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86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
86 Bgb Interim 160409 Final Version
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86 Bgb Interim 160409 Final Version

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  • 1. The Best Global Brands Interim Report How leading brands are navigating challenging market scenarios
  • 2. Throughout all the coverage, comment, and conjecture on the economic crisis we have been constantly answering questions about the Best Global Brands and what lessons can be supplied for creating and managing brand value in these turbulent times. This considerable interest has prompted us to create this report. We’ve realized that we can provide tremendous insight for all marketers on how these brands are performing amidst the turmoil and offer perspective on the world of branding before our full report of Best Global Brands 2009 is published in September. The Best Global Brands Interim Report 2009 4
  • 3. The Best Global Brands Interim Report: How leading brands are navigating challenging market scenarios We are clearly living through a time of unprecedented change. The economic landscape is the unavoidable subject on everyone’s mind. Within this context of the unknown we have seen businesses scale back costs, resources, and investments in order to face the challenges ahead. It’s an understandable and prudent action within such a volatile market, but what happens when you’ve cut as far as you can? What happens when you switch focus to consider the revenues the business creates rather than the costs you can save? Brands will either weather or wither in the storm. Surely the next phase of the economic cycle needs to focus on demand creation, not just With corporate value increasingly cost reduction. Too often demand creation seems too ambitious when consumers have driven by intangibles, like brands, locked their wallets and purses shut. But as we’re constantly seeing, consumers won’t buy companies should first look to what they don’t want, and without demand there’s no revenue coming in to fund even the reduce non-strategic assets. most prudent cost base. As such, we’ll see brands that create demand and sustainable value for their businesses, Our Best Global Brands report has shown even in these lean times. With corporate value time and time again that a brand is often an increasingly driven by intangibles, like brands, organization’s most valuable asset. But then companies should first look to reduce non- how do you manage such an asset in these strategic assets. For businesses with more turbulent times? Ultimately, the difference than 50 percent of their value in intangible between winning and losing – the difference assets, namely the brand, reductions in between staying in business and being out of marketing and innovation cut directly into business and between a brand living or dying the strategic muscle of their organization. – is understanding the role a brand plays and how it derives its strengths. This is absolutely crucial in navigating today’s market. (Read more on the Role of Brand and Interbrand’s process of brand valuation in the sidebar “Calculating brand value.”) 5 The Best Global Brands Interim Report 2009
  • 4. Calculating brand value Interbrand pioneered the methodology for valuing brands some 20 years ago. In that time we’ve valued over 5,000 brands around the world, and our methodology has been used in courts of law, taught in business schools, and applied by tax authorities. We value brands using the same principles that analysts use to value other business assets – by considering how much brands are likely to earn in the future. There are three components to our methodology: For our own purposes of valuing brands for the Role of Brand Index is derived from in a public forum, at this time, it feels Interbrand’s database of more than 5,000 01 Financial analysis counterintuitive to apply data with such prior valuations conducted over the course of inherent deviations. So while a financial 20 years. In-house market research is used to analysis is integral to a valuation, if we are establish individual brand scores against our to consider how to best manage a brand in industry benchmarks. We forecast current and future earnings these circumstances, we should focus on specifically attributable to the branded the other two components of a valuation: products. We subtract operating costs Role of Brand and Brand Strength Score. from revenue to calculate branded 03 Brand Strength Score operating profit. We then apply a charge to the branded profit for capital employed, giving us the brand’s economic earnings. For our public studies, our financial 02 Role of Brand Index This is a measure of the brand’s ability to analyses are based on publicly available drive choice and secure ongoing customer data culled from a range of analysts’ demand, and it is used to assess the riskiness reports to build a consensus estimate for of forecasted Brand Earnings. The Brand financial reporting. The Role of Brand Index is a measure of Strength Score is translated into a discount how much of the customer demand was rate, which is applied to Brand Earnings to At this time, analysts are clearly finding it dependent on the brand at the point of derive the Net Present Value of the brand. This very difficult to forecast earnings with any purchase and is applied to the economic assessment is a structured way of isolating degree of conviction or accuracy. Everyone earnings to arrive at Branded Earnings. By the specific risk of the brand in the context of wants to know when markets will bottom this assessment, the brand’s contribution the business. We compare the brand against out, but in reality no one knows when the to the earnings of the business is isolated. common factors of brand strength in green shoots will appear. For this study, industry benchmark analysis its marketplace. The Best Global Brands Interim Report 2009 6
