not surprising that our students today But they don’t do this on command or on inventory, investments in people, IT systems, learn a lot about brands in the first-year the spot. They do this as a result of ongoing and other assets. They use these numbers curriculum and that, in their second year, investment and commitment. to help them steer their company’s course. many elect to take courses that deal centrally But far fewer know the value of their brand, with brands. For example, in my second-year Given this, it makes good strategic sense for treating it as a more intangible and thus MBA course on Entrepreneurial Leadership, CEOs to pay careful attention to brand in the often more fungible resource. As a result, the one of the subjects with which students are midst of turmoil and doubt. After all, most of brand risks being (subtly) devalued relative most engaged is how specific individuals, one’s rivals are likely to be running away from to other more quantifiable resources and such as Henry Heinz or Milton Hershey or brand. So there is competitive advantage to issues. For instance, a manager under short- Oprah Winfrey, built world-class brands and be had. term pressure to cut customer-service costs why brand mattered so much to their young sees Wall Street’s analysis of the firm’s cost companies’ success. structure. She may not see a corresponding number for the financial effect on brand value 07 Brand and internal if she slashes hotline employees. 06 The brand and confidence CEO priorities in 04 Business school uncertain times students and brands My research suggests that brands play a vital role in sustaining confidence within It may seem counterintuitive, but brands a company. This is most obvious in firms actually matter more – not less – in such as Southwest Airlines, Apple, the Ritz- uncertain economic times. This is because Carlton, or The Container Store. These are all In my 17 years at Harvard Business School, in a downturn or in a moment, such as ours strong, market-leading brands. These are all I have seen MBA students’ interest in brand right now, when there is so much confusion brands that depend on front-line employees grow markedly. Some of this is a result in the economy, most people are running to communicate the core brand attributes of the increasing importance – strategic, scared. Consumers are anxious about prices and value propositions to the consumer. organizational, cultural, and financial – of and jobs and cash flow and housing values. These are all brands that have proven tough brands in a crowded, exciting, but also Company executives are anxious about to imitate. And these are all brands in which confusing global marketplace. Some of revenues and profit margins and year-over- the first customers whom the companies this is a function of the rising importance year comparables. And everyone is nervous sought to win over were the very employees of the internet and the role brands play in about the capital markets, particularly the who became passionate disciples for the helping people navigate this astounding stock market. So, in different ways, most brand and its offerings. (and bewildering) new channel. And some folks are looking for signposts or guidelines of students’ engagement with brands is sui or points to steer by. Some of this searching Take the Ritz-Carlton, for instance. Before generis: brands themselves are becoming is conscious, such as an academic calling a any person takes up the reins of any position more interesting – from the business and financial expert for advice on her retirement in a company property, they undergo an the consumer side. portfolio. Some is unconscious, such as intensive seven-day orientation. This involves company executives changing course several skills training in the specific aspects of times on budget issues (leaving his reports various positions. But it also involves a kind confused and perhaps more anxious). of “baptism in the brand,” as new employees

06 Best Global Brands 2008 are exposed to the company’s service become CEO, worked to create a team of philosophy, its credo, motto, and other people within the company who would be aspects of the Ritz-Carlton Gold Standards. dedicated to each brand – to protecting and 10 Marketers’ The overall intention of the program is marketing their respective lines in it. Here nightmares to prepare employees – mentally as well we can see the emergence of the brand as a as practically – to live and breathe the business asset, as a feature that benefited organization’s motto: “Ladies and gentlemen the organization and was thus worthy of serving ladies and gentlemen.” attention and value. For much of the 20th century, brands remained such business At its essence, this orientation is an assets. They were often more difficult to put Several of the marketers I know are lying investment in the Ritz-Carlton brand. a dollar value on than other assets on the awake at night thinking about these two As such, it is also an investment in the balance sheet. But managers understood issues: a voracious global media that is confidence of the people – from bellmen to them to be important to the operation of increasingly looking to business for the next room service waiters to maintenance staff – the business and treated them as such. “hot scoop” and knowledgeable consumers who hold the brand in their hands every day. who are increasingly making decisions A clearly defined, powerful brand is like a In the last decade, the conception of the based not only on a company’s offerings, but light in the midst of a thick fog. It is a beacon brand as a business asset has grown more on how those offerings are produced and for men and women to steer by and thus a dynamic and complex. As consumers (and distributed. When we marry these issues source of self-assurance. employees) develop deeper and more to great leaps in connectivity, we have a engaged relationships with brands, executive brave new, completely transparent world. thinking about brands is changing as well. Marketers, CEOs, and other business leaders, In many companies today, leaders it seems, now live in glass houses. In this 08 Brand as a understand that the asset that brand environment, where whom a company hires business asset represents transcends marketing, that it is in an East Asian factory can become the related to other key aspects of the business. (scandalous) stuff of internet chat rooms and These aspects include attracting and where one’s sourcing policies can provide retaining talent, analysts’ perceptions of the fodder for global activists, marketers and business, supplier relationships and leverage, other executives are learning the power of media coverage, and more. an old adage: the best defense is a good, Brands first became part of business fast offense. The best way to thrive when parlance in the late 19th and early 20th everyone is looking at everything is: first, run centuries. In the United States and other a clean, smart shop; second, know how your countries, this was a time when integrated, 09 Brand management shop is run – from the top of the supply chain national markets were developing and in developing markets to the bottom; and third, get the story of your the economy was industrializing. A range shop out before others beat you to it, telling of young companies, from Ford to Coca- it on their terms and for their agenda and Cola to Gillette, began manufacturing and almost always with less than all the relevant distributing consumer products for millions information. Brush up your story-telling of households. To communicate their powers. This is fast becoming an important products and distinguish them from One of the most interesting aspects of global requirement for smart brand stewards. competing ones, companies invested in capitalism today is how quickly markets are packaging, advertising, national sales forces, evolving in developing countries. In places and, in some instances, employee training. like China, India, and Brazil, everything is (It is not a coincidence that the advertising happening much more quickly than it did industry emerged as a force in its own right in today’s developed economies, places during this period.) like the United States, Europe, and Japan. What took decades to happen in these Most business leaders of this time did not industrialized countries in terms of consumer use the words “brand” or “brand management” sophistication, brand management, and to describe what they were up to. But the application of technology, is taking entrepreneurs like Marshall Field, who just a few years – sometimes less – in created the premier department store of developing nations today. In some instances, the same name, or Alfred Sloan, who did so entrepreneurs and managers in places like much to build General Motors, knew they China are actually able to leapfrog over had something important in the recognition their counterparts in the United States and It may seem counter- that consumers gave their products, and Europe, moving farther and faster with a new they worked to increase and strengthen idea or new possibility in brand management. intuitive, but brands such notice. For example, in China, brand communication actually matter more via hand-held devices is way ahead of the Managerial thinking about brand developed same strategy in more developed countries. – not less – in uncertain rapidly in the middle decades of the century. We will continue to see exciting innovations economic times. In the 1930s and 1940s, brand management in brand management come from these took a huge leap forward under the young, important economies, as well as from leadership of men like Neil McElroy at Procter other nations where global capitalism is just & Gamble. McElroy, who would go on to now taking hold.

Best Global Brands 2008 07 significant and far beyond the means of any one individual. But, with the The six laws of proliferation of personal technology and the rise of interactive networks, the barriers to entry are gone. Every collaborative consumer with an idea and an iMac is a potential visionary, willing and eager to step into the role of brand ambassador. And this means you’re just as likely to branding find the next great creative director in an anonymous college dorm room as in the by Jason Baer studio of a massive advertising agency. The ability to act as both content producer and content consumer heralds the rise of the prosumer, but with this new paradigm comes a question: What is the role of brand in an environment that values disruptive ideas, constant reinvention, and personal expression, over consistency and long-term strategy?

Biography: Or more plainly: is branding dead? As Interbrand’s Director of Verbal Identity in New York, Jason Baer combines an array When the wrong definition of “brand” of experience in communications, brand is applied, the answer is unequivocally strategy and ideation to help harness the “yes.” Those who define brands by power of language in compelling new their collective assets – taglines, color ways for his clients. Jason has worked with palettes, typography – have no choice but numerous large clients like AOL, Citi, to hold on tight and pray that consumers and Comcast. will grow tired of expressing themselves and retreat quietly to their day jobs. After all, what value do brand guidelines We regret to inform you that your services are have when true self-expression requires no longer required. You’ve been a perceptive and reinterpretation and personalization? judicious marketer, and you should be proud of But the meaning of a brand isn’t rooted in a name or logo any more than the your outstanding contribution to the industry. meaning of your life can be found in However, we’ve found someone younger and far the clothes on your back. A brand is a promise rather than the colors and more capable. images we use to express that promise. Of course, our assets are of tremendous Someone whose pulse is tuned to the latest value. Without them the concept behind our brand remains a desired trends and is inexhaustibly passionate about perception, never to be realized. But if authenticity. Someone with unlimited creative we base our understanding of brands in the fundamental idea rather than resources, and frankly, a greater number of ideas the execution, we may be able not only than you’ve ever had. Getting to the point, we’re to survive this shift to collaborative marketing, but moreover, to strengthen replacing you with... your customer. And by the our brands because of it. way, she’s willing to work for free. We’re in the infancy of this new era, contending with everything from mobile Consumer generated media is no passing process. Commercials, print ads, taglines apps to mashups, and no one can say fad. Many of the world’s most successful and more are being produced by the very for sure where all of it will lead. But brands are progressing beyond the audiences they are intended for and, at first we’re undoubtedly crossing over from centuries-old model of driving awareness glance, it looks as though many functions marketing at people to marketing with through mass marketing, choosing within the larger marketing community are them, and could use a few principles instead to engage customers. In a well- becoming rapidly obsolete. to help us through the transition. With documented phenomenon known by these six basic laws of branding in the age many names – from Citizen Marketing to Not so long ago, the technical skills and of consumer generated media, we may Crowdsourcing – marketers are inviting distribution capabilities required to create find that our jobs aren’t disappearing their customers to take part in the creative and deliver a marketing campaign were quite so fast.

08 Best Global Brands 2008 Ben & Jerry’s recently completed an open too little time for too small a reward. We are

“Video Conetest” for ice cream lovers on its still in the very earliest stages of consumer

site. And more branded challenges and user generated content, and not everyone is 01 The Law of generated activities are appearing on the web prepared to write an ode to their favorite every day. soft drink one week and design a new can Inevitability the next. Coca-Cola burned out its potential Aside from opening up communication advocates, posting far too many challenges Consumer generated media is here to stay. channels with potential artists, writers, in just a few months. Doritos had it right Resistance is futile. Those who scorn the photographers, actors, and directors, the when it created one big challenge for one big idea of non-professional creative work have internet enables us to distribute content in a reward: make your own commercial, and done so largely from within the walls of the way not possible through print or broadcast the winning submission will air during the most conservative advertising agencies, media. For many years, advocates of viral Super Bowl. Now McDonald’s is asking its often with a vested interest in more of the marketing have written extensively about customers to top its ad jingle. It’s no wonder same. We’ve been running some variation the opportunities of the online environment, the thousands of thoughtful (and not so on the 30-second spot since 1941, when the but as social networks and the digital swarm thoughtful) responses to these challenges Bulova Watch Company paid NBC $9 to air usher in the age of the long tail, going digital dwarfed the handful of responses to Coca- the world’s first television commercial. But is no longer a luxury you can afford to pass Cola’s previous contests. bombarding consumers’ senses no longer up (see Chris Anderson’s The Long Tail and the works. As Procter & Gamble’s soon-to-be- upcoming The Nature of Marketing: Marketing former Global Marketing Officer, James R. to the Swarm As Well As the Herd by DDB’s CEO, Stengel, attests, “the traditional marketing Chuck Brymer). model we all grew up with is obsolete.” 04 The Law of

Only the brands that actively engage their Substance audiences in a conversation will survive. Brands that value style over substance And this calls for more than friending our 03 The Law of Numbers won’t pass the test. customers on Facebook or inviting them to Which is easier: writing an 800-word poem a forum on our corporate website. It means A new paradigm requires a new way in iambic pentameter on any topic of your surrendering some of the creative control of looking at numbers. choice, or writing anything you like about and asking them to share their ideas. This You probably know what a set of eyeballs your single greatest achievement? If you’re isn’t a bad thing. Customers who choose to is worth, but how about a pair of hands? If like most people, it’s probably the latter, engage with their brands become loyal brand we value efforts in collaborative marketing because ideas are inspirational, and rules are ambassadors, and the work they create is strictly by impressions, then we’ll see them as confining. If your brand lacks a meaningful far more credible than anything we could failures. But surely anyone who spends hours and relevant idea, all of the brand guidelines say about ourselves. If we don’t ask them contemplating a brand and then creating, in the world won’t help your customers to participate, watch out, because they’ll say, a poster for that brand has had more think creatively. happily take matters into their own hands. than a brand impression. They’ve had a brand Just look at the hundreds of homemade conversion. They’ve become ambassadors, Over the last several months, creative icons Apple commercials (or the more antagonistic and are eager enough to show their brilliant like Shepard Fairey and will.i.am have created Microsoft Zune spoofs) on YouTube and you’ll work to friends and family that they’ll handle content for Barack Obama’s run for U.S. see that this can’t be stopped. So don’t fight the distribution as well. How can we compare President, and did so without being asked. this phenomenon. Embrace it. that to any number of glances at a banner ad? Miraculously, these artistic expressions have been on-brand, because the artists were Let’s also recalibrate our expectations when inspired by a clear, resonant idea (change) it comes to participation rates. The vast and not by rules and regulations. In fact, majority of consumers, while eager to be this creative outpouring has influenced 02 The Law Of engaged, are far too busy to write a webisode MoveOn.org to launch a series of consumer or design a new packaging structure in their Interactivity generated challenges on behalf of Brand spare time, and will continue to play a passive Obama. Brands with ideas as explicit as Don’t just be active, be interactive. role with the brands they love. But as we’ve Obama’s – Staples’ promise of an easy How digital are you? If your only interactive seen from YouTube and Flickr, a small number experience or Starbucks’ promise of a third tool is your corporate website, the probable of content creators can entertain a large space – will have no problem passing this answer is “not very.” Most corporate websites number of people. Like the endless flood of test. Brands without a clear idea will never are akin to a megaphone, trumpeting homespun, teenage videos and late-night, inspire customers to create, no matter how information on a company’s history, mission curmudgeonly rants on YouTube, much of many brand assets you give them. and products, with little more than a “contact the content will be of questionable value. us” page for complaints, new business, and Fortunately though, all it takes is one inspired the press. By expanding corporate websites idea to make an online sensation. So don’t to house creative activities and contests, underestimate the importance of volume. or by developing microsites for a similar purpose, we can communicate directly with One last point on the numbers: try to have aspiring creatives, hobbyists, and brand a few big opportunities for content creators aficionados. Coca-Cola entreats its customers rather than a myriad of trivial opportunities. to “Design the World a Coke” through a Previous iterations of coca-cola.com had the customization tool on its website, while same major flaw: too many opportunities in

Best Global Brands 2008 09 In the end, you’re still running the show. You

conceive, create, and manage the brand, with

a little help from your customers. You get to 05 The Law of choose the form and specificity of content you’re asking for, and to decide what to do Improvement with it once you’ve got it. You decide whether to circulate it or internalize it. If anything, Collaboration can be used to refine brands. you’re in a better position to manage your Think of it as a form of research. While brand than ever before, because your consumer generated marketing often strives consumers are offering their help. You are to engage customers around an already ceding some control, but you have very little well-defined idea, it can also be used to to give and a great deal to gain. So loosen up. optimize a brand. If Harley-Davidson was to solicit homemade commercials and found that the responses focused on precision and performance rather than the company’s decades old promise of freedom and personal Many questions still expression, then that would tell the company something about the relevancy of its brand remain in the 21st century. Perhaps it would have to make a few refinements to its promise. At the end of these six basic laws, many If Geico were to find that submissions to a questions still remain. What are the rewards creative challenge yielded responses with that motivate consumers to act? Will a cautious, analytical tone rather than the consumers flock to functional brands the zany, humorous voice it has been employing, way they’ve converged on lifestyle brands? To this might force them to reassess their what degree will business-to-business brands brand personality. participate in this social phenomenon?

Looking at consumer generated media for Each of us will have to answer questions qualitative clues into a brand also relieves like these for ourselves, but with a sure- these works of having to meet a company’s footed, resonant brand idea behind our usual high standards. If we’re using these businesses, we should find our customers creative works to learn something rather eager to share their side of the story. These than as a substitute for our professionally basic laws certainly don’t provide all of the produced content, then it might not matter answers, but they do give us a framework for if the work doesn’t earn a Clio. navigating this new terrain. And if we’re open to change, we’ll find that our jobs aren’t being completely outsourced to our customers. Not yet, anyway. 06 The Law of Flexibility

Those that can’t bend will break. One thing is certain: the days of complete and total jurisdiction over your brand are gone. You’re playing with others now, and the same rules you’d apply to any collaborative environment apply here. Accept that you don’t have all the answers. Be open to the ideas of others, even if (and particularly because) those others aren’t as immersed in this as you are. Use ideas rather than rules to unite and inspire people, and let them come to their own conclusions. Realize that multi-dimensional brands with one unifying idea but many individualized expressions can be far more powerful than a “museum brand” that you can see but can’t touch.

10 Best Global Brands 2008 Best Global Brands 2008 11 Sustainability and its impact on brand value by Paula Oliveira & Andrea Sullivan

One of the latest buzz words found in In boardrooms, this translates to the “triple management journals, websites, and bottom line,” i.e., a company’s initiatives corporate documents is “sustainability.” must consider environmental, social, and Some people even want to recognize it in a financial impacts. Yes, financial impacts. That company’s balance sheet as an asset. means companies must make investment Okay, let’s not go that far. decisions that will benefit the environment and society, and guarantee the sustainability It is undeniable that sustainability is a new of the project itself. We are not talking about way of doing business, in the same way charitable causes – but ethical products and “re‑engineering” or “just in time” were in the services that will change consumers’ behavior late 1980s. Sustainability is not an asset that and help them to live a more “sustainable” life. can be bought or sold, rather it’s becoming Biography: an integral part of many a company’s Brands enter the debate right about here. The well-traveled Paula Oliveira philosophy. Just as company management A leading brand translates to customers has managed brands and worked practices influence business value, so do what is relevant in today’s world, influencing with clients across a wide range sustainability initiatives. Therefore, the buying behavior. It also develops a strong of geographies. As Interbrand’s question is: How does it create value? relationship with customers because of Senior Consultant in London, its distinct offerings, leading to repeated Paula is a key component of the Moral motivations to invest in sustainability purchasing. In other words, a brand creates Brand Valuation team, and has are not in dispute: climate change, poverty, value in two ways: generating demand, and helped many clients understand the you name it. But what companies don’t reducing risk and securing future earnings for value potential of their brands. know yet is what level of investment they the business. A sustainability program that should make and what is the measurable is consistent with a brand’s positioning will benefit of investing. When the benefit is create value for companies by creating more not clear enough to justify investments on value for its brands. economical grounds, managers easily turn to initiatives that guarantee short-term results Generating demand for products and everyone’s jobs, especially with recession and services knocking on the door. A study from Carbon Trust, a UK-based consultancy that helps businesses to reduce There are some direct benefits, such as: their carbon emissions, shows that social and compliance with an increasingly rigorous environmental concerns can result in changes legislation; cost savings derived from in consumer behavior. Among several optimization of production lines and supply factors that provoke this shift are “issues of chains to reduce energy consumption; immediate personal impact” and “realistic

reduction in CO2 emissions; desire for more available choices.” That’s where brands can ethical products; and simply satisfying make a difference. an emerging and cynical green consumer. Biography: But most importantly, incorporating Let’s take a sector for which sustainability Andrea Sullivan is Interbrand’s sustainability as a business practice will not is a big issue: automotive. Companies such Executive Director of Client only increase companies’ brand value, but as Honda recognized that mineral fuels are Services in New York. Among guarantee a long life for the business. limited and prices of petroleum are rising. her many contributions to the This motivated it to adapt its product range business, Andrea looks after client Relationship between sustainability to fuel-efficient cars. Honda was one of relationships and ensures that and brand value the first movers in this direction and this programs are managed efficiently Although it’s hard to find consistency among is paying dividends today. It was the only and deliver long-term value. definitions of sustainability, it is common car manufacturer to report better US sales sense that it incorporates companies’ in June 2008 than in June 2007, credited relationships with the natural environment, to fuel-efficient Civics and Fits. While social causes, and corporate governance. reducing dependence of gas-guzzling cars

12 Best Global Brands 2008 Figure � — Sustainability matrix, examples Figure � — Sustainability matrix, action points

A. Cost of doing B. Leadership business Factor:

Must do Inﬂuence

C. Laggard: D. Wasted Opportunity: Innovate and don’t greenwash Re-focus Relevance of sustainability for he sector Relevance of sustainability for he sector Relevance of sustainability for

Brand differentiation regarding sustainable issues Brand differentiation regarding sustainable issues

and increasing the number of fuel efficient about both brands. P&G made sustainability brand is perceived as differentiated, but models became a “must do” in the automotive relevant in an unexploited category and is sustainability is not relevant to the sector sector, Honda was first to differentiate and now influencing consumer behavior – not yet (Figure 2C and 2D), there is an opportunity is ahead of the debate. This leading behavior only toward its brands, but toward a new and to develop innovative products and services contributed to an increase of 28% in Honda’s more “sustainable” way of washing clothes. that will raise awareness and relevance of brand value since 2004. P&G has similar initiatives in other product sustainability for the category (like P&G). The lines to save energy and replace chemicals prize is not only leading the category, but The same can be said about GE, which with more suitable alternatives. positively influencing consumer behavior. saw an increase in its brand value by more than US$6.0 billion since 2005, when Honda and GE play in sectors in which For brands that are not differentiated, and do Ecomagination was launched by then-CEO, sustainability is already a concern. Through not play in sectors in which sustainability is Jeffrey Immelt. Among other goals, the portfolio management and innovation, relevant (Figure 2C), there is an enormous risk program intended to increase spending on they are now ahead of the sustainability of greenwashing, i.e., trying to differentiate clean technologies, reduce greenhouse gas debate and are influencing demand for their through communication but not investing emissions, and generate US$20 billion in products and services. P&G went even further, in sustainable development. A study revenue from green products, including jet raising awareness of sustainability issues in a published by TerraChoice, an environmental engines, locomotives, and wind turbines. category apparently unrelated. See Figure 1. marketing firm, showed that 99% of 1,018 This created a halo effect around other offers, consumer products surveyed were guilty of improving perceptions about the company These examples suggest that the first step greenwashing. These companies risk not only and making it top of mind in sustainability in developing a “sustainable” strategy is to their reputation, but also future earnings for surveys. It moved ahead of competitors, identify the relevance of the issue for the the business. such as Siemens and Phillips, which also have sector and how differentiated the brand is strong commitments to such initiatives. regarding sustainability issues. See Figure 2. But GE led the debate and it is collecting the Ann Hand, former SVP, Global Brand & laurels – in the form of dividends – today. Innovation at BP adds, “Brands need to have a point of view on the elements of P&G is another example, but in a different sustainability that are relevant to their way. A few years ago, sustainability was not brand… they can’t solve it all. For BP it’s about a relevant issue in the washing powder or a lower carbon world: alternative energy detergent category. Through investments sources and lower emissions from traditional A leading brand in R&D, P&G developed Tide Coldwater, fuels. It also requires a clear, hard, baseline of translates to customers which does not require hot water for usage where your firm is today; and commitment and, as it is more concentrated, allows from the top in the CEO’s agenda, backed what is relevant reduced packaging materials. Another with investment dollars that won’t get cut in today’s world, example, also from P&G, is Ariel’s “Turn to off in six or twelve months if earnings slip.” 30O “ campaign. The campaign suggests influencing buying consumers turn water temperature in For sectors such as energy and mining behavior. washing machines from 40O to 30O when (Figure 2A), there is a massive impact on the using Ariel with the same results guaranteed. environment and communities. As such, These developments are beneficial for the investments in sustainable initiatives are a customer, who can save energy from water “must do.” But there is also an opportunity heating. They are also beneficial for P&G, for differentiation. The same applies for through revenues and positive opinion automotive and diversified sectors. If the

Best Global Brands 2008 13 Reducing risk and securing future company’s reputation after protests were Brands have the power to earnings for the business held in the area? No. Investment in water change the world Brands create value by generating demand supply in India is not only relevant to the Sustainability is not a fad – it’s a new way and securing future earnings for the population, but also to the sustainability of of doing business. We can determine the business. So how can investments in the business in the country. After all, how influence this business practice has on the sustainability influence those future would Coca-Cola produce soft drinks without overall business and brands, but there is no earnings and brand value? water? This and other initiatives positively standard solution. Companies need to assess influenced the company’s share value at the the relevance of sustainable issues to their A company’s value is today’s value of the end of 2007 and its brand value increased by business, as well as current perceptions about earnings it will potentially generate in the 2% in 2008. their brands on this matter, the potential future. It’s a function of the magnitude of upsides of investing in sustainability projects, those earnings and the risk associated with The same applies to oil and mining groups, and the reputational risk of not doing so. them. Therefore, sustainability is strongly both heavy users of natural resources. BP Brand value is a way to summarize all of this. related to value: the more a company proves had been increasing its brand value since to the financial markets and other audiences 1999 mainly due to its large investments Most leading companies already understand that it is a sustainable business, the lower in safety and renewable energy. However, how sustainability issues can affect their the risk associated with that company its reputation suffered after an accident at businesses. The challenge is to embed a (and the lower the rate used to discount a Texas City refinery in 2005, with shares real sustainable behavior in everything a future earnings). dropping almost 10% in a month. The company does; not only to attract new company’s reputation has recovered, but customers, but to help define future behavior Similarly, brand value is today’s value of the the incident demonstrated the strong and shape the market. In other words, to be earnings a particular brand will generate in the correlation between sustainable actions a leader. “The transformational challenge future. Brand risk is a function of company’s and value creation. is to make “green” a part of the DNA of the risk, adjusted by the strength of particular enterprise, just the way companies had to brands. This depends on many factors, This correlation is also seen in the Best Global make globalization and digital technology a including the investments it receives (quantity Brands 2008 ranking. Financial services part of nearly every business consideration,” and quality), brand image (brand’s perceived institutions included in the 2007 and 2008 says Andrew L. Shapiro, founder and CEO personality and reputation) and customer studies lost a total of US$10 billion in brand of GreenOrder, a business strategy and franchise (relationship with customers). value. This reflects not only the financial management consulting firm that specializes impact from the US credit crunch but also in the field. Coca-Cola is the most valuable brand in the reputational damage caused by breach the world. It consistently invests in its of trust between these companies and the Brands can be the engine towards a more main brand and develops an emotional investment community. sustainable world. They should be ahead of connection with consumers. So why did its the market and create products and services brand value decline US$5.1 billion between “The changing landscape of liability,” a report that will be relevant to consumers while, 2003 and 2007? published by the consultancy SustainAbility, at the same time, helping them to live in a suggests a rapid convergence between more sustainable manner. This will create a Coca-Cola’s decline is due to the fact that companies’ risk management and sustainable positive influence on the environment and it is seen as one of the bad guys by many development programs, as technical communities, as well as generate dividends organizations. Increasing health concerns compliance “may no longer be an adequate to shareholders through growing demand. have been affecting brand earnings in defense against social and environment A sustainable brand will also enhance a developed markets, despite its light, diet and activists in the court of public opinion and company’s reputation and secure future zero versions. Also, its image and reputation even in the courts of law.” This leads to a much earnings through stakeholder loyalty and have been inconsistent around the world. more rigorous approach to risk assessment advocacy, thus increasing brand value. On the upside, Coca-Cola has been investing or, at best, an opportunity to develop winning in many initiatives, such as campaigns to strategies from multiple stakeholders’ points As the saying goes, “today’s best practice is improve community access to safe drinking of view – an opportunity that can help secure the best practice of tomorrow.” Hopefully, water and adequate sanitation in India. future earnings and the sustainability of the today’s successful sustainability strategies Is this only a form of CSR to boost the business in the long term. will soon become standard, promoting long-term benefits for businesses and generations to come.

