Formula For The Right Brand Spokesperson

L'Oreal announced a new addition to their roster of celebrity spokespeople this week, signing actress Julianna Margulies as a new ambassador and celebrity face for the brand. Ms. Margulies currently stars in the critically acclaimed TV series "The Good Wife," for which she won a Golden Globe and SAG award for her portrayal of a loyal yetbetrayed wife of a politician. Does it surprise you that L'Oreal (and most other beauty brands (both luxury and mass merchandiser) went the expected route and found a high-profile beauty to front for their brand? We weren't. But just because it's predictable doesn't mean it isn't practicable, and there are two basic ways a celebrity can positively affect a brand. The first is by creating what might be called "borrowed equity," when the celebrity causes more attention to the brand than otherwise might be the case, an approach usually used when a brand is seeking high levels of awareness. The second is when the spokesperson association actually increases the brand's equity that is, when the values inherent in the spokesperson significantly reinforce brand values. If successful, the brand is then seen to better meet, and can even exceed, expectations consumers dream about for the ideal in the category. That measure - the brand versus the real, unconstrained-by-the-marketplace Ideal - is the very best measure of brand engagement and loyalty because it takes into account real emotional values, something that imagery and good-looking celebrities can't bring about on their own. Ms. Margulies won't appear in advertising for L'Oreal Paris until 2011, but until then, we turned to the Brand Keys' 2010 Loyalty Leaders List to see which brands were currently engaging loyal customers. Here's the top-10 ranking: 1. Mary Kay 2. Maybelline 3. Estee Lauder 4. Clinique 5. Avon 6. Lancome 7. L'Oreal 8. Cosmetics 9. Chanel 10. Max Factor Coco Chanel is said to have offered this bon mot: Women have two weapons - cosmetics and tears.

The Brand Strategy Of Over Delivery

For most manufacturers this initially would sound like a nightmare but is it? Recently I checked into The Peninsula Hotel in Chicago. Knowing the brand your expectations are by default tuned to the highest level still Ive time after time managed to be surprised. When I wished to access music in my room, I was told that the CD library didnt exist in this particular hotel. The 1

apologetic concierge however asked me out of curiosity which CDs I was looking for. Listing all my favorite artists I hang up wondering the reason for this curiosity. 20 minutes later the bell rang on my door. The same person as Ive been speaking with over the phone handed over a bag with three CDs purchased by the hotel, all my favorites and given as a gift to me. I bet youll never forget this story neither do I. But the case is that the extra $20 the hotel decided to spend on my account makes me spread the story just like now. Would you still claim this wasnt worth the investment hardly! The story is very much in line with another experience taking place in a Louis Vuitton store, the maker of luxury leather goods, which explicitly does not offer a lifetime warranty on its products. In fact, the company's documentation states a charge will be applied for repairs. The salesperson to whom you return your faulty product further reiterates this when you take it in for repair. But when you come back to collect your item, you'll almost never pay for the service. The salesperson assures you this was done especially for you. The over deliver and under promise builds your brand in ways which few can imagine as it reflects a brand which cares about you rather than a brand which traditionally only cares about its shareholders. Its a story, which stays with you for life and not only keeps you as a loyal customer it makes you spread the rumour. If you dont believe me ask any kid about how many bricks there is in any box of LEGO and the answer would be there are always too many bricks in the box. I remember as a kid I always noticed the pleasant surprise which always made me think this was a special gift for me. Many years later, when visiting the factory I realized, other factors were the true reason for this generosity still the story stays with me forever. Im certain that my Peninsula, the Louis Vuitton or LEGO experience isnt written down in some manual still it has time after time shown to be consistent every time Ive been spending time with these brands...But how? The reason might be found on the very top of the 70 year old Sydney Harbour Bridge, an icon, which some years ago was opened to the public for what is called a Bridge Walk. The walk takes you through a 4-hour tour on top of the arches of the very bridge allowing you to view the entire Sydney harbor. The surprising bit wasnt the bridge walk but the motivation showed by the guides which time after time seemed to keep up an amazing spirit despite having walked up-and-down the bridge several hundred times in all sorts of weather. I asked Adam, my guide and was told an amazing explanation. Prior to the first as a practicing guide they go through a 4-month education program. The first month is packed with lessons about how to handle people with panic attacks. You know, fear of heights. The second month is dedicated to learning how to memorize the visitors names as well as presentation techniques. You should think that the last two months would be dedicated to learning about the bridge and Sydney and its harbour but wrong! Instead the soon-to-be-guides were left alone with the assignment of creating their own presentation a two month assignment ensuring an amazing ownership of the story, the topic and energy. But what does all this have to do with the Peninsula or Louis Vuitton story, and my mantra of over delivering and under promising? Its simple leaving it all to comprehensive brand manuals wont do it. You cant program a surprise but you can however secure an understanding about the fundamental components creating a true surprise and hand over the execution to the members of your team. Today in a world where cost cutting has become the rule of every product or service consumers are left in a 2

