American brands rule the world

American brands rule the world Cristina GRIGORE Ana Maria DRAGHICI

MEDIAFAX 18 august 2006 American brands Coca-Cola, Microsoft, IBM, GE and Intel ranked this year on top of the “Best Global Brands”, carried out by Interbrand and BusinessWeek publication, due to their extraordinary value. The marketing coherence at global level, the appeal to consumer’s emotions, the extraordinary PR and publication strategies and most of all, the financial value, make the afore-mentioned brands almost invincible. In fact, every year there are almost insignificant changes in the structure of the top; nevertheless, the participation itself in the top 100 is a remarkable success. Given the circumstances, it is sad that brands have no chance in Romania yet, as nobody even bothered to include them in a top so far. Still, the recent partnership between Branzas and Interbrand might be a beginning… Interbrand determines the value of a brand through a mechanism that it introduced on the market 20 years ago, which was used ever since to appreciate over 4,000 brands. The brand value is calculated given the net earnings that the brand generated between July 1, 2005 and June 30, 2006. In order to be included in the classification, brands should have a minimum value of 2.7 billion dollars, to carry out a third of their revenues abroad, to publish their data and financial situation and to address to more consumers than those included in their database. In this year”s report, Google, eBay and Starbucks reported the most significant growth. Google reported the highest growth (24th position in the classification), with a 46% increase of the brand value, due to the strategy by which it placed on the market at the opposite side of Microsoft. On the other hand, the development of the internet and online commerce triggered a 17% growth for eBay (position 47). Yahoo! also reported a 15% growth. Starbucks, whose value reached 3 billion dollars, also reported an important growth (20%). As for the profits, Nokia regained its leader position in the mobile telecommunication industry; Motorola also reported a significant growth after launching the mobile phone Razr. The most significant decreases in this year’s top were registered by Gap (-22%), Ford (-16%) and Kodak (-12%).
Here is the Top 10 Global Brands 2006: Coca-Cola (with a 67 billion dollars brand value, down 1% compared with 2005), Microsoft (56.9 billion dollars, -5%), IBM (56.2 billion dollars, â5%), GE (48.9 billion dollars, â4%), Intel (32.3 billion dollars, -9%), Nokia (30.1 billion dollars, â14%), Toyota (27.9 billion dollars, â13%), Disney (27.8 billion dollars, â5%), McDonalds (27.5 billion dollars, â6%) and Mercedes (21.7 billion dollars, â9%). The top also includes brands for the first time in the classification: Lexus (3 billion dollars) and Burberry (2.7 billion dollars). In an international classification, the United States have the most brands in the top (51%), followed by Germany (9%), France and Japan (8% each), Great Britain and Switzerland (5% each), Italy (4%), South Korea and the Netherlands (3% each). The report emphasizes several trends, depending on domains. Thus, on the market of non-alcoholic beverages, consumers spend most money on carbonated soft drinks, this is why Coca-Cola is one of the three major players controlling 90% of the total soft drinks market.
On the other hand, the computer industry also has strong brands, best characterized by “innovation” as this market is rapidly changing. Thus, the players in this sector not only provide products and services, but also own their own chains of stores, to cut distribution costs. As for brands in IT domain, they resort to a positioning characterized by the fact that, when a brand identifies an unexplored domain, all the others crowd in the same direction. As for the financial services, they continue to be a very interesting and dynamic sector, marked by the fight for the big client. In fact, any respectable company resorts to a serious brand in the financial domain in order to distinguish itself. Brands in the white goods sector- Samsung, Sony, Nintendo, Kodak, Panasonic, Duracell and LG – do their best to stand put and to promote their benefits and positioning. Who is not included in the “Best Global Brands 2006?” The 2006 classification lacks several important international brands. According to Interbrand, there are several reasons why a brand may not be included in this classification: the brand is not popular enough worldwide, it does not publish its data in order to allow the identification of branded activities or is not big enough (its value is below 2.7 billion dollars). Visa, one of the most popular international financial brands, has a structure that does not allow its evaluation like in the case of the other brands. BBC is not included in the top either, as it is a corporation held by the British government and is not expected to generate profit. The Red Cross, Greenpeace and UNICEF are not included in the report either as their value as brands cannot be appreciated by standard methods. “Best Global Brands” is a classification of brands by economic performances. The understanding of elements influencing the value of a brand helps the company that owns it to analyze whether its investment in the rand is proper, whether its marketing strategy associates the brand with a correct message or whether it has the necessary short-term policies to increase the value of the brand. “In most of the cases, companies in the top administrate their business focusing on the brand. They admitted the brand should be the central organization principle, given the value it represents for the company,” said Jez Frampton, Interbrand CEO. “The need to measure and administrate the brand performances continues to be a critical priority for companies’ management, which was proved by their huge interest in the classification,” he added. Interbrand reminds us we are far from evaluating our brands In Interbrand classification, many of the companies on top positions are brands implemented on the Romanian market as well, which is a partial reason of joy for the Romanian economy, given that the Romanian brands are far from benefiting even from a local evaluation, while they might never enter the classification whose condition is a minimum value of 2.7 billion dollars. The publication of Interbrand top is an opportunity for us to remember our market is outside the global game of brands. There is no method to measure the value of brands in Romania. Nevertheless, this year, a local agency from Cluj county signed an exclusive partnership with Interbrand, meaning that, sometime in the future, these