  • 5. Understanding Role of Brand and Brand Strength to understand the future of your market Consider where your brand Every business involves a promise (brand) and the lies within this framework. fulfillment of that promise (business’s abilities). This will help you understand the role brand plays within Thus, creating and managing brand value requires your business as well as the an optimization of the interaction between the strength your brand has in competing in its market. brand and the business. The Role of Brand defines Both the Role of Brand and the degree to which demand is dependent on Brand Strength should be regarded as active levers of the brand, while Brand Strength is the ability the brand. They can be pulled of the brand to generate and sustain demand. or pushed to drive the brand to a different place within the The two factors are essential for increasing matrix. However, you need an business value; while Brand Strength is subject accurate understanding of how the brand adds value to the to the law of diminishing returns, a change in the current business and how it is business model (and subsequently in the Role of positioned in the market. Brand) will pave the way for further growth. A. In Quadrant A (top right), we can see brands The following two-by-two diagram provides a with a high Role of Brand and high Brand Strength. While this may outwardly seem useful framework to consider the relationship like the perfect spot, in many ways this is between Role of Brand and Brand Strength. the most challenging position. What every market has in common is the level of change that has taken place. In turn, customers’ attitudes and economic circumstances have changed in reponse to the shifts. How can these brands therefore ensure that they continue to maintain their Brand Strength and Role of Brand when the dynamics and competitive game of the market are in flux? Positively, they have the ideal conditions to allow them to pull away from their 7 The Best Global Brands Interim Report 2009
  • 6. A of ole hR h competitors. Negatively, they risk losing Hig d, hig gth A h Role of value as customers look for tangible returns h n Bra d Stre n Hig d, hig gth Bra n n n Bra d tre on their purchase decisionSand focus on price an Br“tangible” drivers. No and other verifiable or brand can be taking a timeout right now; C B cutting into strategic assets like the brand of d can have negative short- and long-term ole ran w hB o C h you’re f hR Hig gth, l d i eo B h thelo effects.gIf Rol w in Quadrant A, you needBrand w Hig d, low gth n Bra d Stre n n Stre of Bra n H d, lo gth Hig ngth, nd e ran Stren right strategies to stay there. Bra n Rol B re St of B ra nd Bra ole R B. The brands found in Quadrant B have high D Brand Strength and low Role of Brand, e of meaning the brand is well positioned in a Rol Low d, low gth D Role of market where the brand’s contribution to n Bra d Stre n n Low ow The ngth demand is rather small. nd, l classic advantage Bra Bra d Stre n Ba of this quadrant is the rfreedom to experiment Ro th Ro th le o with new ways to grow the business.treng Strong le o ng f Br S f Br Stre and nd and ran d Bra brands have a strong foundation, and a lower B Role of Brand in your category means a lower risk of exposure or lower risk of stretching your brand out. There is less vulnerability The brands role in customers’ current decision-making D. that create the process, a little more communication or a refreshed touchpoint probably won’t change Brands in Quadrant D are perilously full of opportunities. It would be easy to feel brand most value are much. But if businesses can innovate and meaningfully change the parameters of is redundant if you sit in a business that focuses on demand drivers, which are not the ones that choice, then they can raise Role of Brand in their category and create a disadvantage strongly dependent on brand (the competitive advantage comes from other tangible or are the most among competing brands. Brands that have done this successfully include Zara, intangible assets), and your brand fails to drive demand. However, if competitive pressure relevant to the Southwest Airlines, Amazon.com, and iPod. increases, the brand becomes a needed point of difference. Increasing the Role of Brand or customers’ choice. C. In Quadrant C we find brands that have a increasing the Brand Strength (or ideally doing both) is the key to competitive advantage. high Role of Brand but low Brand Strength Doing nothing allows the brand to wallow to letting it run and seeing if the category score. This is a critical spot on the matrix. with the tide. Quite simply, brand owners drivers can be tipped in your favor or using In this scenario the brand has an important need to make something happen - and fast. the brand in other segments. However, the influence on purchase decisions but fails juxtaposition between Brand Strength and to drive ongoing demand. This means your Understanding the combined effect of the Role of Brand could also allow a brand to brand is important but risky, and your role your