world where surprises are more surprising than ever and unfortunately only for the negative. Far to seldom-true positive surprises arrises but when they do they are spread like wild fire between consumers because they tell a story we all would like to experience. Im sure both Louis Vuitton, Peninsula or LEGO would all agree with me that the cost of such experience isnt overwhelming in fact it is only our extreme cost focus which keeps us away from this way of thinking.

Celebrity Endorsement Guide

Nike is known around the world for being one of the most iconic brands. It was recently ranked as the worlds 25th most valuable brand in terms of its brand value USD10.8 billion by the annual Business Weeks global top 100 brand survey. In spite of many market maneuvers (such as the recent merger between Adidas and Reebok), Nike has remained the leader in its category. Nike is also very well known for another aspect and that is its consistent use of celebrities to endorse the brand. In fact one of the most successful collaborations between a brand and a celebrity is that of Nike and Michael Jordan. So successful was the collaboration that Nike and Jordan launched a new brand variant called the Air Jordan line of sport shoes. Nike pulled off a very similar coup in the sports industry when it joined forces with the ace golfer Tiger Woods to enter the golf category with its apparel, equipment and accessories. Nike had no experience in golf before. Moreover, golf being a very elite game, it was generally considered that a brand like Nike would not be very successful. This might have probably been true had Nike chosen the traditional path to building its equity in the golfing arena. But Nike chose to associate with the best golfer in the world and have him endorse the brand. As is known today, Nike has emerged highly successful in golf. This channel now being used by many brands around the world raises some crucial questions about ways brands are built and also about the impact such collaborations have on branding. Is associating with a leading celebrity the easiest way to build a brand? Should celebrity endorsement be the principal channel of brand communications? How can brands decide on potential brand endorsers? What are the advantages and disadvantages of such endorsements? Is celebrity endorsement always beneficial to the brand? How does a celebrity enhance a brand image? Answers to these and many other related questions are the content of this post. Celebrity Endorsements Endorsement is a channel of brand communication in which a celebrity acts as the brands spokesperson and certifies the brands claim and position by extending his/her personality, popularity, stature in the society or expertise in the field to the brand. In a market with a very high proliferation of local, regional and international brands, celebrity endorsement was thought to provide a distinct differentiation. But over the years, many aspiring brands have jumped on to this celebrity endorsement bandwagon. Even though endorsements have taken on a quasi-industry stature, there is hardly any hugely successful collaboration as those of Nikes. Essentials of Celebrity Endorsements

Even though to an observer it may seem that Nikes success is totally based on Tiger Woods association with the brand, nothing can be far from the truth. As a brand, Nike has established a very strong brand identity and a brand personality over the years. What Nike did was to use celebrity endorsement as one of the main channels of communicating its brand to a highly focused set of customers. So, Nikes association with Tiger Woods was one of the parts of an entire branding process that Nike has been practicing consistently. Contrary to this, most brands that have used celebrity endorsements have used it as the main brand building tool. Before any brand signs on a celebrity, they should consider three main aspects.