14 Best Global Brands 2008 Brands create value by generating demand and securing future earnings for the business.

Best Global Brands 2008 15 The Red Thread: creating and managing brand value by Jez Frampton

“All of the ropes of the royal fleet, from the strongest to the thinnest, are braided so that a red thread travels through all of them, and you cannot remove it without untying all of them. Even the smallest fragment Biography: Jez Frampton, Interbrand’s Group will still allow you to recognize that Chief Executive, is responsible for managing the firm’s worldwide the rope belongs to the crown.” interests and enhancing the strategic and creative offering. Jez’s From Goethe’s Elective Affinities (1809) experience has provided him the opportunity to work with different clients across multiple sectors, The Red Thread is a concept woven the smallest fragment to the whole, is including premier brands like through many cultures. According to Greek powerful and captivating. In our world, Budweiser, IBM and Toyota. mythology, Theseus found his way through this is a wonderfully rich and simple the Minotaur’s labyrinth by following metaphor for brand value. Ariadne’s red thread, and a famous Chinese proverb describes an invisible red thread The brands at the very top of our Best that connects us to all of the people we’ll Global Brands ranking understand the ever meet. The Russians call it krasnaia nit, reality behind this metaphor. For them, and the French le fil rouge. In German, roter the notion of value runs like a red thread faden – literally “red thread” – is used to through their brands, driving demand describe the central or recurrent theme throughout every aspect of their business. of a larger work. They know that their brands must function as assets, not as expenses, and The idea of a bright, illuminating thread that even the greatest brand idea is only that runs through everything, from as powerful as its ability to generate value.

16 Best Global Brands 2008 The subject of brand value has been well detail about fuel consumption, lubricant documented since Interbrand first developed temperatures, braking heat and even driver the concept in the early 1980s. Today, our heart rate. When the competition is fierce competitors, commentators in the press, and the difference between winning and the financial community, and the industry losing can be measured in fractions of a at large have much to say about the topic. second, every detail must be tuned to win. At heart, it’s a simple idea. If a brand plays a role in choice and a consumer must choose Imagine how powerful it would be if you between different competitive products or understood how your brand creates value services in a marketplace, then the brand to the same degree of detail. Are you as must contribute to earnings and profit and intimate with the performance of your hence, must be quantifiable and valuable brand as Formula 1 racing teams are with to the owner. In order to really understand the performance of their cars? Are you as the creation of brand value, we need to prepared to battle the competition? Do you understand what factors drive demand, quantitatively understand exactly how your what role the brand plays across each of brand generates value? those factors, and how strong the brand is versus its competitors. By using brand valuation as a diagnostic tool, we can now understand the precise But the Red Thread is about more economic benefits that brand has on every than a value-generating brand. It’s aspect of our businesses. It is now possible about understanding how that value not only to quantify a brand’s contribution in is generated. It’s about creating, the decision-making process and to measure managing, and measuring brand value its competitive strength in acquiring and across every aspect of the business. retaining customers, but to predict the value of an innovation and understand at which To put this into context, let’s consider an touchpoint our brand investment generates analogy. Capable of accelerating from zero the most demand. The Red Thread helps us to 100 miles per hour and back to zero in see where in the acquisition process we lose under four seconds, a Formula 1 racing car potential customers to our competitors, represents the very edge of technology in the which brand attributes are relevant at each motor industry. Every car is fine-tuned for step in the customer journey, and far more. each individual race, and every surface and Most importantly, it helps us determine element of the car can be altered to create exactly what it is that must be changed, the best aerodynamics, braking pressure, tire and how, in order to maximize value. pressure, gear ratios, suspension and more. It is not the car but each individual component of that car that must contribute to the vehicle’s ultimate success.

What’s more, those components can be quantitatively measured, giving the racing team the information necessary to optimize the car’s performance in real time. Data streams from car to trackside with

Best Global Brands 2008 17 Brand building isn’t a separate exercise from the day-to-day running of the business. It is integral to it.

Consider our work for BMW. Everything in Or take Interbrand, an example that is near that organization is coerced and corralled and dear to me. For us, the notion of brand into a single unifying vision, all united by value itself is our Red Thread. We are the one value-generating idea. For BMW, this consultancy that sees brands as economic red thread is the commitment to please assets, as drivers of demand, and creators of customers with the very best in automotive wealth. We believe that behind every great engineering. This manifests itself in a brand is a great idea that generates value. few obvious ways, such as its tagline and Our daily mission is to understand how that messaging, but also guides management value is created across our clients’ businesses, decisions on everything from showroom providing strategic advice and creative plans to fabric choices, and ensures that the solutions that have a common purpose and company’s outer voice (what it says it’s going foundation in generating demand. Whether to do) reflects its inner voice (what it actually we are producing the corporate identities does). And, as 93% of employees believe that that will fuel the iconic images of the 21st BMW Group is a great place to work, it’s no century or crafting brand architectures to wonder this translates to a brand worth optimize the way a major global enterprise US$23 billion and the highest brand value manages its assets, “value” is quite simply per automobile sold. the lifeblood at the very heart of our business, the common theme that unites us and This is true of many of the world’s most makes us stand out from the crowd. valuable brands. Look at Apple, whose promise of a different experience through I believe that the concepts of brand and ease of use creates a red thread that touches value are inseparable. To be truly effective, all aspects of their business, including brands must be built around the thing that product innovation and interface design. generates the most value for your business. At Disney, the commitment to create A brand conceived in this fashion will create magical experiences produces undeniable demand, in turn improving the monetary value, forming a red thread that affects value of the business. Managed properly, everything from the appearance and this ever-growing cycle of value creation will behavior of its “cast members” to its define the very essence of the 21st century’s television programming. For Nike, the idea eminent brands. of performance runs through the business from “Just do it” to how the organization gets it done.

18 Best Global Brands 2008 But to get there, we need to change the That’s a powerful shift in thinking in a fundamental way that we think about our relatively short period of time. Not everyone businesses. Most companies spend massive is there yet, but the leaders are. The global amounts of time and money optimizing their corporations at the top of the Fortune 500 or supply chains, but few are willing to make our own Best Global Brands ranking see the an adequate investment in the demand world this way, and it’s only a matter of time side of their businesses. This is most likely before it becomes common practice. because the supply side is physical and real. It’s easy to understand the return on Some audiences, despite accepting the tangible investments. The demand side of notion of a red thread, might believe that our businesses, though, is often less clear. the current economic climate makes this It requires courage to invest in intangible the wrong time to invest in measuring and assets. Thankfully, the ability to measure managing brand value. But this could be these intangible assets through precise a costly mistake. This is the ideal time to analytics should help us refocus our attention optimize budgets to ensure that every dollar on creating demand. spent is driving demand and creating value. Every boardroom is subject to greater degrees We must also change the way we think about of scrutiny over the use of shareholder funds brands themselves. Ten years ago, brands and now, more than ever, we need to know were seen as an extension of marketing: where we’re likely to win, and where we’re a kind of halo around a business that likely to lose. made it emotionally appealing. Marketing departments spent time creating “brand ads” with their agencies, an exercise seen as more strategic and separated from the day-today process of selling products, announcing promotions, or launching campaigns. All businesses that

Today, the world has come to realize that aspire to build greater brands are an extension of business strategy. value should consider Now understood to define the essence of differentiation and to serve as primary and their red thread. integral drivers of demand, brands have as Without one, your much to do with product, service, retail, packaging, culture, web, pricing, channels, brand may not be and environments, as they have to do with generating real value. marketing and communications.

Best Global Brands 2008 19 Taking action: acting like a global brand leader by Graham Hales

Biography: People often look at the Best Global Brands Graham Hales is Group Chief study and say, “Well that’s fine if you’re Communications Officer of Coca-Cola, but my business just isn’t like Interbrand. His work consulting that.” It’s a fair response. But whether your for some of the firm’s most high- brand is iconic or unheard of, consumer profile clients – and the Interbrand or business-to-business, big or small, in a brand – has taken him across a developed market or a developing market, diverse range of business agendas, there is always something to learn from the geographies and cultures. Best Global Brands study.

A brand that is managed for growth feeds the actions and ambitions of the organization. Brands come in all shapes and sizes, but the principles at the heart of creating value for brands hold fundamentally true. Perhaps the most important principle is the need to limit the preconceptions and assumed knowledge of a brand. Consumers, and the societies they live in, never stop changing. As a consequence, organizations can never stop learning. Any program that aims to build long-term value for a brand should know this.

The nature of the steps necessary to build long-term value for a brand is cyclical. Each step feeds on the next and yet they can be regarded as distinct from one another to form a linear process while still being intrinsically linked.

So let’s start from a logical beginning.

01 Know your customers

Any branding exercise should be driven by robust data. There’s no set guideline for how much data you need but you need enough to know your markets.

Ordinarily this involves breaking your market down into segments that enable you to make

20 Best Global Brands 2008 observations and develop insights based on focus groups and transform themselves into The emotional connections of a brand can the needs and attitudes of your consumers. real shoppers – the stronger the foundations often be a key source of differentiation when Your market segments need to have enough are for the brand. rational brand attributes are broadly similar. difference to make them manageable and distinct from one another. The segregation of All of the brand’s purchase drivers will offer markets must always be based on objective different opportunities to maximize your market data rather than popular opinion, 03 Pinpoint the role brand’s effect. We need to consider purchase hearsay, or perceived wisdom. The relentless drivers within a context of the role that the search for new ways to consider your market your brand plays in brand can potentially play. is a great attribute in the quest for building a driving a consumer valuable brand. to purchase It is not uncommon to find that one segment 04 Understand of your market may deliver more business volume and another more business value or the strengths and profit. Consequently, some segments will be weaknesses of your more attractive to your business than others as they hold more potential for profit. In the Now, let’s understand the role your brand brand in driving end, segmentation enables you to objectively plays in affecting purchase drivers. purchases view whom your brand targets. We can bring this to life by comparing three Brands need to have a focal point. It’s fine for possible purchase drivers that influence your a brand to ripple out beyond this key focus, consumers: location, price, and empathy but ubiquitous brands that aim to be for (i.e., the brand feels like it connects with me everyone often struggle to be for anyone. and speaks my language). Understanding the purchase drivers then leads to a logical examination of how Location is a classic driver for many brands, well a brand performs against them. This as it governs our access to products. While examination should stem from a market- we can perceive a brand as having broad 02 Know why your driven and competitive basis, i.e., where coverage, if it isn’t actually accessible or and why do our customers think we customers purchase convenient to us, it is a struggle to purchase. succeed or fail and what are our strengths Consequently, location can be a key purchase and weaknesses versus our competitors’ driver with a limited role of brand. strengths and weaknesses.

Next is price. Price has a clear rational and These insights need to be taken into account factual component, as we can compare and when considering a business’s potential This has to be a preliminary step in any contrast prices. But less rational and factual future delivery, as well as its existing delivery program that aims to deliver a valuable brand is the idea that price is rooted solely in a of the brand. A change to the existing delivery to an organization. What is driving purchases belief. We might believe that some brands are could provide the key to increased customer within your overall market? What drives cheaper than other brands – or, although a satisfaction or commitment. loyalty? What creates customer satisfaction? brand may be more expensive than another These answers are all linked. brand, it may offer an additional perceived Your brand’s agenda is now beginning to value. This level of complexity gives the brand unfold. We know what drives purchase. Loyalty and commitment to brands are a key a broader role as it starts to communicate We understand what role a brand plays source of value. Pull back from the big picture relative value to its customers. within this decision process. We are aware and examine the details. What’s really making of our relative competitive strengths and the difference between consumers’ selection Now empathy. One brand may feel like it is weaknesses within the purchase drivers. of one brand versus another? The deeper your meant for us while another fails to engage us We can now move on to the next step. knowledge is of what truly drives purchases – in an emotional connection. This is clearly an what really happens when consumers leave area where the role of the brand is significant.

It is not uncommon to find that one segment of your market may deliver more business volume and another more business value or profit.

Best Global Brands 2008 21 It is essential that the brand purpose is as meaningful, evident and tangible inside the organization as it is outside the organization.

brand in the marketplace. In essence, it’s

everyone that’s engaged in your company – 05 Create the business from the inside out.

case Leadership teams can be nervous about including their people in the process. This sense of insecurity is understandable but invalid. It is important to understand that excluding your employees from the dialogue will often lead to disengagement in the The insights that the previous four steps have process. If you want people committed, delivered (combined with an appropriate they’ll need to feel respected. They’ll need to amount of financial analysis) form the key see the business advantage that the brand components of a brand valuation exercise. can deliver, and they’ll need to understand Having undertaken such an analysis, we can it, ideally, in economic terms. They’ll need to focus on the business end of things and find feel they have an opinion that connects to the out what the brand is worth. direction of the brand.

This defines the economic value (i.e. the Get your employees involved in helping to brand’s worth), that, in its own right, allows articulate the brand’s purpose. They’ll tell the brand to be recognized and developed like you what’s important to them. This will help any other asset. You should also be able to you articulate a purpose for your brand that see the brand’s potential value, (i.e., what it your employees are connected to and will could be worth) if some changes were made consequently support. to sharpen its desirability in the market and drive demand still further. All brands should represent what the people behind the brand want to achieve.

06 Make sure your employees are included 07 Build a clear purpose in the program to for the brand support the brand

We now have the insights upon which the If you are looking for your brand to be brand strategy can be created. We know successful, it will have to be supported our market. We know why they purchase. and well represented by the people who We know the role the brand plays within deliver the brand to your stakeholders. And the purchase drivers. We know how well I don’t just mean front-line sales people. It’s our brand functions, or could potentially everyone that will touch and influence your function, against the purchase drivers.

22 Best Global Brands 2008 We know what our people think. This analysis Internally, you’ll want to focus on how Just as critical to brand consistency is should focus your debate with the brand’s you communicate with each other, what maintaining the momentum behind the stakeholders, as it is grounded in market- HR systems you use to recruit, how you internal workings of the brand. By now driven, commercially focused, business insight. communicate the brand through your you’re in the thick of a change program that operations, and how you appraise and needs to evolve from being dismissed as an We now start to embark on a more creative reward people. You’ll also want to focus on “initiative” to being reinforced as “the way process: building a clear purpose for the external behaviors, CRM programs, and things are done around here.” The best way brand. A brand’s purpose can be articulated customer service models. You need to use the to handle this is to re-engineer your internal through many alternative models. In truth, brand to create non-negotiable performance systems so that the ambitions and intentions it doesn’t matter which model you use so standards that, in time, will become the DNA of the brand are true to your operations and long as the purpose is clear and your people of your brand culture. You’ll need everyone ways of doing business. In time, this makes get it. We have four filters that we put such across the organization to consider their the brand’s strategic goals and desired ideas through. job function as filtered through the brand reputation a reality. and how they can tangibly deliver the brand Firstly, is it credible – is the idea based on an through their work. This is just as important The external world is ready for your message acknowledged truth that the organization for finance people as for sales teams. The only after your brand undergoes internal can deliver against? brand will deliver your reputation. reforms. If you broadcast your new brand before your employees can deliver it, you will Secondly, is it relevant – is the idea based Now let’s consider how we build the brand be in trouble as your brand won’t be able to upon something that drives purchases, externally. External brand building begins meet the consumer’s expectations. something where the role of brand is strong with a brand strategy that becomes evident and the brand can deliver? in all communications. This may sound

restrictive but it shouldn’t be. The right brand Thirdly, is the purpose distinct – is the brand strategy should be a guide – it should act as a 10 Recognize it’s a going to be able to achieve territory that it launch pad, not as a straightjacket. can own and that allows it to stand out from never-ending journey the crowd?

Finally, does the idea stretch the brand – 09 Consistency, does it feel like it will work for the business into the future? consistency,

consistency Sorry, I know we live in a world where we like The brand’s purpose is fundamentally its to tick boxes and cross our achievements off idea and we need to lift this idea beyond lists. But in this case, we conclude only by strategic words so it communicates going back to the start. more fully. The brand now requires an appropriate identity system to ensure Can BMW turn around and say it has ever that every touchpoint of the brand is used been able to provide “the ultimate driving to reinforce and convey the purpose. There’s a perception that brands should be pleasure?” No, because what it is capable policed with a militaristic verve. It is tempting of doing from one year to the next will be but ultimately flawed. Consistency is key but dependent upon the technologies available so are the systems you put in place to make to it and the evolution of what “the ultimate consistency easy. 08 Be relentless in driving pleasure” means to its segments as its markets develop. following your Today’s sophisticated digital asset management systems are certainly capable brand purpose The best brands are constantly looking for of eradicating inconsistency. And while new ways to more fully reflect their strategy. getting the right system adopted can feel They do this by listening – listening to like an arduous task, the easiest way is to customers, listening to colleagues, listening create a system that feels comfortable and to their competitors and listening to their rewarding to use. markets. They listen and adjust and respond

to changing needs. Every time you listen, Like people, organizations may have an Brand assets should be held online. you learn. outer voice (what we say and do) and inner Interactivity can do the “dull” bit by voice (what we really think). However, the undertaking due diligence and providing So we review the entire process and consider broader the gap between these two voices, policing. Meanwhile, image libraries can hold what changes have taken place and ask the more frustrating the organization is to a selection of approved, on-brand images ourselves the simple question, “What more work in or do business with. Any form of that people can select from so they do the can we do?” frustration – internal or external – is highly “fun” bit. Such systems allow people to use toxic for a brand. It pollutes. It creates their creativity so that they are engaged – apathy, disengagement, and cynicism. So but within a prescriptive environment that it is essential that the brand purpose is as promotes consistency. meaningful, evident, and tangible inside the organization as it is outside. The clarity of the brand purpose is sacrosanct.

Best Global Brands 2008 23 Interbrand’s method for valuing the 2008 Best Global Brands

Criteria for Methodology consideration

Using our database of global brands, The Interbrand method for valuing brands Role of Brand Analysis populated with critical information over is a proven, straightforward, and profound A measure of how the brand influences the past 20 years of valuing brands and formula that examines brands through customer demand at the point of purchase is more than 30 years of consulting with the lens of financial strength, importance applied to the economic earnings to arrive at organizations, Interbrand formed an in driving consumer selection, and the Branded Earnings. initial consideration set. All brands were likelihood of ongoing branded revenue. Our then subject to the following criteria that method evaluates brands much like analysts For this study, industry benchmark narrowed candidates significantly: would value any other asset: on the basis of analysis for the role the brand plays in how much they’re likely to earn in the future. driving customer demand is derived from 01 There must be substantial publicly There are three core components to our Interbrand’s database of more than 5,000 available financial data proprietary method: prior valuations conducted over the course of 20 years. In-house market research is used to 02 The brand must have at least one-third Financial Analysis establish individual brand scores against our of revenues outside of its country-of-origin Our approach to valuation starts by industry benchmarks. forecasting the current and future revenue 03 The brand must be a market-facing specifically attributable to the branded Brand Strength Score brand products. We subtract operating costs from This is a benchmark of the brand’s ability to revenue to calculate branded operating secure ongoing customer demand (loyalty, 04 The Economic Value Added (EVA) must profit. We then apply a charge to the branded repurchase and retention) and thus sustain be positive profit for capital employed. This gives us future earnings, translating branded earnings economic earnings. into net present value. This assessment is a 05 The brand must not have a purely B2B structured way of determining the specific single audience with no wider public profile All financial analysis is based on publicly risk to the strength of the brand. We compare and awareness available company information. Interbrand the brand against common factors of brand culls from a range of analysts’ reports to build strength, such as: market position, customer These criteria exclude brands such as Mars, a consensus estimate for financial reporting. franchise, image, and support. which is privately held, or Walmart, which is not sufficiently global (it does business in some international markets but not under the Walmart brand).

Financial Analysis Brand Value Calculation Forecasted current and future revenue speciﬁcally attributable to the brand

Role of Brand Analysis A measure of how the brand inﬂuences customer demand at the point of Role of purchase Brand Analysis

Brand Strength A benchmark of the brand’s ability to secure ongoing customer demand (loyalty, repurchase, retention). Year � Year � Year � Year � Year �

Brand Strength Analysis BRAND Brand Revenues = Discount Rate VALUE Economic Earnings Brand Earnings

24 Best Global Brands 2008 �� %

�� %

�� % Top risers and fallers

�� %

Best Global Brands 2008 25 Best Global Brands 2008

1 66,667 $m 4 53,086 $m

COCA-COLA. Coca-Cola has once again GE. Few companies are in as strong a retained its status as the world’s most position to push the green agenda as GE. Its valuable brand. Proving that it still has Ecomagination program has been incredibly a few tricks up its sleeve, current trends successful in raising sustainability awareness toward healthier diets have seen Coke shift and has reflected positively on the brand. focus to better-for-you drinks in the last As GE continues to expand internationally it year, with the launch of products like the has a unique opportunity to shape the way vitamin and mineral enriched Diet Coke Plus that businesses all over the world approach and the continued push behind Coke Zero, sustainability and in doing so, can cement its which is now available in more than 80 green credentials. countries. Coke has also worked hard to engage consumers, with innovative online campaigns such as “Design Your Own” that invited people to design their own Coke containers and share them with the world.

2 59,031 $m 5 35,942 $m 6 34,050 $m

IBM. Big Blue’s transformation from PC NOKIA. Despite increased competition TOYOTA. Toyota continues to benefit from vendor to solutions provider continues. from the likes of Apple, Nokia has solidified the “green halo effect” of the Prius, which is Recognizing that we live in an increasingly its position as the #1 mobile phone brand, still widely talked about in the media. Like its connected world, IBM has positioned itself increasing its global market share to sister brand Lexus, Toyota has managed to as the partner of choice for businesses that 38%. The iPhone and the Blackberry have control the perception of its national heritage operate across borders. This position has certainly raised consumer expectations where helpful, but also ply its trade as a truly been solidified through a number of smart of what devices can do, but Nokia has not global brand. strategic acquisitions in recent years. Lenovo’s stood still. It recently launched the E61 in announcement to remove the IBM brand from direct response to the Blackberry and is Toyota continues the ThinkPad range earlier than planned will currently developing the “Nokia Tube”, an create more distance between the IBM name eagerly awaited touch screen device that to benefit from the and PCs in customers’ minds, which in turn will will see it compete head-to-head with the clarify what the new IBM is really all about. iPhone. It’s this spirit of constant innovation, “green halo effect” coupled with an innate ability to segment its customers (be it on an attitudinal, of the Prius. geographical or demographic basis) that’s 3 59,007 $m added to Nokia’s brand value this year. Nokia’s spirit of constant MICROSOFT. Despite maintaining its position as one of the world’s biggest brands, Microsoft has had a slightly rocky year. The innovation, coupled with an new operating system, Vista, was poorly received, not least of all by Intel, which innate ability to segment its refused to install it on its machines due to compatibility issues. The failed takeover of Yahoo! and Bill Gates’ decreasing role piled customers, has added to its further pressure on a brand already struggling to articulate how its offering fits together. Looking ahead, the company is hoping a brand value this year diversification from software into the broader online and entertainment arenas, coupled with a US$300 million advertising campaign starring Jerry Seinfeld, will breathe new life into the brand and pave the way for a brighter future.

26 Best Global Brands 2008 7 31,261 $m 9 29,251 $m

INTEL. Having just announced its most DISNEY. The magic has stalled somewhat profitable quarter ever, Intel is reaping the for Disney, with the brand taking a bit of benefits of continued innovation and a a back seat to those it partners, and its partnership with Apple that has seen it get core target becoming more distant from inside some of the most desirable computers the Disney brand as a result. Still, the of the moment. Going forward the brand phenomenon of High School Musical and its will shift half of its advertising budget to spin-offs is keeping the tills singing around the Internet channel to better target the world, and it’s also bearing rich fruit from technology-savvy consumers who are its partnership with Pixar. As consumers spending more and more time online. upgrade to high-definition TV, Disney should see strong sales of its back-catalogue, offsetting the decline in profitability of theatrical releases. To really advance the McDonald’s brand, it needs to make big inroads with emerging markets, adapting its product to win over a whole new generation of families has never from different cultures. been a brand to sit still.