brand plays and the strength it has become seen as “nice to have” rather than competitors tend to win the battle each are pivotal to your future in a marketplace essential. For these brand owners, the brand time the product offering is similar. Brand in which demand is decreasing. The brand is overdelivering for the business in a market building is required, and fast, as the category is closely linked with the business model, where brand could be conceived as being structures will punish weak brands. If these which is evident in the interplay between unimportant. In such circumstances the brand owners want to ensure the brand the provided customer benefits and their challenge is to utilize the brand’s strengths to improves its ability to generate demand, dependence on the brand. Once the brand’s increase the role that the brand plays in the strategies are required to improve the brand’s position in a market has reached a level of market. The opportunity here is the ability to performance. To increase Brand Strength, diminishing returns, a change in the brand’s change the relevance of the demand drivers the performance of the brand on those role in the business requires the consideration and increase the weight on those that are criteria most relevant to the customer must of the business’s entire capabilities and is an most dependent on the brand. be improved relative to that of competitors. opportunity to create value. The brands that A change in the Role of Brand in a category This requires improving the attractiveness ultimately create the most value are the ones requires innovation: new business models, of brand attributes (positioning) and/or that are relevant to the customer choice and delivery infrastructure, and radical product the contact quantity with the customers understood as superior in their market. benefit intensification. If brand plays a low (increase touchpoint investments). The Best Global Brands Interim Report 2009 8
  • 7. The markets of the downturn Ever since the economy began its demise in the summer of 2008, we have watched new market scenarios emerge. These market scenarios provide unique challenges for brand owners, regardless of which quadrant a brand falls into. Some of the scenarios are interrelated and may well escalate into the next sequential stage. All require different techniques and strategies for managing the brand’s safe passage through the ensuing turbulence.
  • 8. 01 Market scenario The Hurricane This is the market that has grabbed the Demand drivers were consistent year over As in nature, market hurricanes are headlines of the credit crunch and the year, and considering the global complexity transfiguring events. They don’t just dump ensuing recession. While it steals the show, of the segment, customer needs were water, take out the power, and raise a few it’s actually confined to a limited number of fairly common across both geographies shingles. Hurricanes possess a power capable sectors - at least for the time being. and segments (insurance, private banking, of reshaping coast lines, claiming entire cities, consumer, and corporate). With customer and changing lives forever. For businesses, like The financial services market has received choice narrowly fixed, and with core products any real hurricane survivor, there will be no the brunt of the hurricane. Before the and people varying very little from one player status quo to return to when the storm finally crisis, financial services brands were often to the next, financial services players turned subsides. The cellar is flooded, the crops predictable, undifferentiated, and not the product innovation engines to full tilt, have gone to spoil, and the customers are on infrequently boring. Consider the client precipitating the financial storm of a century. higher ground, weary and wary of heading environment before the hurricane. home. it was in poor shape, no one could have they were either regional or too small have predicted its dramatic descent and ensuing benefited from the erosion of trust in bigger 01 Sidebar nationalization. Overall, Citigroup’s fall competitors. While it would be a stretch Brands in The Hurricane has signaled frightening warning call to to say it is a great time for these brands, consumers: No bank is safe. these banks have successfully reassured the markets and are less vulnerable in the long- While Citigroup’s CEO’s announcement that term because they have regained or held on to Banks were once synonymous with public he would take a token pay of $US 1 until the consumer trust. This is another effect of “The trust and confidence. But for many, the company returns to profitability is a step Hurricane.” current global meltdown in financial markets toward rebuilding shareholder and leaders’ had led to a recalibration of their relationship trust, much more needs to be done to rebuild Santander is a good example of a regional both with their own money and with the trust internally and externally. It must take bank that is persevering despite the crisis. banks that look after it. Consumers no measures to consistently build trust by Santander is Europe’s second bank by market longer trust the financial sector. The global ensuring that the brand strategy and business value and is number one in Eurozone. While meltdown and the financial industry’s risky strategy are aligned. A further understanding Merrill Lynch (ranked 34 in 2008), and JP investments with consumers’ money have of its brand value, management for the Morgan (ranked 37 in 2008) once