Branding Quotes

" Products are made in the factory, but brands are created in the mind" 

-Walter Landor, Founder of Landor Associates. 

Building perceived value

When you look at the market value of Coca Cola provided by stock analysts, it seems to be a bit ludicrous that a simple sugar carbonated drink is worth $68 billion. Out of the $68 billion, only 15 percent of Coca Cola's market value is captured in their visible assets while the rest of 85 percent is captured in its hidden value. Accountants and financial analyst call this hidden value good will. Others call it a premium. Basically it is just perceived value.

Every time we drink Coca Cola, we not only perceive it to taste better than other carbonated drinks out there but that it also makes us happy, hence Coca Cola's open happiness campaign. It is this perceived trust between the consumer and the brand that has consistently pushed Coca Cola's brand relentlessly across the globe. And it is this unique ability of Coca Cola, that has identified the firm as a brand leader that has transformed brands into a process of perception building.

Without doubt we live in a world driven by image. Because of this, a single stroke of controversy can either stunt the growth value of brands or even destroy it completely. A survey demonstrating how frail the value of perception is was recently done by Political & Economic Risk Consultancy, a Hong-Kong based risk analysis firm, of business executives in Asia on the perception of corruption in the Asia-Pacific region. The survey found that business executives rated Indonesia and Cambodia as the most corrupt countries in the Asia Pacific region. Interestingly, last year Indonesia was ahead of Cambodia. The Philippines, India, Thailand and Vietnam were also perceived corrupt however not as severe as Indonesia and Cambodia, while Singapore was the least corrupt out of all countries in Asia. The survey clearly shows how fragile perception can be and that Indonesia's past efforts in curbing corruption have gone unnoticed. The distortion between perception and reality continues to stigmatize Indonesia. Numerous country brand rankings like the Country Brand Index by Futurebrand, a branding consultancy, perennially ranks Indonesia at the bottom among its peers. 

Without doubt changing the perception of corruption that is so institutionalized in society is far more complex than changing the perception for a particular brand. Although the Indonesian government has pushed for institutionalized reform and believe that supplying reforms to media channels are suffice to improve perception, what is evident from the survey is that more reforms are needed. Petty bribes are still rampant in Indonesia where basic needs such as security are only disposable if you have enough cash to bribe police officers. 

Just like any other product, changing perception requires a drastic transformation of the social norms and habits of people. The process of building perception cannot exist only with a supply of reforms. It must coexist with a genuine demand. Only when we see more visible signs of authentic demand from ordinary folks to eradicate corruption will we see a change in light for Indonesia's brand value. 

Farmville, My fishbowl, and brands

Photo Source : flickr.jurvetson

Over the past few months, the growth of social networking websites especially Facebook in Asia has skyrocketed.   There are over 300 million active users of Facebook alone with close to 17 million active users in Asia. With only 2% of market penetration, Facebook without doubt will continue to grow in the region. As Facebook continues to see double digit growth in the region, driven by countries such as Indonesia, Taiwan, Thailand, and the Philippines we must ask ourselves why are more and more people displacing Friendster and switching to Facebook. 

While the growth of social networking websites in the U.S and Europe have grown as a result from the desire of users to share their stories and connect with people they know, the trend ofFacebook's growth in Asia reveals a different story.  The trend of Facebook users in countries such as Indonesia and the Philippines is indicating that users are not using the social website as a communication tool but more of a social gaming platform. The growth for social games onFacebook such as Farmville and My Fishbowl have been phenomenal.  Out of the 300 million active Facebookers out there, 50 million users are actively engaged as virtual farmers on Farmville and 6 million are aquaculturists on My Fishbowl in Asia.   

As more and more Facebookers influence their networks to play , the growth outlook for brands to tap into these networks looks promising. While brands prefer to engage consumers on their social sites rather than advertise in click through ads, it makes perfect sense for brands to engage and promote the brand to their consumers through social gaming websites. By developing a social game that revolves around a brand, this will not only engage new consumers to the brand but it will create a much stronger shopping experience between consumers and the brand. Because the growing trend reveals social games that involve users growing and selling products to other users are popular in Asia, brands should replicate a gaming concept that revolves around these areas. 

