Viewpoint -- What Makes, And Breaks, A Brand Name Today?

Dec. 21, 2004
A vibrant brand name implies quality. But as the recent decline in value of Coke and Ford show, brand names require constant vigilance.

The brand name on the world's favorite soft drink is worth more than $68.9 billion -- more than the value of the entire annual national output of Chile. But that valuation -- assigned by New York-based consultancy Interbrand Corp. -- while still the most valuable in the world, is slipping. Coke, which has been on top for all three years Interbrand has conducted its most-valuable brands survey, dropped 5% in value from last year. It's now understood that we are defined by what we eat and drink, wear, drive, listen to, click on, and surround ourselves with. For years it was only consumer-goods marketers who understood the power of brands and spent mightily managing the equity they'd built up. Now virtually every marketer has come into the increasingly crowded tent. They recognize a vibrant brand implies quality and accountability and enables shoppers to negotiate an avalanche of choice, while helping the company keep up the prices of its stock and its product. Brands are the ambassadors to markets that companies enter and guarantors for new products. Interbrand, which ranked the world's 100 leading global and public brands (those that sell at least 20% outside of their home country or region) by dollar value, determined fewer than half of the 74 brands for which it had a 2000 valuation gained value in 2001. Second-place Microsoft dropped 7% this year, the result of antitrust troubles and the technology slowdown. IBM, General Electric, and Nokia rounded out the top five. GE was the only member of the top 10 that did not lose value. The others in that class include Intel, Disney, Ford, McDonald's, and AT&T. The next 10 include Marlboro and Mercedes, Citibank and Toyota, Hewlett-Packard and Cisco Systems, American Express and Gillette, and Merrill Lynch and Sony. Only one of the top 10 -- Nokia of Finland -- is based outside the United States, as are 16 of the top 50, including Louis Vuitton of France, Nescafe of Switzerland, South Korea's Samsung, and Italy's Gucci. Several well-known brands, such as Mars and Visa, were excluded because there is not enough available data to make comparisons. Amazon and Yahoo! both found themselves down 31% when the bubble burst. Xerox dropped 38% because of chaos at the top, while No. 8 Ford fell 17% when the tires on its Explorer were blamed for several hundred accidents and deaths, causing its brand to be worth $6.3 billion less than it was a year ago. (Interbrand calculates the Ford brand is worth $30.1 billion today.) On the other hand, No. 88-ranked Starbucks was the biggest gainer in the top 100, up 32% in value to about $1.8 billion. In 20 years Starbucks has grown from 18 coffee shops to 4,435 while spending less than $20 million on typical advertising. Instead, it spent on employee benefits, believing "the brand starts with the culture and naturally extends to our customers," says Chairman Howard Schultz. Even companies that sell to other businesses, rather than directly to consumers, have recognized the need to manage their brands to stay afloat in the marketplace. Without brand differentiation, customers shop on the basis of price, says Jan Lindemann, global director for brand valuation at Interbrand. But he warns that advertising and brand-building are not the same -- as both the victims (, eToys, and and successes (Starbucks) of the frenzy demonstrate. Implanting the idea of a mascot and convincing consumers what the brands stand for are radically different propositions. Bernice Kanner is a marketing and advertising columnist. She is based in New York.

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