greatly left stakeholders shaken to the core. The long-term, and a grassroots and human profited from their focus on brokering and hurricane has hit – so how do banks regain effort to engage with stakeholders can all investment banking, Santander’s strong focus consumers’ trust and how can corporate help Citigroup and other financial services on retail banking has left it in a much stronger branding contribute to this effort? businesses navigate this terrain. The brands position now. The bank has even withstood that display their leadership by taking active a blow from the Madoff incident; although Citigroup, once the world’s biggest bank control, explaining why we’re in the mess, and Santander was one of the institutions most by assets, and ranked number 19 on Best offering solutions will demonstrate that they affected by the scandal, it has also been Global Brands 2008, lost US$ 253 billion of its are serious about real organizational changes one of the first to offer to return some of market value in two years. The government and accountability. The fluctuations of the money lost by clients in the fraud. This is taking a stake in the bank of 40 percent. Citigroup, in particular, reflect the confusion measure has been imperative in regaining While last year its high exposure to subprime and volatile emotions consumers feel toward consumer trust. Santander is also using its mortgages, high costs, and unfocused financial brands at this time. newly advantageous position to gain access growth through badly integrated merger to liquidity and market share in core markets and acquisition activities established that Meanwhile, banks that did not appear on such as Spain and the U.K. Both measures the Best Global Brands 2008 list because suggest that Santander will emerge stronger from the storm in the long-term. The Best Global Brands Interim Report 2009 10
  • 9. A recent study proves this case. In February and March 2009 we helped a bank conduct The same wind open for new lateral movers and new entrants. On March 30, Tesco announced global research with clients across corporate and private banking segments. These that shook the it would open 30 branches of what is reported to be called Tesco Bank, a model customers described a Category 5 market hurricane. They don’t trust anyone and foundation it had been testing. (“Tesco to Open 30 in- store ‘bank branches.’” Financial Times. March they don’t believe anything. Their hierarchy of needs has been turned completely on can also raise 3, 2009, p. 19) its axis. The absolute basics are now the highest-order drivers of demand (solvency, the sails. • Rebuild - Leverage the moment to rebuild a new brand. It is too early to know who stability, open for lending). It is a customer will do this successfully. environment that has been truly transfigured. opportunity for brand owners is to capitalize on the sea of change and build new brands. If you’re managing a brand in the midst of Where is the value in the hurricane? What’s This is easier said than done but could a hurricane, recognize that the old ways of the forecast? And can anyone turn it to his include: doing business have now changed. Create or her advantage? The short answer: near, future scenarios based upon consumers’ term inevitability followed by longer-term • Renovate - If you’re a brand with valuable anticipated needs and start to maneuver opportunities. consumer affinity, this market could be a new yourself in this direction as quickly as you opportunity for you. For example, Sandoval can. Remember, the same wind that shook The Swiss market is the perfect example of is using its strong focus on retail banking and the foundation (Lehman, Bear Sterns) can the near term. The largest Swiss bank, UBS, legacy of trust to steal market share from also raise the sails. Indeed, a March 2009 has been one of the hardest hit during the competitors. Interbrand North American banking sector hurricane. It is literally hemorrhaging assets, study not surprisingly shows that the many of which are flowing into the state- • Reinvigorate - Dig deeper into customer role of brand in this sector has increased backed Cantonal bank, and smaller, regional drivers of attachment and use the significantly. For brand owners in financial banks like Credit Suisse and Raiffeisen. Like transformative nature of the market to services, this means the return on branding the hotel operator outside town, regional affect broad and lasting business and brand innovation and investment has likely never banks are profiting as customers flee the site strategy changes within your organization, as been greater. (Read about these brands and of the storm in search of safety. But this is a one global financial services client is doing. more in the “Brands in The Hurricane” sidebar on reaction among customers to businesses that the previous page.) existed before but have now become more • Relocate - The simultaneous rise in Role attractive because of these extraordinary of Brand and decline of trust and reputation conditions. The larger, longer-term among incumbents leaves the door wide 02 Market scenario The Depression This is perhaps the most typical market of – although The Depression can be see across Managing a brand in such circumstances these times. Demand once flowed with all categories, from cosmetics to electronics. means that you really need to have your consistency but has since taken a downturn In the case of the auto industry, brands finger on the pulse of the marketplace. that’s in tune with the economic conditions. like Honda and Ford have seen purchases Demand has slowed as consumer spending postponed as consumers are in a “wait and Key questions brand owners should ask has restrained. Whether this downturn is see” mindset about their spending on major include: “U” shaped, bath shaped, or “L” shaped is purchases. They will eventually return, but difficult to determine. What we do know is who knows precisely when or what it is that • What are the game-changing innovations? that the trajectory of demand drivers will buyers will want. Brands need to stay in the change according to the market. The auto game and ensure that they have the flexibility • What tactics can unlock demand? industry is a typical example of this market to move with the market. 11 The Best Global Brands Interim Report 2009
