Best Global Brands: Lessons Learned

Despite this past week, the year 2008, in general, has been an excellent one for developing nations. China, Brazil, Russia, India and other historically troubled economies continue to enjoy burgeoning middle and upper classes that are spending money on purchases they could not afford in the past.

In contrast, this has not been a good year for developed nations. The United States, and now every country tied to America’s radioactive financial service industry, is suffering because deluded borrowers and irresponsible lenders were circulating money they never actually had.

So, what can Interbrand’s 2008 Best Global Brands report teach us about the world’s top 100 brands in this bipolar global economy? Plenty.

Lesson #1: Brand Engagement is Crucial

Here is how Merrill Lynch positions its brand online:

Merrill Lynch demonstrates its commitments to clients and shareholders through the firm’s emphasis on excellence, integrity and ethical behavior…

If the employees of Merrill Lynch truly believed in and behaved according to the brand attributes promoted on the company’s website, they would never have lent large amounts of money to entities who were not qualified to borrow a lawnmower. Though individual citizens share much of the responsibility, financial services touting a devotion to fiscal responsibility and economic viability failed to maintain brand engagement among their ranks, and the result has been a devastating collapse of trust and shivers of recession that are reverberating across the globe.

Investing in the proper training of employees so they embrace and live corporate brand attributes is a key component of branding, so it is not surprising that myopic financial service brands such as AIG, UBS, and Morgan Stanley have all dropped in Interbrand’s 2008 Best Global Brands rankings. As the report states, “But while no brand has come away completely unscathed on account of the interdependent nature of the industry, some have weathered the storm significantly better than others.” Long-respected stalwarts HSBC and Goldman Sachs, for example, have not only survived but are managing to capitalize on the decline of their competitors.

Lesson #2: Luxury Brands Adjust to the Tides of the Global Economy

In several hundred years, after the human race has drowned in what used to be the polar ice caps, the world will be a giant blue ocean spangled with bobbing Louis Vuitton handbags and glimmering bottles of Chanel perfume: one huge soup of luxury brands. They are the perfect storm survivors. Luxury brands benefit from a consumer-driven psychological buoyancy that allows them to paddle the currents that stir the global economy.

Manfredi Ricca, managing director of Interbrand’s Milan office, explains, “In times of economic expansion, luxury brands will see new segments of consumers who can afford access to luxury brands, but they can always count on a stable core of adepts.” In this case, “adepts” means wealthy people and their offspring. Paris Hilton. Putin’s nephews.

People like nice things. Unfortunately, most of us can’t afford the highest in quality, the finest in elegance, and the sleekest in design. The vast majority of the human race cannot afford a Rolex watch. However, as many economies around the world thrived during the past year, increasing numbers of people came within financial reach of luxury brands. On instinct, understandably, many of these nouveau rich rushed into the nearest Cartier store, purchased the gaudiest bling available, and flaunted their new social status to people who don’t even know their name.

Yet, as these demographics become accustomed to nice things, something compelling happens. Ricca explains, “In a mature economy, a consumer’s self-confidence derives from being discerning rather than merely rich. Subtle details, which add depth to the product experience, are not within reach of the wealthy, but the wealthy cognoscenti.” Indeed, being able to afford Iranian caviar, and being able to deconstruct Iranian caviar, represent two different levels of experience with the luxury-brand lifestyle.

Lesson #3: Know Thyself and Build Trust in Others

Branding communicates a set of values and promises to customers. When a brand delivers on those promises, trust is created, and a relationship based on shared experience and loyalty ensues. That bond is vital to brands, particularly when the economic climate sours and consumers shift their spending habits.

As the 2008 Best Global Brands Executive Summary states, “The uncertainty of a downturn drives consumers to want more for their money and demand a more emotionally rewarding experience for their hard-earned and limited cash.” In such times loyalty often competes with necessity. “It’s no longer a choice between Nike or adidas shoes. The question becomes, ‘Do I buy shoes or an iPod?'” Not exactly Sophie’s Choice, but a tough decision for any parent with kids in high school.

