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BAV Group Best Countries Origin Index Report

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The Origin Index is the newest part of our annual Best Countries Report, the world’s largest study of nations as brands. Through our Origin Index analysis, we explore the connection between a nation’s brand power and the companies that call it home.

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BAV Group Best Countries Origin Index Report

  1. 1. A Study on The Power of Nation Brands in Global Markets
  2. 2. For over 25 years, BAV Group has worked to understand and celebrate the power of brands. The ability of brands to influence and, ultimately, become part of culture often results in financial success, and a country’s trade performance is also affected by how it is perceived around the world. The Origin Index is the newest part of our annual Best Countries Report, the world’s largest study of nations as brands. Through our Origin Index analysis, we explore the connection between a nation’s brand power and the companies that call it home. We surveyed over 21,000 global consumers to understand how much a brand’s nation of origin can influence the purchase preferences of consumers, and what marketers can do to tap into a country’s strengths. 2
  3. 3. Source: 2019 Best Countries Report The Best Countries Origin Index (OI) explores how a country’s reputation is a direct driver of its success as an exporter in select industries. 77% of the respondents in the 2019 Best Countries Report say they prefer to know where the products they buy come from. The power of a nation’s brand can have enormous halo effects on its key industries and the brands within them. How a country is perceived is inextricably linked to consumer desire to engage with its products, and we observe this connection across industries and geographies. —Michael Sussman, CEO, BAV Group 3
  4. 4. Source: 2019 Best Countries Report; Export Figures: UN Trade Statistics, 2017 The OI is based on consumer perception and preference — not actual purchasing habits or a country’s record of exports. Our study shows, however, that consumer perceptions of countries can track closely with real-world export figures. The connection between these two metrics yields two important insights: 1. Country of origin branding has an important effect on the ability of nations to compete in global markets. 2. There is room for a country to overperform if it leverages its brand strategically, and underperform if it doesn’t take advantage of its brand strengths. Germany Japan Italy United Kingdom France Canada Sweden United States South Korea Belgium NetherlandsChina Hungary Czech Republic Mexico India Slovakia Morocco Myanmar R² = 0.56 4
  5. 5. Source: 2019 Best Countries Report Germany Germany Germany France Japan Italy Italy France Japan Switzerland France Italy Germany France France United States Italy Canada United Kingdom United Kingdom United States United Kingdom Spain Germany United Kingdom France Canada United States United Kingdom Germany Portugal United Kingdom France United Kingdom Switzerland Spain Switzerland Switzerland Germany Italy Canada Japan United States Canada Canada Spain Australia Switzerland Sweden Sweden Sweden Germany Sweden Australia United States Sweden United States Italy Denmark Switzerland France Canada Argentina Canada Switzerland Denmark Netherlands Sweden Netherlands Sweden Switzerland Spain Denmark United States Japan Netherlands South Korea Netherlands Greece Japan Out of 80 countries measured, these are the top-ranking nations driving consumer preference across key industries. The United States is a top 10 brand globally in most categories, but does not lead the list in any sector. RANK 5
  6. 6. Source: 2019 Best Countries Report; Export figures: UN Trade Statistics, World Bank; BAV Global Studies 2015-2018 America was once the indisputable economic leader of the world. Not only did the United States hold the largest GDP in the world for 80 years, it also enjoyed the largest share of global exports—17% of all goods circulating around the world in 1960 came out of America’s factories and American land. According to the Best Countries OI, many American brands are still some of the most desired globally. Global BrandAsset Valuator® data proves how much consumers value brands like IBM, Google, and Apple—America’s leading technology brands—which are among the top 50 most powerful consumer brands in the world. Prominent cosmetics brands like Maybelline, Revlon and Clinique have also grown in brand equity globally in the last few years. Brands in sectors like Automobiles, Healthcare and Food, however, are not as valued around the world, ranking outside the top 5. This means that while emerging American tech and beauty brands can act as brand ambassadors when entering new markets—creating a competitive advantage—other industries must be more strategic in how they leverage Brand USA’s imagery. USA OI RANKING HIGHER GLOBAL RANK LOWER GLOBAL RANK TECH/ELECTRONICS COSMETICS AUTOMOBILES FOOD PHARMACEUTICALS FASHION HEALTHCARE WINE 6