8 31,049 $m 10 25,590 $m

McDONALD’S. McDonald’s has never been GOOGLE. Google is the undisputed king 2008 25,590 $m 43% a brand to sit still and its ability to adapt to of the internet world and the last year has 2007 17,837 $m consumer needs is almost as fast as its food. seen it gain even more ground against rivals. ||||||| McDonald’s has been addressing the healthy Innovations like Google Mobile, Google Docs & 0 5 10 15 20 25 30 Brand Value $m eating issues that have dogged it in the past. Spreadsheets and Google Book Search extend Its french fries are now trans-fat free, and the brand’s reach and ubiquity and make it an Brand Google its offering of healthier meal options keeps increasingly important part of our everyday Country of origin US increasing. Looking ahead, the chain aims to lives. Yet these projects wouldn’t be possible Sector Internet Services become the #1 destination for chicken and without its core business – 99% of its revenues Brand Value ($m) 25,590 to significantly boost its coffee credentials come from advertising on its search result Rank 2007 20 by introducing 14,000 coffee bars at its US pages. Google’s meteoric rise from small start- Rank 2008 10 outlets. With specialist baristas serving up to corporate behemoth is not without its cappuccinos and lattes at a time when critics. As it becomes more powerful, the brand consumers are less willing to fork out for a is forced to constantly tiptoe around the ever Google is pricey Starbucks, it’s a shrewd move. Further changing landscape of privacy and copyright increasingly tested afield, aggressive expansion in emerging laws. Google is increasingly tested by its markets will see 120 restaurants open in unofficial corporate motto: “Don’t be evil.” by its unofficial China and an innovative series of smaller corporate motto: kiosks sprout up in India. “Don’t be evil.”

Best Global Brands 2008 27 11 25,577 $m 13 23,298 $m 15 21,940 $m

MERCEDES-BENZ. The Mercedes-Benz BMW. BMW reacted to the increased demand AMERICAN EXPRESS. The changing market E320 BLUETEC diesel was voted 2007 World for cleaner cars that are cheaper to run by conditions in the industry have helped AmEx. Green Car by automotive journalists from investing in fuel-efficient engines like its While the competition are busy focusing 22 countries, endorsing the company’s EfficientDynamics system. Currently, 40% of on internal business issues, AmEx is free to environmental credentials. It has also all cars sold have diesel engines. The brand expand market leadership and reorganize benefited from increased demand for is presenting efficiency as its future, with its corporate structure to better service luxury cars in emerging markets. The brand the proviso that driving pleasure won’t be customers. It increased its marketing and recently launched a new visual identity compromised. Increased demand for luxury card-member spend by 20% from the year and slogan (“The Star always shines from in emerging markets and well-built cars that before, and launched new initiatives like the above”). Mercedes appear to be striking a hold their value has played into BMW’s hands. Plum card in the US. The brand furthered powerful balance between tradition and Look out for an emission-free small car in the its aspirational status by investing in big forward thinking. near future. celebrity advertising campaigns in the US and by forming some premium co-brand partnerships in Europe, such as with Harrods and BMW.

12 23,509 $m Louis Vuitton continues

HEWLETT-PACKARD. By putting the to grow in all regions and consumer at the heart of product design, HP has received favorable coverage in all the right places. Never one to go down without behave quite unlike most a fight, the brand has made a concerted effort to boost the design credentials of its products, with a single design philosophy other luxury brands. across the board. By creating a unified look and feel, along with consistent and intuitive interactivity, HP is creating a distinctive presence in the marketplace that will help it compete with its rivals. 14 22,069 $m 16 21,602 $m

GILLETTE. Gillette has maintained its LOUIS VUITTON. Louis Vuitton continues high-profile with the US sponsorship of to grow in all regions and behave quite Major League Baseball and the Gillette unlike most other luxury brands. For the Champions Program, a strong promotional first time, it advertised on television with initiative uniting three major sporting heroes. a travel-themed 90-second spot that was Continued expansion of the Fusion range shot in France, Spain, India, and Japan. An into new markets during 2007 drove sales aggressive expansion plan has seen 22 new and helped solidify the leadership position stores open, including three in new markets, of Gillette in the razors and blades market and the brand has enjoyed significant globally. New lines have helped it consolidate growth in its ready-to-wear footwear, its positioning as “the best for men,” while watches, and accessories collections. the Venus razor has helped it gain big in the female side of the business, too.

28 Best Global Brands 2008 Cisco has invested heavily in researching 19 20,174 $m the needs of businesses and consumers and the CITI. It’s no surprise that the US credit crunch 2008 20,174 $m has left a dent in the brand value of most investment is already 14% 2007 23,443 $m financial services brands, but Citi is one of ||||||| paying dividends. the worst affected. Negative news continues 0 5 10 15 20 25 30 Brand Value $m to plague the brand more than a year after the credit crisis began. It has been one of Brand Citi the more high-profile sufferers, being forced Country of origin US to announce eye-watering losses and cut Sector Financial Services thousands of jobs. New CEO, Vikram Pandit, Brand Value ($m) 20,174 has taken bold steps to refocus the business Rank 2007 11 on its core areas, which has resulted in the Rank 2008 19 closure of many unprofitable branches and the sell-off of some global operations. 17 21,306 $m

CISCO. Cisco has invested heavily in understanding what businesses and consumers need and the investment is starting to pay dividends, taking the brand from strength to strength. The business is positioning itself well for the Web 2.0 revolution and is developing tools to enable businesses to create stronger bonds with their customers. The acquisition of Pure Networks in July 2008 will also help to strengthen Cisco’s networking credentials on the software side.

18 21,300 $m 20 19,079 $m 21 17,689 $m

MARLBORO. With its hands becoming HONDA. Honda has a genuine stance SAMSUNG. Samsung has recently increasingly tied in western countries in the on sustainability, having introduced overtaken Sony as the world’s biggest way it can market its products, Marlboro is environmentally friendly cars early on. Its F1 producer of televisions. Its philosophy of focusing on emerging markets to increase team is, somewhat paradoxically, a showcase bringing people the latest technology at a its market share and position itself as leader for its corporate citizenship program, fair price has quickly made it a firm consumer to stem the growth of rivals. The brand will Earthdreams. But it has failed to leverage favorite, while its phones are now second always be plagued by health concerns, but these credentials as successfully as Toyota only to Nokia. Looking ahead, the brand the successful introduction of Marlboro Suns, has in the media. Inventive marketing, such realizes the importance of having stronger a smokeless tobacco product, and Marlboro as the triumphant live parachute jump representation at the point of sale, so it will Filter Plus, featuring extended filters, shows advertising, has contributed to the goodwill open more Samsung retail outlets to deliver it’s working to reduce the negative health people feel towards the brand. the full brand experience. impacts of its range. Ultimately, the brand may well face decline as a more connected world means that emerging markets may change their cultural views on the effects of smoking quicker than expected.

Best Global Brands 2008 29 Madonna, 22 13,840 $m NEW Kylie Minogue

H&M. Posting strong sales in difficult 2008 13,840 $m and Roberto conditions, the inexpensive, trend-conscious 2007 Swedish brand continues to grow into an ||||Cavalli are industry leader. It is aggressively pursuing 0 5 10 15 Brand Value $m geographic expansion, specifically targeting China, Russia, the Middle East, and Egypt. Brand H&M expanding It has tapped into celebrity culture with Country of origin Sweden collections from Madonna, Kylie Minogue and Sector Apparel the fan base Roberto Cavalli expanding the fan base of the Brand Value ($m) 13,840 brand and legitimizing its status on a world Rank 2007 - of H&M. stage. Innovative channels for connecting Rank 2008 22 with the consumer, such as MySpace and the Sims2 computer game, increase the frequency and depth of engagement.

23 13,831 $m 24 13,724 $m

ORACLE. Through strategic acquisitions, APPLE. Can anything slow the ascent of 2008 13,724 $m 24% including that of Bridgestream Inc, Apple? Its ability to identify new customer Moniforce and, most significantly, BEA needs and deliver products of beautiful 2007 11,037 $m |||| Systems, Oracle has established itself as a simplicity and desirability continue to put 0 5 10 15 leader in middleware (software that connects it in a league of its own. The latest iPods, Brand Value $m components across networks). Its extended iPhone and MacBook Air strike the perfect Brand Apple reach and offering bring customers an all-in- balance between coolness and mass appeal, Country of origin US one service. while the in-store Apple Genius bars shift Sector Consumer Electronics consumer expectations of what after sales Brand Value ($m) 13,724 service should be. Add to that the improved Rank 2007 33 company stance on sustainability and Rank 2008 24 Mr. Jobs and co. really do seem to be ticking all the boxes right now.

30 Best Global Brands 2008 25 13,583 $m 27 13,143 $m 30 12,621 $m

SONY. Despite fierce global competition HSBC. Despite losing billions in the US market UPS. Responding to the downturn in the US in the category, Sony has had a great year, and being one of the fist major banks to suffer economy, UPS expanded its online, supply thanks to the continued success of flagship the effects of the US sub-prime lending crisis, chain, and freight services. International brands, including Bravia, Vaio and Cyber- HSBC has seen strong international growth, markets are playing an increased role, with Shot, while the lower price of the PS3 has with a number of acquisitions under its belt UPS focusing on building strategic assets finally convinced consumers to bite. Sony and an increasing presence in Asia helping to in China and India. The most profitable also won the Blu-Ray versus HD DVD war, stabilize the brand. company in its sector, it is continuing to gain standing the brand in good stead for a ground through aggressive marketing such future share of the high-definition market. as sponsorship of the Beijing Olympics and Sony clearly understands the opportunities some major US ad campaigns. afforded by increased technology 13,055 $m convergence. It unveiled a strategy to deliver 28 movie, TV and gaming content through the PS3 and its Bravia TVs, while in the process, making the most of its vast entertainment 12,228 $m NESCAFÉ. Nescafe has benefitted from the 31 assets in Sony BMG Music and Sony Pictures. increase in demand for premium coffees, with By 2011, it plans to make 90% of its products its “Connoisseur Coffee” range and café style network enabled. coffees performing particularly well. It has SAP. SAP has continued to broaden its offering taken on the role of educating the public on through key acquisitions, most notably that the health benefits of coffee and is beginning of Business Objects. The “Best Run Businesses” to engage and expand its customer base with campaign has been successful in increasing 13,249 $m online media. the familiarity of the brand to different 26 audiences, including small- and medium-sized businesses, which remain a strategic focus. This effort helps position SAP as more than PEPSI. Pepsi is fighting hard. Its online just a software brand and paves the way for activity, content, and promotions are 12,672 $m 29 diversification further down the line. broad and interactive, but focused on a young market with an emphasis on sports promotions and pop music. Like Coke, it has NIKE. Despite increased competition from given consumers a chance to personalize Adidas, Nike remains the world’s #1 sports their own cans. It has even encroached on 11,695 $m brand. Smart partnerships are never far 32 sacred territory by coloring its cans red in away from Nike. It teamed up with Apple support of “Team China” in the year leading to launch an innovative MP3 player/sneaker up to the 2008 Olympic Games. Pepsi’s for runners and it’s making further inroads DELL. Despite sustained growth, Dell’s environmental stance is also increasingly with emerging markets – helped, no doubt, direct sales strategy has been suffering. visible. It launched the “Have We Met Before” by its sponsorship of China in the Beijing The increasing importance of design and campaign, in which it printed messages and Olympics. Along with the successful launch of aesthetic appeal in personal computing facts on cans to educate customers on the women’s innerware, Nike has been expanding means there’s been a greater shift to in-store benefits of recycling and, in March 2008, it its direct-to-consumer business, which it purchase, where customers can see, feel opened the first 100% green sports arena believes will continue to grow. Also online, and try things out before buying. This has in the US. The recent, restricted launch of the brand launched interactive consumer changed the way Dell sells computers. In Pepsi Raw in the UK is the first new product concepts like Nike ID and Nike + , creating an January 2008, it closed 140 retail kiosks that in more than ten years. It’s made from online buzz about the brand and new ways were, in effect, posh PR vehicles that didn’t all-natural ingredients and contains no for fans to interact with it. sell products. To get PCs in front of people, artificial preservatives, colors, flavorings or Dell has partnered big retail brands like sweeteners. It’s a compelling but tentative Walmart in the US, Bic Camera in Japan, and step into the healthier-drinks market. Carphone Warehouse in the UK, which has offered great exposure, but has limited the control Dell has over the way its products are Interactive consumer presented and explained. concepts like Nike ID and Nike + are creating a buzz.

Best Global Brands 2008 31 33 ® 11,438 $m 34 11,399 $m

BUDWEISER. While still the beer of choice MERRILL LYNCH. Merrill Lynch is in the 2008 11,399 $m in the US, the King of Beers needs to ensure unenviable position of being among the 2007 14,343 $m 21% its personality to drinkers shines through worst hit by the credit-crisis. Without a |||| in other countries if it’s to keep its crown. retail side to their business to help support 0 5 10 15 Brand Value $m Non-beer alternatives have gained popularity and balance the business, they’ve been left in recent years, broadening consumer tastes. struggling with the reality of colossal losses. Brand Merrill Lynch Following its recent takeover by InBev, A brand which has traditionally thrived on a Country of origin US the Budweiser brand should prosper given reputation for not being a risk taker, has seen Sector Financial Services its flagship role within such a large its involvement in packaging sub-prime US Brand Value ($m) 11,399 international portfolio and the access it homeowner securities spectacularly backfire. Rank 2007 22 will gain to new markets. Rank 2008 34

35 10,913 $m 36 10,876 $m

IKEA. Ikea continues to focus on global CANON. Traditionally known as a consumer expansion with new stores opening in 11 brand, Canon is not as well positioned as countries. One of the most stable brands some of its rivals to make a real impact on in the world, its products are consistently the business-to-business market despite innovative, stylish, and a great value – an attempts to refocus its activity. Advances unbeatable mix in times like these. Hoping in mobile phone technology continue to appeal to a new demographic of young to threaten sales of digital cameras, as people and to expand its brand recognition consumers are increasingly happy to in new markets, Ikea reached a deal with capture and send pictures via their Electronic Arts to create a special ad-on phones. Canon has done well within the pack for the popular Sims 2 computer game environmental agenda, launching an featuring a wide range of Ikea products to innovative calculator partly made from decorate people’s virtual homes. recycled Canon photocopiers. It has also demonstrated good growth potential in emerging markets. In India, Canon is opening stores targeting both businesses and Innovative, consumers and marketing aggressively to stylish and reposition Canon as a lifestyle brand. great value – 10,773 $m Ikea is an 37

unbeatable mix J.P. MORGAN. Despite having an innovative and more diversified business than many of its direct competitors, JP Morgan has still in times like suffered at the hands of the US credit crunch. Along with a fall in overall performance, these. earnings per share fell 49%. Compared to the competitors, however, JPMorgan was not viewed as carrying as much risk and therefore did not suffer as much damage to its reputation.

32 Best Global Brands 2008 38 10,331 $m 40 8,772 $m

GOLDMAN SACHS. Even Goldman Sachs NINTENDO. In just a few short months, 2008 8,772 $m 13% proved vulnerable to the economic turmoil Nintendo pulled off something the gaming 2007 7,730 $m in the US, especially in credit markets. Its industry had been struggling to do for years – ||| shares were down a significant percentage widen the market. With the phenomenal 0 5 10 Brand Value $m from the previous year and it was forced to success of the Wii and DS consoles, Nintendo write off over $2 billion. Yet, the firm’s ability has fuelled the acceptance of video games Brand Nintendo to manage its risks and still have time for as a form of entertainment for all age groups Country of origin Japan philanthropy has kept it in people’s good and genders, giving the games console Sector Consumer Electronics books. Despite a fall, it has done better a legitimate place in the living room and Brand Value ($m) 8,772 than many of its rivals and has actually people’s hearts. Innovation continues to drive Rank 2007 44 strengthened its brand in relative terms. the brand as new concepts, such as Wii Fit and Rank 2008 40 the Brain Training series, push the boundaries of what video games can be and the ways in which people can engage with them. 39 9,710 $m

KELLOGG’S. The Kellogg’s brand continues to thrive, both in the US and overseas. The greater public awareness of healthy eating has put pressure on some of its higher salt and sugar content products, and the way its In just a few children’s products are marketed. This has been cleverly offset by a big push behind the 41 8,740 $m benefits of its more healthy brands, such as short months Special K. Kellogg’s has vowed to reformulate many of its flagship brands to healthier Nintendo pulled UBS. Overall, UBS was one of the brands hit recipes and meet self-imposed health the hardest by the credit crisis. It suffered standards over the next year and a half. Its off something massive losses on sizeable trading positions healthy agenda was also supported by its in the US and was hurt by the sudden purchase of Bear Naked – the second-biggest the gaming collapse in the US mortgage securitization maker of granola behind Quakers in the US – market. Disagreements on the inside fuelled a brand bursting with health benefits. industry had a new lack of confidence that has damaged a brand that had always been known for its been struggling prudence. Litigation cases in the US have also contributed to reputational damage. Against this backdrop, expansion outside the US to do for years. remained steady, but unspectacular, and UBS still has an over-reliance on partnerships.

42 8,696 $m

MORGAN STANLEY. Morgan Stanley lost a 2008 8,696 $m lot of ground this year and will need to work 2007 10,340 $m 16% hard to reclaim its position. Like many of its |||| competitors, the bank has been involved 0 5 10 15 Brand Value $m in a class-action suit with shareholders outraged by its delay in disclosing the level of Brand Morgan Stanley its exposure to mortgage-backed-securities Country of origin US in the US. Economic crisis aside, the brand is Sector Financial Services attempting to re-build trust by focusing on its Brand Value ($m) 8,696 illustrious heritage. Rank 2007 37 Rank 2008 42

Best Global Brands 2008 33 43 8,325 $m 44 8,313 $m NEW

PHILIPS. Philips has always been well- THOMSON REUTERS. The highly publicized 2008 8,313 $m regarded in the electronics field and is merger and rebranding of Thomson Reuters 2007 leading the way when it comes to has created one of the strongest players in the |||| sustainability. It was awarded the Stars industry, with a big presence in high-growth 0 5 10 15 Brand Value $m of Energy prize in 2008 in recognition regions such as India, China and the Middle of its work in energy preservation. The East. It will take time for the brand to reach Brand Thomson Reuters brand’s products are becoming increasingly its true potential as the group restructures to Country of origin Canada diversified and, after recognizing healthcare become more efficient but, with exciting new Sector Media as a key growth area, it has an innovative services for mobile devices and increasingly Brand Value ($m) 8,313 range of health diagnostic products at intelligent data management, Thomson Rank 2007 - various stages of development. Reuters is shaping up to be one to watch. Rank 2008 44

Gucci has a firm grip on both its brand and the revenues it generates, something that will provide advantage as it enters into emerging markets.

45 8,254 $m 46 7,991 $m 47 7,948 $m

GUCCI. One of the world’s most coveted EBAY. eBay has historically dominated ACCENTURE. As the world’s largest luxury brands, Gucci can’t afford to rest the world of online auctions but there business processing outsourcer, Accenture on its laurels. With an increased brand appear to be changes afoot. Recognizing has benefited from its solid track record communication budget of 41.5% over last that customers (both buyers and sellers) of efficiency as businesses are now more year, the brand has capitalized on its lead increasingly want to be able to trade cautious about how they spend. The brand positioning of creativity, quality, and the without necessarily entering into an auction, is still benefiting from the halo effect of Tiger kudos of being “Made in Italy.” With a retail eBay is encouraging fixed-price listings Woods, its celebrity sponsor, who reinforces network it directly owns and operates, Gucci by making changes to its fee structure. the message that Accenture understands has a firm grip on both its brand and the This demonstrates responsiveness and a what it takes to be “high-performance.” revenues it generates, something that willingness to flex its business model to meet will provide an advantage as it enters into changing needs. However, the move also emerging markets such as India. represents a shift away from its auction roots and makes its offering more closely resemble that of Amazon. International expansion has been good, though eBay is still struggling with the format in China and Japan, being forced to team up with partners with a better understanding of the local markets. Meanwhile, on home turf, its eBay Motors site is gaining momentum, thanks to a big promotional push.

34 Best Global Brands 2008 48 7,943 $m 49 7,896 $m

SIEMENS. Siemens has led the charge in FORD. Despite recent changes to the product 2008 7,896 $m reaching consumers in emerging markets. portfolio, Ford has struggled to convince 2007 8,982 $m 12% With increased investments in infrastructure consumers that it does more than just ||| and services aimed at an older demographic, produce big cars with big engines. This is a 0 5 10 Brand Value $m it has increased demand for its services in problem of momentum – having invested some interesting places. An investment heavily in owning the big-truck space in the Brand Ford in sustainable technologies and energy past, it’s taking time to shift its image. This Country of origin US solutions, along with a willingness to be a isn’t helped by negative media coverage on Sector Automotive spokesman on the subject, is helping frame the company’s performance, undermining Brand Value ($m) 7,896 the brand in a progressive light. However, confidence in the brand with internal Rank 2007 41 a lack of strong brand communications, and external audiences. Ford has started Rank 2008 49 coupled with reputational damage following the change process and is producing a recent corruption scandal have limited smaller vehicles in the US, but needs to brand value growth. communicate with customers and employees to re-establish its reputation.

50 7,609 $m 51 7,508 $m 52 7,193 $m

HARLEY-DAVIDSON. Despite its rich heritage L’ORÉAL. L’Oréal has reinforced its position MTV. As a youth brand, MTV is expected to and cult following, Harley-Davidson saw a as one of the world’s most prominent keep up with the times. In this era of social 9% fall in revenues in the US, suggesting it cosmetics companies by successfully networking and user generated content, is struggling to stay relevant with its home expanding into emerging markets. It it has made the most of online and mobile audience. Things look rosier overseas where has also taken advantage of the growing channels, adapting content to suit these it grew sales by 40% by focusing on non-core demand for male grooming products by audiences and choosing partners that can audiences, such as women and younger using celebrities to endorse the brand. The help it to reach them in new and exciting adults, particularly in Asia. The brand has brand continues to use the slogan “Because ways. But it’s the brand’s activities in enjoyed real equity in the past, but it needs to You’re Worth It” - a consistent message that emerging markets that could reap the biggest find new ways to engage consumers to make helps to reinforce its identity. rewards. An expanded influence in China and sure the same is true of its future. India sits alongside real headway in Arabic markets, as North Africa and the Middle East Harley-Davidson has adopt a more relaxed cultural attitude and enjoyed real equity in music increases in popularity. the past but it needs to find new ways to engage consumers to make sure the same is true of its future.

Best Global Brands 2008 35 53 7,047 $m 57 6,437 $m

VOLKSWAGEN. This was another brand to COLGATE. Colgate’s brand growth this year benefit from the deserved German reputation can be attributed to an increase in advertising for solidity and reliability. VW has moved to spend, resulting in exceptional sales growth. overtly own this territory with the simple, New products have been successfully category-claiming tagline, “Das Auto.” Walter launched, both in the US and internationally. de Silva, the group’s new design chief, set The launches have been supported by threefold goals for the group in an attempt fully integrated campaigns that make the to create a distinctive look for the brand: most of online interactivity to engage with (1) create an identifiable design for each consumers. VW brand; (2) create a unique face for the Golf and build a family of derivatives; and (3) simplify the design of future VW cars. 58 6,434 $m 54 7,022 $m

AIG. The negative press surrounding the US financial services industry, as well as AIG’s infighting and slowness to acknowledge errors publicly, has damaged the brand relative to more agile competition. AIG is on the defensive, with less effort being spent on rebuilding its diminished image and a renewed focus on its balance sheet. AMAZON.COM. The world’s biggest 2008 6,434 $m 19% bookstore gets bigger, largely due to a shift 2007 5,411 $m in focus away from books. Amazon is fast ||| becoming a super-mall, selling everything 0 5 10 Brand Value $m from toys, jewelry, clothes, and electronics 7,001 $m Brand Amazon.com 55 alongside its core offering of books, CDs, DVDs and games. Recent innovations include Country of origin US the Kindle (a wireless e-book reading device), Sector Internet Services AXA. Although its making some strategic Amazon MP3, DRM free music downloads, Brand Value ($m) 6,434 acquisitions in relatively stable emerging Checkout (Amazon’s own online payment Rank 2007 62 markets, AXA has not been immune to system to rival PayPal) and the successful Rank 2008 58 negative market conditions. Market Amazon Prime unlimited free shipping sentiment has dented its share price and service, which encourages repeat custom. a series of blunders led to clients being Behind the scenes Amazon’s web-services reimbursed for poor management of their offering gives 330,000 developers access to accounts, all at a time when consumer trust some of Amazon’s technology in exchange in the US financial sector is at an historic low. for a fee.

56 6,646 $m 59 6,393 $m

HEINZ. With sales struggling, Heinz has XEROX. When it comes to printers and front of mind in business purchase decisions. embarked on an awareness drive, supported photocopiers, the hardware is becoming so And, by refocusing on services like document by some innovative products (it is planning cheap that it’s the cartridges and maintenance outsourcing and office solutions, it’s opening to launch 100 new lines around the world that are most profitable, making the B2B up a whole new market. With its recently this year). The continued success of the market more appealing than the consumer refreshed identity, Xerox is positioned as a brand is driven by growth in emerging market. Xerox has long been associated with modern, dynamic provider that can adapt to markets, particularly in Russia, India, China, the B2B market, so it’s in a great position to be the ever changing office world. Indonesia, and Poland.

