The Worlds Top Ten Brands

Companies around the v^HlI invest large amounts of money each year to create awareness and preference for their top brands. Powerful brand names command strong consumer loyalty and provide competitive advantage in the marketplace.

What are the world's most powerful brands? Interbrand, a consultancy that specializes in branding, released a new piece of research in 1996, naming McDonald's as the world's leading brand. Interbrand drew up an initial list of some 1,200 brands by polling staff in its 12 offices, spread across Europe, America, Asia, Australia and South Africa. This long list of brands was then trimmed down arbitrarily to 500 global brands and the survivors graded according to four criteria to give a final score. The criteria were: brand weight (or the brand's market share within its category), which accounted for 35 per cent of the final total; breadth (how wide a slice of the world in terms of age, gender, religion and nationality the brand appeals to) was another 30 per cent; depth (die loyalty of its customers) was 20 per cent; and length (how far the brand has stretched or is likely to stretch beyond its original category) was 15 per cent.

Under Interbrand's system, McDonald's scored 856 points against 849 for Coke. The most striking absence from the new top ten (see Table 1) was Kellogg's, which fell from second to 17th. The cereal maker has been overtaken by high-tech arrivals such as Microsoft, and by old brands that have done more to extend their appeal. Whereas Kellogg's influence is confined to the breakfast table, names such as Disney and Levi's are no longer just confined to the cinema and jeans. Disney also gained from being die only brand in an otherwise unbranded industry; nobody nsks you to go and see a 'Paramount film' or talks about 'Warner' characters.

Given die obvious power of brands, some argue that they should be included alongside other assets in their owners' balance sheets. Various accounting standards boards (including the United Kingdom's) are looking at this issue. At present, most balance sheets concentrate on historic-cost assets, rather than trying to guess the future value of intangible assets, such as brands. Interbrand is one of several firms that tries to calculate the value of brands by estimating each product's expected net cash flow and discounting it at a rate that reflects how secure Interbrand guesses the brand's future is.

The suspicion remains that putting brands on a balance sheet would simply be an excuse for excessively ereafi-re accounting. Brands may be deep, but some argue that valuing them is not necessarily meaningful. Although there is still disagreement among business analysts and academics about how to measure brand power, few marketers doubt die value of a powerful brand. As one brand consultant states, almost anywhere in die world, 'When you mention Kodak, I'm pretty sure everyone sees that vellow box.'

TABLE 1 TOP TEN GLOBAL BKANIIS

1996

1990

1

McDonald's

Coca-Cola

2

Coca-Cola

Kellogg's

3

Disney

McDonald's

4

Kodak

Kodak

5

Sony

Marlboro

6

Gillette

IBM

7

Mercedes-Benz

American Express

8

Levi's

Sony

9

Microsoft

Mercedes-Benz

10

Marlboro

Nescafe'

SOURCE: Intel-brand, 1996.

SOURCE: Intel-brand, 1996.

SOURCES: 'Assessing brands: broad, deep, long and hiwy". The Economist (16 November 1996), pp. 112-13; Jon Rees, 'McDonald's heads top brands list', Marketing Week (15 November 1996), p. 10; Jiiterbrand, World's Greatest Brands (New York Wiley, 1996).

Marketing

Highlight

13.2

Some products, however, carry no brands. 'Generic' products are unbranded, plainly packaged, less expensive versions of common products ranging from such items as spaghetti to paper towels and canned peaehes. They often bear only black-stencilled labels and offer prices as much as 40 per cent lower than those of main brands. The lower price is made possible by lower-quality ingredients, lower-cost packaging and lower advertising eosts.

Despite the limited popularity of generics, the issue of whether or not to brand is very much alive today. This situation highlights some key questions: Why have branding in the first place? Who benefits? How do they benefit? At what cost?

Branding helps buyers in many ways:

t Brand names tell the buyer something about product quality. Buyers who always buy the same brand know that they will get the same quality each time they buy.

» Brand names also increase the shopper's efficiency. Imagine a buyer going into a supermarket and finding thousands of generic products.

• Brand names help call consumers' attention to new products that might benefit them. The brand name becomes the basis upon which a whole story can be built about the new product's special qualities.

Branding also gives the supplier several advantages:

t The brand name makes it easier for the supplier to process orders and track down problems.

f The supplier's brand name and trademark provide legal protection for unique production features that otherwise might be copied by competitors.

• Branding enables the supplier to attract a loyal and profitable set of customers.

t Branding helps the supplier to segment markets. For example, Cadbtiry can offer Daily Milk, Milk Tray, Roses, Flake, Fruit and Nut and many other brands, not just one general confectionery product for all consumers.

Branding also adds value to consumers and society:

t Those who favour branding suggest that it leads to higher and more consistent product quality.

• Branding also increases innovation by giving producers an incentive to look for new features that can be protected against imitating competitors. Thus, branding results in more product variety and choice for consumers.

• Branding helps shoppers because it provides much more information about products and where to find them.

• Brand Name Selection

Selecting the right name is a crucial part of the marketing process. The brand name should be carefully chosen. A good name can add greatly to a product's success. Most large marketing companies have developed a formal, brand-name selection process. Finding the best brand name is a difficult task. It begins with a careful review of the product and its benefits, the target market and proposed marketing strategies.

finding a name for a product designedjbr worldwide markets is not easy Companies must avoid the pitfalls inherent, in injudicious product naming.

Desirable qualities for a brand name include the following:

1. It should suggest something about the product's benefits and qualities. Examples: Oasis (a still fruit drink), Kleenex (tissue paper), Frisp (a light savoury snaek).

2. It should be easy to pronounce, recognize and remember. Short names help. Examples: Dove (soap), Yale (security products). Hula Hoops (potato erisps shaped like the name). But longer ones are sometimes effective. Examples: "Love My Carpet' carpet cleaner, 'I Can't Believe It's Not Butter' margarine. Better Business Bureau.

3. The brand name should be distinctive. Examples: Shell, Kodak, Virgin.

4. The name should translate easily (and meaningfully) into foreign languages. For example, in Chinese Ferrari is pronounced as 'fa li li', the Chinese symbols for which mean 'magic, weapon, pull, power', which flatter the brand. But accountancy firm Price Waterhouse was reported to have been translated as 'expensive water eloset'.

5. It should be capable of registration and legal protection, A brand name cannot be registered if it infringes on existing brand names. Also, brand names that are merely descriptive or suggestive may be unprotectable. For example, the Miller Brewing Company registered the name Lite for its low-calorie beer and invested millions in establishing the name with consumers. But the courts later ruled that the terms lite and light are generic or common descriptive terms applied to beer and that Miller could not use the Lite name exclusively.14

Once chosen, the brand name must be registered with the appropriate Trade Marks Register, giving owners intellectual property rights and preventing competitors from using the same or similar name. Many firms try to build a brand name that will eventually become identified with the product category. Brand names such as Hoover, Kleenex, Levi's, Scotch Tape, Formica and Fiberglas have succeeded in this way. However, their very success may threaten the company's rights to the name. Many originally protected brand names, such as cellophane, aspirin, nylon, kerosene, linoleum, yoyo, trampoline, escalator, thermos and shredded wheat, are now names that anv seller can use.is

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