Month: February 2015

Last week I wrote a blog around brand differentiation which lead me on to this week’s blog around the world’s most powerful brands.

Coca Cola, the world’s most famous FMCG giant, was finally dethroned from its stronghold as Interbrand’s most valuable brand – a position it has held since the Interbrand ranking began 14 years ago.

At the top position in the Best Global Brands ranking of the most valuable brands in the world ranking since 2000, Coca-Cola handed over its position as the world leader in the report this year.

Interesting enough replacing Coca Cola are Apple and Google – two brand names that have come to define popular culture and the sign of the times for many global tech users.

The breathtaking rise of these two technological innovators signals a shift in global values, from traditionally “consumable” products to technological enablement.

More than that, though, it provides a valuable lesson for brands and branding experts in how to create a worldbrand that appeals in today’s market.

Google and Apple’s expertise in innovation and new product development (NPD) is a given – valued at $93,291m (£58.5m) and $98,316m (£61.6) respectively, their stronghold in the field is indisputable.

As a result, Coca-Cola took third place with a brand value almost stable (+2%) at $79.21 billion.

Is this just the start of the rise of tech brands to the global market?

In the Top 10, in addition to Apple and Google, the tech companies are well represented with IBM, Microsoft, Intel and Samsung, i.e. 60% of the 10 most valuable brands in the world.

HP (14th), Oracle (18th), Amazon (19th) or Ebay (28th) are not very far. And Facebook, which despite its “merely” 52nd place, has the strongest increase in the report this year with a 43% increase of its brand value.

The presence and growth of digital and tech companies in the ranking of the most valuable brands in the world is not new. But today, it marks a turning point. Symbolized by the “fall” of Coca-Cola – historical and undisputed leader up to now – from the number 1 position of the most valuable brand in the world. The beverage brand is now on third position behind Apple and Google.

Coca-Cola spent 14 years in a row at the number 1 position of the most powerful brands in the world… before being overtaken by Apple and Google.

However, more than a real decline of the Fast-Moving Consumer Goods (FMCG) brands, we are rather experiencing a stagnation of their brand value (+2% for Coca-Cola, +5% McDonald’s, +1% for Gillette, +8% for Pepsi and Kellogg’s or -4% for Nescafé). Which is, combined with the high increase of tech brands, the reasons that lead to these evolutions in the 2013 Best Global Brands.

If the Interbrand’s ranking includes some results that may surprise (IBM is at the 4th place, Colgate is 50th, etc.), it remains the objective witness of a real change in the consumption patterns among consumers. The new technologies took a major role in the lives of consumers. Tablets and smartphones are selling by tens of millions of units worldwide. More than a billion and a half persons are connected to Facebook. And the transition of a part of our economy towards the information technology industry is now a reality.

Digital and tech brands have completely changed consumption patterns, therefore, the brands “that count”, those which relate to consumers and accompany them in daily life have changed. The companies in the digital and information technology sector are now installed in the front seat of the most valuable and powerful brands in the world. And it’s should stay this way for a moment.

Samsung, which is still seen today as a challenger to Apple, could pull out of the game in the years to come. And as technology continues to evolve, new usage and products should continue to play an increasingly important role in consumers’ lives.

As Interbrand writes in its report: “Every so often, a company changes our lives, not just with its products, but also with its ethos.” This ethos, famously pioneered by celebrated visionary Steve Jobs and summed up in the “Think different” motto, is valuable to us as consumers because it also alters how we are perceived socially, by association.

They have made themselves indispensable, creating a genuine consumer “need” for their products across many levels – emotional, psychological and social.

They have bridged the gap between technology and the consumer, pioneering a new sense of intimacy within the sector. And this they have achieved by starting from the beginning, rigorously building their brands before applying the same rigour to their products.

From this starting point, both have appropriated that recognisable “worldbrand” cycle, with brand attracting not just consumers and sales but also talent; with talent and research fuelling new growth and with that growth leading to an increased capacity for innovation, customer insight and “getting it right”.

Within the tech sector, Google and Apple aren’t just at the forefront of this movement – arguably, they have pioneered it.

But the Fast-Moving Consumer Goods (FMCG) brands may not have said their last word. They have still thousands of ways to innovate and enhance the customer experience and their relationship with their audience.

The Internet and social media offer them now a new field of possibilities to engage and reach their consumers in a different way, we will have to wait and see.

Recently I have been engaged with many discussions about company brands, and the questions that have been asked are “brands back in crisis… again?” Not because of the difficulty in competing for the consumer’s attention among the 3,000 new brands launched each year, without counting the Internet, nor because of the repercussion on the brand’s image of the unethical business practices of certain multinationals, but because of a problem that may undermine the foundations, the fundamental principles and the origin of the concept: Brand indifferentiation.

A recent study by consultancy firm Copernicus published and entitled The commoditisation of Brands which reached the conclusion that it was increasingly difficult for the consumer to perceive the differences between a certain brand and that of the competition. The study claimed that 86% of brands in multiple categories tended to have the same key attributes.