  • 10. inventory levels in the U.S., Europe, category to see a decline in demand. and Japan. Although Nintendo’s Wii benefits 02 Sidebar And yet, despite a decline in demand, from the trend for consumers to Brands in Honda is doing some things right to stay at home and spend time with their family it may be affected in the The Depression stay on top of the situation. While it is dialing down some aspects of its short-term by a number of factors. First, a deepening recession in Japan brand, it has aggressively focused has slowed demand. As the country on the new, innovative, hybrid car Many leading brands that once had slides into a downturn, Nintendo has “Insight,” which it just started selling consistent demand for their products already reacted by cutting its sales in Japan and which will be available are now experiencing a depression. target by one million Wii consoles to in Europe and the U.S. in April. The Indeed, The Depression scenario is 26.5 million for the year. Likewise, a small, stylish, compact eco car is the most common result of the global soaring yen cuts profits on products priced around $US 20,000 (20 percent economic crisis. they sell overseas. The yen has been cheaper than the price of a Prius) hitting three-year highs against This scenario is, of course, most and improves fuel efficiency with an the dollar. evident in the auto industry. Ford Eco Assist feature that gives drivers and GM have seen stocks tumble, feedback and assigns scores on the Still, despite the worsening bottom with bailouts imminent. While Ford efficiency of his or her acceleration line, the company claims to be is combating layoffs and production and braking practices. Honda’s plan “recession proof,” citing the fun and cuts by aggressively focusing on the was to introduce the car to capture innovation of its products. It still launch of a new Ford Taurus to uplift the middle-class consumer that expects record, high revenue and the brand’s reputation in the U.S. wants to be eco friendly and can’t operating profit due to its focus on as well as focusing on the Chinese spend money in this consoles that appeal to people who market, it is hard to tell if this will economic situation. do not usually play video games. provide the real boost the brand So far, this strategy has proven While it is hard to know if the car needs. The question is: Given Ford’s successful. Whereas rival Sony, which will be cheap enough to attract Gen situation, is this game-changing catered to the overseas market and Xers in the U.S. and Europe as well, enough? real game player, is bracing for its the current economy could very biggest-ever loss this year, Nintendo Meanwhile, Honda, which has well prove to be what ultimately has performed relatively well. proven to be a far more stable brand shifts the perception of hybrid cars However, while sticking with what over the last few years, is also in from an environmentally-conscious works is a strong strategy that should The Depression scenario. While we trinket to an intelligent, value-for- prove Nintendo well in the long run, predicted a revenue increase of eight money purchase. If so, Honda is well unless Nintendo also focuses on percent in 2008 and two percent in prepared to capture share, with even maximizing customer relationships 2009 for Honda in Best Global Brands more hybrids in the work over the and more game-changing 2008, given the current economic next five years. innovations, it may see demand slow situation, we now expect a decline of While the auto industry may even more. 12 percent in 2008 and six percent in have been the hardest hit by The 2009. Honda has also been forced to Depression scenario, it is not the only cut back on production to bring down The Best Global Brands Interim Report 2009 12
  • 11. • How do I maximize my customer relationships? • What’s the right portfolio to allow me flexibility for the future I can’t see? • What aspects of my brand do I need to dial up and dial down? (Read about these brands and more in the “Brands in The Depression” sidebar on the previous page.) 03 Market scenario The Fairer Winds Someone has always got to win. In this The questions Fairer Winds brands should market, the winners are the low-budget consider include: brands that either by design or circumstance have found themselves in the right place • How can I ensure that I hold on to my at the right time. Low, cost, value retailers market share even after the crisis? are typical examples here, as are fast food outlets that steal share from eating out • How can I innovate and cater to a new occasions that cater to sit down, family audience? meals. Or, in McDonald’s case, directly stealing share from Starbucks by presenting • How do I leverage my advantageous itself as a more affordable coffee option. As position in a cost-effective way? economic hardships become more apparent to consumers they seek out value, and that’s • Where can I diversify? (Read about these just what these brands offer. They currently brands and more in the “Brands in Fairer Winds” benefit from the gravitational pull of value. sidebar on the next page.) This is evident from fast fashion retailer Zara’s successful profit despite the downturn, particularly in markets like Japan where it has gained share. The challenge for these brands is to hold on to their new customers once the economy recovers. 13 The Best Global Brands Interim Report 2009
