BusinessWeek’s Top 100 Global Brands
As we’ve seen, branding is one of the areas which, if done properly, strongly influences innovation effectiveness. What can we learn from BusinessWeek’s Top 100 Global Brands?
First all, note that the brand is not necessarily the parent company. Coca-Cola is both the brand and the parent company. But in the case parent company Daimler-Chrysler, the winning brand is Mercedes-Benz (how many Americans realize a Mercedes is a Chrysler, sort of??).
Second, what do the rankings mean? Looking at the ranking methodology we see this:
Step one is calculating how much of a company’s total sales fall under a particular brand. In some cases the brand encompasses nearly all sales, as with McDonald’s (MCD ). In others it is tied to only one set of products: Marlboro within Altria Group (MO ). Using reports from analysts at JPMorgan Chase (JPM ), Citigroup (C ), and Morgan Stanley (MS ), Interbrand projects five years of sales and earnings tied to each brand’s products and services.Step two is calculating how much of those earnings result from the power of the brand itself. To do this, Interbrand strips out operating costs, taxes, and charges for the capital employed to arrive at the earnings attributable to intangible assets. The brand’s role is then estimated within those earnings vs. other intangible assets such as patents and management strength.
In other words, the methodology attempts to isolate the impact of the brand alone, regardless of the type or quality of products or services. What it’s telling you is that Coke is the company whose financials are the most impacted by the name “Coke” itself. It sells because it’s Coke.
That said I think their methodology is flawed, because the final ranking is by an absolute “brand value.” This rewards large companies that deal in products with a broad market appeal. In other words, I think they should rank brands based on the percentage of the company’s business that is attributable to brand, rather than an absolute sales number. Take, for instance, the brands Ford and Harley-Davidson. Using the ranking methodology Ford ranks higher because the market for cars is bigger than the market for motorcycles. But is there any doubt that the Harley-Davidson brand doesn’t inspire stronger loyalty in their customers? Without the brand and the customer experience the brand inspires, they’d be nothing.
Most of these companies establish brand by quality of products. But I believe there is a strong relation between branding and customer experience. The two are synergistic. Starbucks creates a memorable customer experience so the brand is established and the connection is indelible. Harley-Davidson, Lexus, Walt Disney - all brands connected with emphasizing customer experience.
I am working towards developing the relationship between core competencies, products, branding, and customer experience as well. To me this would serve as a strong innovation diagnostics/strategy tool.
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[...] Brand, Facilitation, Innovation, Creativity, Business. trackback A couple of weeks ago I posted BusinessWeek’s Top 100 Brands. Needless to say, this list reveals the value that effective branding represents. As a [...]
[...] What Is The Brand Value Of The Name “Vick?” September 1, 2007 Posted by Innovation Catalyst in Customer Experience, Business Practices, Creative Thinking Techniques, Branding, Brand, Innovation, Creativity, Business. trackback It’s been estimated that the brand value of name Coca Cola accounts for over half of the soft drink manufacturer’s corporate revenue. Conversely, take away the brand and the company loses over half of it’s value. Companies like Interbrand have elaborate methods of estimating the value of the brand itself. [...]
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