things may happen in Romania as well, but not too soon, according to Bogdan Branzas, CEO and creative director of Branzas, exclusive Interbrand partner. He says they cannot specify an exact moment for carrying out a top of brands based on specialty studies, adding that “such a top on the Romanian market would be strictly made for the domestic brands. It would be irrelevant to also include international companies operating in Romania in such a top” Branzas said. Branzas Design is having talks with Interbrand for carrying out such a top on the local market. “We are considering all options, we are trying to find arguments, as well as establish the necessary efforts to be made, as it takes the work of a team of evaluators to gather information and to carry out the evaluation,” Branzas said. Branzas specialist says there are two types of reasons why there is not even an attempt to carry out such a top on the Romanian market. The first one would be the size of the Romanian market and the level of development of the local brands and the second would be the financial and accountancy system used in Romania. “The financial and accountancy system might change as the European norms will stipulate the adopting of the international system. As for the local brands, most of them are rather young and we will have to see whether their financial evaluation would be an option. This classification of brands is strictly based on their financial value, determined by Brand Valuation method, owned by Interbrand and the only method internationally acknowledged,” Branzas said. The interest of the companies on the market is very important when evaluating brands in Romania. It seems the companies are not completely disinterested, although they did not get involved in such a project so far. “Serious companies in Romania are rather interested in the Brand Valuation. I think a Top 5 Romanian Brands (for example) would be very interesting for the local market. We already have talks with a few companies, we carried out detailed presentations of the subject and of the method. As it is a process with high implications in business and in brand management in general, but also in finances and PR, talks last longer, because all implications are taken into account. Such a decision is not easy to make but we are optimistic, we think the management of Romanian companies will finally take his step. We look forward to find out what will be the first Romanian brand officially evaluated,” Branzas said. Brand’s global value and local markets Globally, Coca-Cola brand value is 67 billion dollars, so that the brand ranks first in Interbrand top. Still, we don’t know what Coca-Cola position would be if we evaluate the brand value on the local market. The representatives of the company trust the excellence of such results. They say the same principles are applied globally, as well as on the Romanian market, leading to the success of Coca-Cola business on any market. The story of Coca-Cola success worldwide was constantly analyzed by experts and has no secrets anymore. The representatives of the Romanian branch say that part of the global success of this business is given by the fact that “Coca-Cola promise” is applied in every corner of the world where the company operates. According to its organizational culture and to its global business strategy, each Coca-Cola branch must observe the values and principles of the brand and of the company, must operate at high-quality standards from the point of view of products and of services as well, and implement responsible marketing policies. The quantification of Coca-Cola brand value also included the other brands of the company like: Fanta, Cappy and Sprite, also reminded by Coca-Cola Romania as valuable brands. Attila Der, Nokia Marketing Manager Hungary and Romania, says the activity on every local market is also supported by the global strategy, as the global strategies are created to support each local market. The representative of Nokia, brand ranking 6th in the Interbrand top, talks about the general values that triggered the global success of the brand. “Nokia is guided by performance. In every country where Nokia creates and innovates for consumers, it uses a combination of aspirating and emotional characteristics, based on benefits, so that every consumer would be satisfied,” Der said. Der says the influence of the Romanian branch’s results on the position of the brand in the top is part of a reversible process. He also says the performances registered on every market support the global performance, stressing that the global performance consists in the activities developed in each country where Nokia operates. Nokia representative thinks the lack of brand valuation on the local market is a consequence of the fact that companies did not have enough time to develop, not a consequence of their disinterest. “A successful brand can only be built in time, by a coherent and firm communication process. Still, first of all, we need the guarantee of high-quality products. Secondly, this quality must be maintained in time. A successful story is in fact a combination between high-quality products provided constantly and a communication strategy thoroughly elaborated,” Der said. In fact, he says it is impossible for certain Romanian companies not to have carried out measurements for their evaluation so far. “These studies are mainly based on detailed segmentation of consumers, on marketing strategies of the companies and on the financial analyses. As for the financial analyses, the factors referring to the confidentiality policies of the company should be taken into account,” Nokia representative said. In its turn, Pepsi ranks 22nd in the Interbrand top. The representatives of the company say the evolution of PepsiCo brands in Romania is in perfect harmony with the results that PepsiCo reported worldwide. From the point of view of Dana Iordache, Senior Brand Manager Pepsi Lipton International PepsiCo, the future evolution of the company in Romania is determined, on one hand, by the force that the company has at international level. On the other hand, the performance of the company in the past years in Romania is also important (solid and spectacular growth). Dana Iordache is not that pessimistic regarding the lack of interest of Romanian companies in evaluating their own brands. She thinks there are a lot of local brands which, over the years, developed coherent and professional marketing strategies, which certainly increased their value and popularity. ”It is true that brands with international tradition can get higher performances, but this is due to the fact that they are more experienced,” Iordache said.