36 Best Global Brands 2008 60 6,355 $m 62 5,955 $m

CHANEL. Regarded as one of the world’s ZARA. Having expanded into eight new 2008 5,955 $m 15% most iconic fashion brands, Chanel maintains territories in the last two years, Zara is now 2007 5,165 $m its desirability through classic appeal that is a truly global force, with operations in 72 ||| constantly being reinterpreted for modern countries. It owes its status as the master of 0 5 10 Brand Value $m times. More affordable ranges are offered impulse shopping to its truly original business in limited quantities and, during the fears model. The retail stores are not just the end Brand Zara of recession, Chanel has maintained price of a highly efficient supply chain, they are the Country of origin Spain points and exclusive positioning. Familiarity beginning of the design process. Design input Sector Apparel with the brand is sure to rocket following the comes from market specialists and buyers as Brand Value ($m) 5,955 release of the biopic “Coco avant Chanel.” well as designers, so its fast fashion is directly Rank 2007 64 customer-driven. The weekly rollout of new Rank 2008 62 stock gives people a reason to visit more regularly than most outlets, and the price 6,105 $m point makes spontaneous purchase highly 61 likely. How do you buck a downward trend? Give the people what they want.

WRIGLEY’S. Chewing gum sales may be down in the US, but this has not stopped Wrigley’s from continuing its expansion internationally, including a growing presence in the Chinese market, thanks to specially tailored flavors and packaging. Wrigley’s are working hard to reduce any negative health associations through clever partnerships with organizations like the American Dental 63 5,592 $m 65 5,496 $m Association, which gave the Extra and Orbit brands its seal of approval – the first gums ever to receive the accolade. The NESTLÉ. While increased advertising spend YAHOO! Despite continued innovations, such recent acquisition by Mars should provide has helped keep Nestlé relevant in established as Yahoo Mobile, and its dominance in many Wrigley’s with greater resources to further markets, it’s geographic expansion and an markets, the brand has suffered at the hands build their brand. expanding product range that keep the brand of a failed takeover by Microsoft. Ironically, growing. With such an extensive offering it’s by declaring that the offer “undervalued” the inevitable that negative news stories and brand, its rejection has resulted in lawsuits, health scares will never be far away, and this management shake-ups, and strategic Yahoo! suffers year it’s the presence of potentially harmful activities that have subsequently reduced its Bisphenol A in baby formula cans that made perceived value and angered shareholders. at the hands of the headlines. a failed takeover by Microsoft. 64 5,582 $m 66 5,408 $m

KFC. Dogged by the poor health perceptions DANONE. Danone has joined the barrage of of fried foods, the brand is taking strides to western brands making inroads in Asia and become more health conscious by piloting has successfully introduced a wide range grilled chicken in selected US markets. of products in new markets. Following a KFC is also trying to appeal to diners for prolonged restructuring of the business, breakfast and lunch, as well as dinner, a new focus on health products is bearing with portable options catering to those fruit as Danone reorganizes its offerings to mealtimes. Like many of the brands in this cater to health-conscious consumers and year’s ranking, KFC is expanding by looking shareholders. to emerging markets to back up flagging domestic sales, and is adjusting its menu to suit. In China, for example, diners can enjoy fried dough and preserved egg porridge along with their chicken.

Best Global Brands 2008 37 The secret to Rolex’s 5,407 $m success has been a 4,956 $m 67 long-term view on 71 its relationship with AUDI. Audi has shown the biggest gains in consumers, focusing ROLEX. Rolex is the world’s biggest luxury the sector by focusing on good, sustainable, watch brand. The secret to its success has recognizable design and smart positioning. on performance and been a long-term view on its relationship It has focused heavily on engine efficiency and continuity. with consumers, focusing on performance emphasized the diesel range. A reputation and continuity – something demonstrated for reliability plays well to a market looking by the great value collectors put on vintage for vehicles that hold value, and it has Rolex watches. Recent investments follow made considerable advances in aligning the 5,264 $m this strategy, with enhanced after-sales range under a consistent design philosophy. 69 services and distribution benefiting from In emerging territories like India, where increased spending. it began production this year, Audi has positioned itself well for the growing high- AVON. While valiantly trying to crack new end luxury market. markets, Avon’s real success has been in its traditional heartland. Although progress has been slow in the Far East and Latin America, a global rebranding campaign featuring Reese Witherspoon has raised its profile. 72 4,846 $m 68 5,288 $m

HYUNDAI. Korea’s national brand CATERPILLAR. Caterpillar has been one 5,072 $m champion (and the world’s 6th-biggest of the major beneficiaries of the rapid 70 car manufacturer) now adds, as standard growth of emerging markets. As the world’s equipment, many of the advanced features largest maker of construction and mining of its higher-priced rivals – from both western ADIDAS. The constant evolution and re- equipment, diesel and natural gas engines and eastern sides of the globe. Paralleling investment in its brand has helped Adidas and industrial gas turbines, it is in an enviable Toyota’s Lexus, Hyundai has launched an become one of the leaders in the industry, position as these new markets expand at an upmarket prestige car brand under the second only to Nike. The acquisition of extraordinary rate. From a brand-building name Genesis, using the Super Bowl football Reebok and some well-chosen sponsorships point of view, its sponsorship of NASCAR in broadcast – the world’s most expensive have kept it in the headlines and, more the US and a strong citizenship approach has commercial air time – to publicize the new importantly, on the shirts and sneakers of helped soften its image. range and, along with a refined digital some of the world’s biggest sporting heroes. strategy, to promote the Hyundai brand in The tagline “Impossible is Nothing,” much like the US. As fuel prices soar, environmental “Just Do It,” enables it to talk to consumers concerns increase, and the economy shows both inside and outside the sporting world, signs of weakness, it is the smaller, cheaper, broadening its appeal as a sporty fashion more efficient, far eastern manufacturers like brand with attitude. Hyundai that stand to benefit.

73 4,802 $m NEW

BLACKBERRY. It was only a matter of time the move. The only cloud on the horizon for 2008 4,802 $m before the brand, ubiquitous with corporate BlackBerry could be the threat of Apple’s users, reached out to a wider consumer base iPhone as the ultimate business phone. But 2007 |||||| and hit the big time. By concentrating more with a raft of new 3G products of its own in 0 1 2 3 4 5 on style and introducing pocket-friendly the pipeline, such as the Bold, a flip-phone, Brand Value $m models like the Pearl and Curve, the brand and BlackBerry’s first touch-screen model – Brand Blackberry now appeals to an audience eager to embrace the Thunder – the world’s addiction to the Country of origin Canada smarter phones with internet and email on nifty little devices looks set to continue. Sector Consumer Electronics Brand Value ($m) 4,802 Rank 2007 - Rank 2008 73

38 Best Global Brands 2008 74 4,636 $m 77 4,357 $m

KLEENEX. Saddled with a brand name that’s GAP. When it comes to fashion retailing, 2008 4,357 $m in danger of being seen as a generic descriptor the middle ground has always been a 2007 5,481 $m 20% like Rollerblades or Walkman, Kleenex is once battleground, and lately you’d be forgiven |||||| again trying to build equity in its brand name. for thinking that GAP has been on the losing 0 2 4 6 8 10 Brand Value $m Sponsorship of the Beijing Olympics gives side. Despite a slow increase in profits, thanks a relevant (yet expensive) tie-in for award- largely to cost-cutting, worldwide sales are in Brand Gap winning tear-jerkers that work nicely with its decline as budget-conscious consumers trade Country of origin US emotional “let it out” campaign. down or are lured away by more appealing Sector Apparel competitors. Gap’s brand reputation has Brand Value ($m) 4,357 suffered through child labor issues in India Rank 2007 61 and turning things around could take more Rank 2008 77 than just boosting its online offering. 75 4,603 $m When it comes to fashion retailing, PORSCHE. Porsche has grown strongly in emerging markets like the Middle East, the middle ground has always been Russia, India, and China, where there is a a battleground. growing demand for conspicuous status symbols with heritage. By broadening its product range with models like the Cayenne, Porsche has managed to appeal to a broader demographic, shedding the stigma of being an ’80s Yuppie plaything, and has adopted a more grown-up, family-friendly persona. The build quality means they hold their value well, which is particularly positive in the current climate.

76 4,575 $m 78 4,281 $m 79 4,236 $m

HERMÈS. One of the most exclusive and PANASONIC. With a strong line-up of CARTIER. Performing exceptionally well in prestigious fashion houses in the world products, Panasonic has made strides jewelry and watches, Cartier is now looking continues to pursue a strategy of creativity, internationally and the brand has been to China to boost revenues, growing the quality, know-how, and artisan spirit. A helped by unifying all markets under the number of outlets to capitalize on the strong strategic refocus on geographic expansion Panasonic brand name, replacing the historic demand from the Asian market. Looking has seen inroads in India and China and Matsushita Electric Industrial Co. and ahead, the resilient nature of high-end the high-profile opening of a store on Wall National brand names in its native Japan. consumers leaves Cartier in a strong position, Street – one of 40 planned in 2008. Once again it was a top sponsor of the even against the backdrop of the current Olympics this year, putting its name in front economic climate. of the world. Panasonic’s Lumix camera and Viera television brand continue to do well and it’s benefiting from some wise industrial partnerships, particularly in the LCD arena. Taking a slightly different track to its rival Sony, Panasonic is continuing investment in the white goods sector, a profitable category ignored by its rival.

Best Global Brands 2008 39 80 4,208 $m 83 3,951 $m 86 3,768 $m

TIFFANY & CO. Tiffany & Co.’s consistent MOET & CHANDON. Still mopping up ING. ING has continued to differentiate brand strategy and focus on the customer after years of worldwide prosperity, Moet itself in the marketplace, emphasizing its experience ensure that, regardless of & Chandon have continued to display reputation of being “easy to work with.” While economic conditions, people will always find strength and confidence in its brand by the bank has been hit by the US financial a little sparkle when they walk through the increasing its price, in spite of changing crisis, it has not been effected as dramatically doors. That said, a positioning of “affordable economic conditions. Where it has been most as some others within the industry. ING luxury” may leave the brand exposed if successful is in continuing to transform the has continued to build awareness through mainstream consumers continue to cut back category from being seen as something for advertising and its sponsorship of the on luxury spending while highly affluent a seasonal treat to an all year round drinking Renault Formula One racing team. consumers stay loyal to the ultra-premium choice that is short-hand for “being fabulous.” end of the market. It will be interesting to see As emerging markets continue to get a taste how consumers react to the new “Collections” for the good life, this strategy will stand them store format. in good stead for years to come. 87 3,721 $m

4,097 $m 3,911 $m MOTOROLA. Motorola has lost its 81 84 category leadership position. Through a lack of innovation and growth into new segments, the brand is in serious decline. PIZZA HUT. Squeezed by the desire for BP. Following a couple of nightmarish years, While innovative new products from Apple, healthier eating, but from a cost-conscious BP is still trying to restore the value of its Samsung, Nokia, and BlackBerry tap into consumer, Pizza Hut has worked hard to brand to 2006 levels. Revenue has been fast-changing consumer needs, Motorola deliver affordable healthier options, such as boosted by record oil prices, but its reputa- has been left behind and has seen its 2007 “The Natural” pizza, to try and stay relevant. tion has been tarnished further by problems self-claimed 14% market share erode further. In the US, its new Bistro concept tries to and incidents in Alaska and Texas City, while With the business due to be split into two attract a broader customer base, by marrying instability in its Russian TNK-BP venture divisions, time will tell if the changes can the restaurant’s traditional pizza and chicken threatens to cause more harm. On a more lead to a sharper focus. wing menu with more upscale items, such positive note, BP is now seen as a leader in as Chicken Florentine and Sausage and working towards greener energy. Its Pepper Rustica. Convenience has always investments in sustainable energy sources been key in the pizza business and Pizza Hut work to reduce exposure to the price of oil has rolled out a mobile ordering system that and the ultimate threat of its exhaustion. 3,682 $m uses the latest technology to bring pizzas to 88 people’s doors. However, despite all of these innovations, Pizza Hut faces flat sales in core markets and, like other chains, is looking to DURACELL. The Duracell bunny just keeps 3,879 $m China and India for sustained growth. 85 on going, albeit without spectacular ascent. With many gadgets now favoring rechargeable lithium batteries, you’d be forgiven for thinking the market is shrinking. STARBUCKS. Despite a challenging year But driven by demand in developing for the business, Starbucks has focused its markets, particularly in Latin America, where 4,033 $m energies on rebuilding the brand. As the credit 82 distribution has been vastly increased, the crunch bites, consumers are less willing to pay brand has built on the gains made last year. a premium for what has effectively become a daily staple. The success of Starbucks has made ALLIANZ. Thanks to a more conservative other outlets up their game, with brands like approach, Allianz has significantly improved McDonald’s offering coffee arguably as good its position over the competition since the US for a fraction of the price. In the US, Starbucks credit crunch. The brand is strong on ethics is cutting costs through layoffs and shutting and honesty, and along with the prudent down 600 under-performing shops. It’s a story approach, this has been reinforced by the repeated in Australia, where 61 of its 85 stores fact that they contact all customers over were closed as the brand offered no real benefit the age of 74 to make sure they understand over local coffee houses. Despite its problems, the products they hold. In terms of growth, Starbucks is fighting back by focusing on the inroads in Scandinavia, Slovenia and Japan experience of its outlets, exploring music and began to pay off. entertainment initiatives, and improving service by retraining baristas and engaging them with the brand.

40 Best Global Brands 2008 The continued 89 3,590 $m 92 3,582 $m emphasis of family and ethical values SMIRNOFF. Smirnoff has continued to be JOHNSON & JOHNSON. The continued the worldwide vodka of choice, with sales emphasis of family and ethical values has helped the steadily growing in all markets, particularly has helped the Johnson & Johnson brand the US. The launch of Smirnoff Ice Light is maintain a place in people’s hearts, with a Johnson & Johnson appealing to a more health-conscious female wide range of products and partnerships market and builds on the success of its vodka- doing the balance sheet no harm either. brand maintain a based alcopops range. The brand has been With the acquisition of Pfizer, the brand has engaging with consumers in new ways of become a worldwide force, which may, in place in people’s late, making the most of interactive media time, stretch the perception of it being a such as blogs and video to appeal to younger family company. hearts. drinkers, and building up a long list of action- movies where its products have been placed. 93 3,527 $m NEW 90 3,588 $m FERRARI. Ferrari has always been a highly 2008 3,527 $m desirable brand, but this year sees it break 2007

LEXUS. Clever marketing in the US has into the list for the first time. Increasing |||||| maintained the perception that Lexus is an global prosperity over the last decade has 0 1 2 3 4 5 Brand Value $m American brand, rather than Japanese. This made the brand increasingly attainable. is vital in a country where people prefer to Ferrari has managed the growth well by Brand Ferrari buy home grown products. Elsewhere, the limiting production and maintaining a sense Country of origin Italy brand is seen as less exciting and sporty than of exclusivity to the brand. Despite a fall Sector Automotive its nearest rivals, BMW and Mercedes, but in the value of the US dollar, (which made Brand Value ($m) 3,527 this hasn’t stopped its growth. It has invested the car relatively more expensive in one of Rank 2007 - heavily in hybrid cars with its sister brand Ferrari’s key markets), the brand achieved Rank 2008 93 Toyota. This makes it an increasingly popular record-breaking sales last year. This was choice in places like London where this supported by huge growth in emerging technology is exempt from the Congestion markets where the brand is increasingly Fuelled by strong Charge tax. bought as a status symbol. sales in emerging markets where the brand is increasingly 91 3,585 $m bought as a status symbol. PRADA. Prada has been the top spender on marketing and advertising among the luxury global brands. With the Chinese market expected to account for 10% of global sales by 2010, the region has been a key focus for development. The Prada phone, developed in conjunction with LG, was well received and helped the brand to reach new audiences.

Best Global Brands 2008 41 94 3,526 $m NEW

ARMANI. As one of the world’s most 2008 3,526 $m dynamic fashion brands, Armani has a long track record of promoting the luxury Italian 2007

|||||| lifestyle. But recent investments in new 0 1 2 3 4 5 categories have helped the brand reach out Brand Value $m to new audiences. The Armani brand now Brand Armani stretches into areas as diverse as fragrance Country of origin Italy (Armani Code), home furnishings (Armani Sector Luxury Casa), technology (co-branding with Brand Value ($m) 3,526 Samsung) and hotels (the first Armani hotel Rank 2007 - opened in 2008 in Dubai). Rank 2008 94

Armani reaches out to new 96 3,502 $m NEW audiences through

MARRIOTT. With a classic approach to 2008 3,502 $m the brand. hospitality, Marriott has seen its focus on availability and assurance of service 2007 |||||| and quality pay dividends. By asserting 0 1 2 3 4 5 Brand Value $m itself as a class above competitors and 3,513 $m continuing efforts to enhance its image Brand Marriott 95 among frequent business travellers, it Country of origin US has demonstrated a strong grasp of the Sector Hospitality industry. It has also generated positive Brand Value ($m) 3,502 HENNESSY. While emerging markets like press for its long-standing sustainability Rank 2007 - China and Russia fuel growth, the Hennessy initiatives, including efforts to significantly Rank 2008 96 brand is in decline in the US as consumers reduce energy and carbon emissions across switch to alternatives like whisky and its network. As the brand embarks on an other spirits. Recently the brand has tried ambitious project to roll out a series of to reinforce its brand message with an boutique hotels under the brand “Edition,” advertising campaign built on its values of its place as a leading hospitality brand “heritage” and “authenticity.” looks assured.

97 3,471 $m

SHELL. Despite the problems affecting the industry, Shell has continued to bolster its strength internationally. It is one of the most recognizable petroleum brands in the world, with a presence in 110 countries and a reputation for being a good employer. Shell believes so strongly in its business principles that its set up a whistle-blowing website for employees worldwide to report any violations they come across and, like its peers, it is investing heavily in alternative energy sources.

42 Best Global Brands 2008 98 3,401 $m 99 3,359 $m NEW

NIVEA. Already a leader in skin care, it’s the FEDEX. Despite a downturn in the US 2008 3,359 $m expansion into areas such as hair care that’s market, FedEx is benefitting from the helping the brand build on its success in the last growth in global trade and has continued to 2007

|||||| few years. Nivea has demonstrated an ability strengthen its brand in emerging markets. 0 1 2 3 4 5 to adapt to customer needs and tailor products Awareness has been raised after heavy Brand Value $m for the Asian and Latin American markets. The investment in sponsorship and advertising, Brand FedEx “Beauty is” advertising campaign has resonated including a campaign for the rebranded Country of origin US well around the world, presenting beauty Kinko’s, which is now called FedEx Office. Sector Transportation as something that is within everybody and Brand Value ($m) 3,359 challenging traditional stereotypes of what Rank 2007 - is considered beautiful. Rank 2008 99

The FedEx brand spread its wings and has compensated for the downturn in its home market.

100 3,338 $m NEW

VISA. Ironically, considering its position 2008 3,338 $m as the world’s #1 credit card brand, Visa has barely been affected by the US credit 2007 |||||| crunch. Unlike the lenders whose cards carry 0 1 2 3 4 5 its brand name, Visa carries no consumer Brand Value $m debt. Instead it makes money from Brand Visa transaction fees, which have been increasing Country of origin US steadily over the years. The brand’s global Sector Financial Services nature makes it the perfect sponsor for Brand Value ($m) 3,338 international sporting events such as the Rank 2007 - Beijing Olympics, beaming its brand name Rank 2008 100 into the homes of millions of people the world over, many of whom may be taking their first steps with credit.

Best Global Brands 2008 43 Industry insights

of the brand. We’re seeing more emphasis on

product support. Customers perceive value Computer software Computer hardware in having a person on hand to help them with any difficulties, even if they don’t end Bill bows out Box clever up soliciting their help. The emphasis is on dialogue and relationships, and the personal touch, are great drivers of loyalty. While Dell’s move will give them tangible retail presence, it remains to be seen whether people feel there is the expertise to match the scale. It has been a case of the rich get richer This year sees the continued march of again this year. The industry is totally computer hardware into the mainstream. dominated by the three major enterprise Whoever said “the geek shall inherit the software giants, Microsoft, Oracle, and Earth” was spot on. Technology is not only Computer services SAP, which continued to grow in brand cool these days, it’s part of the furniture. value. The competition is not even This ongoing shift from unsightly, Man and machine remotely close to their level. This gap is confusing, generic boxes to ubiquitous, maintained by the big three continuing enabling, lifestyle accessories brings to use acquisition as a consistent certain expectations in terms of design, growth strategy, staying current with price, distribution, and support. The brands technologies, and keeping strong, that have a vision of the near-future diversified brands. The prominence of drivers of demand and capture it are the The US-dominated sector has grown acquisition over organic growth is cause for ones moving ahead of the pack. steadily in brand value this year. It’s no concern among industry watchdogs who surprise, given the value of contracts and wonder whether diversity and expertise Product design is an obvious battleground. the long-term impact of IT investments, are sustainable in such a climate. Apple, which has grown beyond this sector that B2B customers go for trusted brands, and now sits comfortably in consumer especially in uncertain times. Reliability, Despite remaining the biggest brand by electronics, is the incumbent beauty queen accountability and products that last are value in the sector, Microsoft has had a here. But Dell’s recent launch of a bamboo- what count here. For companies who rely tough year. The retirement of Bill Gates leaves cased computer suggests the sector is on technology to compete and connect the company without its talisman. It was reacting to demand for more visually pleasing with customers, it can be less a question of particularly scarred by the failure to acquire products. Consumers expect both form and whether they can afford to, and more of a Yahoo!, and signs point to installed software function now. We’ve seen co-branded laptops question whether they can affordnot to. losing relevance as SAAS gains traction, from Acer and Ferrari, and HP partnering which presents a threat to its traditional with Microsoft in a move to bolster search We’re talking service, so the human touch is core revenue model. credentials that may prove beneficial for both a massive factor in this industry. This is most parties. Maintaining a pipeline of products evident in customer relations and attracting The face of software companies is increas- with a distinctive aesthetic will separate the talent. Companies want answers to business ingly benefit-focused as communications contenders from the pretenders. needs, and this requires both man and emphasize the human element of the brand. machine. IBM has engaged in advertising This is largely thanks to mass media advertis- Sustainability is high on the agenda too. designed to make the brand meaningful to ing, especially in airports and transportation Consumers are looking for energy efficiency, those outside the tech community. This has locations, focusing on the tangible and and are increasingly savvy about the bridged the gap that remained after they intangible results companies can achieve manufacture and afterlife of hardware. divested their broadly appealing ThinkPad through these products and services. As technology evolves ever quicker, there is a product line to Lenovo. Traditional ad campaigns aimed at small busi- growing requirement to recycle components ness owners represent an emerging touch- and build green credentials into the processes A brand that appeals to prospective point in the sector. as well as the end products. This is a long- customers and employees alike is a must. term game, and an opportunity for brands Accenture’s continued Tiger Woods co- In promoting ease of use, productivity, and to attract new customers. Maintaining branding/endorsement indicates the friendly interfaces, software brands are creat- broad product portfolios, investing in importance of emotional attachment in a ing new drivers of demand. Companies seek research, and diversifying geographically sphere that has traditionally lacked it. He’s to provide function and service, and court are emerging as tactics to clean up on green. shown the ability to triumph over adversity their audiences with promises of profitability Virtualization is also a huge opportunity for and the frailty of one-man brands this year. and additional services waiting in the wings. IT to help people to live more sustainably, bringing people together without the need Despite all this, consumers remain intimi- for physical transport. dated by the software industry, viewing its products as necessities rather than desirable Where you sell your products has become package components. Still, a familiar name more important this year. Apple’s highly or offering makes a dramatic difference to the controlled branded retail environments are consumer feeling safe and comfortable. If you in stark contrast to Dell’s arrangement with don’t understand, go with a brand. Walmart, intended to increase the exposure

44 Best Global Brands 2008 Whoever said “the geek shall inherit the earth” was spot on – technology is not only cool these days, it’s part of the furniture.

Best Global Brands 2008 45

Consumer electronics Internet services Transportation Beautiful features Combine and conquer? An industry on the move

Prettier, better, and cheaper seems to be This sector saw the biggest average Change is this year’s dominant theme the order of the day. Design has become growth in brand value, reflecting the in transportation. Although customer increasingly important as a driver of pervasive influence of the internet on demand is growing – particularly for trans- choice. In fact, people now view aesthetic everyday life, and easier access from national services – the economic slowdown appeal as a given when buying electronic multiple platforms. One industry theme has made business difficult. So brands are goods. If it isn’t sleek and stunning, it that won’t go away is the difficulty searching for new ways to connect with doesn’t sell. Some brands have learned companies are having in monetizing the consumers and raise awareness. this the hard way. huge user bases they attract. This has led to accusations of inflated valuations and Three major approaches to brand The battle of beauty has spilled beyond fears of another dot-com bubble. management have evolved. Cooperation product design onto the shelves, as brands between competitors has benefited some, ramp up point of sale to be the fairest of Too many companies are too heavily such as DHL and UPS in air transportation. them all. We’re seeing FMCG-style brand reliant on advertising, so the big brands are Sponsorship of key events has opened up management driving choice in the form expanding their offerings to try and spread a broader customer base for others. UPS of sophisticated in-store collateral and risk and increase reward. Google is engaging is hoping its official status as logistic and retailer strategies. in retail with its increasingly popular online express delivery sponsor of the 2008 Beijing tools, like Google Docs, which encroach on Olympics will dovetail nicely with its strategic Convergence continues and in the home, Microsoft territory. Why pay for something focus on building assets in China. And there’s the television remains the icon we arrange when you can get it free? been more aggressive advertising both online our furniture around. It’s fast becoming the and offline – especially by UPS – as a way of hub for internet access as well as more Self-styled “Senior Maverick” at Wired changing brand perceptions. traditional entertainment, retaining magazine, Kevin Kelly, astutely points out that, relevance through innovation. “When copies are free, you need to sell things Businesses in this sector are looking to that cannot be copied.” One key quality that newer forms of relationship-building. Many BlackBerry enters the ranking for the first can’t be copied is trust. This is where brand and companies have posted short films online time this year. Having built a solid base of reputation are at their most influential, and to give consumers greater insight into their business users, it has moved to broaden the reason why the likes of Google have the brands, while others, such as UPS, have its appeal by emphasizing the lifestyle license to expand their offerings. created charitable foundations in a bid to features of its products. Apple’s iPhone was a enhance their reputation. significant launch and, after first-generation This is an extremely fluid sector, with fast reticence from consumers, the combination waxing and waning of popularity and of looks and functionality is proving a hit with relevance. The decline of AOL is already old the faithful. Motorola has struggled to shine news – a stark warning against complacency in the face of stiff competition. to any seemingly unassailable brand. With the stakes so high, it’s no wonder there are rumors of enormous mergers like Yahoo! and Microsoft abounding.

