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  Billion Dollar Brands: It's Your Turn Next

by Cliff Kurtzman
Chief Executive Officer, ADASTRO Incorporated.
 
 

August 4, 2003

Interbrand, working in conjunction with BusinessWeek, recently released its annual rankings of the 100 most valuable brands in the world. A brand may relate to an entire company (e.g., McDonald's Corp.), or just a portion of a company (e.g., Marlboro). Brands that made the ranking were all estimated to have a value of greater than $1 billion. They also had to be global in nature, meaning they must derive at least a third of their sales from outside their home countries and have significant distribution throughout the Americas, Europe, and Asia. Finally, they must have publicly available marketing and financial data. These criteria excluded some of the larger brands, including Visa International, the BBC, Mars and (in all likelihood) Google.

Brand value was calculated by Interbrand as the net present value of the earning that the brand is expected to generate and secure in the future. The rankings were based on a detailed analysis of how much of each product's sales are driven by the brand name, weighted for such other factors as market leadership, stability, and the ability to cross national borders. Data to support the brand rankings was supplied by J.P. Morgan Chase & Co., Citigroup, and Morgan Stanley.

Frankly, I think there is a lot of hocus pocus and subjectivity that goes into these numbers. Nonetheless, there clearly is value in these brands and undertaking the process of making this kind of an analysis on an annual basis can truly allow one to see real trends and relative movements, regardless of the validity of specific numbers.

Here is Interbrand's listing of the top 10 most valuable brands, including estimated brand value and company name. I've also included a past or present slogan for the organization -- slogans are a topic we will likely revisit in a future article:

  1. $70 billion Coca-Cola - "Real"
  2. $65 billion Microsoft - "Where do you want to go today?"
  3. $52 billion IBM - "Solutions for a Small Planet"
  4. $42 billion GE - "imagination at work"
  5. $31 billion Intel - "Intel inside"
  6. $29 billion Nokia - "Connecting People"
  7. $28 billion Disney - "Where friends share the magic"
  8. $25 billion McDonald's - "You deserve a break today"
  9. $22 billion Marlboro - "Come to where the flavor is"
  10. $21 billion Mercedes - "The future of the automobile"

More important than absolute ranking is taking notice of which brands gained and lost the most value over the past year.

The top gainers were:

  1. Ranking 25, Samsung gained 31% in value, going from $8.3 billion to $10.9 billion (this is the second year in a row that Samsung has been identified as the fastest growing brand.)

  2. Ranking 12, Hewlett Packard gained 18% in value, going from $16.8 billion to $19.9 billion -- emerged even stronger after swallowing Compaq

  3. Ranking 35, SAP gained 14% in value, going from $6.8 billion to $7.7 billion

The top losers were:

  1. Ranking 76, Reuters lost 28% in value, going from $4.6 billion to $3.3 billion -- lost ground to Bloomberg in a weak market.

  2. Ranking 34, Kodak lost 19% in value, going from $9.7 billion to $7.8 billion -- steadily falling sales impacted by digitalization of photography.

  3. Ranking 14, Ford lost 16% in value, going from $20.4 billion to $17.1 billion -- Europe and Japan are gaining ground.

Interactive media-related brands on the list included AOL, ranked at 64 and losing 8% in value; Yahoo!, ranked at 65 and gaining 1% in value; and Amazon.com, ranked at 74 and gaining 7% in value. I was surprised not to see eBay on the list--most likely they were excluded from consideration for not being sufficiently global in nature to meet the selection criteria.

So how did Samsung, which has doubled in estimated brand value over the past two years, achieve such stellar results? It certainly didn't happen by accident.

"Chairman Kun-Hee Lee identified and emphasized the great competitive value of building a premium brand in 1996." said TaeHo Kim, Vice President, Corporate Communications Department of Samsung Group. "Because of this, we have launched a coordinated global program to make Samsung a top international brand and have led the effort by establishing a unified corporate identity that extends to all of our marketing activities."