Attractiveness of the celebrity: This principle states that an attractive endorser will have a positive impact on the endorsement. The endorser should be attractive to the target audience in certain aspects like physical appearance, intellectual capabilities, athletic competence, and lifestyle. It has been proven that an endorser that appears attractive as defined above has a greater chance of enhancing the memory of the brand that he/she endorses. Credibility of the celebrity: This principle states that for any brand-celebrity collaboration to be successful, the personal credibility of the celebrity is crucial. Credibility is defined here as the celebrities perceived expertise and trustworthiness. As celebrity endorsements act as an external cue that enable consumers to sift through the tremendous brand clutter in the market, the credibility factor of the celebrity greatly influences the acceptance with consumers. Meaning transfer between the celebrity and the brand: This principle states that the success of the brand-celebrity collaboration heavily depends on the compatibility between the brand and the celebrity in terms of identity, personality, positioning in the market vis--vis competitors, and lifestyle. When a brand signs on a celebrity, these are some of the compatibility factors that have to exist for the brand to leverage the maximum from that collaboration.

Even though these three major principles must be adhered to by companies, practically it might be difficult to find celebrities that satisfy all these three conditions. Depending on the nature of the brand and the kind of product being used, companies can selectively emphasize one factor over the other. Celebrity Endorsements - Do's and Don'ts All brands must be aware of the following aspects of celebrity branding:

Consistency and long-term commitment: As with branding, companies should try to maintain consistency between the endorser and the brand to establish a strong personality and identity. More importantly, companies should view celebrity endorsements as long-term strategic decisions affecting the brand. Three prerequisites to selecting celebrities: Before signing on celebrities to endorse their brands, companies need to ensure that they meet three basic prerequisites, namely the endorser should be attractive, have a positive image in the society, and be perceived as having the necessary knowledge (although it might be difficult for a celebrity to meet all three prerequisites) Celebritybrand match: Consistent with the principles discussed earlier, companies should ensure a match between the brand being endorsed and the endorser so that the endorsements are able to strongly influence the thought processes of consumers and create a positive perception of the brand. Constant monitoring: Companies should monitor the behavior, conduct and public image of the endorser continuously to minimize any potential negative publicity. One of the most effective 4

ways to do this is to ensure that celebrity endorsement contracts are effectively drafted, keeping in mind any such negative events. Selecting unique endorsers: Companies should try to bring on board those celebrities who do not endorse competitors products or other quite different products, so that there is a clear transfer of personality and identity between the endorser and the brand. Timing: As celebrities command a high price tag, companies should be on the constant lookout for emerging celebrities who show some promise and potential and sign them on in their formative years if possible to ensure a winwin situation. Brand over endorser: When celebrities are used to endorse brands, one obvious result could be the potential overshadowing of the brand by the celebrity. Companies should ensure that this does not happen by formulating advertising collaterals and other communications. Celebrity endorsement is just a channel: Companies must realize that having a celebrity endorsing a brand is not a goal in itself; rather it is one part of the communication mix that falls under the broader category of sponsorship marketing. Celebrity ROI: Even though it is challenging to measure the effects of celebrity endorsements on companies brands, companies should have a system combining quantitative and qualitative measures to measure the overall effect of celebrity endorsements on their brands. Trademark and legal contracts: Companies should ensure that the celebrities they hire are on proper legal terms so that they dont endorse competitors products in the same product category, thereby creating confusion in the minds of the consumers.

An important aspect that companies must note is that celebrity endorsements cannot replace the comprehensive brand building processes. As branding evolves as a discipline companies must be extra cautious to utilize every possible channel of communication rather than just a celebrity endorsement. When all other steps in the branding process is followed and implemented, then channels such as celebrity endorsements can provide the cutting edge as it did for Nike.

10 Benefits Of Brand Licensing

There are ten key benefits to licensing your brand. Brand Licensing enables: 1. Brand Managers to extend their brands with minimal investment. Through the licensing arrangement, third party manufacturers are responsible for everything from product development to inventory management to store replenishment. 2. The brand to obtain supplementary marketing support. For the right to use the brand in their category, the manufacturer must agree to spend a percentage of their net sales on marketing. This marketing commitment not only supports the category licensed, but can be significant to the overall brand. 3. Trademark protection in the category. For a brand to benefit from trademark protection in a particular category, it must be actively sold in that category. If the category lies vacant, others may claim rights to use the mark. Extending a brand into a category via licensing helps brand owners meet the commerce standard. 4. Increased consumer connections and insights in the categories being licensed. Extending a brand via licensing offers thousands of incremental opportunities to connect with consumers. By inserting a survey inside the licensed package or a toll free number on the exterior, a brand owner can gain many additional insights about the brand. 5