  • 12. 03 Sidebar Brands in Fairer Winds The winds have knocked many brands left and right. But for some, the winds seem relatively fair. Low-budget brands like McDonald’s, for instance, have found themselves in the right place at the right time. McDonald’s had already strengthened its offering over the past few years to update the brand by focusing on more healthy offerings. This update has helped to give it a head start on capturing a new, middle-class audience now looking for a low-cost alternative to dining out at more expensive eateries. McDonald’s was also smart to seize an additional opportunity by stealing new audience share from Starbucks. When consumers cited that Starbucks coffee prices were now too high to indulge daily, McDonald’s leveraged its already, established coffee offering, positioning it as a low-budget but premium alternative. So far, its efforts have paid off. Similarly, while all retail has suffered, fast fashion brand Zara has suffered less due to its low-cost to quality quotient. Zara, which has become a truly global force over the last few years, has a particularly rock-solid business model, with a weekly rollout of new stock and truly customer- driven design that is based on input from market specialists, buyers, and designers. Zara has stayed committed to its effort and has seen an increase in sales, particularly in Japan, where luxury brands once flourished. It hasn’t taken a breather either, with plans to extend into Zara Home and to collaborate with MTV on a clothing line. The challenge for both, however, will be ensuring that they hold on to their new customers once the economy recovers. This means that they need to work harder than ever before on their products and services, drawing shoppers beyond just cost. The Best Global Brands Interim Report 2009 14
  • 13. 04 Market scenario The Fog Despite the market downturn putting a While in reality the business remains solid, fog in front of certain brands, these brands brands in The Fog market scenario need to: continue to benefit from a constancy of demand. Still, it’s difficult to see through The • Stay vigilant and prepare for any oncoming Fog, peering through to see what obstacles shifts. are real and relevant and what obstacles may be anticipated but proven untrue. This is a • Remain in tune with consumers’ attitudes risky position because if you bet on hanging and demonstrate empathy with what they on to the fundamentals (i.e., identifying and are going through. reacting to more structural market changes), then you may win. But if the downturn is • Stay on course while also remaining flexible stronger than expected, the brand could fail. to adapt quickly to changes. This position requires constant vigilance, frequent insight refreshing, and the flexibility • Look to where you can streamline without to quickly adapt to changes. These brands significant risk to your strategy. (Read about need to continue on course with conviction these brands and more in the “Brands in the Fog” but must constantly have all their sensors sidebar on the next page.) on to see what dangers lurk around them. Many of the FMCG companies and the utility companies sit within this scenario. Demand drivers for brands like Coca-Cola are largely unchanged, and purchases can’t be postponed. As such, Coca-Cola’s strategy is to continue as usual, hoping to come out stronger in the long-term. Meanwhile, luxury brands like Louis Vuitton and Ferrari are stable, but are cutting costs to plan for obstacles ahead. 15 The Best Global Brands Interim Report 2009
  • 14. audience still want to shop online? with a 10 percent decrease in profits, Amazon needs to watch its market LVMH has already started strictly 04 Sidebar closely and continue to stay in tune controlling its costs, scrapping plans Brands in The Fog with consumers’ attitudes. for a new 10-story Ginza flagship store due to open in 2010. It has also Similarly, Coca-Cola has maintained lowered prices on all its products While brands like Amazon, Ferrari, stability, with projections of growth by seven percent to spur demand. and Louis Vuitton continue to benefit of six percent from 2010 onwards. Still, it continues to move forward from a constancy of demand, the The results presented in the fourth with creative line collaborations and uncertainty of the future puts a cloud quarter 2008 are strong, with six Neverfull, a lower-cost line. While over their situation. percent growth in Latin America and Neverfull has proved to be a best double-digit growth in China and Although Amazon’s better-than- seller, it – and price cuts – may well India. Such results in a challenging expected profits in the fourth prove to decrease the brand’s value environment suggest that the brand quarter could easily put it in “The in the long-term. Also, even when was undervalued in Best Global Fairer