Given the booming growth of social gaming sites in Southeast Asia and growing affluent population, P&G's portfolio of consumer brands and active push in the region would be the perfect brand to develop a social gaming platform. The social gaming platform would involve gamers to play a virtual game of producing and selling P&G brands to a network of other gamers. Because consumers in the region are known to be fiercely loyal to their brands and resort to communicating their interests online, the strategy to couple P&G brands with a social game would further strengthen the connection between the brand and its consumers. 

As more and more of Asia's population joins Facebook and brands increasingly use social gaming websites, the velocity of awareness for a brand will undoubtedly grow. Brands that were only positioned in certain markets will transcend beyond its borders. Consumer goods that are traditionally marketed in the west might strike a cord with a typical housewife in the Philippines. While it may seem lucrative for Facebook and brands to partner together and provide each other with economic value, the en masse of users using Facebook just for games could destroy Facebook's value proposition in the long run. If the growing trend for Facebook users in Asia continues to accelerate from users that just add random friends to monetize their Farmville experience rather than adding genuine friends to interact with; is Facebook really progressing the way people communicate and interact?

China Rules

Photo Source: flickr.phogel

In the realm of business, branding can be considered to be a fluffy discipline. Rarely do people think of it as a hard science driven by tangible data because of the ambiguity involved in measuring the power of brands. Do we measure brand value on how much a firm invests in advertising? Or do we value a brands strength according to the amount of profit it earns? What we mean by "value" without doubt can mean many different things depending on who is valuing it and what angle they are taking. 

When it comes to valuing brands, brands are often considered as intangible assets. It is also important to note that brands are also conditional assets, which means that brands cannot stand alone without its product or service offering. Hence,  brands derive their value from both the tangible assets they support and the intangible qualities that they are worth to consumers.

Whether you believe or not that it is possible to quantify the value of brands, the truth is that branding is a powerful asset that can bring much added value to the brand's value chain.  Brand Finance, a branding value consultancy, recently released their top 500 Global brands that ranked the value of brands according to their monetary value. The top 10 Asian brands ex-Japan & Korea that made it on the list include:

Rank	Brand Name
1	China Mobile
2	Bank of China
3	ICBC
4	China Construction Bank
5	Bank of China
6	China Telecom
7	China United Network
8	Agricultural Bank of China
9	China Unicom
10	Petrochina

Source : BrandFinance

As a result of China's economic ascent it's not such a big surprise to find that Chinese brands have dominated the top 10 brands originating from Asia ex-Japan and Korea. Although they did not make it to the top 20 Global brands, the sheer force of Asian brands creeping up the global stage are quite evident. Most of the growth in brand value in Asia was driven by the telecommunications, banking and energy industry. The growth of financial brands alone in China was 137%. When we look at the intangible qualities of brands it makes perfect sense as to why the telecommunications and banking industry in China have led the pack in brand value. 

Banking brand value in banks

Given China's growing affluent population and notoriety on being savers rather than spenders, this has primarily driven the value of banking brands in China to skyrocket. More and more of China's banking brands are making significant capital investments in producing and deploying their bland platforms to capture more consumers. 

Not only is the value of banking brands in China being driven by consumers, but they are also accumulating value through their voracious appetite for alliances and foreign acquisitions. Alliances and acquisitions of brands can bring considerable access to foreign technologies, raw materials, and knowledge for a brand. As more and more of China's brand acquire access into the tangible and intangible assets of other brands, they can easily access foreign markets and gain significant brand awareness at minimal cost. And it is this powerful control over influence that is primarily driving significant growth in China's banking brands. 

Connecting brands with Broadband

While banking brands are relying on alliances, talent, and acquisitions to drive their brand value, China's telecommunication brands on the other hand are relying heavily on innovation and technology. As China continues its economic ascent, more and more of its affluent population are increasingly connecting to the Internet. The need for a digital and broadband economy is evident and many China's telecommunication brands are pushing forward in the development of broadband technologies for their consumers. 

Just like talent and alliances, valuing innovation and technology can be equally complex and at times ambiguous.  However innovation and technology are more tangible and identifiable, because they can be measured by R&D expenditures and number of patents that the brand holds. It is important to note that when it comes to valuing the brand from an innovative and technological perspective, the brand must fully use their discretion to highlight the potential power of these intangible assets that can be exploited to create value and increase future value for the brand. 

Hungry energy brands 

Without doubt China's economy is dependent on energy. And as a result of this China's investment portfolio has increased its presence in Africa with acquisitions in banks and energy firms. The purpose of China's acquisition of banks in Africa is not to only increase its banking brand portfolio but it is also to secure its place in financing China's portfolio of energy brands. 

