Lessons from BrandZ

Jul 17, 2014 No Comments by

Anastasia A. Kourovskaia 

Eight years of tracking the rise and fall of the world’s biggest brands highlights key mistakes that have cost brands dear and ways in which successful brands have set themselves apart. Anastasia Kourovskaia explains.

No one company gets everything right when it comes to building brand value. Mistakes are common and, mostly, pretty easy to avoid.

In fact if there’s one key lesson that no brand with ambitions to grow should forget, it’s that brands that become complacent and ignore the consumer are never going to do well – just look at Saab or Maybach.

In the course of tracking brands, both in growth and decline in the BrandZ Top100 Most Valuable Global Brands Ranking for the last eight years, we have identified eight lessons that can help brands be different and meaningful.

Lesson 1: Brands can create value incredibly fast, but they can fall from grace just as quickly.
The key to growth is in being meaningful and different by building brand based on a human truth. Apple’s rapid rise from No 29 in the original BrandZ Top100 in 2006 with a brand value of $16.0bn to No 1 in 2013 with a value of $185bn comes on the back of a universal truth that people want technology to work simply and easily. The danger is that complacency leads to a swift demise. By contrast Nokia lost its consumer connection at around the same time, thinking its then-superior technology would be enough to beat the challenge of the iPhone. It has since dropped from $44.0bn at No 9 in 2008 to $10.7bn and No 81 in 2011, exiting the ranking altogether in 2012.

Lesson 2: Emulating the leader in a growing market provides plenty of growth but without your own connection, you won’t make it to the top.
The fact is that ultimately to be a great brand you need your own distinct connection with consumers. Samsung has risen remarkably far and as a fast follower but it’s yet to make the move from a very good, solid brand to a great brand. There have been flashes of marketing excellence, including the recent Oscar selfie campaign but it’s yet to unearth its own universal truth.

Lesson 3: Great product alone is not enough.
In fact it’s not even 90%, because people aren’t rational. The technological gap between Apple, Samsung and their competitors is fairly small, but their relative business fortunes have been miles apart. The significant difference is brand love and an affinity with consumers driven by Apple’s and Samsung’s ability to meet the needs of consumers in a meaningful way.

Lesson 4: International expansion isn’t the only route to growth.
Whilst crossing borders has helped many brands –from HSBC to Dove – to gain prominence, in the modern world it is not always the answer. Walmart’s purchasing power hasn’t ensured a smooth global expansion and its BrandZ ranking has declined slightly over the last eight years to No18 valued $36.2bn in 2013. Amazon, the Number 1 in Retail category at $45.7bn, has driven brand growth by expanding its footprint into other categories and changing the way we buy everything from books to appliances.

Lesson 5: The power of reinvention is massive.
In the mid-1990s, with its stock price hovering at the $10 mark, IBM really needed to redefine its business and to set its path for future growth. The brand ideal centred around “building a smarter planet” has galvanized the R&D behind new products and services and given IBM a broader, more exciting agenda. A decade later IBM was one of the Top 10 brands in the world. Other brands on a similar path include Vodafone, which is moving from a mobile operator to a rounded pan-European communications brand. The fastest-growing telecom brand, BT, entered the ranking at No 94 in 2013 and keeps storming up as a result of successful expansion beyond calls and lines into broadband, television and lately entertainment.

Lesson 6: The competition (and the opportunity) isn’t always obvious. In many categories the biggest threat comes from the providers of substitute products and services.
The success of Visa and MasterCard is a testament to their ability to think beyond the obvious. The two brands may be fierce competitors but both clearly recognise that their common enemy is cash and cheques. Visa has been particularly successful in gaining traction thanks to this approach, moving from No 36 and $16.3bn in 2009 to a spot in the BrandZ 2013 top 10, at No 9, with a value of $56.1bn.

Lesson 7: Just because you are from one country doesn’t mean you can’t also be a local brand on the other side of the world.
Some of the most iconic American brands such as McDonald’s and Coca-Cola have successfully transcended their origins to become global brands that feel local around the world. McDonald’s and Coke have become part of the community wherever they operate and connect via their universal truths such as Coke’s Happiness message. This strategy has helped both brands retain top 10 positions (and further gain places) even as the brand value required to stay in the top 10 has increased by 18%.

Lesson 8: Happy employees are far more likely to work for a great brand.
The quality of the working environment that brands create can have a direct impact on the success of the company. A new wave of brands who have employees at the heart of their philosophy have been able to create a great deal of value. It took Red Bull just under 20 years to enter BrandZ Top 100 in 2009, growing a further 29% by 2013 in the intensely competitive Soft Drinks category. Similarly, Wholefoods has made great strides in the retail sector entering the Top 20 Retail brands at #13 with a value of $6.7bn in 2013.

Our research clearly demonstrates that brands that set themselves apart and remain meaningful among their target audience are better positioned to grow the value of their brands. The success of the world’s biggest brands highlights how these lessons have helped them to create clear blue water with the competition and drive higher brand value and ultimately higher shareholder value.

Anastasia A. Kourovskaia is a Vice-President EMEA at Millward Brown Optimor

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