For an industry based on innovations and exceptional technologies, brands have been slow to address sustainability issues. Harper’s Magazine (March 2008) suggest that the energy usage of data centers is extremely large and problematic. Google appears to be leading the industry in sustainability, investing in clean energy with plans to be carbon neutral by the end of 2008. Amazon.com (despite being named after a rainforest) and Yahoo! appear to have no official green policy. Google has announced a new green building but, overall, the industry is unimpressive in this regard.

46 Best Global Brands 2008

Automotive Anyone looking for a case Keen to be seen as green study on complex global socio-economic forces

Anyone looking for a case study on should look no further than complex global socio-economic forces should look no further than the automotive industry. With fears of the automotive industry. recession, environmental pressures, rising affluence in developing markets, and a multitude of variables to be fine- tuned in different regions, it’s difficult to know where to begin.

Production of many passenger cars, light trucks and SUVs exceeded demand. This was especially pronounced in North America and Europe, the main revenue and profit centers. Excess capacity, coupled with a proliferation of new products being introduced in key segments, will continue to keep pressure on manufacturers’ ability to increase prices on their products. This could be offset, at least in part, by the long-term trend of consumers purchasing higher-end vehicles with more features. In the US, for example, consumers in the highest income brackets are buying upscale and more frequently. However, for the mass market, choice is increasingly driven by more practical considerations such as fuel efficiency, reliability and residual value.

Emerging markets will be the major growth center for at least the next decade. Established global brands face a choice: they either have to position themselves for the rising middle class looking to trade up, or for the low-cost mass market where they’d have to contend with the likes of the “one lakh” Tata. In addition to transport for all, the trend for democratized luxury will see more comfort for less money. Look out for Hyundai’s affordable luxury car launch.

Soaring oil prices combined with inefficient in environmentally friendly technologies, Volume brands have tailored models to engines have hit consumers hard. The result is improving efficiency (e.g., BMW market needs, while premium brands like a renaissance of the small car. Global demand EfficientDynamics and Mercedes BlueTec) Audi have opened flagship showrooms, is expected to grow 30% to 27 million units by and reducing or eliminating emissions using architecture and experiences to 2013. BMW and Nissan are set to enter the (e.g., Nissan electric concept). Perception is communicate brand values. We’re seeing market with emission-free models. everything though, and manufacturers are more integrated marketing campaigns, falling over one another to be seen as green. opening dialogs with customers, and making Sustainability looms large; no surprise use of Web 2.0. Expect no mercy in this war there. SUVs will take some of the hit for The successful brands are managing on many fronts. the perception of vehicles as arch-polluters. perceptions actively through touchpoints This is compounded by global oil prices, and and design. Almost every manufacturer has demand is expected to fall by 4% in the next worked on product design, strengthening five years. Chrysler, GM, and Ford look set to identity with common design attributes suffer most. The industry is investing heavily throughout ranges, and attention to detail.

Best Global Brands 2008 47

Sporting goods Apparel Luxury Searching for a winning Rags and riches Substance beneath streak the status

“Faster, higher, stronger” aren’t just ideals The struggling economy has hit clothing During times of economic anxiety, product pursued by athletes. The sporting goods brands hard. In 2007, just 3.5% of personal quality and service are the two values that brands behind them would no doubt love consumption expenditure was on apparel consumers just aren’t willing to trade off, to see similar market conditions. Key and footwear, the lowest proportion in 30 according to a Yankelovich study. These US sales and margins have come under years. With less money around, brands are rank well ahead of novelty and indulgence, intense pressure, and the industry is having to fight hard to stay relevant and as people look for something solid amidst suffering. Overall demand in the market appealing to consumers. all the uncertainty. Luxury customers are is down as consumers continue to spend no different; the brands that look to have with care. Manufacturers have responded by divesting the most opulent futures are ones that under-performing brands and focusing on have retained a very precise focus on these Leading brands will hope that the stars better-performing brands. Partnerships with two aspects of their brand promise. made at the Beijing Olympics will present celebrities and famous designers have helped rewarding sponsorship opportunities even successful brands differentiate themselves In terms of product quality, consumers today after the Games are finished. But while those from the competition and justify higher appear to be making purchases that are might prove useful to pique interest in the mark-ups with fewer markdowns. defensible in some way – there has to be real short term, they’re unlikely to turn around substance beneath the status. This is true flagging sales in the long term. However, Retailers are offering more “shop-in-shops” across the board, even with the super-rich. Adidas will expect its official status as an where floor space is dedicated to individual Brands like Hermès, Prada, and Rolex are Olympic Games Partner to pay significant displays of specific brands with distinctive doing well because the continuity of their dividends. Coupled with its partnership with signage and fixtures. This creates the designs makes their products appear to be the NBA, the brand hopes to re-ignite its atmosphere of a specialty store with purchases that will last. Brands like Gucci and performance in the US, in particular. focused expertise. Louis Vuitton stress innovation (noteworthy innovation, not just novelty) to a greater Product and customer experience innovation As business becomes more and more global, degree, which is another way of providing look more promising. The leading brands we’re seeing brands traveling more to substance to their product offering. Although have all invested in new retail concepts in an mitigate the impact of difficult times. Luxury this is a riskier approach, these brands effort to reinvent the customer experience brands are looking to capitalize on the have been able to mitigate and keep loyalty strong. Building on the rising affluence in Asia, and foreign this risk through skilled success of interactive product concepts, fast fashion retailers are scaling management of their such as Nike ID and Nike+, Nike has shown up their presence in the US. product portfolios. again that it is in touch with its customers by Despite the general mood of introducing women’s innerwear. gloom – Gap’s brand value Service is even has fallen 20% and Levi’s has harder for dropped out of the top 100 consumers – some apparel brands like to trade off Zara and H&M are thriving than product by having streamlined quality. Luxury operations and a truly customers differentiated expect proposition.

48 Best Global Brands 2008 immersive experiences. Tiffany & Co. is a to recession fears and rising oil prices – good example of a brand that is faltering especially in the US and Western Europe. So somewhat as a result of its loss of focus on it is more important than ever for hotels to Restaurants service. By trying to serve different tiers of ensure their brand has a clear proposition customer in the same location (something that matches consumer expectations. A Better for everyone? that no luxury brand has really succeeded surplus of rooms across the sector makes in doing), it has tarnished the captivating brand the critical factor in driving choice. experience from its consumers’ perspective. On the other hand, Rolex has supported The green issue is another hot topic. But the continued appeal of its product with the winners in this year’s ranking have investment in after-sale services that extend moved beyond encouraging guests to re-use Healthy eating is the dominant theme in the relationship with the customer and towels and to reduce their use of water and the restaurant sector. No surprise here, enhance interactions with the brand. energy. Marriott’s microturbine farm in New but we’re not just talking about concerns York catches the eye – it’s the first hotel in over obesity in Europe and North America. This extends to personalization too; people’s Manhattan to use ultra clean technology Restaurants are diversifying menus willingness to pay top dollar comes with an to provide its own electricity, cooling, and to attract customers with improved expectation that special efforts will be made heating on site. nutrition and reduced fat content. to accommodate them. This makes investing And many governments are introducing in employee management, examining new legislation relating to health issues, the brand’s promise in a service context in such as a ban on trans-fat. excruciating detail, and training employees Food to deliver accordingly, all vitally important. Sourcing natural ingredients has been an While positive service experiences are often Health, wealth and obvious response to demands for healthier attributed to the particular service person packaging meals. It seems inevitable the sector will turn involved, negative experiences are most often green sooner rather than later. Diners are attributed to the brand. Get all of this right, increasingly concerned about the environ- and you can charge what you like. mental impact of eating out, and the growing trend to support local farmers, manufacturers, and restaurants looks set to continue.

Brand owners will have to manage their sus- The “perfect storm” of rising oil prices, tainability credentials increasingly carefully. Hospitality economic decline, and pressure on land through increased population and Combined = more In the race to respond to changing consumer affluence has put serious price pressure lifestyles, the big brands are exploring a individual? on food companies. The heightened cost variety of options. We’ve seen a rapid rise in of commodities has been passed on to the fast-casual segment. “To go” options from consumers in an attempt to stay profitable. casual dining restaurants present one of the To justify the hike, larger brands are seeking fastest growing segments in the US, eating innovative ways to keep their products into market share from fast food brands. relevant and available. New packaging Grocery chains and even convenience stores There’s nothing new about guests looking choices and brand extensions, new are offering meal replacement options with for hotels with a distinctly individual feel. distribution channels, acquisitions food cooked in store. But we’re seeing new approaches from to increase product access, and hotel operators and developers anxious partnerships to get the products onto McDonald’s is poised to stretch its brand and to meet the needs of demanding, well- the shelves have all enabled brands to introduce premium coffee bars with lower heeled consumers. get in front of all consumers. price points across the US, an interesting move given predictions of a production deficit Partnership with big name fashion icons In response, consumers are being more in global coffee markets and increasing prices is the current favorite. We’ve known about selective with their spending. Healthier foods this year. But it’s still a clear challenge to Ritz-Carlton’s association with Bulgari for have become a major priority. Marketing the likes of Starbucks. Starbucks isn’t sitting some time, but this year we’ve seen Marriott focus has shifted towards the healthier still however, and has introduced breakfast hop into bed with Ian Schrager to create products in a portfolio in an attempt to sandwiches in a bid to connect with the the new Edition boutique hotel. Armani also bolster credentials. This is also backed up eating habits of its customers. The question opened its first hotel at the start of 2008 in a with real product development, as the big remains: is Starbucks diluting their brand by venture supported by Emaar Hotels in Dubai. brands follow the success of niche players in going too far? Store closings and decreased Other entrants into the sector, such as Ikea, this area. As well as leading to acquisitions, sales seem to indicate so. and even the rapper, Jay-Z (under J Hotels), the quest for new, differentiated products, confirm that hospitality is a natural stretch formulations, and formats has led many In an interesting aside to the health craze, for lifestyle brands. companies to increase their research and brands like McDonald’s and KFC are planning development budgets. aggressive expansion into emerging markets. The result, of course, is an increasingly China and India are especially attractive given aggressive market in which establishing new In addition to reactive measures at home, their growth potential. brands is becoming more difficult. That’s all the brands featured have pushed hard in on top of tougher economic conditions in overseas markets. general. Fewer people are travelling due

Best Global Brands 2008 49 Smirnoff has been especially quick off the Even so, concerns over the credibility of the

mark, equating healthier drinks with a drive green theme still shadow the sector. The big Beverages to boost sales among women. The release of boys are responding by shining their light the lower-calorie Smirnoff Ice Light alcopop elsewhere in an effort to maintain favorable Top of the pops exemplifies its diversified product range and brand opinion. Sport continues to offer the is marketed as an alternative to light beer required halo: GE chose the Olympics, and for women. It’s a strategy that certain other, Philips is sponsoring the Williams F1 team. more male-focused brands in this sector could do well to consider.

Developments in the beverage industry Promoting healthier products is just part of Financial services have focused on product, packaging, and a continued focus on reputation-building. customer engagement, where brands have “Drink responsibly” has been the underlying Crisis, what crisis? made considerable advances. mantra in this sector for some years now, but the last year has seen a renewed focus The well-documented concerns over obesity on control and prevention for brand owners continue to persuade brands to develop wanting to build trust. And they’ve extended healthier options. We’ve seen a rise in the their responsibility to the environment, number of wellbeing drinks with dietary introducing recyclable bottles and packaging There are no prizes for guessing the supplements like water with vitamins on offer. to keep greener-minded consumers keen. dominant theme in financial services. It’s virtually impossible to find any editorial No industry escapes the need for green. Both Smirnoff and Moët & Chandon which doesn’t mention the US credit crisis If we are to drink from plastic containers, have found innovative approaches to and its global impact. But while no brand they must be recycled. Bottles with a communicating their brand. If you’ve got a has come away completely unscathed on “waistline” that supposedly use less plastic good story, you’ve got to find a better way account of the interdependent nature of have emerged. The consumer jury is still of telling it, which these days means using the industry, some have weathered the out as to whether this is a credible the internet. Smirnoff, in particular, has storm significantly better than others. environmental packaging solution or a created a more experiential way of sharing marketing gimmick. Water brands SEI and its heritage using blogs, short films, and In this climate, prudence is valued. Goldman Fred Water have differentiated themselves other media to show it can connect with Sachs continues to live up to its reputation with a flask-shaped bottle. the internet generation. as a leader, remaining relatively unfazed as its fellow firms have announced write-down Newsflash: people are spending more time on after write-down. In fact, it has strengthened the internet, so it makes sense that beverage its brand in relative terms because peers companies are using that channel to connect Diversified have struggled so much. Citi has taken with them. Packaging and engagement have a particularly bad beating, reeling from aligned absolutely at Coke, which invites For the greener good internal power struggles, debating over the consumers to design their own label. When sustainability of its model, and huge losses. Pepsi launched its new product, Tava, with a campaign aimed at 35–49 year-olds, it did But the damage is self-inflicted. What started so entirely online. Blogs, and widgets like out as a business issue for banks has become the Coke Tag, and social networking sites a brand issue: if you can’t manage your assets like Sprite Yard are the preferred method of Demand for environmental solutions properly, how do you expect people to trust building communities of beverage buddies is playing a crucial role in the sector. you? The reputational damage was not online. This is Drink 2.0 – make it social, make A general need for improved energy contained just to the investment banking it viral, and give people a place to be heard. efficiency has taken hold, sparking a operations. Customers lost trust in the rise in green technologies. Some brands brands and this carried over into other areas are already making the most of the of the business, especially private banking,

opportunity to grow positive perceptions. where trust and relationships are the keys Alcohol GE’s Ecomagination initiative is a case to success. Moving forward, consumers in point, having done wonders for the will seek firms who can substantiate their Toasting good health company’s reputation as an innovator reassuring overtures. in sustainability. Trusted brands have been able to gain a Emerging markets and developing countries greater share of new business in these are driving up demand for agricultural turbulent times. Barclays, one of the UK’s products and infrastructure. The appetite leading – and oldest – retail banks, is It was only a matter of time before appears insatiable, dominating this part perceived as a relative safe-haven. It has people’s obsession with improved health of the sector. In an effort to enhance their made significant gains from the collapse hit the alcohol sector. Like we’ve seen sustainability credentials, both John Deere of UK bank Northern Rock, collecting elsewhere, consumers are searching for and Caterpillar are increasingly supporting new customers in search of security. healthier products and the big brands cultural, educational, and environmental And insurance firms have managed to are responding with diet beers and low- projects in local communities. avoid drastic losses through judicious calorie alcopops. brand management. After all, it’s not their business models that are flawed.

50 Best Global Brands 2008 Despite reduced consumer confidence, Overall, the sector is facing a knotty some credit card brands have prospered. conundrum. Companies must manage their American Express has reinforced its brands more carefully than ever to build Personal care leadership position with co-branding value. But in order to embrace the full initiatives with luxury brands. It’s still the potential of the internet, they must accept Substance + style = credit card to be seen with. Visa enters the that control of their most valuable asset value top 100 for the first time this year, benefiting will diminish. from huge increases in consumer spending in developing countries. The tendency to use plastic over cash to make payments in the developed world has also helped. Energy Old versus new Which is more important: style or substance? In the last year we’ve seen increased activity from brands keen to Media reveal their true depth to consumers. Greater than the sum of When it comes to personal care, it’s clear its parts? style is now nothing without substance. When it comes to oil prices, it seems the Sustainability is a central theme. With only way is up. So the usual concerns consumer expectations – as well as demand about the use of carbon and oil energies – for environmentally sensitive products on versus renewable sources have been the increase, brands are responding with brought into even sharper focus. more eco-friendly ingredients and packaging. As the sector grows ever more complex, L’Oréal is leading the way, continually The big players have realized that brand is global media brands are finding it increas- reducing the weight of its packaging and the best way to communicate their global ingly difficult to achieve the simplicity they increasing the use of recyclable materials. strategies. Greener and safer are the favored need to cut through to consumers and But others are beginning to follow. Kleenex themes, with BP making the most of its build meaningful relationships. There’s no recently launched a premium facial tissue investments in renewable energies in the shortage of evidence: multiplatform tech- made with recycled fibers. hope it offsets safety concerns in the US after nology, proliferation of media channels, problems in Alaska and Texas. the continued rise of the internet, devalua- The high cost of energy and raw materials has tion of content through piracy, free access dogged the industry, so companies have been But as economies around the world continue to sites such as YouTube, and the growing looking for new areas of growth. Many are to weaken, energy companies will need diversity of consumer tastes across the in the process of launching new products in to manage other parts of their PR more world. All this translates to fragmented emerging markets, with a particular focus on effectively to maintain their reputations. market segments eroding brand value. male grooming and products aimed at older Enormous profits at the expense of consumers. Avon has made slow but steady consumers is one message that is unlikely to In an effort to make sense of the chaos – or at progress in markets such as China, while wear well into next year. least stand out from it – brands are investing L’Oréal and Gillette have seen more rapid heavily. Through significant research and sales increases. NPD, they’re refocusing on the needs of their customers. It’s impossible to ignore Of course, style still plays a critical role in this the growing importance of mobile devices sector. Using celebrities to endorse products for consumers hungry for up-to-the-minute is more popular than ever. The message information. It’s been clear for some time behind Gillette’s Champions Program with that the internet is the future for the media Henry, Federer, and Woods is blunt, but the sector. The merger between Thomson and fit of the brand with these celebrities is Reuters has created opportunities to offer razor sharp. new services in mobile devices and data management. At the same time, MTV is developing mobile TV in partnership with SFR in France, as well as a raft of new initiatives with other brands.

We’ve also seen media brands turn to other, more established methods of increasing presence. Both Thomson Reuters and MTV have expanded into China, India, and the Middle East. And there’s been an increase in spending on advertising, although a question mark hangs over the effectiveness of traditional “one direction” communications in the context of the internet and its user generated content.

Best Global Brands 2008 51 The business purpose for brand valuation by Nik Stucky

Brands are part of the capital of a business valuation is the key insight to bridge between and, as such, they can be created, bought, creating and managing a brand and the value sold, managed, and exploited in the same these activities contribute to the company. way as other business assets. With the The assessment reveals the brand’s value emergence of the global economy and drivers and quantifies its contribution. increasing competition, brands and brand Brand valuation provides a way of focusing management have become a core element management’s attention on these value of corporate policy. Against this backdrop, drivers and aiming the marketing activities assessment of brand value is gaining in at brand value creation. The assessment also relevance. Company acquisitions occur provides a detailed insight into the brand’s with increasing frequency. This, together contribution to the company’s risk profile. with keener competition, means that ongoing reporting, controlling and Brand valuation creates added value for many monitoring of brand value development stakeholders: public and social affairs, risk now have a central function in determining management, investor relations, credit rating business success. agencies, controlling, taxes, marketing, strategic corporate development, mergers Brand valuation is a complex process and and acquisitions, and business development. calls for an understanding of the individual The context in which brand valuation is character of a brand. Experience and used is multifaceted and hard to generalize, expertise in branding are key prerequisites, but can be looked at through the lens of the especially for the correct interpretation business goals. of input and output data. Nevertheless, the value of a brand is based on Extending the business based on the identifiable economic principles brand’s equity Brand valuation identifies and can therefore be reliably the value contribution of the brand asset to assessed. The Interbrand method shareholder value and makes it comparable combines formulas and procedures to other intangible and tangible company that are accepted as standards in assets. Often the brand is the most valuable general business management, asset of the business and offers the biggest financial theory and marketing opportunity to grow by extending the doctrine. Because input data is business activities under the brand. In this usually obtained from primary case, it is key to understand the brand’s sources, the brand values derived equity and how this can be developed and from it are objective and highly extended into new business fields. ® reliable. The assessment process is based on a clear concept of the Assessing the economic impact on branding brand’s economic functions. Brand decisions Brand valuation is an indispensable valuation thus dovetails smoothly basis for successful brand management. with established corporate strategic Its ultimate aim is to increase the value of a considerations and procedures. company. Any decision to change a brand’s In this way, value-oriented brand fundamentals – may it be its architecture, its management becomes an integral color, or its strategic focus – will have long- part of value-oriented corporate term implications on the brand’s economic management. contribution to the business. The upside potential and the downside risks of these The essential benefit from brand decisions can be analyzed and quantified with valuation is that it links branding the help of sophisticated prognostic models, Great unbranded beer Same great taste, higher price, more preferred decisions with the resulting which can express their impact in terms of economic benefit. As such, brand their financial implications.

52 Best Global Brands 2008 Setting performance metrics for Financing projects and businesses Providing investment advisory Stocks of controlling purposes The attention of Increasingly companies use intellectual companies with strong brands tend to be the marketing management has to be focused property rights such as brands as collateral better performers on the stock market. These on value creation. The value of a brand is a to obtain debt financing. One option days, it is important for analysts and investors meaningful parameter to establish financial is securitization of the brand asset. to understand the brand as it is often the key performance measurements and serves Securitization is a process that allows value driver of the business. Brand valuation as a performance indicator for various companies to raise loans in anticipation of helps to identify the potential market out- controlling purposes. These key performance future cash. Mostly the debt capital is secured performers by ranking the stocks of a defined indicators have to be based directly on the by brand-related royalties or, in some cases, universe by brand value, brand strength, and economic function of the brand and need to by the sheer value of the brand. The key several other brand-related criteria. A tested be integrated into an all-around performance benefits to this are the reduction of capital quantitative financial modeling helps to measurement system of the company. The cost and that this transaction is the balance weight these parameters. The interaction of purpose of performance measurement is to sheet. The company’s finance can be secured these criteria are needed to select the stocks link brand management performance with in a similar fashion through sales and lease- that lead to a portfolio with the strongest the strategic goals and the financial success back of brands. Both schemes can be pursued financial performance. Brand valuation of the company. by companies, which use self-created or provides a tool which can be implemented by acquired brands to expand success through investors fund managers and assets mangers. Defining transfer prices in tax related issues acquiring other brands. These transactions Brand valuation is key to defining defendable are off the balance sheet. Brand valuation Legitimizing brand investments and arm’s length royalty rates when establishing provides the insight into the value, as well internal business case In many industry an internal licensing program between parent as the risk of the transaction, while also sectors, branding is still a much undervalued and subsidiary companies. Licensing can checking on the liquidity of the asset. issue and often perceived as a marketing bring a range of financial, legal, and operative gimmick belonging to the world of fast benefits. Because the incoming royalty Defining the royalty rates in third party moving consumer goods. Convincing stream is taxed at lower rates if the brand licensing agreements Brand valuation the company’s management and other is domiciled in a low-tax country. And yet, provides fair and robust brand royalty rates stakeholders that a brand contributes to the benefits of an internal licensing scheme for optimal exploitation of the brand asset the value and the business is often the first are not only financial in nature. An internal through its license of the brand to third step to professional and systematic brand licensing scheme can increase the legal parties. Our approach determines the fair management. protection of the asset, increase the ability split of the economic benefit from the brand and leverage to manage the asset across as well as the share of risk and cost between Supporting risk management As these risks countries and divisions, establish brand licensee and licensor. This analysis reveal the are mostly non-transferable, companies have management as a profit center and create most appropriate royalty rates for the use of to establish sophisticated risk monitoring a brand-minded organization. the brand. Our brand royalty rates apply to all systems and action plans to mitigate such relevant commercial situations, including co- risks. Brand-related risk is still not sufficiently Reporting on the value of the brand branding and licensing into new categories as understood and hard for most companies Communication with investors and well as geographical markets. to grasp. With the emergence of new and financial analysts is facilitated through “soft” forms of liabilities such as reputation or the analysis and quantifying of the brand Providing a fair opinion Brand valuation brand, brand valuation and particularly brand value. The intellectual capital statement can serve as a basis for negotiation if the risk evaluation become critical to company is a management tool and an information ownership of a brand changes through, risk managers. Risk management is always source where employees, customers, merger, acquisition, or joint ventures. tightly connected with the value, that is at co-operative partners, and investors can The current value, as well as the potential risk – therefore, brand valuation is the right see how a company generates value for value of the brand can be evaluated in the tool with which to address the concerns of them. Brand-related value reporting makes context of the new owner. Furthermore, the Chief Risk Officer. sense in the context of a full disclosure of brand valuation ascertains the contribution the intangible asset of the company and a that a brand offers to a joint ventures. It corporate culture that is used to manage in allows for the joint venture’s share of profits, line with brand performance measurements. investment requests, and shareholding. The statements usually include: the Biography: Nik Stucky relevance (quantified) of the brand to the Building the fundament in brand-related is the Global Practice business, the link between branding and litigations Brand valuation by Interbrand can Leader of Interbrand’s corporate strategy, the measures to track the assist in measuring the damage caused by Brand Valuation performance of the asset, and the actions brand law infringement and is recognized as a services. Since joining to sustain and grow the brand’s value. The support in claims for damages. As the damage the company in May goals of the communication are: to create is often incurred in a partial aspect of a brand’s of 1991, Nik has awareness for the importance of the brand total value, in a specific geographic region, been instrumental to all stakeholders; to establish commitment or during a certain time period, it becomes in integrating brand regarding measuring and managing the crucial to assess the damage of the brand’s valuation into the overall services of Interbrand, asset; and to voluntarily fulfill additional equity and translate it into a monetary value. as well as taking part in valuation projects, information expectation. In a legal case, the fact-based arguments publications, lectures, and broadcasting on the and logical interlinking of facts become topic of brand valuation. particularly important for success.