5. A brand to gain incremental shelf space. If a brand owner chooses to extend a brand via licensing into a new category, the brand gains tremendous additional exposure in those categories in every retail store the product is sold. When sold into major chain retailers, the brand can gain thousands of additional feet of brand exposure in each category. 6. Entre into new distribution channels. By licensing the brand to a manufacturer which currently sells into a retail channel where the brand currently does not have a presence, the brand can gain access to that channel via the licensing relationship. 7. The brand to enter new regions. Similar to new channel access, a brand can gain entre into new regions via a manufacturer which has a presence in regions where the brand is currently not sold. 8. Access to patented technology. Many companies which choose to license brands offer proprietary innovation to the brand owner. When the patented technology reinforces the brands position, the new product offered can be met with tremendous consumer appreciation and pent up demand. 9. Knowledge transfer from the manufacturing partners who license the brand. A licensing arrangement provides the opportunity for the brand owner and the manufacturer to share insights and knowledge across multiple disciplines including product development, marketing, R&D and sales. 10. The brand owner to capture royalty revenue through the manufacturers sales of licensed product. This symbiotic relationship helps to create new products for the marketplace that consumers crave. For every dollar in revenue generated by the manufacturer, the brand owner receives a percentage in royalty payments, most of which go straight to the bottom line.

Rebranding The Asian Carp

Think of it as Extreme Makeover, Aquatic Edition. Asian carp, scorned as inedible and hunted down as vanquishers of native species, are being taste-tested under new names on menus from south to north. The background: Asian carp were imported to the southern U.S. in the 1970s to suck up scum from catfish ponds. But theyve become monsters in the eyes of many as they have migrated North. They can grow to 100 pounds, multiply like guppies, and tend to leap crazily out of the water, bruising and breaking boaters bones. The fish got a lot of attention once they migrated up the Mississippi River and broke through an electric barrier designed to keep them out of Lake Michigan. State and federal governments have doled out millions of dollars to various agencies to eradicate them. But too little attention has been given to a rebranding solution: Eating the Asian carp out of existence, or at least making a dent in the population. It began in Louisiana, where wildlife officials rolled out a promotion dubbing the fish the Silverfin, and enlisting chefs to create recipes for the tasty white meat of the bighead carp and silver carp, two dominant invaders. A cross between scallops and crabmeat, declared one seafood chef. Meanwhile, carp boosters in Kentucky, after trying the fish smoked and canned, concluded that it tasted remarkably like tuna. They proposed calling it Kentucky Tuna. 6

 Northward in Chicago, a chef at an upscale restaurant has his own solution. After failing to seduce diners to the wonders of Asian carp, even when he gave away free appetizers, the chef reintroduced the fish on local TV as Shanghai Bass. People are renaming these poor fish because of the American peoples prejudice against the name carp, observed an economist at Kentucky State University. Were trying to break that mindset and find a name that sounds more appetizing. Right now the field is wide open. By the way, in China and Vietnam, carp have been farmed and considered delicacies for millennia. But Americans confuse the foreign invaders with the bottom-feeding, stronger-tasting common carp. The Asian carp mainly eat plankton, not garbage on the floor of rivers and lakes. Their flesh is not high in mercury, and is rich in healthy omega-3 fats. This rebranding approach has worked before. Few people in the United States ate the scary-sounding Patagonian Toothfish until marketers renamed it Chilean Sea Bass. It became so popular that overfishing is now a problem. So why not Shanghai Bass?

Top Ten Branding Mistakes

1. Not being consistent in what the brand stands for. Often, a brands management does not have the discipline to stick to one message over time. The message changes frequently depending on the audience, the issue of the moment and what competitors are saying. 2. Not standing for anything. Often, organizations grow through mergers and acquisitions. Sometimes, the acquired companies and brands have little in common. They can vary significantly in quality and responsiveness and needs met. There is no common thread holding them together. 3. Not delivering a good value for the price paid. I have worked with more than one brand whose managers have gotten greedy and increased prices while decreasing quality and service levels. This is not the formula for long-term success. 4. The CEO just doesnt get or support branding. I have interacted with CEOs that just dont get branding. Some have said to me, I dont see why our brand has to be unique and differentiated if we produce quality products? Isnt that enough? 5. Focusing on product features and attributes rather than customer benefits and shared values. It is more powerful and sustainable for brands to connect with their customers at the benefit and values level. Attributes and features are less emotionally compelling and much easier for competitors to match and exceed. 6. Thinking it is enough to say that we are the quality, service or innovation leader. These are overused phrases that people disregard as being typical chest beating. Rather than claiming to be the leader in these, strive through your actions to be the definitive leader in these. 7. Making a promise but then not delivering on it. Consider BP as an example. It is better to have not made the promise than to have made it and then clearly not delivered on it.