  7. 7. Source: 2019 Best Countries Report American consumers see the US as the leader in every category except medical (Pharmaceuticals, Healthcare). For local companies marketing to an American audience, communicating an American heritage can drive brand power and engagement. However, in the global marketplace, Brand USA trails behind players like Germany and the UK across a variety of industries. We see the biggest gaps in Brand USA’s power within the Automobile and Food sectors. While Americans overwhelmingly prefer American-sourced cars and food, the rest of the world does not hold them in such high regard. How can Brand USA close the gap? A key starting point is to focus on perceptual strengths in innovation and technical expertise, regardless of category. TECH/ELECTRONICS COSMETICS THE WORLD sees the USA as AMERICANS see the USA as AUTOMOBILES HEALTHCARE PHARMACEUTICALS FASHION FOOD WINE When it comes to Made In USA brands, American consumers and global consumers diverge. 7
  8. 8. Source: 2019 Best Countries Report; Export figures: UN Trade Statistics, 2017. Healthcare sector information is missing due to lack of comparable export data. While the United States is a major exporter across a variety of industries today, Brand USA’s performance on the OI translates into lower predicted demand for American goods than we see in actual 2017 data—a warning sign for future export numbers. This is especially prominent in the industries in which Made In USA ranked lowest (Automobiles at #8 and Food at #11). Despite being the indisputable global leader in Food exports and #3 in Auto exports by value, people across the world don’t indicate a preference for American-branded goods. American brands working together to drive positive perceptions of their country of origin can help Brand USA’s rank on the OI—and their bottom lines, too. $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 Automobiles Pharma Fashion Tech/Electronics Food Wine Cosmetics Actual US Exports Predicted US Exports based on OI Rankings 8
  9. 9. Food is one of the biggest discrepancies in how Americans perceive their market, compared to how the rest of the world sees it. The United States is the largest exporter of food products in the world, but consumers around the world don’t necessarily prefer American food over other countries’. What is the world’s perception of American food? In the Best Countries Report, the US ranks #19 out of 80 countries in being “health conscious” (the leaders include the Nordic countries, Netherlands, Canada, Japan and Australia) and ranks even lower in having “great food” (the top 5 countries are Italy, Spain, Mexico, Greece and France). Still, there are opportunities to leverage perceptions of the US in the Food industry. The US is seen as innovative, trendy and fun—qualities that are ripe for food-brand competition. In the United States, Kraft’s high brand equity is similar to the likes of Google and Nike on our PowerGrid®. It’s just one example of how much Americans value their food brands. In the rest of the world, the meaning of Kraft does not translate and results in much lower brand equity globally. USA South Africa China Germany Italy Brazil Spain Mexico India Source: 2019 Best Countries Report; Export figures: UN Trade Statistics, 2017; BAV Global Studies 2015-2018 9 Esteem & Knowledge Differentiation&Relevance
  10. 10. Source: 2019 Best Countries Report; BAV Global Studies 2015-2018 Unlike Germany and Japan, where the actual auto export numbers align with their #1 and #2 spots in the Auto OI ranking, Brand USA is the third biggest exporter of cars, but is ranked #8 on the OI. American car companies can have significant ammunition when it comes to driving their global brands if they lean into the right strengths of Brand USA. Global prowess, innovation and technological expertise are powerful drivers of brand identity for the auto industry, and are areas where the American brand excels globally. As sustainability becomes more important in the auto industry, this is an area that Brand USA can improve significantly. Today, it is ranked #34 in the world for “caring about the environment,” leaving US auto brands with much opportunity to improve. Germany—#1 in Auto—is the source of many powerful global car brands. BMW is an example. While BMW is more powerful than most car brands around the world, Americans, who see American brands as #1, don’t see it that way. Esteem & Knowledge Differentiation&Relevance10 BMW USA BMW UK BMW France BMW China BMW Japan BMW Mexico USA UK France China Japan Mexico BMW Automobile Category Average
  11. 11. 11 Nation Brands in the Best Countries Origin Index Report