Coca-Cola Brand value– 67 billion dollars Position in the top in 2006 – 1 Position in the top in 2005 – 1 Headquartered in the United States  First appearance on May 8, 1886, when a pharmacist named John Pemberton brought a bottle of Coca-Cola syrup at Jacobs’ drugstore in Atlanta. The syrup was mixed with mineral water and sold for five cents/glass.  The company evolved from a single product to over 400 brands in 2006 and from sales of 9 products in 1886 to over 1.3 billion products/day in 2006  The company is currently present in over 200 countries worldwide  The first version of Coca-Cola bottle was produced in 1916. Microsoft Brand value– 56.97 billion dollars Position in the top in 2006 – 2 Position in the top in 2005 – 2 Headquartered in the United States  Monopoly of Microsoft platform and of Office series continues to dominate the market in 2006 as well, given that Google and Apple continue to compete with Bill Gates’ company.  Some of the most popular products of the company are Microsoft Windows, Microsoft Office, MSNBC, Xbox, Xbox 360  According to Microsoft 2006 Annual Report, the company reported revenues worth 44.28 billion dollars in the fiscal year ended on June 30, 2006, as well as operating revenues of 16.47 billion dollars, and net revenues of 12.6 billion dollars.  Microsoft employs 71,553 people out of which 44,298 in America  In September 2005, Microsoft had branches in 102 countries worldwide

IBM Brand value– 56.20 billion dollars Position in the top in 2006 – 3 Position in the top in 2005 – 3 Headquartered in the United States  After giving up Lenovo, IBM struggled to get the attention of corporate leaders. Intel Brand value– 32.31 billion dollars Position in the top in 2006 – 5 Position in the top in 2005 – 5 Headquartered in the United States  One of the most important processor manufacturers in the world, competing directly with AMD

GE Brand value– 48.90 billion dollars Position in the top in 2006 – 4 Position in the top in 2005 – 4 Headquartered in the United States • The brand was founded in 1876 by Thomas Alva Edison, who opened a laboratory in New Jersey, where he created the most appreciated invention – the electric light bulb. • The brand founded by Edison extended from cooking plates to credit cards • The company employs over 315,000 people