Best Global Brands 2008 53 The impact of risk on brand value by Jean-Baptiste Danet & Valérie Herdlicka

How management of brand value creates shareholder value

For decades, industrialists considered first and foremost the tangible assets of a company to be its principal source of value.

However, notorious acquisitions over the last decades have proven the opposite: Nestlé bought Buitoni for 35 times the profit, Biography: Jean-Baptiste Danet Biography: Valérie Herdlicka is Adidas bought “Salomon Worldwide” for is the Chief Executive Officer the Brand Valuation Manager in 37.6 times the net consolidated profit. The of Interbrand in Europe. With France and has dedicated her career increasing discrepancies between the market extensive experience in marketing, to the study of a brand’s impact capitalizations and the prices that are paid at Jean-Baptiste has been successfully on the creation of shareholder the time of acquisitions show that intangibles managing clients, dating back to his value. Having studied at the French have been recognized since the late 1980s, days as the Marketing Director for Business School of La Rochelle, she as key values for a company. Looking for Philips Consumer Electronics. participated in a one-year research transparency behind these outstanding project on the development of a values, international financial reporting brand valuation methodology. standards have obligated companies to Today, Valérie continues to find new, recognize all acquired intangibles on the creative, and financially rewarding balance sheet since 2005. answers to strategic issues by combining the analysis of brand Thus, brands – always at the heart of value creation with Interbrand’s business success – not only need to be creative and strategic thinking. clearly and truly valued but also need to be understood as the key variables that create shareholder value.

54 Best Global Brands 2008 In the case of a brand like Exxon, ensuring

a differentiated brand over time requires a Perceived high brand Managing and valuing tracking system and proactive management of other operational risk factors, such risk potentially destroys brand risk as failed internal processes, people, or shareholder value systems. In short, the lower the role brand has in generating revenues, the higher the potential operational risk for those branded revenues. The Exxon brand has a low role in The interest of brand management through influencing demand and generating revenue. A brand that is legitimately noted on the the risk management framework is to However, it is definitely in a very comfortable balance sheet may even show that an make a brand indispensable, to be built and position to face sudden exposures that intangible asset is the single most important supported in a most financially rewarding affect the entire market. The reason is that element that the CEO has to manage. manner and to keep its competitive position the brand is managed with a pure business Therefore, new dimensions start to be over time. perspective, focusing management to integrated into the science of branding: consider operational and market risk rather brand risk management is essential for a The analysis of brand value helps than direct brand-related risk factors. This is company to survive and prosper. management understand the degree to especially true for companies where the brand which the brand is an intangible driver of plays a minor role and brand culture is low. A strong brand creates current and future demand. Identifying the key drivers that A correct understanding of brand exposure demand and ensures operational freedom. stimulate the preferred choice of one brand to those types of risk allows management to From a customer perspective, a brand is the helps to define the part of revenues that anticipate potential risk factors that could company’s differentiator and creates prefer- are directly attributable to the brand. This weaken the brand’s relative position or its ence on the market. It limits the product’s or means you would understand the extent of future development in the market. service’s substitutability on the market and the loss if the brand was no longer an asset of leads to a higher market share and a price the business. The loss of the Nike brand, for The determination of brand value at risk is premium. From a cost structure point of view, example, would be disastrous for the group, the analysis of the risk-adjusted sum of a strong brand equals negotiation power with as a predominant proportion of the Economic earnings that will be generated solely from suppliers and other stakeholders. A strong Earnings are attributable to the brand. the brand itself in the future. Optimizing the brand also lowers the perceived risk for the However, the ability to earn a profit in excess role of the brand in the customer’s perception investment community and it improves a of a base return is only partly a function and anticipating future potential operational company’s access to capital and the cost of of branding for an industrial leader like risk factors allows management to establish capital employed. The higher the perceived Exxon, which depends much more on other a strategy which surpasses the purely risk, the higher the required rate of return. intangibles, such as patents, technologies, financial aspect of the brand to make it What matters here is the risk perception of and databases. a tool for managing wealth. investors. And the brand undoubtedly has an impact on this risk perception.

Translated in financial terms, this means that each brand has the capacity to add value to the current business and to secure future earnings. This is true for brands in All brands have the capacity direct relation with the end user, as well as for brands in a purely B2B environment. Brands for every type of company are essential to add value to their current drivers of shareholder value and this trend is constantly increasing. Brand-related risk is businesses and secure thus growing proportionally. future earnings.

Best Global Brands 2008 55 The future of future-proofing brand investments by Greg Silverman

Biography: Greg Silverman is the The web search definition is important because it suggests Global Practice Leader of Analytics. that brands are competing with each other for consumers. With over 20 years of experience When focusing on competition, the branding industry in the business, Greg and his team traditionally looks to the role of the brand, as it is a measure measure brand investment to show of influence and compares the brand against other decision in advance whether an idea has the criteria. This measure of influence is capitalized on when a potential to earn brand equity. He brand’s equity unlocks value by connecting with end-users. has done work on an extensive list Unlocked value is brand strength – the ability to protect of clients that boast some of the future revenue. biggest brand names in the world, including AT&T, Bank of America, The new order Lexus, and Gillette. This relatively static picture of competition and branding has dominated the landscape for decades. However, over the last decade, this framework has broken down with the increasing dominance of social networks. Social networks are moving the branding debate from the traditional and hierarchical to the latent and networked. As such, the long- Understanding brand today held view of competition and branding no longer works Before defining the way a brand works, it is necessary to because the forces behind the collective value of all social understand the role of the brand and brand strength. The role networks have changed. In short, our customers’ culture is of brand explains what percentage of any purchase decision trumping our strategy. is attributable to the brand. It is a measure of the influence brand has on customer demand. This understanding informs Along with the declining relevance of old strategy models, decision-makers on how the brand is doing today. Brand we are witnessing a decline in the impact of the measures strength, on the other hand, is a series of benchmarks that attached to them. The greatest advance in the past decade measure a brand’s ability to secure ongoing customer demand has been in the realm of choice-based research and marketing (choice, repurchase, retention). mix models that measure change in a limited number of issues in a marketplace. Marketing mix models are rooted in the Together, the role of brand and brand strength provide conventional wisdom that, if you track spending and sales - managers with the knowledge to understand the future simultaneously controlling for all other variables - then you outcomes of marketing decisions made today. When can clearly identify what is optimal. A question still remains: incorporated with current computing and analytics What company can actually control for all the variability of capabilities, the combination is no longer just informed the market? Media mix optimization has clearly improved speculation. Rather, it offers measurable scenarios that can efficiency, but the process is backward-looking. Additionally, provide insights that lead to courageous decisions. the rigid data requirements do not accommodate the most important factor: emergent social network influences are not If you type ”brand management” in the Google search box simple to track. and follow the link to the first definition available, this is what appears: “Branding seeks to distinguish your company, Here’s a common example: Apple’s new iPhone specs were product or service from the competition and create a lasting posted among friends on Facebook and the specs received impression in your prospect’s mind.“ (1000ventures.com) poor feedback, which magnified critics’ reviews. How can Given the relevancy scores that Google is presumed to obtain Apple account for word of mouth that could change the – 90% – it is safe to assume that this definition is the common product launch environment? The challenge now is to predict understanding of brand management. the unpredictable in a new market environment.

56 Best Global Brands 2008 A new paradigm Agent-based modeling has already enabled: Many marketers today unnecessarily constrain themselves by saying, “You can only optimize what you know.” With • A US healthcare provider to accurately predict the today’s consumers riding on waves of unobserved and hard adoption of a new plan among seniors to track patterns, new tools are needed to provide a future- looking perspective on brand-related value creation. The • A global sports organization to launch a rebranding breakthrough in measurement will come in agent-based campaign that creates free buzz modeling (ABM). An agent-based model is a computational model for simulating the actions and interactions of • An automotive company to effectively reduce autonomous individuals in a network. It is capable of incentives while growing market share assessing an individual’s effects on the system as a whole by combining elements of game theory, complex systems, • A major consumer goods retailer to lower store emergence, computational sociology, multi-agent systems, size 30% and increase sales and evolutionary programming. Monte Carlo methods are used to introduce randomness. The future Media mix optimization drives cost management, which can The models simulate the simultaneous operations of help “meet the street,” but often sacrifices investment in new multiple agents, in an attempt to recreate and predict the revenue streams. Discrete choice modelling can evaluate actions of complex phenomena. The process arises out of changes in the know. Although both offer insights into brand, a multiplicity of relatively simple interactions. The tool not neither delivers on the imagination required to generate only captures the efficiency requirements of media models, growth for brands. In the end, revenue sustainability is the but also accounts for emerging forms of behavior that hallmark of a good brand. Its strength lies in its ability to fuel innovation. Currently, it is being applied to forward- protect future earnings during down markets and unlock looking business decisions. value where brand can play a role.

There is no better time than now for strong brands to understand models that uncover the hidden behavior behind these new revenue streams.

Seemingly disparate groups of information become value creating segments

Best Global Brands 2008 57 Planning your touchpoints to accelerate profit by Rune Gustafson

ultimately engages customers (or any “Use your good judgment in all situations.” other stakeholder) in many different ways, be it through advertising, product, This is followed by, “There are no additional packaging, and its people. Each contact rules.” Nordstrom recognizes that building or touchpoint builds up an experience customer relationships is done one customer that endures well beyond the product at a time. Nordstrom shares fantastic or service. It defines and reinforces relationship-building stories throughout the the perceptions that customers have organization to illustrate and train everyone about the brand. Conversely, it is equally about what its service ethos of “going the powerful at defining negative perceptions extra mile” means in practice. For example, of a brand. a customer at its Chicago store was searching for a black bow tie: For service businesses, touchpoints are often time-based and are perishable “I was going to a black-tie party, and experiences that increase reputation risks. needed a ready-made bow tie. Nordstrom’s But touchpoints also provide a golden didn’t stock one, but the guy there said, opportunity to create a powerful moment “If you have ten minutes, how about I teach Biography: Rune Gustafson is Chief of intimacy through staff-customer you how to tie one?” And, in the middle of Executive Officer of Interbrand interactions. Shifting these perceptions is a busy Saturday afternoon, he did just that in London. Rune leverages his the crucial foundation to staying closer to and got the sale. “I was happy, I recommend extensive experience in brand and current customers and engaging new them to everyone, and I still tell the story retail propositions to regularly customers to try your brand for the first ten years later.” contribute to publications and time. These deliver increased revenues and conferences throughout the UK margins that accelerate brand value and Clearly, the power of a great service ethos and Europe. profitable growth for investors. can generate sales, great relationships and great word of mouth marketing. But the most Nordstrom targets a single touchpoint important lesson marketers can learn from Nordstrom, the US retailer, has dominated Nordstrom is that it invests primarily in a single We continually observe that the most its market though the service it delivers to touchpoint. Of course, its stores are clean and successful brands, especially the ones seen its core customers. It has proven that well designed, but its focus is on the staff- in our Best Global Brands ranking, strive to customers will pay a higher price for a customer touchpoint. put the brand at the heart of their business. superior service. In so doing, this helps to differentiate it from low-price discount Every CEO and CMO knows that they must They understand that, by using the brand brands (Nordstrom’s sales per square foot invest in their brand’s experience. But as a central organizing principle, they are twice the industry average). The the question that haunts them is: Which can direct every single business function, service differentiation is delivered though touchpoint is the driver of purchases and which from HR and Distribution to Finance. In the belief that, at all times, the most ones are simply nice to have? Early thinking doing so, they are able to deliver a truly important person in the entire business is on touchpoints was based on satisfying each holistic brand experience that runs through the customer. It counter-intuitively contact to a better level than your competitor. the organization and then outwards, achieves this – not with a biblical service This approach is highly ineffective and reduces thus engaging the customer. The brand manual – but with a single rule: business performance because it follows four classic touchpoint management mistakes.

58 Best Global Brands 2008

Classic touchpoint Fact-based touchpoint Making bolder, fact management mistakes strategy based investment decisions

01 Targeting too many The only way to develop a touchpoint The InterContinental Executive Board boldly customer segments strategy that will increase business decided to invest heavily in its staff as its Businesses often try to appeal to the widest performance (and avoid these four mistakes) primary touchpoint, with the statistical possible audience. But without defining a is with a fact-based, analytical approach. knowledge that this would deliver the highest narrow, attitudinally based audience, the ROI. In fact, it would provide almost double touchpoint experience will be fragmented InterContinental Hotels is an excellent the ROI compared to any other touchpoint. and often results in conflicting perceptions. example of a traditional brand that has Had it made many of the classic touchpoint re-invigorated itself by developing a new mistakes outlined above and invested too 02 Dilution of the brand investment across brand positioning and executing it perfectly little in too many touchpoints with too many too many touchpoints by embedding it in the customer experience customer segments, it would certainly not There are literally hundreds of possible and offer. It used a sophisticated statistical have achieved such strong business results. touchpoints and no brand in the world has Return on Investment (ROI) model designed InterContinental’s brand has revived in the the time or resources to deliver each contact to identify where and how to invest in the year following the 2006 rebrand. There was to the highest level. customer experience. First, it identified a an increase in positive brand perception of narrow target audience that had a clear 10% and an increase in revenue per room of 03 Competing on basic factors only attitudinal preference for luxury travel 12% (source: IHG.com). The success of this In an increasingly competitive environment, experiences that enriched their life and rebranding was the ability of the business to classic benchmarking activities ensure that provided them with the additional social put their brand positioning, “In the Know,” at brands copy each others’ differentiators currency of local knowledge and stories. the heart of their operations and translate resulting in a zero sum game. They are Then, InterContinental cleverly used the this into a valuable touchpoint. mistakenly all trying to compete on best statistical model to identify which specific practices rather than boldly challenging parts of the customer experience truly drove In a world where consumers are bombarded convention. Those that do, like Virgin them to choose InterContinental and, as a by multiple messages every minute and or Disney, have been able to create an result, strongly increased their satisfaction. internal investment is increasingly scarce, unassailable differentiation with their This provided the Executive Board with the there is an unequivocal case to be made chosen target customers. clear evidence of what drives revenues and for drastically reducing the number of margin. It also identified areas of cost saving; touchpoints and investing strongly in a 04 Relying on customer myths parts of the experience (and costs) that single touchpoint that accelerates brand to prioritize choices could be removed without affecting their value and profitable growth. This naturally The Best Global Brands demonstrate that customers satisfaction. raises the following critical questions for they have the leadership mindset to make every CEO and CMO: hard choices and prioritize customer Its new positioning is the hotel brand that segments, touchpoints and investments is “In the Know” and delivers exactly what • How do you currently measure based on facts rather than perceived wisdom. their guests’ value without the things the ROI of your touchpoints? they don’t value. Guests benefit from the authentic, insider knowledge about the • Which touchpoints can you live without? places they visit. They are prepared to pay a premium (and stay more frequently) for • Which touchpoint can you truly own gaining this social currency and the priceless that differentiates your brand? stories they could share with their family and friends. The challenge was to educate • Which touchpoint actually drives Each contact and motivate large numbers of migrant or your profits? part-time staff employees to deliver on this or touchpoint promise consistently around the world. It was a fundamental shift to move from builds up an hiding the staff to making them the heroes and encouraging them to interact with experience guests. For employees, this new positioning was translated into an insider knowledge which endures program for staff. It used the phrase, “To you it’s just a walk to work; to our guest it’s well beyond a great view of local culture” to educate and empower all their staff to share their local the product knowledge with guests. or service.

Best Global Brands 2008 59 Building brands in emerging markets by Interbrand’s leaders in Brazil, China, India and Russia

Aléjandro Pinedo, Nicola Stanisch, Iain Ellwood, and Jonathan Chajet share their perspective on the opportunities and challenges facing brands in developing economies.

Biography: Aléjandro Pinedo has Biography: In addition to her 18 Biography: Iain Ellwood is the Head Biography: Jonathan Chajet is been the Managing Director for years in branding, Interbrand’s of Strategy covering Interbrand’s Interbrand’s Managing Director in Interbrand in Brazil since April 2006. Managing Director in Russia, Nicola business in India and the Middle East. China. His work delivers strategic With over 20 years of professional Stanisch, has experience in the With over 15 years of international solutions to clients’ global and experience, Aléjandro has had the financial industry. The multi-lingual experience, including living and local branding issues. His expertise opportunity to work with valued Nicola has built valued relations working in Japan, Hong Kong, the lies in brand strategy, business brands such as Nike, Red Bull, in Croatia, Ukraine, and Russia, Netherlands, and the US, Iain has planning, market research, naming, and Mizun. His responsibilities and was one of the driving forces led highly effective engagements for and visual identity. He has helped at Interbrand have been diverse, behind the decision to open the new clients including Mitsubishi, British enhance some of the world’s most including brand valuation, strategy, Moscow office in March 2005. Airways, and UBS. recognizable brands, including and brand identity for clients in Adobe, Bayer, Nestlé, and Lexus. projects ranging from financial services to consumer goods and petrochemicals.

60 Best Global Brands 2008 workplace or a place to do business), with

Brazilian products, services and brands. 01 How are consumers in emerging 02 Are customer touchpoints different in markets different from developed markets? emerging markets? If so, how? Iain Ellwood, India: The Indian market has seen a number of categories and consumer groups leapfrog the expected development path. For example, fixed line telephony has

largely stagnated, as it’s simpler and quicker Nicola Stanisch, Russia: A client told me Nicola: In Russia, I see only one difference: to get a prepaid mobile phone from a store once: “We are like children that have been there are no established structures as there than go through the lengthy and complex looking through the windows of a sweet shop are in mature markets. The mobile phone process of setting up a line into your home for years. Now we are allowed to go inside shop easily starts selling loans or integrating with a full service contract. Mobile phone and, although we know it is not good for us in a travel agency. There is no experience of usage is increasing by over 5 million new the end, we can’t stop eating and trying all the “what a bank is” and, therefore, a lack of customers every single month. There are sweets in there.” The market is hungry for new clarity about the touchpoints. The presence now more than 25 million mobile phone things. Russian consumers are willing to of security personnel is pervasive in Russia users in India. experiment and try out what’s new and and some shopping experiences start with a exciting rather than seeking stability or security check – again, not your best brand India has a very wide range of socio- reliability in brands. Brands are a means of touchpoint experience. economic groups from billionaires (78 at showing off, to demonstrate the financial the moment) to those that live on less than success of the newly wealthy. Particularly Aléjandro: In Brazil, the traditional one dollar a day (approximately 350 million in service areas like banking and insurance, touchpoints are still the main way to connect people). But despite this diversity, our brands are seen as inexperienced or lacking with consumers: retail, open network TV, research confirms that these people largely trust, and are driving consumers to prefer and radio. The penetration of open TV is share aspirations. It is not that they have non-Russian brands. amazing and will be the main mass media different aspirations, but just that they are vehicle for awhile. The same happens with further away from achieving those: they are Aléjandro Pinedo, Brazil: Brazil used to be radio broadcasting, especially outside of all looking up at the stars, just some from the the typical poor, underdeveloped “banana larger urban centers. Although everyone is penthouse and some from the roadside. republic” country. We focused on our own excited about new technologies, especially internal market and, until the mid-1990s, telecom and internet, only a small portion Jonathan Chajet, China: One of the most were distant or closed to external products and of more sophisticated, upper class and striking differences between consumers brands. In the last 12 years, with a more younger consumers actually use these in China and their counterparts in the West stabilized democratic government (post- resources as branding touchpoints. Having is what motivates them to purchase. military control) Brazil has opened up to the said that, we must consider also that Brazil In developed markets, self-actualization is international market. This process has even has approximately 120+ million operational at the top of Maslow’s hierarchy of needs. accelerated in the last five years. Brazil’s cell phones (should reach about 140 million In marketing terms, consumers seek brands economy is now stabilized and growing by the end of this year), but most of these that help them feel better about themselves. at a rate of 5%+ per year and inflation is under are prepaid, used mainly for calls and Hence, today’s popularity of sports-utility strict control and has been low for the past messaging, not for internet access or other vehicles and Timberland boots: “I may never 10 years, which is also a rather new communication purposes. get into the outdoors, but at least I feel like development for consumers and companies. I could.” Iain: The most surprising touchpoint With economic stability and development, weakness in India is the lack of organized But in China, status seeking is at the top of consumers in Brazil have improved their retail. This is predicated on the lack of the pyramid. Group before individual, we economic consumption levels, gaining access organized logistics and distribution. Or before me, needs of superiors before needs to new products and brands. About 20% of rather, because manpower is so cheap, of self – these values are the result of the “D-class” consumers were upgraded to it is still economical to have an incredibly long thousands of years of social and family “C-class,” and this represents about 40 million and winding supply chain. There are 7 million norms. In marketing terms, Chinese people in Brazil. Brazilian companies have unorganized retail outlets in India, mostly consumers seek brands that give them “face,” also discovered the international market small kiosk-sized places that sell a few bars of asking, “What does this brand make others and are now in need of brands to develop soap or shampoo each day. They are local to think about me?” Hermès, Häagen Dazs and internationally, rather than just commodity such an extent that most middle class Indians Johnnie Walker are extraordinarily popular products to be exported, which was the case will still ask their store keeper to select in Asia – even if consumers rarely make the in the past. their goods or brands and often have them purchase for themselves. delivered to their door. Brazilian consumers are more eager, excited Theoretically, as luxury goods become more and anxious (similar to Russia perhaps, like By contrast, and entirely predictable in democratized and consumers become more kids in a candy store) than developed market the land of Bollywood, above-the-line accustomed to a higher standard of living, consumers. There seems to be a sense of communications, like advertising, PR and status seeking will diminish in importance urgency to participate in international sponsorship activity, are highly sophisticated in China. But in wealthier countries, such as markets. Brazilians are studying and preparing and impactful. Their advertisements pump Japan and Korea, that have been modernized themselves to compete abroad. Consumers out huge raw emotional energy, celebrity for decades, there is little evidence that this and companies look to China and India as the glamour, and eye-popping vibrancy. They hierarchy is changing. So, for the time being, places with which they will have to compete make western advertising look apologetic status seeking is the playground of modern to access more developed markets, such and diffident about their product. This branding in China. as North America and Europe (either as a over-heated competitive communications

Best Global Brands 2008 61 landscape makes for a constant decibel and Nicola: Russia has been an open market for celebrity war. 18 years now, so it’s as though the maturity 04 Should marketers approach brand- of the market is in a stage of adolescence. building differently in emerging markets? Jonathan: I am fascinated by the “leveling” The first communication service that entered effect that the internet has had on emerging was advertising. PR followed. Both claimed, markets. The rise of the internet and global to a certain degree, that they also were doing entertainment is giving Chinese consumers branding. So the term is well known, but the a taste of Western lifestyles. Illegal copies content and understanding is blurred. Nicola: Speed is crucial. It can be better of the latest James Bond thriller hit the to come out with an 80% solution quickly streets of Shanghai less than 12 hours after When it comes to creating and managing rather than work towards 100% but lose the simultaneous premiere in London, New brands as valuable business assets, the momentum. But, due to the characteristically York and Tokyo. And so does Bond’s preferred interest is mainly on the “creation” part: eager Russian consumer described above, brand of vodka. Online social networks, new names, new logos, and new businesses should also focus on consistency, camera-enabled mobile phones, and high- communication styles. Very few Russian aligning all branding activities. A brand can definition streaming media: each innovation brands demonstrate strong brand be introduced, or will stand out momentarily, is a window into what’s possible for even a management capabilities. Western brands with one crazy activity but it can only be dollar-a-day garment worker. are perceived as being stronger but there grown and maintained with the ongoing and is little understanding of what it takes to consistent recognizability of the brand, which But like India, the majority of sales in China become that strong. In building a chain is then outstanding in itself. happen, not in gleaming shopping malls, but of experiences for Russian consumers, in local “mom and pop” shops that often serve advertising is still dominating. Point of sale, Aléjandro: Brand strategy makes more as the front half of the shop owner’s home. for example, is largely neglected. sense now in Brazil, as do internal brand There is little room for product variety, and a engagement and brand experience initiatives. branded experience involves the scent from Aléjandro: The maturity of the market Slowly (very slowly) brand owners realize tonight’s dinner and a micro-thin plastic bag in Brazil is quite young, with basic that advertising is an important complement to carry your purchase home. As a result, communication activities still developing. to brand-building, not the only necessary brands must rely exclusively on the promises Advertising agencies have been the “brand initiative. Design has also gained more they make before the point of purchase. builders” for a long time and only recently importance, since the imported brands have more sophisticated branding strategies bring an advanced and more sophisticated become relevant. There are many new level of the design element in their combo 03 What is the state of maturity of “non-media” activities gaining importance, (packaging, communication, etc). branding in your markets? especially in large urban areas, such as