8. Not understanding who your customer is or how your brand could appeal to him or her. Some organizations have not figured out who their target customers are or what really motivates them. They sell products but they really dont have much customer insight. One cannot create a strong brand without deep customer insight. 9. Not innovating. I have encountered many brands that rest on their laurels. They offered revolutionary products at one time but the competition has long since surpassed them. In the long run, the strongest brands in the land cant compensate for mediocre products that are not keeping up with competitive offerings. 10. Not supporting the brand with resources. I am amazed at how many organizations want strong brands but recently laid off their brand managers and slashed their marketing budgets. How do they expect to build strong brands without adequate resources?

Marketing Brands To Women

It's an implicit equation that has hamstrung Western civilization for at least 300 years, and harmed the effectiveness of advertising equally. I'm referring to the equation that judges rationality as superior to emotions, with the former being the cherished fiefdom of male executives at major companies and the latter the touchy-feely and not altogether important province of female consumers. But the breakthroughs in brain science over the past quarter century have laid that false duality to rest: we're all primarily emotional decision-makers, and since everybody feels before they think, objectivity is a myth and so is pure, disciplined rationality. For ad agencies struggling to promote often undifferentiated offers, what a relief. The days of being onmessage can now give way to a greater, truer reality. What's most important in 21st century marketing will to be on-emotion, meaning to create the right emotion at the right time, for the right audience, on behalf of the right positioning of a branded offer. But even with this new freedom to follow their correct instincts (visuals and emotions win), the ad agencies have plenty of work of their own cut out for them. After all, as a law suit from the NAACP alleges, ad agencies have problems with diversity. For instance, as reported by Advertising Age of the 58 Super Bowl spots where the identity of the creative team could be affirmed, 92% of the creative directors were white males. Here's some help for them in overcoming blind spots: 1. To be on-emotion is also to be on-motivation. That figures, since the two words have the same root in Latin: to move, to make something happen. Among the five core motivations of physical satisfaction, empowerment, enjoyment, attachment and self-esteem, male creative directors and the approximately 80% of CMOs who are men may be equally to blame for the fact that in the ads my company has tested over the past decade, 39% of them focused on enjoyment and 30% on empowerment. Those are motivations that you could argue tilt masculine, especially empowerment. But what are the motivations that create the most emotional engagement and the greatest volume of positive feelings? They're the motivations women understand and cherish: the greater intimacy of both attachment (to others), and protecting one's self-esteem. 2. As fMRI brain scans have shown, mass murderers are literally cold people. Their minds show less emotional activity than ordinary people. So in advertising, so long as the emotions shown are authentic 8

and not ultimately detrimental to the branded offer, show some feelings. But make them plausible. Do we really need to see a parade of housewives gaga over holding a conversation with Tidy Bowl Man? Condescension hurts. And speaking of authenticity, make sure the smiles on display aren't faked: with the two halfs of their brain literally connected a bit better than those of guys, when we say a woman is in "touch" with her feelings, there's scientific proof. 3. Finally, values matter. As Carol King famously sang, "Is this just a moment's pleasure? Will you still love me tomorrow?" Feelings can be fleeting. But the feelings that matter long term are those that reveal our personality (a hot head is somebody who is frequently angry, for instance) and our value system, which is distinctly ours and something we are deeply invested in emotionally. Branding is in the final analysis entirely emotional, a matter of building a relationship between a company and targeted consumers. So don't expect cause marketing to fade. Women in particular are looking for extra, emotional reasons why they should care about a brand based on it caring about them, and the causes that matter to them. What should go away, but probably won't on the other hand, are gender portrayals that inadvertently or otherwise demean women, thereby undermining self-esteem and inviting contempt for the brands trying so hard to create a positive emotional bond to the predominantly female shoppers of the world who pay their salaries by making their purchases.