Brands that have and continue to consistently build trust with consumers are better off in tough times than brands that seek to capitalize on the latest trend or exploit the sincerity of the moment—for instance, going green. The article “Sustainability and its impact on brand value,” by Paula Oliveira and Andrea Sullivan, concludes with the sentences, “A study published by TerraChoice, an environmental marketing firm, showed that 99% of the 1,018 consumer products surveyed were guilty of greenwashing. These companies risk not only their reputation, but also future earnings for the business.” Why? Because consumers can see through the greenwashing malarkey. Consumers were raised by parents who called that sort of thing lying. Check out brandchannel’s 2008 brandjunkie awards, where “None” was the number one answer to the question, “What brand do you think is truly (going) ‘green’? Why?”

Brands who aren’t true to who they say they are can be more susceptible to outside forces and peer pressure from changing markets and emerging trends. There is a difference between being thoughtful, engaged, and flexible, and simply being something you are not. Like trustworthy.

Lesson #4: Brands are Defining Borders in the Global Economy

Dr. Jürgen Häusler, CEO of Interbrand Central & Eastern Europe, thinks the branding world has it backwards. He writes, “Brands create nations? Why do we furrow our brows when we read this sentence? Because we usually consider it a law of nature that the cause-and-effect relationship is the other way around: Nations create brands.”

With the incredible expansion of international commerce and advances in transportation over the past 100 years, immigrants—both legal and illegal—have become the blood coursing through today’s economic circulatory system. The phrase “Made in _____” should be expanded to say “Made in _____, by _____.” For example, “Made in the U.S.A., by Mexicans.” Or “Made in Italy, by Vietnamese.” Or even “Made in France, by some Algerians, four Russians, a Brazilian, and nine Saudi Arabians.”

Dr. Häusler explains that when consumers around the globe think of fine “Italian” menswear, they aren’t thinking of Italy, the actual country, at all; they are, in fact, collectively thinking of Italian brands such as Armani, Brioni, and Ermenegildo Zegna. The same principle applies to cars, (renowned German car engineering is the genius of Audi, Mercedes, BMW, and Porsche), and booze (all of France doesn’t make Champagne, Champagne makes Champagne). Though particular nations may benefit from the halo effect of these brands, which is certainly warranted, credit should be attributed to the brands for the quality of their products and their admirable unwillingness to compromise the brand values that consistently ensure quality.

Lesson #5: Technology Continues to Empower the Consumer

Jason Baer, Interbrand’s Director of Verbal Identity in New York City, in “Six laws of collaborative branding,” succinctly characterizes the current intersection of branding and technology: “One thing is certain: the days of complete and total jurisdiction over your brand are gone.” Understandably, a brand’s worst nightmare is of being hijacked by disgruntled customers with plenty of attitude, heaps of time, and a high-speed Internet connection. So if your primary consumers are 15-year-olds, be very afraid. They have plenty of each.

Brands, however, must respect social networking. Corporations spend millions of dollars on marketing research to understand what their customers, and potential customers, are thinking. With the Internet today, that information is everywhere. Brands must deal with positive feedback by being grateful, intelligent, and gracious, reaching out to loyal customers and building mutually beneficial relationships with prospective ones. Negative feedback should be treated deftly and honestly, and never create the impression of being defensive, paranoid, or dismissive. How a brand reacts to negative feedback and criticism speaks volumes about its values, ethics, and maturity. Above all, respect the power of pedestrians on the Web.

Baer writes, “Only brands that actively engage their audiences in a conversation will survive… If we don’t ask them to participate, watch out, because they will happily take matters into their own hands. Just look at the hundreds of homemade Apple commercials (or the more antagonistic Microsoft Zune spoofs) on YouTube and you’ll see that this can’t be stopped. So don’t fight this phenomenon. Embrace it.”

After all, brands that don’t value input from their customers don’t have much value themselves.

At least that is what online consumers are telling us.

For more information at http://www.brandchannel.com

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