São Paulo and Rio de Janeiro, but they are Iain: Indian businesses have always been concentrated among only a small very good at incorporating new things into percentage of brands targeted at more their business and the same is true for Indian sophisticated consumers. brands. They have an open and inquisitive Jonathan: Branding in China is still in mindset that is pragmatic about the need its infancy stage. But brands are playing With economic stability, lower inflation to constantly adapt to rapidly changing an important social role for the Chinese levels, more imported products, and local markets conditions. They learn eagerly and consumer. In China, standing out can be brands entering the market, companies are quickly from successful foreign brands, both difficult. Start with 1.3 billion people. The beginning to think more strategically about internationally and from those that have majority of the population lives in some of the managing their brands. Slowly but surely, entered the Indian market. world’s largest and most densely populated they are starting to understand that you cities in the world – so personal space is at a cannot position and build a brand simply India is polarized in its understanding and premium. If you are fresh out of university, on television advertising alone. appreciation of branding. Given that 50% you are competing with millions of other of the population will be under the age of graduates for the same jobs. And the intense Iain: Branding is still largely about two 25 by 2010, there is a dramatic difference pressure to put group before self discourages things: building consistency of image and between young and old. This is also true of setting yourself apart from the crowd. driving tactical sales. Indian brands are brand-building for these two audiences. largely consistent in their use of color, The youthful men and women expect Brands give Chinese consumers the chance language and simple visual identity systems. First World brand experiences and are to talk about themselves without ever Indians have always had a rich art and comfortable demanding them, appreciating speaking a word. Young Chinese consumers visual heritage that is evident in their use of them and paying a little extra for them. are eager to find ways to express themselves. graphical and display visuals. The older generation is more functionally They accessorize their mobile phones, create biased in its needs and uses word of mouth elaborate online alter-egos, and incorporate However, branding is still a very tactical predominantly. This intergenerational schism fashion from around the world into a activity focused on delivering short-term results in the parents being surprised and personal style that is uniquely their own. sales. This means that there is very little confused by the behavior of their children. Brands, whether global or local, are part of strategic brand building activity across the color palette that Chinese consumers the customer experience. There is also no Jonathan: Branding in China is beginning a are using to decorate their lives. common understanding of the case for brand new chapter. No doubt, as local consumers investment and the measurement of the enjoy a higher standard of living, their return on that investment (ROI). appetite for brands will grow. Boardrooms on Wall Street and in the City are no longer asking when they will enter China, but

62 Best Global Brands 2008 rather how they will increase market share Nicola: During the 1990s, Russian brands Jonathan: Historically, China’s economy (and earn better margins). For many, Asia were extremely unpopular and almost only has been dominated by large-scale state- already represents a substantial portion of purchased due to economic necessity (for owned enterprises with special advantages: their revenue and profits. And local brands example, auto manufacturer, Lada). Parallel protection from competition, dominant are getting much more savvy about how to to the growing self-confidence of the Russian market share, priority financing, and compete against global competitors. people during the past eight years, some consumer recognition accumulated through brands in core industries (chocolate, liquor, a long history. But several highly market- Given the diversity across China, it’s hard transportation, heavy manufacturing) are oriented, competitive brands are growing to identify a common set of values and gaining attraction by playing the nationalistic in popularity. These brands have taken preferences that marketers can use to target card. These established and sometimes the lead in management innovation and a pan-Chinese consumer. Western brands pre-revolutionary brands, along with some brand-building in their industry, including still largely dominate the luxury landscape, new Russian brands, understand the Russian reorganizing their marketing departments, owning equities like “premium,” “high quality,” soul and mentality. They show this by using such as appointing chief marketing officers, and “innovative.” But for basic consumables, old Soviet or Tsarists’ symbols, playing with increasing brand-building budgets, and are wealthy consumers in Shanghai so Russian literature or using Russian national tracking results. different from their counterparts in Tokyo, heroes in testimonials. It is problematic New York, or Paris? In an age of intense that “New Russia” has no symbols yet, the Sports brand Li-Ning is competing head- national pride, our differences may be less brands should develop a clear profile, despite to-head with world-renowned brands dramatic than most would readily admit. being Russian. Nike and Adidas in the Chinese market. Chinese search expert Baidu has out- Aléjandro: Offering unique “provenance- maneuvered strong pressure from 05 In what ways can homegrown brands based” elements to our brands will help the Google with better localization, brand defend themselves against imported Brazilian market to compete with imported communication and understanding of brands entering their market? brands, while still showing foreign markets the Chinese language. In 2006, Baidu’s and international consumers that Brazil market share rose to 60%, winning the lead produces high quality products and can brand position in China’s market. Young and highly them in a sophisticated way. The traditional market-oriented companies, like Li-Ning cheap and stereotyped associations of Brazil and Baidu, are listening carefully to the Iain: A surprising number of international – beach, soccer, samba-dancing girls – do not market, gradually accumulating brand value, brands have not been able to crack the Indian actually represent the best things the country and taking their places alongside China’s market. The insight is that, while Indians are can offer. advantage-rich enterprises. intellectually adaptable, they have a number of physical and behavioral needs unique to Brazil has rich culture, design, architecture, During the early stages of development, their market. Brands like Nokia have achieved music, web design, classic and contemporary many Chinese brands spend their time the optimal balance of international and local arts and crafting, and should incorporate studying the successful experience of foreign needs because their mobile phone is both these elements to its brands. The most brands. After years of practice, some Chinese dustproof and has a built-in torch light (power important factor, however, is an internal one. brands have migrated from learning and outages are frequent in India). Local brands Brazil should get rid of its “inferiority complex,” following to creating and exploring their own can beat the foreign competition by owning originating in the past, and compete unique path. They are rooted in the soil of a the customer. They will know more about internationally at the same or a higher level vast market, searching for their own brand their customers, their lives, families and as other high quality players in the market. principles in China, and creating localized aspirations than any foreigner can ever know. best practices. But they must use this textural knowledge to drive their R&D with confidence. Otherwise they will succumb to the gloss of foreign competitors and feel that they must simply follow them. India is a proud nation and is rightfully recognizing that its time as a BRIC One of the most striking country is finally coming. They must harness that confidence to deliver what they believe is right for Indians. differences between

The quality level of brand communications consumers in China and must also increase dramatically. While, in the past, most Indian companies used similar quality materials, foreign brands have brought their counterparts in the a much higher standard of production to their advertising, retail design, and below-the-line West is what motivates communications. This will require Indian brands to gain, not just superior marketing capabilities, but also superior production them to purchase. facilities and distribution partners. The consequence of this is that Indian brands will have to invest, far more than previously, in their brands, both strategically and tactically in the marketplace.

Best Global Brands 2008 63 Brands create nations by Dr. Jürgen Häusler, PhD

Biography: Dr. Jürgen Häusler, PhD is CEO Interbrand Central & Eastern Europe. He has experience as a social scientist at the Max-Planck-Institute, a doctorate in social sciences, a degree in Business Administration, and has received research grants for work at M.I.T. Jürgen has applied his experience to successful endeavors at Interbrand. He is a Honorary Professor for Strategic Business Communication at the University of Leipzig.

Brands create nations? Why do economy – among other things – the epithet “Made in” no longer says much about where essential components of the we furrow our brows when we product were actually manufactured. Who hasn’t observed read this sentence? Because that personnel are not always natives of the country the brand is tapping for its perceived benefits, even among the so- we usually consider it a law of called premium brands in the airline industry? And by trusting nature that the cause-and-effect in the alleged cultural traits of the entire population of a given country in the first place, aren’t we ultimately expressing relationship is the other way regrettable and obsolete prejudices? around: Nations create brands. This is the point where we can begin thinking of the cause- What do we mean by “Nations create brands?” Brands leverage and-effect relationship working in the other direction. So it’s their origin to position themselves for more success on the not “the Germans” who stand for “Freude am Fahren” (indeed, global market. They try to exploit people’s impressions or quite the contrary, sometimes) but BMW, Mercedes and convictions about the special strengths of entire nations. Porsche, who are spreading the news around the world People the world over believe a car “Made in Germany” must be that Germany is the place to go for masculine Fahrfreude, imbued with German engineering expertise. Putting on a suit exclusive appearance and technical perfection on four “Made in Italy” turns normal mortals into passionate lovers. wheels. France doesn’t make the best sparkling wine – And the luxurious “Swiss made” watch exudes the added aura it’s Veuve Clicquot that ensures that Champagne enjoys a of exclusivity that its status-hungry wearer longs for. worldwide reputation for the most exclusive product in its category. “Made in Italy” is not the basis for the success of Indeed, “Made in Switzerland” is a good example, having Italian menswear designers – on the contrary, “Made by demonstrated considerable success in the past few years. Armani, Ermenegildo Zegna or Brioni” gives “Made in Italy” Now it’s not only marketing experts who know that its universal prestige. In other words, these brands influence “Swiss-ness” is on the upswing and has become the central the perception of “their” nations. thrust behind any number of brands in diverse sectors. The confidence that offerings, ranging from financial products To be historically precise, one should note that this relatively and airline flights to coffee makers and skin care products, new development may continue to grow in importance. will be perceived by the world as attractive and desirable The phenomenon reflects the rise in importance of brands if they sport a white cross on a red background, preferably themselves over the past few decades. Our perception of with the word “Swiss” in their name and a visual identity the world is increasingly influenced by the constructs of dominated by red and white, has long since spread across brand-builders. For example, the Lange brand recently put the borders of the Alpine nation. the long-forgotten town of Glashütte back on the world map. And for most of the world, the Samsung brand defines What’s actually going on in our heads when we buy into such people’s image of South Korea. Nations still fighting for one of national, collective claims of quality in products and services the top positions among the countries of the world would do provided by individual companies? Evaluated in light of well to keep an eye out for homegrown brands that have the contemporary ideas about rational thought, not much. After potential to capture the world’s attention. After all: Brands all, who among us still hasn’t realized that in the globalized create nations.

64 Best Global Brands 2008 SAP waldorf

People all over the world believe a car “Made in Germany” must be imbued with German engineering expertise.

Best Global Brands 2008 65 The luxury kingdom by Manfredi Ricca

Imagine floating in a gravity-free chamber. The laws of physics are the same as those we deal with in everyday life. Yet, they act with different intensities, ultimately creating a completely different environment.

In many respects, this is what happens with who can afford access to luxury brands, but luxury brands. While they obey most of the they can always count on a stable core of principles of value creation that are common loyalists. Because this stable core typically to all brands, the extent to which these belongs to the wealthiest part of society, principles apply is completely different – spending power remains virtually untouched giving life to a kingdom apart. by economic downturns. This means that while luxury brands react quickly to a positive Unlike any other economic outlook, in times of recession they A kingdom, in fact, where the notions of can only fall so low. In a summer dominated demand and preference leave place to those by signs and expectations of a slowdown, of desire and unsubstitutability. Our Best major analysts have raised credit ratings Biography: Manfredi Ricca manages Global Brands study shows how it can play a across the luxury industry. Luxury brands Interbrand’s office in Milan. In his prominent role in virtually any competitive ensure a continuity of demand that, from a decade with Interbrand, he has gained sector, in combination with other drivers of financial perspective, translates into lower significant experience in the luxury demand. In luxury, because brands are the risk and, ultimately, higher value. sector, providing advice and valuations reason why consumers choose those goods to a number of outstanding global and services, they are the engine of the entire The second mechanism through which luxury brands. His articles, interviews and business model. They are responsible for most brands reduce business risk is diversification. comments regularly appear on the of the value created by their companies. While brand extension is a widespread main Italian business and mainstream phenomenon across virtually every category, media. Manfredi is also a frequent Luxury brands are the result of the pursuit luxury brands enjoy an uncommon potential. conference speaker, as well as an MBA of excellence along one or more relevant Since they fulfill the most inspirational and and university lecturer. dimensions of a relevant product or service. self-reflective needs, they are less tied to the In time, these brands influence behavior sector they originate from: they tend to more than factors like distribution, embody a lifestyle rather than a category. So functionality, and even price. In fact, such while brands like Prada and Bulgari historically is their power of attraction that these built their reputation in very specific sectors, brands defy even the basic microeconomic today they seem to know no boundary, their relationship – up goes price, down goes names having added value to diverse items demand. Luxury is where demand is virtually like mobile phones, fragrances or resorts. immune to price increases. The age of access Brands for all seasons This extension potential should be handled All brands perform the economic function with great care, since at stake is the integrity of mitigating risk. But the degree to which of the business’s key asset. However, it luxury brands achieve this is unmatched. This also offers the chance for these brands to is reflected by these businesses’ well known connect with a wider public without losing stability through swinging economic cycles. their status. Fragrances and accessories are the best and most frequent examples: Two key factors explain this. In the first two ways in which luxury brands reach out place, luxury brands have a pulsating target. to a far broader customer base, providing In times of economic expansion, luxury accessibility without losing the mystique brands will see new segments of consumers given by the yet-unaccessible main offering.

66 Best Global Brands 2008 While a fragment of the likes of Hermès depth to the product experience, are not in a “horizontal” view, can luxury be reduced and Chanel is now available to become part within the reach of the wealthy, but of the to a number of selected industries. of the everyday life of a wide segment of wealthy cognoscenti. consumers, these brands still preserve their Over and beyond that, today’s reality iconic status through their exclusive core This leads luxury brands to revert to resists the possibility of defining luxury as a categories. They have succeeded in offering, craftsmanship, detail, creativity, and category or a sector, then identifying brands at the same time, the one-of-a-kind and the innovative, show-like advertising. Most that can fit the definition. On the contrary, most widely sold worldwide – the former flagship stores today are about giving brands competing in diverse industries are generating the cult, the latter dispensing it to an insider’s story – a way of providing constantly reshaping the category of luxury the masses. intellectual, not just economic, exclusivity and testing its boundaries. in the face of a numerically higher access to The other axis of diversification – luxury. They are temples protecting the idol The iPhone may be the most recent example geography – poses different questions. In worshipped by the masses. of a (product) brand marketed by a non- today’s quickly changing world map, luxury luxury brand, escaping the traditional brands are facing the challenge of playing Who’s in, who’s next definition of a luxury brand. And yet, the two very different roles in two completely We have identified the laws ruling brand iPhone creates desire, demand, and value, different contexts, both of which are value creation in the luxury kingdom. just like a luxury brand. essential to their success and growth. Yet, an increasingly difficult task is to define its boundaries. No doubt, we must expect the boundaries From showing... of the realm of luxury to continue to blur, In emerging economies, luxury brands are When luxury adopts a “vertical” perspective, dissolve, and reshape around those brands quintessential to the fast-paced development it can no longer be employed as a synonym of that change the way people think about a of new, layered social structures. In countries exclusivity. This concept is shattered by the category. Yet, no matter what, one thing like Russia and China, they are the perfect shift from luxury as “the average consumption holds true – the economic rewards for those answer to the quest for symbols that can of above-average people” to the “above- brands that get to fall under the luxury clearly legitimate and communicate one’s average consumption of average people.” Nor, kingdom’s laws are clearly impressive. belonging to the new élites. In the past, such status had to be declared within a single society. Today, as emerging markets open their doors to the global economy, luxury brands have the ultimate advantage of The rise of individualism has also led becoming universal symbols and statements luxury to be about much more than simply of cosmopolitanism. The accelerated change and growth in these markets are intensifying communicating one’s status to others. the performance of brands like Prada, Ferrari and Gucci, which are milking their iconic status in comparatively new markets.

...to knowing The challenges that lay ahead for luxury brands in mature economies are more subtle and complex. On the one hand, the concept of luxury and self-satisfaction itself has gradually shifted and dematerialized. Luxury has now changed from mere possession to something nearing more the concept of experience, expanding its focus from products to the wider pleasures of life. The age we live in is a lot more about collecting experiences – think about the success of electronic storage supports of all kinds – rather than simply possessing objects.

On the other hand, the rise of individualism has also led luxury to be about much more than simply communicating one’s status to others. In information and knowledge obsessed societies, rather than simply delivering the economic capital, luxury brands have to address one’s intellectual capital, too. There has to be a rationale behind a product that claims to be deluxe. In a mature economy, a consumer’s self-confidence derives from being discerning rather than merely rich. Subtle details, which add

Best Global Brands 2008 67 It’s what’s on the inside that counts by Stephanie Colton & Carolyn Ray

Engaging your people to deliver an exceptional brand experience.

team, the most sophisticated organizations understand that success rests on their ability Brand in the blood to work together, with the onus on leadership and middle managers, as well as the HR, marketing, and communications teams.

However, the ultimate measure of success is not just employee satisfaction. Brand-builders are not just happy, they are deeply committed. These are the people who go above and If you like brand value ranking lists, can beyond, who ride out the tough times and we suggest taking a moment to read the who actively recommend you to friends and “Best Companies to Work For” results family. Engagement – defined here as the published by Fortune magazine this year? creation of happy, committed, productive The highest risers in our Best Global Brands and loyal advocates – is not a “nice to have” study were also praised for their ability to but an essential pillar of any business strategy build a strong internal culture. These are the because of the impact employees have on mighty “employer brands” – companies like financial performance. Google and Goldman Sachs. They are masters at work, adept at applying their brand idea to the whole business, both inside and out. Unlike their competitors, who see brand as The costs of a marketing exercise, these leaders have brand in the blood. It is part of their DNA disengagement and runs through everything they do, from hiring the right people to recognizing and rewarding success.

For highly evolved brands, this is a logical Winning the war on progression. Employees are internal customers – their needs must be mapped talent and served, their loyalty, earned. Brand is the red thread, binding the workforce together with customers in a common experience. Connecting up like this leads to a positive, focused and productive workforce.

With the looming talent war, companies This is second nature to only a small minority. who use their unique brand to attract, retain, For the rest of us, staff engagement remains and grow good people are likely to come a major issue. According to Interbrand’s out on top. Whereas, in the past, brand may Pride survey in 2007, on average, only 47% have been the domain of the marketing of UK workers feel proud to work for their

68 Best Global Brands 2008 Biography: Stephanie Colton is a Biography: Carolyn Ray is a Senior Senior Consultant on the Brand Director of Brand Engagement at Engagement team at Interbrand Interbrand in Toronto. Drawing on her in London. With her background 18-years-plus of strategic experience, in anthropology, knowledge Carolyn works with organizations to management, and organizational create strategic brand engagement change, she brings a diverse range programs that help their employees of experiences to her assignments, deliver on the promised brand having worked in the public and private experience, which requires her to be sectors, in the UK and overseas. adept at a broad range of services.

employers. Gallup recently published research Search engines. Not exactly exciting, are they? for whom Google has become “like a good stating that 54% of US employees are not But talk to anyone who works for Google friend.” Google people are passionate about engaged in their jobs, while 17% are actively and they’re positively evangelical about their connecting people in a way that makes disengaged. Similarly, a Towers Perrin study employer. This year Google ranked #1 for the their lives better. This philosophy applies to states that 38% of the global workforce is second year running in Fortune magazine’s everything it does. disengaged from their work, and 41% are “Best Companies to Work For” and was the unsure if they like their jobs. highest riser in its category for the third year Goldman Sachs running in the Best Global Brands study. It is Best Global Brands (#38) The effects of this can be catastrophic. clearly doing something right. The secret of its Fortune Best Companies to Work For (#9) Disengagement is seriously bad for business. success is a single-minded focus on rewarding the talented people that come to work for Despite turbulence in the global markets, Gallup research indicates that disengaged them – the 12,000-plus self-styled “Googlers.” the investment bank, Goldman Sachs, employees in the US cost employers over reported record sales and profits. US$300 million per year in lost productivity. In the “owner’s manual” for Google Compensation and benefits rose 23% from According to a landmark study by the shareholders (the company gives stock the previous year, to $20.19 billion. With White House Office of Consumer Affairs in options to 99% of employees), the founders around 25,000 employees worldwide, this is 1996, staff indifference is the number one explain: “Our employees are everything. a company well known for investing serious cause of customer defections, triggering Google is organized around the ability to effort into attracting and retaining the right up to 68% compared to just 14% for poor attract and leverage the talent of exceptional people. As a brand, it has a deep commitment products and service. Customers will put up technologists and business people. We to delivering their idea – the confidence and with a lot, but disengaged staff can very often have been lucky to recruit many creative, trust of leadership. As an employer, it has a be the final straw. principled, and hard-working stars. We reputation for only hiring the best, which hope to recruit many more in the future. in turn means that candidates are already We will reward and treat them well.” And it striving hard before they are hired. The does. Each year Google mints a fresh round competition pales in comparison. Learning from the of millionaires so, in one way, you can say Google is practicing what it preaches. Its recruitment process embodies the brand. leaders Take its graduate recruitment site. Head and The website is full of positive statements shoulders above the competition – powerful, about Google’s people: “We love our direct – it is a perfect rendering of their brand employees and we want them to know positioning. The interview process tells you it.” Believing that “appreciation is the best that they are not just interested in your motivation” they have created a uniquely academic or professional track record, they The leaders in this field don’t just manage inspiring workplace which people feel want to know what drives you and how well their brands, they live and breathe them. proud to be part of. Annual ski trips, on- networked you are. Once inside, they make site massage, yoga and daycare, seminars, an explicit mutual contract highlighting what Google culture clubs, and community work all create they will require from you and what you can Best Global Brands (#10) an atmosphere of serious fun, proving that expect in return. As a result, employees know Fortune Best Companies to Work For work and play are not mutually exclusive. they will not get job security, but are sure to 2008 (#1) On its own jobs pages, it lists the top ten receive a good salary, the best resources, good reasons to work at Google. The first reason treatment. On their CV, Goldman is a name to to join is “to lend a helping hand” to users, conjure with, a name that opens doors.

Best Global Brands 2008 69 So the key here is that expectations before, Rule 2 Unlike Lean, Six Sigma, or a CRM project, during and after employment are aligned. Recruit the “massive middle” to the cause. brand-building can be done subtly, wrapped The brand promise is delivered and meets around existing initiatives to add focus and expectations. As a result, its people are Many organizations focus their brand- meaning, e.g., as the principle informing proud advocates, reinforcing the external building efforts exclusively on the top the design of a new intranet site, induction perception that Goldman is an untouchable 10–15% – the “high potentials.” However, this materials, performance appraisal system, brand, halo and all. overlooks a critical segment of the workforce, internal communication campaign, internal coined by some as the “massive middle.” True product launch and so on. When brand The brand idea is supported by 14 business brand engagement speaks directly to the solid is presented as another initiative, principles underpinning every aspect of its citizens, the people that you count on every overburdened employees can be forgiven operations. They underline the unusual effort day to show up and do their jobs. Within this for believing that the brand will add more Goldman puts into managing its talent, group, influential types – brand champions, work when, in fact, it should make their lives its pioneering spirit and a belief that the brand ambassadors, or change agents – easier and more inspiring. world of finance will not stand still, and that can become a powerful force for change. complacency can lead to extinction. This Mobilizing them at various points in the Rule 4 rejection of complacency, and the foresight of branding process will significantly improve Return of a promise = promise of a return. two exceptional bankers, helped them escape your chances of success. This group can: the carnage on Wall Street this year and to Both Google and Goldman Sachs believe in gain a serious lead on the competition. • provide a reality check, identifying what mutuality between employee and employer. will work and what won’t Balancing the requirements of the company with the needs of the individual employee • act as change agents delivering key is an essential part of their strategy. The Summary: the four messages and communications to brand idea is layered on top of that to provide colleagues meaning through a positive set of shared golden rules of emotional connections. world-class brand • model on-brand behavior and inspire others to follow suit When Harvard Business School published the engagement Service Profit Chain model in the late 1990s • identify gaps and opportunities to align (Heskett, Sasser, Schlesinger, 1996) they the business with the promised brand proved what these brands already knew – experience happy employees means happy customers who, if properly cared for, contribute to an Having a strategic part of your workforce equally healthy balance sheet. According to that understands the brand and its Gallup research, the stock prices of companies These cases – and others like them – highlight benefits generates a groundswell of action who topped Fortune magazine’s Most Admired four golden rules that, if followed, will and support. Using them to spread the Companies in 2007 appreciated 50% over increase our chances of success. message up, down and laterally, can lend their peers after investing in employee credibility to the brand engagement process, motivation and alignment. Research Rule 1 particularly in places where management published by Gallup showed not only are The launch is just the beginning. communications are typically met with a engaged employees, on average, 38% more mixture of cynicism and suspicion. productive, they are 30% less likely to leave. When these brands were launched or in their infancy, the creators knew that a glossy book Rule 3 Building a branded, customer-focused culture or a video would not be enough to direct Brand is not an initiative. takes stamina, discipline and investment, culture and behavior internally. Both Google active leadership at all levels, cross-functional and Goldman Sachs had visionary founders Because of the connections between brand thinking, and detailed alignment of core who knew the importance of writing both and business strategy, our leaders look at the processes. Only with all these pieces in place customer and people-focused principles branding process as a long-term operational can the brand truly become something into their DNA from the outset. Of course, commitment or way of working, not a short- owned and lived by everyone, from leadership it is all too easy to fall at the first hurdle. term initiative. While other initiatives are to the front-line employee. There are countless tales of companies developed in response to specific business who made big investments in creating a objectives, the brand strategy is developed to new brand positioning or identity system, support the business strategy as a whole. This only to find that they struggle to activate means it must be implemented throughout it. Communication alone will not change the whole organization and be supported by behavior. Success comes when you take rigorous management processes. people on a journey – from understanding to believing, and from believing to really living the brand. Your people are more likely to get on board when they are given the chance to discover the benefits for themselves, which means shaping an engagement strategy that is interactive, multi-disciplinary and targeted.

70 Best Global Brands 2008 Best Global Brands 2008 71 The value of creativity by Andy Payne

be appropriate for a brand but it really is just a signature, if you like. Also, people have an 01 What is the role for creativity in expectation that they should like a logo, but it’s creating brand value? more important that they identify it with the brand and that it provokes the right messages.

The brand strategy should provide the seed from which the visual vocabulary germinates. Let’s answer that by looking at it in a linear We all interpret visual codes, sometimes fashion. Put simply, the role of creativity is to consciously, sometimes subconsciously. Look bring the brand’s strategy to life. We make at the way people may interpret a piece of art the brand strategy evident to the world inside and “get it” when others clearly don’t. It’s about and outside the organization. But, in truth, it visual stereotyping and knowing how to evoke doesn’t really work in a linear fashion. the right emotional context for the brand.