  12. 12. Source: 2019 Best Countries Report German brands have a distinct advantage in industries requiring technical know-how. With the German “seal of approval,” communications centered around German heritage can elevate brands’ reputations for being innovative, high quality and high performance. While cultural brands—like wine or fashion—will not be able to lean into their “German-ness” in the same way, positioning centered on innovation and quality will certainly provide differentiation in the space. Germany is ranked #4 in the overall Best Countries Report. While it is not seen as #1 in any of the key Best Countries rankings, it is #2 in prestige, having a skilled labor force and in having a well-developed infrastructure. It is #3 globally for having a well-educated population and strong international alliances. It is no wonder, then, that consumers around the globe are preferring German goods when it comes to technical products, admiring Germany’s auto craftsmanship and trusting German medical products. Germany’s #2 OI rank in Tech/Electronics, behind Japan, aligns with its #2 Entrepreneurship sub-ranking behind Japan in the Best Countries Report. AUTOMOBILES HEALTHCARE PHARMACEUTICALS FASHIONTECH/ELECTRONICS FOOD WINE COSMETICS 12
  13. 13. Source: 2019 Best Countries Report; BAV Global Studies 2016-2018 BrandAsset® Valuator, the world’s largest and longest-running study of brand perceptions, tracks consumer perceptions of over 50,000 brands in more than 50 countries. This includes German brands. BAV’s PowerGrid® of Brand Equity is a tool for visualizing the power of brands across a variety of categories in both a category-agnostic and a geographically- agnostic fashion. Esteem & Knowledge Differentiation&Relevance Siemens Braun BMW Volkswagen Porsche Mercedes Hugo Boss DHL Adidas Bosch Bayer Nivea Audi 13
  14. 14. Source: BAV Global Studies 2016-2018 BrandAsset® Valuator data shows that the more “German” Opel’s image is, in various European markets, the more powerful the brand. Just as Opel is using its German identity to get credit for the country’s positive qualities, other brands need to understand the perceptual strengths they can borrow from their country of origin. R² = 0.758 Brand Strength vs. Levels of “German-ness”* by Market *Un-leveraged Germanic Traits = Leader, Prestigious, Dynamic, Best Brand, High Quality, Stylish, High Performance, Innovative, Visionary, Progressive, Intelligent, Up-to-Date Poland Turkey Hungary Netherlands Germany Italy Spain France Belgium Austria UK 14
  15. 15. Source: 2019 Best Countries Report TECH/ELECTRONICS AUTOMOBILES HEALTHCARE WINEPHARMACEUTICALS FASHION FOOD COSMETICS Japan is the #2 Best Country according to the 2019 report, standing out especially—as #1 globally—in Entrepreneurship, having an educated population and skilled labor force, being innovative and having technological expertise. Additionally, Japan is credited for being trendy (#4) and health conscious (#8). This reputation for technical know-how—similar to that of Germany—means that technology from Japan is coveted. It is no surprise then that consumers would prefer to buy Tech/Electronics from Japan (#1 in this OI category). Japan’s Automobile industry also scores highly (#2). While still in the top 15 in all categories except Wine, Japan has an opportunity to use its positive Nation Brand perceptions to improve the standing of some of its industries on a global scale. Brand Japan is powerful, with many positive associations to technical expertise and innovation. Japanese brands might not be taking as much advantage of this reputation as they could be. While Tech/Electronic brands and Automobile brands from Japan exude power and influence, Japanese brands in other categories can also lean into these strengths. 15
  16. 16. Source: 2019 Best Countries Report A top 10 Best Country, France’s brand image is about culture, luxury and modern global connection. Ranked #2 in the Best Countries Report for being fashionable and trendy, and #3 in prestige and modernity, it is also seen as “connected to the rest of the world” (#3). It is among the top 5 countries for having strong international alliances, being culturally accessible, having great food and an educated population. With strong associations in the areas of culture and luxury—and the credibility to be among the top power players on the global stage—France’s dominance in the Fashion, Cosmetics, Food and Wine categories (and even Pharma) shows that French brands have been able to use their country’s image to their advantage. French brands can lean on their country’s powerful image in culture and luxury to position themselves in the global marketplace, or at least get credit in those areas much more readily. But it’s not just the strength of their country that can provide a powerful foundation; look to fellow French brands (that have been dominating the global marketplace for decades, and have played a major role in developing what Brand France has become) as beacons. FASHION COSMETICS PHARMACEUTICALS TECH/ELECTRONICSWINE HEALTHCARE AUTOMOBILES FOOD 16