This distinction is now outdated and fairly inaccurate, because we all know the enormous success of some of these brands. Wal-Mart, in the United States, Sainsbury in England and Caprabo in Spain manage a portfolio of brands with a power of attraction and levels of quality that many manufacturers would like to have.

The problem is so important that even the branding gurus are beginning to use the term superbrand or powerbrand to designate the strongest or those with a greater power of attraction than others.

This is the living proof and acceptance that there is a hierarchy within brands, what we could call a level of branding, that is to say brands within brands.

As is well known, brands were created to be able to differentiate what we offer from what the competition offers. We “branded” it to avoid confusion and help people to remember, identify the manufacturer and aid the choice of purchase.

A strong brand should fulfil three basic goals: information, differentiation and seduction:

Information because it should tell us something about the product offered that is intelligible and decipherable: I have to understand the proposal of basic value or what the product offered consists of.

Differentiation because what it tells us should be perceived as different by the purchaser or, in other words: I understand what you are telling me and I think that it is something that the others haven’t told me.

Seduction because this is the raison d’être of any brand. The first two are in the service of the third: in the end a brand has to tell us something that we consider to be interesting and that ends up seducing us. And seduction is something very subtle.

There are many brands that have reached the first stage. They have succeeded in getting us to recognise their logos and we see their advertisements.

We should not confuse Communication with brand creation or management. The objective of Communication may be to achieve renown for what we offer, but we have to define the brand, to know what to communicate, what to say in our communication plan. In short, what meanings, values and personalities are important and distinguishing. The objective of Brand Management is to maintain the consistency and strength of the brand so that it can be adequately exploited. This should be the work of a good brand manager.

Following a brand’s Vision, Mission and Values, it is important that a brand is:

1. Emotional as well as a real offer

2. A feeling of community

3. The values within the consumer

4. A communication goes further

5. An obsession with small details

Before communicating and transmitting, however, you need to define. Three very important elements make up the product we offer: what it is, what it does and what it means. If we cannot complete and define each of these dimensions we do not have a strong brand. All products talk about what they are, and today we are rarely differentiated by what we do. To think about brand management is to consider the creation of meanings.

Therefore Actimel does not sell fermented milk but the ability to strengthen your defences against external aggressions, a VW Beetle is much more than a compact car, a Palm is almost like a Game Boy for adults, a Hallmark card is the possibility to communicate a feeling, Evian is the purest, most crystal-clear water in the world, Disney sells you eternal youth, and a BMW is for those who know how to appreciate the subtle difference between driving and ‘driving’.

Fortunes have been made by those who found opportunities in the face of adversity. And many of those have been CEOs who generated reputations for bringing value to stakeholders in the most difficult circumstances.

The current economic environment may well be setting the stage for a new round of stand-out CEOs.

Speculation about a further recession dominates the business press these days not to mention geo-political issues, sanctions and even elections in 2015. Turmoil in the capital markets, concern over consumer spending and layoffs fill the headlines. Wall Street Journal economists, Goldman Sachs and the Tatum Survey of Business Conditions are all predicting recession.

Even optimists have noted that continuing talk of recession can become a self-fulfilling prophecy.

In the current environment the daily pressures of managing are exacerbated by the uncertainties evidenced daily on the national news. Companies that were in marginal condition a year ago may benefit from some degree of restructuring this year as a course-correction driven by the economy.

Many in the C-suite think the approach of a turnaround situation is obvious. For example, if a company is experiencing successive quarters of losses and is having difficulty paying its vendors on time, there is clearly need for assistance. But it is important to understand that rarely does a company’s financial health deteriorate to that extent overnight.

Many businesses in the early stages of potential difficulty may not be showing the outward earnings or cash flow signs of distress. There are almost always more subtle indicators which, either singly or together, can give management a “heads-up” that there may be some rough waters ahead. These leading indicators may vary in importance across various industries, but they generally are the same few.

Now is the time to consider the early indicators, because erosion of financial performance is like an illness – by the time the signs are obvious the disease has become harder to remedy. Performing a financial diagnostic during a volatile economic climate is a sensible preventative measure not unlike a basic health screening that enables you to take action before a situation becomes dire.

So how can the C-Suite tell if a changed approach is warranted?

Many of today’s finance executives have come of age during a strong economic period and may never have experienced recession while in a leadership role. Happily, there are lessons that any business leader can learn from the world of Turnaround Management. Executives who specialise in turnarounds see again and again situations that could have been more positive if the management team had recognized issues at an earlier stage.

Below I have detailed some leading key warning indicators:

• Declining Gross Margin and/or Operating Margins. Is there sufficient cash to sustain the company? This includes cash on hand, cash to be collected, or cash from a DIP (debtor in possession) loan.

• Inability to Meet Forecasts. It is not unusual that actual financial and operating results for a given month or quarter might vary from the original annual budget.