China's energy firms have increasingly positioned themselves with energy suppliers securing themselves along the value chain of various energy firms in Africa. The relationships built between China's energy firms and Africa's energy firms creates the trust that is essential to building brand equity. Hence when looking at the relationships and suppliers that China's energy firms have built it makes sense why their brand values have also skyrocketed. 

Challenges Ahead

Although many corporations in Asia today still consider branding as a discipline lacking tangible data, the reality is that it is those corporations that think that way that never become brand leaders in their fields. Without doubt, branding can be valued and bring tangible results. While it may be a seminal discipline, the incongruity of valuation methods for brands is merely an insouciance. 

What is more threatening to the discipline of brand valuation in Asia is its weak judicial system and intellectual property rights. Because brands are identifiable assets and should be under the full protection to whichever entity holds rights over it, the proliferation of piracy and the weak judicial system in Asia is a continuous threat to the legal protection of brands and intangible assets such as patents. It is not the plethora of valuation methods you apply to value a brand that makes brand valuation complex and ambiguous, but it is Asia's weak judicial institutions that is creating an even more complex and ambiguous future for the power of brands. 

Top 10 Global Banking Brands in Asia

Here are the top 10 global banking brands for 2010 ranked according to brand value in Asia ex-Japan, the list was compiled from BrandFinance, a leading consultancy in brand valuation:

Rank	Name	Country	Brand Value (USD Millions)
1	ICBC	China	12083
2	China Construction Bank	China	12078
3	Agricultural Bank of China	China	6023
4	State Bank of India	India	4551
5	Bank of Communications	China	3269
6	China Merchants Bank	China	2212
7	ICICI Bank	India	2614
8	Shanghai Pudong Development	China	1962
9	China CITIC Bank	China	1866
10	Bank of China	Hong Kong	1550

The complete list of all financial institutions that made it to the top 500 can be found on the BrandFinance Global Banking 500 list which is listed here.

Brand Evolution

For many long-haul business travelers which in this case applies to spending 10-16 hours in flight, the luxuries of sleeping on a flat bed and having a power socket to finish any unfinished work are requisites to be fully prepared once the plane lands and you head to the briefing room. This happened to be the norm for many business travelers a couple of years ago when decadence ruled our expense accounts.  Corporations poured in money so frivolously into premium travel that it carried airline brands such as Singapore Airlines and Cathy Pacific to become leaders in their fields. As the economic bubble popped and tumbled, so did it bring down with it our opulent behaviors that had propelled the economy to reach unsustainable levels. 

As traffic for air travel passengers worldwide have declined,  the prospects of serving premium passengers remain bleak. Many airlines todays are wondering whether there are opportunities available to serve their premium passengers in an economic downturn.  The reality is that times of a recession are perfect opportunities for brands to innovate themselves. Brands that commit in reinventing themselves during an economic recession have proven to receive 4 times their return on investments compared to those that backed away from investing in innovation. 

While many airlines have withheld the delivery of their aircraft orders, Air Asia is pushing forward its brand with new aircraft and cabin interiors in hopes of reinventing the landscape for business travelers. Air Asia has recently introduced flat-bed business class seats with power sockets on its flights to Europe. Its the first ever for a low cost carrier and its value proposition looks better than what heritage carriers are offering in the current market to business travelers. The value to fly on Air Asia's premium seats is equivalent to an economy seat on a heritage carrier, which means that a flight to London would approximately cost $1500. Not only is this price incredibly affordable for business travelers but it also fares well with leisure travelers who hate the idea of sitting up right for 13 hours and are willing to spend more than $1000 on a cross continental flight. 

Photo Source : Air Asia

Air Asia's push to cater to premium passengers with their new product offering makes perfect sense. At times of a recession, consumers are rarely price takers. Consumers do not automatically shift their purchasing behavior to purchase cheaper items.  What consumers do look for is good value.  Air Asia's decision to up the ante on their product offering is leading the way in differentiating itself from the pack by offering value rather than low prices. 

While many heritage carriers like Singapore Airlines and Cathy Pacific have discounted fares on premium classes, the reality is that discounting often leads to a price war among all competitors and is easily replicated by everyone else. It rarely adds value and at times can destroy the value of the brand. Cutting costs often entails cutting good service and cutting wages which can easily backfire on the values that the brand originally stands for. 