Winds” scenario, a few factors the market turns, it is unclear if Brands 2008 as well. And yet, while make its situation foggy. The site’s consumers will have the same interest Coca-Cola is on track with the same ability to search out the lowest price in luxury that they once did. strategy that has served it well in the offering for products and aggressive past, the potential fallout in emerging Ferrari is in a similar position. promotion and discounts proved markets (its biggest growth area) may Although sales were up in 2008 attractive to long-time customers as impact the brand in the following (particularly in Eastern Europe), well as customers new to Internet months. If that proves to be the case, and Ferrari has a track record of shopping. The U.S. launch of its Coca-Cola needs to be ready to adapt profiting in even the worst of times Kindle 2.0 in February 2009 also to a changing marketplace. (it continued to sell well even during resulted in better-than-expected the 1970s fuel crisis), it has plans returns. And yet, while it seems Some brands that are already to shed 10 percent of its workforce. clear that we may have undervalued beginning to prepare for an uncertain Even though Ferrari President Luca Amazon’s brand in our ranking, future include luxury brands Louis di Montezemolo has been quoted as Amazon still needs to stay on its toes. Vuitton and Ferrari. Despite a saying “There will always be people Without another Kindle launch to surprisingly higher than expected crazy enough to buy a Ferrari,” carry it through a tough year, will it sales in 2008, LVMH is likely to because the future looks particularly be able to perform as well? Also, after decrease in value. Japan’s economic murky for luxury brands in particular, the storm, will the newly attracted situation is likely to impact the brand its taking measure to plan accordingly. The Best Global Brands Interim Report 2009 16
  • 15. Considering the challenges Brands that find themselves in The Hurricane first to understand how they will evolve, and market scenario need to consider how their you’ll come out ahead. brands should deliver in the future and create appropriate strategies. Changing business If you’re benefiting from The Fairer Winds models create the need for new brand scenario, you have no time to enjoy the strategies and a clear understanding of the moment. As fast as this market came to you it strengths and weaknesses of the existing can get carried away. Today’s consumers may brand assets. At some point the market will be feeling the financial pinch, but they are just recover, and so the challenge is to determine as demanding as they’ve always been. Low what will constitute the right brand for that budget will not be a differentiator for long. market of the future. We don’t know when that market will rebound, and there will be And for brands lost in The Fog, your mantra no grand announcement to signal it is time to should be to keep going with everything start leading again. If you want to be a part you’ve got. Show confidence but keep moving of it, you need to get to the front of the queue forward with all your sensors on. With so and define your moment. much change occurring, you’re bound to hit the odd bump in the road. Be smart about the Brands within The Depression scenario need real trouble spots and do what you need to do stamina and resilience. Keep your culture to avoid them. Find the level of adaptation to buoyant. Make sure your people are focused maintain demand. on customers. You’ll be fighting against the depression for as long as it takes markets to Best Global Brands has shown time and time turn around. Constantly take the pulse of the again that a brand can be an organization’s market. Adapt and flex your offer to ensure most valuable asset. But such assets aren’t that you remain in tune. Stop listening to just for good times. They also provide a great your customers, and the depression you’re in source of confidence and opportunity as could escalate into something truly nasty. You markets go through trials and tribulations. A need all your wits about you to get through strong brand is a valuable asset that enables this as quickly as possible without long-term you to tackle the future and the opportunities damage to your business. You may well need it brings. to redefine your business, so keep an open and informed mind. Things will be in constant flux. Consumers will adapt and evolve. Be the 17 The Best Global Brands Interim Report 2009
  • 16. 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, Best for logo. We have changed the dialogue, Global Brands is our annual report on the defined the meaning of brand management, world’s most valuable brands and the insights and continue to lead the debate on that can be drawn from how these global understanding brands as valuable business organizations create and manage brand assets. 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. To date, 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 valued. Contact us General inquiries: Media inquiries: Jez Frampton Lisa Marsala Global Chief Executive Officer Global Communications Manager Tel UK: +44 (0)20 7554 1000 Tel: +1 212 798 7646 Tel US: +1 212 798 7777 lisa.marsala@interbrand.com jez.frampton@interbrand.com Additional information on brands www.interbrand.com www.brandchannel.com For reprint permission of this report or its articles, please contact Lisa Marsala. 19 The Best Global Brands Interim Report 2009

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