  17. 17. Source: 2019 Best Countries Report The UK is a powerful global brand, but not a dominant player in any one category, both in terms of its overall brand image and the OI rankings. In the Best Countries Report, the UK is ranked #5 (just ahead of Sweden and behind Germany), and is most known for its global connections and international alliances (#2). Beyond this reputation, it stands out in Entrepreneurship, Power and Cultural Influence—three Best Countries sub-rankings in which the UK is also ranked #5. Additionally, it is ranked #5 in leadership, as well as being prestigious and fashionable. With such a dynamic, wide-ranging identity, the UK’s OI rankings are also strong across a variety of categories, even without dominance in a particular one. A top 5 OI brand in every category except Wine, its brand strength as an exporter is generally reflected in its actual trade numbers. Without a dominant brand image in any one category—and a powerful identity overall—UK brands can lean into their identity in versatile ways, strategically choosing to take on elements of the brand’s powerful characteristics that might be harder to develop independently (for example, a reputation for quality, globality or fashionableness). PHARMACEUTICALS FOOD FASHION WINETECH/ELECTRONICS COSMETICS HEALTHCARE AUTOMOBILES 17
  18. 18. Italy’s brand reputation, according to the Best Countries Report, is centered around its culture and heritage (ranked #1 in the Cultural Influence and Heritage sub-rankings, and #2 in Adventure). It is also #1 for having great food, fashion, being culturally accessible and trendy. Its friendliness (#2) and rich history (#3) also contribute to this image. This cultural credibility has helped Italy secure top OI rankings in Food, Wine and Fashion. This aligns closely with the country’s current profile of exports. However, Italy also stands out for its OI rank in the Automobile category, where it comes in at #3 (much higher than its export numbers, but these are growing rapidly). Brands like Ferrari and Lamborghini are examples of Automobile brands leaning into Italy’s strengths in cultural clout, fashion and trendiness beyond just their reputation for performance. While cultural brands in categories like Food, Wine, and Fashion can most easily use their Italian heritage to create a competitive advantage, categories like Automobiles, Cosmetics and Healthcare (also top 10 Italian OI sectors) could also take advantage of Brand Italy. Italy is still developing its reputation in technology and Italian tech companies have an opportunity to shift perceptions of their home country as they grow on the world stage, ultimately paving the path for even more development in that area. FOOD WINE FASHION PHARMACEUTICALSAUTOMOBILES HEALTHCARE TECH/ELECTRONICS COSMETICS Source: 2019 Best Countries Report 18
  19. 19. China’s position in the OI rankings is one of the most misaligned compared to reality. China is still developing its global brand identity, and the Best Countries Report reveals how much of a dichotomy exists between China’s image and trade power: its three most defining qualities—where it is ranked #1—are being economically influential, dynamic and having cheap manufacturing costs. It is also seen as being entrepreneurial (#2) and a leader (#3). China’s rank as #3 in having an “influential culture” shows that global consumers recognize its power as a brand, but have not yet figured out exactly where it fits in their lives. While there is still some way to go to bring perception and reality in line for China, its top 15 rank in Tech/Electronics, and top 25 rank in Automobiles and Fashion, communicates an openness to the Nation Brand’s growth. Being associated so strongly with “cheap manufacturing costs” is a challenge many Chinese brands looking to develop more multi-faceted global personas will need to overcome. They need to lean into China’s reputation for dynamism and cultural influence while also defining their brands from within. China’s brands will play a major role in defining its future reputation, with brands like Huawei and Lenovo elevating China’s Nation Brand similar to the way that Samsung has helped define South Korea globally in the last few decades. TECH/ELECTRONICS AUTOMOBILES FASHION WINEHEALTHCARE COSMETICS FOOD PHARMACEUTICALS Source: 2019 Best Countries Report 19
  20. 20. Source: 2019 Best Countries Report; Export figures: UN Trade Statistics, 2017 Mexico’s identity is that of an exciting brand—known for being fun (#4), sexy (#7), culturally accessible (#9) and for having great food (#3). It is ranked #5 and #7, respectively, on the Best Countries' Heritage and Adventure sub-rankings. While these characteristics make Mexico a top destination for cultural travel, this does not translate into wanting to buy Mexican goods. Even when it comes to its OI rank for Food, Mexico is #23—twenty spots behind its Best Countries ranking. There is also a disconnect between perception and reality when it comes to Mexico’s exports. Mexico is a top producer of automobiles in North America, yet ranks #30 in the OI Automobile ranking. Similarly, Mexico is the 7th largest