It is quite clear that the traditional brands of Singapore Airlines and Cathay Pacific have suffered from the economic recession and that the relevancy of their brands are no longer tuned in with consumer preferences. While many brands still believe that opportunities do not exist for brands to grow in an economic recession, Air Asia's evolving brand has just proved them wrong. The premium travel industry doesn't look so bleak after all. It's re-innovation just got started. 

Packaging Brands for Asia

 After spending hours being bombarded by 300,000 products hanging on the sides of counters, dangling from the ceiling, and protruding podiums lit with fluorescent lighting we often we leave the grocery store with a minor headache or sometimes a migraine. Consumers are not the only ones with headache after spending time in a grocery store, but brand managers also feel the same way when it comes to competing against the plethora of brands vying to get the attention of consumers to buy their product. To compete with the variety of brands out there, more and more brands these days are relying on good packaging and design to attract consumers to purchase their product. Good packaging and design has proven to not only increase the bottom line but also enhance the emotional connection between the brand and the consumer. 

Over the recent years, the trend of packaging and design has revolved around the principles of simplicity, honesty, personality, practicality, sustainability, and authenticity. Living in today's hyper consumer society, brands are eschewing clutter and relying on simple design to carry out their message. Given the loss of consumer trust in brands as a result of the global financial crisis, brands are positioning their packaging with a sense of honesty to rebuild the trust that was lost. Many brands are creating individual messages and personalities that give a sense of individuality that is equally shared with the consumer. Given the amount of technology that helps us operate more efficiently in our daily lives, many brands are replicating trends in technology to make our lives less of a hassle. As climate change awakens our awareness on how our consumption impacts the environment, brands are joining the bandwagon and looking for design and packaging materials that do minimal damage to the environment. Consumers are also looking for packaging that are more authentic to communicate the brands promise to deliver.

          

Photo Source: flickr.bfishadow

While trends indicate global brands adopting packaging design based on principles of simplicity, honesty, personality, practicality, sustainability, and authenticity ; many Asian brands still shy away from embedding these principles into their brands.  The case of simplicity in packaging and design has yet to adorn many the packaging and design of Asian brands where products heavily rely on cluttered images of graphics and celebrities to endorse the product and brand to their consumers. The more images and bright colors that adorn the product, the more attractive it is for the Asian consumer to purchase the product. This is because for many consumers in China, Korea, and Thailand where logo graphic symbols are inherent in their writing systems, the cluttered images on a product provides a familiar language to them. As a result of the direct association between the images of a product with the local language, it gives a more authentic feel for asian consumers to believe in the product without the need to rely on outside sources for opinions.  The more colorful and graphic the package, the more memorable it is for the consumer. 

Given the predilection of Asian consumers to purchase products and brands that symbolize their social status in society, Asian brands rely heavily on adorning their packaging with images that showcase trends of pop culture and the lives of celebrities. With a celebrity image on their package, not only does it give a sense of credibility but it also gives authenticity that the product will justify their social status. What is proven is that the more attuned a language is to popular culture and graphic symbols,the more relevant the brand is with its consumers.  

When it comes to sustainability, many asian brands have yet to adopt packaging practices that leave minimal environmental impact. The reality is that investment in sustainable practices are just too expensive for Asian brands to invest in. Not only does it rely on heavy capital investment, the lack of good governance and transparency in the business culture has made it difficult to position sustainable packaging in the region. 

Although good packaging ideas have yet to be fully adopted in Asia, trends of practicality are among the few principles of design that are assimilating well with consumers in Asia. Given how technological driven Asian consumers are, the practicality of package design in Asia has flourished. Many Asian brands are making the daily lives of their consumers much easier with products that are more accessible for consumers to consume and produce. As technology continues to drive the economies in Asia, banking on brands that create products that are practical and functionally aesthetic will drive brands to be leaders in their fields. 

What is important to note is that packaging and design for brands will never sustain a brand's equity in the long run. As social media spreads ideas of good packaging across the region, Asian brands will slowly adopt the principles of good packaging into their brand strategy. The movement for good design however is becoming more sober and less serious. Design aesthetics are converging and replicating so quickly without really revolutionizing the landscape. What is clear is that a heavy dose of innovation is needed to revolutionize how brands construct our social environment. And the truth is that it only takes small doses of active listening and discourse between brands and consumers to achieve such results.