"The continuously strong rise of Samsung's brand value reflects the company's commitment to invest in its brand on a global scale and make brand value a key corporate target throughout the organization from including the CEO and all employees. Samsung has successfully made brand building the key focus of its marketing strategy including product development, selection of distribution channels, channel marketing as well as external and internal communications," said Jan Lindemann, Global Managing Director of Interbrand. "Samsung's key success factor is management's ambition and determination to make Samsung the leading brand in its field and to put the required investments and organization behind the brand."

My sense is that Samsung came to the realization that the critical factors in building its brand were the strength and quality of the organization's relationships and the ability to provide measurable benefits to customers. Samsung's vision encompasses a world where interconnectivity, new levels of interactivity and accessibility, and a globalized society drive a demand economy. As Nick Wreden, "Brand Futurist" and author of the book "FusionBranding: How To Forge Your Brand for the Future," points out:

"Competition in the demand economy is based on the organization, orchestration, and integration of supply chains, or an ecosystem of suppliers, manufacturers, partners and customers. That's because it will take a coordinated, interactive supply chain to deliver tailored solutions to customers whenever and wherever they want. No company will be able to brand, no matter how much is spent on marketing, without an integrated end-to-end supply chain."

Samsung's example allows observations of a set of principles any organization can use to achieve substantial gains in brand equity:

  1. Samsung didn't just focus on the next quarter. A brand management plan must look out five and ten years into the future at a minimum.

  2. Samsung realized and had the courage to make substantial organizational shifts and changes in conjunction with its brand strategy.

  3. It has to start at the top. Samsung's Chairman Kun-Hee Lee made a personal decision and commitment to increase the value of the Samsung brand. He didn't delegate the job to his staff, rather, he made it his own personal mission. Whether the leader's title is chairman, CEO, president, managing partner, or brand manager, the commitment and direction has to come from the top.

  4. Kun-Hee Lee may not be a rocket scientist, but he acted like one -- he didn't just tell his employees he wanted to increase the value of the brand, he assured that a detailed plan was laid out to achieve the objective (see the The Korean Herald article referenced at the end of this essay). And, very importantly, the plan was not advertising centered -- rather, it placed a focus on product development, selection of distribution channels, channel marketing as well as external and internal communications.

    In most organizations, marketing is separated at arms length from technology, product development and delivery. It takes a very special individual or team to have the breadth and scope of technical and marketing skills to transcend these barriers. Brands that succeed in the future will do so by melding and integrating brand considerations throughout the enterprise. And that is only likely to happen if the organizational command chain puts in place the processes that assure that it occurs.

  5. Samsung didn't run and duck for cover just because the economy became weak. Rather, they appear to have viewed it as an opportunity for to move ahead of potential competitors.

Alas, what if your business didn't make the top 100 this year? Well, you are in good company. It just so happens that Interbrand neglected to include ADASTRO - "Business IS Rocket Science" and it's parent company, Starhold - "Envision & Engage" in the top 100 as well. But we rest assured knowing that processes are in place to turn our own enterprises, as well as those of our clients, into significantly more valuable businesses over the coming years.

Business IS Rocket Science. If you plan and strategize key decisions just like a rocket scientist would, you will maximize your opportunities, increase the value of your business, and shape the best possible future for your organization.

Additional Reading

BusinessWeek, August 4, 2003
America Has Image Woes, Not Its Brands
http://www.businessweek.com/magazine/
content/03_31/b3844021_mz046.htm

and
http://www.brandchannel.com/images/
home/bgb_2003.pdf

BusinessWire, July 25, 2003
Samsung Named the Fastest Growing Global Brand Second Year
in a Row by Interbrand
http://www.businesswire.com/cgi-bin/
cb_headline.cgi?&story_file=
bw.072503/232065196

FusionBranding: How To Forge Your Brand for the Future
by Nick Wreden
http://www.fusionbrand.com/

 
 
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