Building a Global Brand

While many consumer goods markets in the West are stagnating, 65% of the worlds population is living in societies that are experiencing economic growth of 5% or more a year. While the baby boom occurred between 1945 and 1960 in the U.S.A., much of the rest of the world is still experiencing a baby boom that began in 1975. The average person has seen his or her standard of living double in the past 15 years, far surpassing that of the USA or Western Europe. Put very simply, the majority of the growth potential in consumer markets exists outside of the USA and Western Europe. Benefits of Global Branding In addition to taking advantage of the outstanding growth opportunities, the following drives the increasing interest in taking brands global: economies of scale (production and distribution) lower marketing costs laying the groundwork for future extensions worldwide maintaining consistent brand imagery quicker identification and integration of innovations (discovered worldwide) preempting international competitors from entering domestic markets or locking you out of other geographic markets increasing international media reach (especially with the explosion of the Internet) is an enabler increases in international business and tourism are also enablers

When to Leverage a Single Brand Globally

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A company is more likely to leverage a single brand globally if: it is already operating worldwide (one brand is more efficient) the brand is an extension of the owner and his or her personality the brands relationship to its country of origin creates positive associations (like a watch brand from Switzerland or a gourmet food brand from France) Global Brand Constants At a minimum, when going global, the following elements should remain constant throughout the world: corporate brand brand identity system (especially your logo) brand essence Global Brand Variables The following elements may differ from country to country: corporate slogan products and services product names product features positionings marketing mixes (including pricing, distribution, media and advertising execution) These differences will depend upon: language differences different styles of communication other cultural differences differences in category and brand development different consumption patterns different competitive sets and marketplace conditions different legal and regulatory environments different national approaches to marketing (media, pricing, distribution, etc.) Language Translation A key question in global branding is this: Do you translate the brand name into the local language or keep it in the original language? You should probably keep it in the original language if (a) there is no intrinsic meaning and it is easy to pronounce or (b) global awareness of the brand name is already high. You should consider translating the name into the local language if it is suggestive of a key benefit (that would be lost if the original name were used). Other key global branding questions: Have you identified the relative attractiveness of each market for your brand (and have you identified consistent criteria for doing so)? 10

Have you conducted an attitude and usage study in each country whose market you are considering entering? Do you know the category and brand development indices in each country in which you operate? Do you have a global branding scorecard that can be applied country by country? Do you have agreement on which decisions are made centrally and which ones are made locally? Taking a Brand Global: Other Considerations Because of the extended global baby boom, youth marketing is a huge opportunity. Brand names, designer labels, and other forms of status will play well to the global youth market, in general. Global advertising needs to consider the fact that, for much of the world, the economy is booming and the context is unprecedented optimism. The tragic events of September 11, 2001 notwithstanding, the economies of many nations continue this growth. The worlds consumers are not nave. Much of the world has access to English language television. Start marketing in countries before their spending power is fully realized. Due to media exposure, people are forming their brand opinions now. Representing male/female relationships appropriately will vary from society to society. Be sure that you fully understand the local cultures before attempt to do so. Using distributors is frequently a good way to break into foreign markets. It is critically important to carefully choose the right distributor when trying to enter a new market. Ultimately, there is much to be gained by extending your brand globally. The saying think globally, act locally makes much sense in this context. The key is determining what elements you will tailor for local markets. That depends upon a thorough understanding of the similarities and differences between the local markets you intend to serve.

Speedy Starbucks has grown too fast

Howard Schultz took a deep breath and began to write. It might have been Valentine's Day but the subject of his letter was anything but romantic. Instead, the 55-year-old New Yorker was about to sit down to write a letter of complaint slamming Starbucks and its current business practices. Schultz's letter criticised the Seattle-based company for growing its global chain of 13,000 coffee shops too quickly. As a result, he accused the company of commoditising itself and losing much of the romance and soul that were once central to its brand. His 800-word composition left no room for doubt: Starbucks had grown its business at the expense of its brand. It was a damning indictment of Starbucks' marketing strategy over the past decade. In and of itself, the letter was not remarkable. It is the kind of complaint routinely posted by disaffected customers or posted on blogs by unhappy former employees. To appreciate the magnitude of this particular letter, you have to know who the author is. Schultz is not a Starbucks customer or ex-employee; he is the company's chairman. What is even more remarkable is that Starbucks appears to be doing just fine. Its growth targets, share price and underlying sales are all relatively strong and its expansion into Asia seems to be on track. Schultz, though, is a very different kind of chairman. The brand is deeply ingrained in his leadership. In 1981, while working as a sales rep for a coffee maker, he discovered Starbucks on a trip to Seattle.