exporter of Tech/Electronics in the world. However, in the OI ranking, Mexico ranks #38. A wide disparity between perception and reality is an obstacle for Mexican brands looking to make their mark on the global marketplace. While leaning into positive qualities around Mexico’s exciting personality can create a competitive advantage in some industries, over- relying on its heritage could also be a risk. A campaign to educate global consumers about Mexico’s capabilities and expertise can positively reflect on all Mexican brands, as can identifying beacon Mexican brands that can shape the country’s identity and, in turn, positively influence perceptions of Mexican companies overall. WINE FOOD AUTOMOBILES PHARMACEUTICALSFASHION TECH/ELECTRONICS HEALTHCARE COSMETICS 20
  21. 21. Borrow from your country’s strengths Shield yourself from your country’s weaknesses Know which elements must be developed from within Understand the commonalities that your brand shares with your country of origin 21
  22. 22. ONKEYATTRIBUTES ON KEY ATTRIBUTES The OI Matrix lays out the relative strengths and weaknesses of a corporate brand and its nation of origin to create a framework of relative opportunities. STEP 1: Identify the most important attributes—i.e. drivers of brand equity and engagement for a brand STEP 2: Use the BrandAsset® Valuator and Best Countries data to rank the corporate and nation brand on each of those attributes STEP 3: Map attributes into the matrix to lay out a strategic communications plan 22
  23. 23. Source: BAV USA, All Adults 2018 In looking to make an impact on the American market, Nutella can take advantage of some of Italy’s reputation for glamour, charm and being social. The brand should continue to develop its premium and healthy persona on its own. High High High High High High Low Low Low Low Low Low High High High Low Low Low High High High Low Low Low Down to Earth Authentic Trendy Glamorous Social Charming Healthy High Quality Reliable Daring Energetic Helpful GLAMOROUS SOCIAL CHARMING DARING ENERGETIC HELPFUL HEALTHY HIGH QUALITY RELIABLE DOWN TO EARTH AUTHENTIC TRENDY Nutella should lean into its Italian-ness for these attributes Nutella should continue to develop on its own 23
  24. 24. The 2019 Best Countries Report is a rankings and analysis project by U.S. News & World Report, BAV Group and the Wharton School of the University of Pennsylvania. The rankings evaluate 80 countries across a range of categories, from economic influence and military might to education and quality of life, to capture how nations are perceived on a global scale. The methodology was inspired by the BrandAsset® Valuator model of Brand Equity, the world's largest database of consumer perceptions of brands and the largest and longest-running study of brands, uniquely tying the Best Countries rankings to a proven model of measuring perceptions. For more information, please visit the U.S. News & World Report Best Countries website at www.usnews.com/news/best-countries. The Best Countries Origin Index is part of the Best Countries Report—now its in fourth year. The largest study of Nation Brands, Best Countries asks over 21,400 people around the world to rate 80 Nation Brands on social, political, economic, geographical and cultural dimensions. We presented respondents with a series of country pairs and asked them to choose “which country they would prefer to buy products from” in a series of sectors: Cosmetics, Pharmaceuticals, Healthcare, Automobiles, Wine, Food, Tech/Electronics and Fashion. For example, would they choose France over Italy when it came to Fashion? Would they choose China over Australia when it came to Tech/Electronics? Comparisons to export data were performed on the 2017 Global Export Values compiled by the United Nations Trade Statistics Division. For more information, please visit their website at unstats.un.org/unsd/trade/default.asp. Countries Elites, Business Decision Makers & Citizens Country metrics Rankings Attributes Years of learning 24
  25. 25. For more information, please contact: Anna Blender SVP Account Director BAV Group Anna.Blender@bavgroup.com BAV Group 3 Columbus Circle New York, NY 11019 www.bavgroup.com BAV Group is a global consultancy with expertise in consumer insights and brand marketing strategy. Using BrandAsset® Valuator, a proprietary brand management tool and global database of consumer perceptions of brands, BAV informs strategic and creative solutions that drive business results. Over 25 years, BAV has captured data and consumer insights on more than 60,000 brands in 50 countries around the world, evaluating 75 brand image and equity dimensions that matter. BAV Group is a unit of VMLY&R. CULTURAL TRENDS & INSIGHTS CUSTOM RESEARCH AND TRACKING BRAND ELASTICITY ANALYSIS BRAND EQUITY AUDIT BRAND PARTNERSHIP & SPONSORSHIP ANALYSIS DEALS & ACQUISITIONS EVALUATION PORTFOLIO ARCHITECTURE SOCIAL EQUITY ANALYTICS BRAND POSITIONING & OPTIMIZATION 25

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