The brand’s visual vocabulary should play It’s always tempting to see design briefs with these stereotypes, knowing which cues and marketing strategy in separate silos to extenuate and which to downplay, which Biography: Andy Payne is of an overall brand management process. to reinforce and which to redefine in order to Interbrand’s Global Creative But, if there’s only one brand, really there accentuate the idea of the brand. Director. With a track record of great should be just one brief that delivers against success, Andy has worked on some one strategy. There is so much more to building the visual of Interbrand’s most prestigious vocabulary and system of the brand than a projects, including Thomson To manage a brand’s value, you have to be logo. Brands have multiple touchpoints and, Reuters, Toyota, and McDonald’s. looking at the strategic and creative intent to succeed, they need to build their messages of the brand as one. They are both equal and cumulatively and holistically across these parts of the value chain. Strategy and design touchpoints. They all represent opportunities should become indistinguishable. A brand for the brand and the trick is to work out what isn’t just a strategy. The strategy needs to be is the most meaningful touchpoint to you, executed. Likewise, a brand isn’t just about its then over-deliver against it so you create value. design. Strategy and creativity therefore need Many brands make the mistake of simply to work in harmony to really deliver the brand replicating their visual formula across their promise in a tangible way. The role of design is touchpoints. This visual splattering may show to capture the emotional space in consumers’ ownership, but may not use the medium to minds, while the physical performance of its best effect in terms of communicating the Creativity runs the brand’s products or services captures the brand. We always have to see the touchpoint rational mind space. as a means through which we communicate the whole way the brand idea, rather than simply owning the touchpoint. through our 02 What the biggest error that people make when they’re considering When a brand is reviewing its identity a branding project? system, it should review the touchpoints it solutions and communicates through, multiplying the use of those that over-deliver brand value and should work minimizing the usage of those that under- deliver. It will focus the brand’s spend The worst thing anyone can do is to simply more effectively and more efficiently. harmoniously focus on the logo. I sit here as a Creative We’ve seen programs where brands have Director, and can say to you honestly it actually saved $60 million by discontinuing with strategy. really is just a logo. Sure, a logo needs to ineffective touchpoints.

72 Best Global Brands 2008 Temptation

Organic

There is a huge number of choices that We’re also now seeing how brands move with

consumers make on a daily basis and brands us and how they need to flex themselves 03 What do you believe makes a are able to break out of this clutter to speak according to the immediate times we’re in. great brand? to consumers, to stand for something in IBM is a great example of this. When people their eyes. were uncertain of doing business online, they helped us with e-business. When we became I’m really interested in the ideas that say, “I’m concerned about the pace of business, they

for you,” and how we best execute against gave us on demand. It has all been one IBM Well, as you can see from the Best Global these ideas so they’re memorable and really throughout but they’re flexing the brand to Brands study, brand value is potentially the deliver for the business. dial into our emotions at any given time. The ultimate measure of success for a brand. But, world seems only to increase its pace and while it shows you the result of the success, Again, this is where strategy and creativity this places a huge pressure on brands to keep what drives success is hugely significant. need to work together. We need to create ideas up with the way attitudes are continually for a business that go beyond straight strategy evolving. It sounds daunting, but the A great idea sits at the heart of the brand. and become robust, rich ideas that can define a rewards for getting it right are evident, so we It’s the strategy that will re-energize the brand’s communications and behaviors across shouldn’t expect it to be easy. brand and stretch the brand into new a whole host of opportunities. The idea can’t business opportunities. It has to be true be confining or limiting; it has to be more of a and something the organization can deliver launch pad; a launch pad that is always clear against, and it has to be something that is 05 What inspires you? enough to show you that you’re on brief and on relevant in that market. It has to be different strategy, but also a launch pad that is an idea, and distinctive from its competitors. breathing life into executions and creating value in your market. This thinking should convey a brand’s personality. A great brand idea is much easier People often ask me for a definition of great to work with if it creates a really clear picture creativity. For me, it’s being able to work with in our minds. 04 How has the branding business a business of thousands of people, across changed over the years? multiple geographies and multiple service A great tool in defining this personality is lines, and inspire and influence the way language; understanding what the brand they work by giving them better business says. It’s often overlooked, but the words potential against their competitors. are key. Well firstly, branding is still a really young Look at any of the Best Global Brands. We Take something as simple as an apple. Look business. We’re one of the oldest brand all know something about them. We can at it and it’s just an apple. consultancies and we’ve been going since come from different cultures and different 1974, so it’s still a young industry. backgrounds and there would probably be Put the word ‘temptation’ next to it and our a tremendous commonality in the way we’d whole point of reference changes. For me one of the biggest changes is the fact describe Nike, Apple, Google, etc. These that, as a designer by background, I’m invited brands transcend languages and cultures. Put the word ‘organic’ next to it and our to debates to make the most of business They have the whole world talking about references change again. opportunities and challenges from a creative them in the same way and sharing their brand perspective. It’s great working closely with ideas. That is a huge challenge, but a fantastic But each time it’s just an apple. business people and seeing the changes challenge. Like most people in branding, I we can make to their ways of thinking. am endlessly fascinated by trying to help This shows us how powerful language is. What once felt like a problem becomes an create such opportunities for businesses and Each time we’ve redefined the apple through opportunity. What may once have been allowing their ideas to be shared. the use of language. taken for granted, suddenly becomes their competitive advantage. What may have simply been “their way of doing things” becomes their guarded culture.

Best Global Brands 2008 73 Answers to the most commonly asked questions

What is brand value? 75 How did you take account for the fact that brands are run Why value brands? 75 through franchisees? 77

How does Interbrand derive What is the relationship between the value of brands? 75 the following terms: brand awareness, brand equity, What was the basis of the brand share, and brand value? 77 financial assessments? 76 Do the valuations reflect the What was the basis for the underlying state of the economy? 77 marketing assessments? 76 How does brand value rank against What was BusinessWeek’s role ad spending? 78 in the Best Global Brands ranking? 76 Is it possible to recognize brand Why are certain brands not on the list? 76 value on a balance sheet? 78

Certain obvious global brands are missing. What is Interbrand’s view on brands Were they considered? 76 appearing on balance sheets? 78

Within certain large industry Why is Interbrand an expert sectors there are no brands that in assessing brand value? 78 appear on the list. Why? 76 Does Interbrand conduct other What % of the branded business brand studies? 79 needs to be outside the home country to be considered global? 77 What is the difference between the valuations in BGB and consulting Was this the only test for being global? 77 valuations for clients? 79

Was there a limit to the number of brands included from any one industry? 77

Are there any brands that have a sufficient brand value but did not make the list? 77

74 Best Global Brands 2008 What is brand value? How does Interbrand derive the brand, but also because of the location of Brand value is the dollar value of a brand, value of brands? the gas stations. For each of the brands calculated as Net Present Value (NPV) or Our valuation approach is a derivative (and categories) we have assessed the today’s value of the earnings the brand of the way businesses and financial Role of Branding. is expected to generate in the future. assets are valued. It fits with current Like any other financial value, brand corporate finance theory and practice. The Role of Branding is derived as a value is based on the assumptions and There are three key elements and they percentage (%). Thus, if it is 50%, we take information available at that point in are detailed below: 50% of the EVA as brand earnings. If it is time. Brand value is calculated according 10%, we only take 10% of the EVA. to the most widely accepted and used Financial Forecasting valuation principles. This makes brand We identify the revenues from products Brand Strength value comparable to business-, and all or services that are generated with the To derive the net present value of the NPV-based asset values. brand. From these branded revenues we forecast brand earnings, we need a deduct operating costs, applicable taxes, discount rate that represents the risk The valuations of brands appearing and a charge for the capital employed profile of these earnings. There are two in the Best Global Brands (BGB) are to derive the economic value that is factors at play: first, the time value calculated in their current use to generated by all tangible and intangible of money (i.e., US$100 today is more their current owner. Therefore, these business assets of the branded business. valuable than US$100 in five years valuations do not necessarily represent Economic Value Added (EVA) is a value- because one can earn interest on the the potential purchase, extension or based management concept and is a money in the meantime); and second, licensing value of the brands. generally accepted principle to measure the risk that the forecast earnings will the ability of a business to generate actually materialize. The discount rate returns over and above its invested represents these factors as it provides capital. Based on reports from financial an asset-specific risk rate. The higher Why value brands? analysts, we prepare a financial forecast the risk of the future earnings stream, The purpose of these valuations is to and calculate the EVA of the branded the higher the discount rate will be. demonstrate to the business community business. To derive today’s value of a future that brands are very important business expected earnings stream, it needs to assets and, in many cases, the single Role of Branding be “discounted” by a rate that reflects most valuable company asset. We also Since EVA includes the returns for all the risk of the earnings actually aim to make branding and marketing assets employed in the business, we materializing and the time for which key business issues that have direct need to identify the earnings that are it is expected. For example, US$100 shareholder value impact. Through eight specifically attributable to the brand. from the Coca-Cola brand in five years years of publishing Best Global Brands in Through our proprietary analytical requires a lower discount rate than BusinessWeek magazine, we have created framework, called Role of Branding, US$100 from the Fanta brand in five the world’s most significant we can calculate the percentage of years, as the Coca-Cola brand is stronger and influential brand and marketing EVA that is entirely generated by the and therefore more likely to deliver the study. In fact, PRWeek magazine brand. In some businesses, e.g., in expected earnings. produced a study demonstrating that fragrances or packaged goods, the the BusinessWeek/Interbrand Best Global Role of Branding is very high – as the The assessment of Brand Strength is a Brands ranking was the third-most brand is the predominant driver of the structured way of assessing the specific sought-after benchmark report customer purchase decision. However, risk of the brand. We compare the by CEOs, CFOs and CMOs. in other businesses (in particular, B2B) brand against a notional ideal and score the brand is only one purchase driver it against common factors of Brand among many, and the Role of Branding is Strength. The ideal brand is virtually “risk therefore lower. For example, people are free” and would be discounted at a rate buying Microsoft not only because of the almost as low as government bonds or brand, but because the company has an a similar risk-free investment. The lower installed base of 80% of the market and the Brand Strength, the further it is it would be extremely difficult for most from the risk free investment and so the users to switch their existing files to a higher the discount rate (and therefore new software platform. In the case of the lower the Net Present Value). Shell, people buy not only because of the

Best Global Brands 2008 75 What was the basis of the Why are certain brands not Within certain large industry financial assessments? on the list? sectors there are no brands that Published annual reports were used This is a frequent question, especially appear on the list. Why? to examine the revenues, earnings and from companies who would expect their Airlines – There has clearly been balance sheets of the brand-owning brands to be on the list. There are five significant investment in airline brands companies. Analyst reports from possible reasons: (and many of them are, by definition, JP Morgan Chase, Citigroup, and global) but they are still operating in Morgan Stanley are used as the basis • The brand is not sufficiently global situations where the brand plays only for identifying the specific brand a marginal role. In most cases, the revenues and earnings and for • The brand has a pure B2B single customer decision is based on price, forecasting future earnings. audience and has no wider public route, schedule, corporate policy or profile and awareness frequent flyer points. The brand may often only have a real impact when all • The company does not produce these other items are at parity. We have What was the basis of the public data that enables us to identify assessed the brand value for airlines marketing assessments? the branded business (the company by using internal data to strip out the Unlike other brand value rankings, has multiple brands or has unbranded impact of these other factors. But from Interbrand does not rely on a single production) purely public information this is difficult source of marketing information. Using to do reliably. a single brand study would limit the • The brand is not big enough (brand type of information (usually perceptual value below $3.3 billion falls below the Telecommunications – Although there data) and the type of customer (usually 100-brand ranking are many large telecom brands that are general public) that can be considered. highly valuable, at present none of these Because many leading brands operate in • The business is driven by a number of brands fulfill all of our criteria. specific customer segments (particularly intangible factors and it is difficult to B2B brands), sourcing data exclusively separate the brand from the rest Pharmaceuticals – No pharmaceutical from the general public would prove very brands have been included since the restrictive. Instead, Interbrand refers to 2007 ranking. Pfizer and Novartis a wide array of primary and secondary – which were both included in the sources, which are applicable to each Certain obvious global brands are 2006 table – have been excluded brand. These include, among others, missing. Were they considered? following a review of our approach. ACNielsen, Gartner, Hall & Partners, and In each case there was a reason why Our review concluded that brands Datamonitor. Moreover, Interbrand they could not be evaluated based on should only be included where they utilizes its network of brand valuation purely public data. For example: resonate with consumers on a global experts from offices around the world level. In the pharmaceutical industry, to ensure that the ranking assesses the BBC – A unique organization since it’s a it is the product brand rather than brands from a global perspective. government-owned corporation that the corporate brand with which the is not supposed to generate a profit. consumer builds a relationship. The lack There are, however, parts of it which of global recognition of pharmaceutical are commercial and which do generate What was BusinessWeek’s role in the companies is fundamentally driven by profits, but these are still the minority of Best Global Brands ranking? regulatory differences around the world. the business. BusinessWeek did not influence the In the US, for example, pharmaceutical selection of brands or the determination companies are able to communicate and Red Cross – As a not-for-profit of any of the values. Their role was to advertise directly to consumers, whereas organization, it’s not possible to value publish the study and to tie the reported in the EU this is forbidden. the brand based on an earnings model. performance of brand value to some of This would be true of other global not- the wider issues affecting these brands. for-profit brands such as Greenpeace, National Geographic or Unicef. It is possible to assess the financial value of such brands, but only using a different kind of model.

Mars – This is a privately held and highly secretive organization. Other privately held brands such as IKEA are included since appropriate financial data is publicly available.

76 Best Global Brands 2008 What % of the branded business needs Are there any brands that have a What is the relationship to be outside the home country to be sufficient brand value but did not between the following terms: considered global? make the list? brand awareness, brand equity, In most cases, one-third, however if There are certainly strong national brands brand share, and brand value? the home country of the brand is small that have a value exceeding $3.3 billion Brand value is the only measure that looks (e.g., the Netherlands), we require a but did not make the list because they do at the economic benefit of the brand to higher percentage. not meet our global criteria. This would its owner. In other words, it is an end in be true of many of the financial services itself. Brand awareness and brand equity and telecommunications brands, but are a means to an end. Brand awareness also surprisingly true of a lot of food, beer is simply knowledge that a brand exists, Was this the only test for and retail brands. thus brand awareness may prompt being global? customers to consider buying a product. No, we also wanted evidence that the Brand equity is a measure of customer brand was established in a wide number perceptions of a brand, thus it may give a of markets around the world. At the very How did you take account for customer reason to prefer a product over least it needed to have a substantial the fact that some brands are run the alternatives. Brand share is simply presence in at least one country in through franchisees? the market share achieved by the brand. each of the following 4 regions: North This was an issue with all the food retail Thus brand awareness, equity, and share America, Latin America, Europe, and brands – McDonald’s, Pizza Hut, KFC, are all measures of what a customer Asia-Pacific. It also needed to be and Starbucks. We based our valuation thinks or does. It is not an assessment managed consistently as a global brand. on the earnings that the brand owner of the economic value created by those As an example, Walmart is a valuable makes from the brand and an estimate thoughts or actions. brand but it is not consistently branded of the earnings that the franchisees as Walmart around the globe. make from the brand (what is called a total-system view). As in all other valuations, these earnings were then reduced to take account of a return Do the valuations reflect the Was there a limit to the for the use of the tangible and other underlying state of the economy? number of brands included intangible assets. Yes – in two ways. The forecasts are from any one industry? prepared with an overall view on No, however, one of the requirements economic growth at a point in time. of a leading global brand is that it is, in The formula for converting the Brand fact, leading. The mark of leadership is Strength Score into a discount rate is not just about market share, but also tied to the underlying government about behaving as a leader – setting bond yield. trends, quality standards, authority, etc. Thus, there are brands that are in the top three of their category’s market share but did not make the cut and there are brands that are not top-three that did make the global ranking. The rules described are guidelines and, ultimately, each brand was assessed for inclusion on its own merits.

Best Global Brands 2008 77 How does brand value rank What is Interbrand’s view on brands Why is Interbrand an expert against ad spending? appearing on balance sheets? in assessing brand value? It is not really appropriate to try to We support the notion of the different In 1988, Interbrand developed and correlate these two. Brand value is a accounting standards to recognize the introduced the first valuation of a measure of the output from a series value of brands on the balance sheet. portfolio of brands that used a brand of brand investments and initiatives Interbrand has led the debate on this specific valuation approach. Since then over a long period of time. Advertising issue for many years. However, current we have continuously updated and is one element in a wide spectrum accounting standards allow only for improved our valuation approach to of communications that companies the recognition of acquired brands, make it the global industry standard of employ. Other communications include not internally developed brands. Also, brand valuation. The Interbrand brand sponsorships, online, point of sale, the impairment test for brands on the valuation methodology is the most customer service, etc. In some cases balance sheet allows only for a potential widely endorsed and employed valuation brands are built with very little or no value reduction but not increase. The approach around the world. Interbrand advertising, as in the case of Starbucks, acquisition criterion means that the alone has valued more than 5,000 where retail space and employees are Gucci brand is recognized on the balance brands in all industries worldwide. the key communications channels. sheet of PPR as an intangible asset, while the Louis Vuitton brand does not show Our valuations have been endorsed by up on the balance sheet of LVMH. leading academic institutions including Harvard, Thunderbird, Columbia, Emory, Is it possible to recognize brand value We conclude that the recognition of and St. Gallen. Our valuation approach on a balance sheet? acquired brands on the balance sheet is has a wide range of applications, Several accounting standards – such as a step in the right direction for providing including strategic brand management, International Accounting Standards IFRS shareholders with better information marketing budget allocation, marketing and US-GAAP – require the recognition of about the assets they have invested in. ROI, portfolio management, brand acquired goodwill, including brands, on However, it’s still not sufficient, as the extensions, M&A, balance sheet the balance sheet. The standards clearly value of internally generated brands recognition, licensing, transfer pricing, identify brands as intangible assets with cannot be disclosed despite making up and investor relations. Our valuations an infinite economic life. This means the vast majority of the most valuable have been audited for inclusion on the that, unlike other intangible assets brands around the world. balance sheet by all leading accounting (e.g., patents, databases) or goodwill firms. Also, many tax authorities and law (e.g., training, workforce), brand value courts around the world have accepted does not have to be amortized through our valuation approach. the income statement. However, they are subject to an annual impairment test and their carrying value needs to be reduced if the value declined. The technique is consistent with the way in which Interbrand has assessed brands for balance sheet inclusion – though, of course, using more extensive and proprietary data.

78 Best Global Brands 2008 Does Interbrand conduct other What is the difference between the brand studies? valuations in Best Global Brands and We have established national brand value consulting valuations for clients? rankings in Switzerland, France, Spain, The valuation methodology is the same, Australia, Singapore, China, Taiwan, however, the level of detail and the Mexico, Canada, and Brazil. These follow data input significantly differ. The BGB an identical valuation process but only valuations are based on publicly available look at locally owned brands. marketing and financial data. Also, the BGB valuations are mostly consolidated A US-specific study would be redundant top-line assessments, although due to the great overlap with the global we recognize segment differences table – 53 out of 100 are US-based. for diversified brands by product or service but not geography or any other In April 2008, Interbrand also published classification (e.g., financial services a table of the 25 most valuable European or technology). As the valuations are retail brands. based on publicly available data, they are only as reliable as the data that the brand-owning companies publish about themselves (in annual reports, analysts briefings, press articles, syndicated market research, etc.).

Consulting valuations are based on detailed customer segmentations, as well as in-depth marketing and financial analyses. They have a much higher level of accuracy and granularity. The purpose of a consulting valuation extends well beyond assessing financial numbers and goes on to identify and quantify value drivers so as to manage brands for increasing the shareholder value of the underlying businesses. However, if clients undertake consulting valuations, we are in a much better position to identify publicly available data that is likely to align the BGB valuation with the consulting valuation. In cases where companies make our consulting valuations publicly available, for example through a note in the balance sheet, these values will also be published as the BGB ranking value.

Best Global Brands 2008 79 About Interbrand About Best Global Brands Interbrand began in 1974 when the world Voted the third-most influential industry still thought of brands as just another word benchmark study by business leaders, for logo. We have changed the dialogue, Best Global Brands is our annual report on defined the meaning of brand management the world’s most valuable brands and the and continue to lead the debate on insights that can be drawn from how these understanding brands as valuable global organizations create and manage business assets. brand value.

We now have nearly 40 offices and are the We pioneered the technique for valuing world’s largest brand consultancy. Our brands in 1984 and have continued to practice brings together a diverse range improve upon the methodology and set the of insightful right- and left-brain thinkers pace for other approaches. Our valuation making our business both rigorously techniques have long been recognized by analytical and highly creative. Our work business, academics and regulatory bodies creates and manages brand value for clients as a uniquely valuable strategic tool. Today, by making the brand central to the business’s we have conducted over 5,000 valuations for strategic goals. clients to provide guidance in managing their most valuable asset – their brand. We’re not interested in simply being the world’s biggest brand consultancy. We want to be the most the most valued.

General inquiries: Media inquiries:

Jez Frampton Lisa Marsala Group Chief Executive Officer Group Communications Manager Tel UK: +44 (0)20 7554 1000 Tel: + 1 212 798 7646 Tel US: +1 212 798 7777 [email protected] [email protected] Additional information on brands Graham Hales www.interbrand.com Group Chief Communications Officer www.brandchannel.com Tel UK: +44 (0) 20 7554 1169 Tel US: +1 212 798 7581 For reprint permission of this report or [email protected] its articles, please contact Lisa Marsala.

80 Best Global Brands 2008 Best Global Brands 2008 81 Creating and managing www.interbrand.com brand value™ Best Global Brands 2008

2008 2007 Country of 2008 Brand Change in 2008 2007 Country of 2008 Brand Change in Brand Sector Brand Sector Rank Rank Origin Value ($m) Brand Value Rank Rank Origin Value ($m) Brand Value

1 1 US Beverages 66,667 2% 51 51 France Personal Care 7,508 7%

2 3 US Computer Services 59,031 3% 52 52 US Media 7,193 4%

3 2 US Computer Software 59,007 1% 53 54 Germany Automotive 7,047 8%

4 4 US Diversified 53,086 3% 54 47 US Financial Services 7,022 -6%

5 5 Finland Consumer Electronics 35,942 7% 55 49 France Financial Services 7,001 -4%

6 6 Japan Automotive 34,050 6% 56 53 US Food 6,646 2%

7 7 US Computer Hardware 31,261 1% 57 57 US Personal Care 6,437 7%

8 8 US Restaurants 31,049 6% 58 62 US Internet Services 6,434 19%

9 9 US Media 29,251 0% 59 56 US Computer Hardware 6,393 6%

10 20 US Internet Services 25,590 43% 60 58 France Luxury 6,355 9%

11 10 Germany Automotive 25,577 9% 61 59 US Food 6,105 6%

12 12 US Computer Hardware 23,509 6% 62 64 Spain Apparel 5,955 15%

13 13 Germany Automotive 23,298 8% 63 63 Switzerland Food 5,592 5%

14 16 US Personal Care 22,069 8% 64 60 US Restaurants 5,582 -2%

15 15 US Financial Services 21,940 5% 65 55 US Internet Services 5,496 -9%

16 17 France Luxury 21,602 6% 66 67 France Food 5,408 8%

17 18 US Computer Services 21,306 12% 67 68 Germany Automotive 5,407 11%

18 14 US Tobacco 21,300 0% 68 66 US Diversified 5,288 5%

19 11 US Financial Services 20,174 -14% 69 65 US Personal Care 5,264 3%

20 19 Japan Automotive 19,079 6% 70 69 Germany Sporting Goods 5,072 6%

21 21 South Korea Consumer Electronics 17,689 5% 71 71 Switzerland Luxury 4,956 8%

22 _ Sweden Apparel 13,840 NEW 72 72 South Korea Automotive 4,846 9%

23 27 US Computer Software 13,831 11% 73 _ Canada Consumer Electronics 4,802 NEW

24 33 US Consumer Electronics 13,724 24% 74 70 US Personal Care 4,636 1%

25 25 Japan Consumer Electronics 13,583 5% 75 75 Germany Automotive 4,603 9%

26 26 US Beverages 13,249 3% 76 73 France Luxury 4,575 8%

27 23 UK Financial Services 13,143 -3% 77 61 US Apparel 4,357 -20%

28 24 Switzerland Beverages 13,055 1% 78 78 Japan Consumer Electronics 4,281 4%

29 29 US Sporting Goods 12,672 6% 79 83 Switzerland Luxury 4,236 10%

30 28 US Transportation 12,621 5% 80 79 US Luxury 4,208 5%

31 34 Germany Computer Software 12,228 13% 81 74 US Restaurants 4,097 -4%

32 31 US Computer Hardware 11,695 1% 82 80 Germany Financial Services 4,033 2%

33 30 ® US Alcohol 11,438 -2% 83 85 France Alcohol 3,951 6%

34 22 US Financial Services 11,399 -21% 84 84 UK Energy 3,911 3%

35 38 Sweden Home Furnishings 10,913 8% 85 88 US Restaurants 3,879 7%

36 36 Japan Computer Hardware 10,876 3% 86 81 Netherlands Financial Services 3,768 -3%

37 32 US Financial Services 10,773 -6% 87 77 US Consumer Electronics 3,721 -10%

38 35 US Financial Services 10,331 -3% 88 89 US Consumer Electronics 3,682 2%

39 40 US Food 9,710 4% 89 91 UK Alcohol 3,590 6%

40 44 Japan Consumer Electronics 8,772 13% 90 92 Japan Automotive 3,588 7%

41 39 Switzerland Financial Services 8,740 -11% 91 94 Italy Luxury 3,585 9%

42 37 US Financial Services 8,696 -16% 92 90 US Personal Care 3,582 4%

43 42 Netherlands Diversified 8,325 8% 93 _ Italy Automotive 3,527 NEW

44 _ Canada Media 8,313 NEW 94 _ Italy Luxury 3,526 NEW

45 46 Italy Luxury 8,254 7% 95 87 France Alcohol 3,513 -3%

46 48 US Internet Services 7,991 7% 96 _ US Hospitality 3,502 NEW

47 50 US Computer Services 7,948 9% 97 93 Netherlands Energy 3,471 4%

48 43 Germany Diversified 7,943 3% 98 96 Germany Personal Care 3,401 9%

49 41 US Automotive 7,896 -12% 99 _ US Transportation 3,359 NEW

50 45 US Automotive 7,609 -1% 100 _ US Financial Services 3,338 NEW