Business

Saturday June 30, 2012

Getting the true essence of branding

By EUGENE MAHALINGAM
eugenicz@thestar.com.my


BUILDING a successful brand is more than just having attractive symbols or smart catch phrases, which is apparently what many company heads and entrepreneurs limit their marketing efforts to.

“The first thing that needs to be understood is the connection between branding and business value. In our experience, far too many companies equate branding with a logo, tagline or advertising campaign,” says Interbrand client services director Jonathan Bernstein.

“They don't really understand the connection,” he adds.

Bernstein: ‘Brand is a value creator for the business.’

Bernstein was speaking on the sidelines after the launch of Malaysia's Most Valuable Brands (MMVB) recently, an awards ceremony that honours the top 30 brands in the country. Interbrand, a global leader in brand consultancy, is undertaking the brand valuation process.

To valuate the brand strength of the companies, Interbrand has identified 10 components, namely clarity, commitment, protection, responsiveness, authenticity, relevance, differentiation, consistency, presence and understanding.

Among the components that have accounted for major shifts in branding in recent years, says Bernstein, include corporate social responsibility, proliferation of social media, role of design, audience fragmentation and increased pressure on returns on investment.

Interbrand has valued over 5,000 of the world's leading brands, with an aggregate value in excess of US$500bil and has conducted comparable studies in China, Singapore and Taiwan in Asia.

It is interesting to note that, for many years, only Korean and Japanese names have managed to make it into Interbrand's annual ranking of the top 100 global brands.

Last year's global ranking saw HTC of Taiwan enter the elite top 100 for the first time. Indeed, recognisable Asian brands are few and far between.

Asked why this was so, Bernstein says: “The primary reason is because the understanding of brands as a creator of value, as a driver of business performance is better understood in the West. They understand how brands drive business performance and have been investing in branding longer.”

“But in terms of potential, there's a lot that can be tapped in this part of the world (Asia).”

With that in mind, can Malaysian brands make it someday?

“Brand is a value creator for the business. I think getting past that hurdle (associating brands with logos and taglines) is going to open up a lot of doors for Asian brands, especially Malaysian brands,” Bernstein says.

We're already seeing Malaysian brands starting to position themselves as regional players. It's a natural step to becoming a national player,” says Bernstein, adding that local names such as AirAsia, Maybank and CIMB have already made their foray into the region.

He says it is a misconception that consumers also see brands as merely logos or taglines.

“I think a consumer looks at a brand as an experience it can provide,” Bernstein says.

“In simpler terms, brand equals reputation and that reputation is built over time. There are a thousand small acts that go into building or decreasing your reputation. The experience that comes is effectively the brand.”

Bernstein says companies need to decide the type of experience they want to create, so that their consumers can better understand what the brand stands for or is trying to communicate.

“Of course, the product needs to be in line with what is being communicated. So I think customers don't see brands as a logo or a tagline. That's how I think management sees it.

“If management can shift to delivering more of an experience, they can then drive preference, choice and loyalty.”

Bernstein also shares his thoughts on why it's imperative to invest in a brand.

“There's only one reason to invest in a brand, and that's if that brand creates economic and financial value for a company. It's the only reason management should put money in growing a brand.”

He says brands can create value in three ways profit, growth and risk.

“Strong brands drive preference; brands that are preferred can charge a premium price; and higher margins equal profits.

“Strong brands drive choice. This can increase consumers' decision to purchase. They buy more and that drives growth. So strong brands can decrease the risk in realising those earnings.”

  • E-mail this story
  • Print this story
  • Bookmark and Share