What can be learned from Branding?

What can be learned from Branding?

The world of brands has been transformed in ways not seen since the term itself, derived from the Old Norse brand meaning ‘to burn’, entered the business lexicon. Brands from so-called developing countries, including — enter those the ranks from of the BRIC world’s countries top 100 — Brazil, most Russia, India, and China valuable brands.

Brand refers to the custom of owners burning their mark (or brand) onto their goods, but the burning of a different kind has swept over brands and their owners for reasons linked more or less to the recent global economic catastrophes. While long-established companies such as Lehman Brothers, respected and feared in equal measure on Wall Street since before 1929, have been swept away, a host of new names have sprung up to take their place.

Tencent, the Chinese social network and internet portal, led the list of fastest risers, becoming the eighth-most valuable global brand and overtaking China Mobile as China’s most valuable brand. That puts it ahead of Walmart, Disney, and BMW in terms of brand value.

The prevalence of valuable brands outside of Europe and the United States has led to BrandZ, a leading brand research company, producing alongside its top 100 world brands, the top 100 Chinese brands, and a top 50 for both India and Latin America.

Why branding matters

This is considered the holy grail of the product/service aspect of the marketing mix. A brand encompasses not just what a product is or does but all the elements such as logo, symbols, image, reputation, and associations.

The McDonald’s arches represent its brand as a welcoming beacon drawing customers in. Branding is an intangible way of differentiating a product in a way that captures and retains markets through loyalty to that brand. Coca-Cola tastes a little different from a supermarket brand, but the promotion that supports the brand confers on the consumer the chance to share the attractive lifestyle of those ‘cool’ people in the adverts.

Alongside this dramatic position jostling the global meltdown has revealed some important facts about the economic resilience of established brands. Warren Buffet’s statement ‘it’s not until the tide goes out that you can see who is swimming naked’ could be aptly applied here. The share prices of the top 100 brands as identified in the BrandZ study have outperformed the S&P 500 by over 50 percent over the period 2005—17. The reasons for this outperformance in hard times seem to be:

A brand generates trust, a fact that appears to transcend business sectors. Consumers are as loyal to Coca-Cola, Procter & Gamble and Walmart as business users are to Cisco, HSBC, and Goldman Sachs for a company, for its products, and for its services. According to BrandZ consideration of brand in the purchase decision has risen by 20 percentage points since 2005 so in uncertain economic conditions, people turn to something they can trust — an established brand.

Brands are established in almost every corner of the globe. In China, India, and Russia brands are as prevalent as in France, the United Kingdom, or the United States.

Today over a dozen emerging market economies now have world-class brands, where there were none at all in 2000. This global dimension allows businesses with top brands to keep growing across economic cycles. So while the Western economies shrank between 2008 and 2010, China, India, Brazil, and much of South America were powering ahead.

The population of top brands is relatively stable, and that in turn allows them the luxury of formulating and implementing long-term strategy, rather than being buffeted by turbulence.

Seven of the same brands are present in both the 2006 and the 2018 BrandZ rankings. True, some positions have changed with Google now number 1 brand up from seventh in 2006 and IBM in the seventh slot up from eighth.

This resilience means that firms such as Starbucks, Samsung, Toyota, and Exxon had the ability to recover from difficulties relatively quickly. Exxon, for example, a virtual pariah after the Valdez oil spill disaster in 1989, was back in the top rankings in under a decade, coming in at 52nd in the world, ahead of Cisco and Gillette in 2018. 

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