• Increasing Debt. Cash, whether on hand or as the result of borrowing, is most always an indicator of the health of a company. Lack of available cash coupled with the need to incur debt for capital expenditures or for an acquisition can be positive reasons to incur debt.

• High Turnover among Employees and/or Management. Even in today’s highly automated world, corporate results are still the product of the efforts of management and employees. When there is corporate health there tends to be stability in the workforce.

• Declining Market Share.Market share can be the most difficult and contested business metric that exists, especially if your industry has a substantial number of closely held private companies.

Early corrective action denotes strong leadership. Taking early action when warning signs first appear is where reputations can be built. All companies face some difficult issues during their life cycle, and CEOs and CFOs who take decisive action are recognised for their keen awareness of their business metrics and the resulting steadiness during business cycles.

An experienced outsider can help assess issues and recommend actions to make a course-correction to a more profitable future. This objective perspective will vastly enhance the speed of insight, given the officers are typically already stretched thin. Remember, when the economy changes drastically the techniques that have worked before may not be effective.

There is always a certain loneliness at the top, but this generation’s stand-out CEOs would do well to consider how the techniques of Turnaround Management could bolster results. Many pitfalls can be avoided with wise counsel, protecting or even building the reputations of the leadership team who stays ahead of the curve.

Social media sites already offer free advertising in the form of tweets and Facebook posts, but these tools can only take your brand so far. The next step involves paying for social media ads, and if you’re considering this option, you’re probably most concerned with one big question: What will my return actually be? Will spending money on an ad on Twitter or Facebook bring more customers to my business than the same amount spent on Google AdWords?

Social media have become an accepted part of a company’s marketing efforts. Around 70 per cent of Fortune 500 companies have a Facebook page and 77 per cent have a Twitter account, according to a study by the University of Massachusetts Dartmouth Center for Marketing Research. The average company spends around $19m on social media a year, according to research group TCS.

But at the same time there is a creeping feeling of dissatisfaction – are those social media campaigns producing results? Nate Elliot, analyst at Forrester Research, sounded the alarm on social media advertising last autumn, saying that marketers were less satisfied with Facebook and Twitter advertising than many older forms of digital advertising, including email marketing.

Snapchat recently started to include advertisements in its popular ephemeral messaging app, but its advertising strategy is notably different from its competitors’ strategies. Snapchat says it has no interest in tricking its users into clicking ads by blurring the line between advertising and organic content created by actual users.

The majority of social media platforms purposefully gather as much user data as possible to help brands place relevant and targeted ads. Snapchat calls that strategy “interesting,” but the reality is that it can it deliver targeted ads?

The question is though, would they been better spending a couple of thousand pounds on LinkedIn advertising?.

Do high-value customers respond to ads?  Even highly targeted ads pushed to them by popular sites like LinkedIn or Viadeo?

The facts are, if you are going to advertise you need to consider the short-term and long-term view, tactical and strategic, to build the brand and convert the advertising spend into ROI, social media advertising needs to be integrated into your social media marketing:

·        Understand your targeted social media channel

·        Target the correct users with your message

·        Ensure the advertisements are supplementing the present content on the social site

·        Have a social networking presence

This covers the two obvious targeting issues: get the right network and target the right users; and then tackle the issue of integration: connect your adverts to your social media presence and engage with the people visiting/connecting with you. I have heard of social media consultants running Facebook ads that, instead of linking to their landing page, links directly to a Facebook Page (or Group). This resonates with the last two points above and makes a tremendous amount of sense – the ad-clicker is already signed into Facebook so they can take action simply by clicking that they “Like” the page. No landing page could get that result in fewer clicks.

Nielsen and Facebook recently teamed up to create an “independent” report which highlighted the value of combining “social” with advertising. Unsurprisingly, people responded better to adverts that told them which of their connections “Liked” the company whose advert they were viewing.

In summary, social media performs two important functions. The first — and most obvious one — is that it enables participants to communicate among themselves. With the possible exception of LinkedIn, that’s the less important role for experts, consultants, advisors and thought-leaders.

The more important role when it comes to marketing is how social media functions as a search engine. People still go to Google to search, but increasingly, when clients are seeking answers to their most vexing problems, they turn to social media.  After Google, the second most powerful search engine is YouTube, (which is owned by Google).

When clients are trying to discover who the true thought-leaders are in a particular field, they turn to Twitter, Facebook and LinkedIn as the tool for finding who’s at the forefront. If you are not visible, you will not make it on the short list of those who are viewed as experts.

The good news is that most experts, consultants and advisors still think of social media as a place to primarily interact with others. They have not grasped the huge potential social media offers to break out of the pack and become highly visible. For those who are aggressive now, there is a huge opportunity to capitalise on this huge benefit of social media, before others jump and cease new opportunities. I think this window will only stay open another 12-18 months, which by then it will be common knowledge.​