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Impressed with the small coffee-bean company, he badgered its management team to take him on. One year later, he became director of marketing and operations and became convinced that Starbucks should go beyond selling beans and actually serve coffee to its consumers. Starbucks' existing management refused to listen and, eventually, Schultz left and created his own coffee-bar business. It made so much money that he was able to return, buy Starbucks and turn it into a cafe business. So, while not quite the founder of Starbucks, Schultz is very much the soul of the business. He can see things that others cannot. Starbucks is his baby and he has an almost preternatural sense of its brand equity. If Schultz thinks Starbucks is in danger of commoditising its brand, everyone within that organisation should pay immediate attention. He is almost certainly right. In case after case, the biggest threats to a strong brand are growth and success. They force a company to increase scale, become bureaucratic and generic, and focus increasingly on the financial imperatives, rather than those of its customers or its brand. Eventually the company loses its way in a snowstorm of its own creation, as the success that its brand equity bestowed upon it now blinds the organisation to the way forward or back to its heritage. Make no mistake, Schultz's memo is the act of a true leader; one who recognises that there is more to success than short-term sales, remembers almost biologically the meaning of the brand, upholds this above all other things, and is more than prepared to take responsibility for the mistakes of the past in order to protect the brand that he loves. Perhaps Schultz was writing a Valentine's note after all. 30 SECONDS ON ... STARBUCKS - Starbucks started out selling coffee beans in Seattle's Pike Market Place in 1971. Sixteen years later, the company was transformed by Howard Schultz, backed by local investors, and expanded to 17 sites, including Chicago and Vancouver. - The company grew to 84 outlets by the end of 1990. The next year, it opened its first airport concession and its first Los Angeles outlet. There were 116 stores by the end of 1991. In 1992, it completed its IPO and had 165 stores by the year's end. In 1993, its store count reached 272, growing to 425 in 1994. - In 1996, Starbucks stores opened through a joint venture in Japan and Singapore. There were 1015 branches by the end of the year. The firm entered the Philippines in 1997, when it grew to 1412 stores. - Starbucks' major push into the UK came in 1998 with its acquisition of the Seattle Coffee Company. Its store count reached 1886. - Store numbers rose faster from 1999, up from 2498 to 12,440 by the end of 2006's fiscal year.

Top Brands Illustrate Marketing Power

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It is time to stop speculating about brand equity and turn, instead, to the ice-cold empiricism of financial brand values. Monday saw the annual publication of the BrandZ Top 100 brands from Millward Brown Optimor and, as usual, there were a host of winners and losers. The first slice of good news was domestic (FYI - I'm based in London). Although only six British brands made the Top 100 list, they grew their value at an average rate of 33% - significantly higher than the 21% average of the Top 100 as a whole. Vodafone led the British contingent growing in brand value by a whopping 75% to $37bn (18.7bn). But the BrandZ data that drives the Top 100 also recorded a slowing in Vodafone's brand momentum, suggesting that the good times may not continue. Another big winner this year was McDonald's. The world's eighth-biggest brand recorded a 49% rise in value to $49.5bn. Impressively, it also recorded a brand momentum score of seven, suggesting its gamble to divest the other brands in its portfolio and focus on its main cash cow appears to be paying off. I must now eat humble pie and accept that you can revitalise burgers and fries in the 21st century. I did get one prediction right this year, though. Robert Polet, who took over as chief executive of Gucci Group after two decades working for Unilever, is just as good as I told you he was. His main brand, Gucci, increased in value by 43%, and with a brand momentum score of 10, it seems Polet's revolution will continue to deliver results. Brand values can go down as well as up. Thanks to the honesty of returning chief executive Howard Schultz, we already knew that Starbucks was in deep trouble. But the BrandZ data provides us with a quantitative assessment of just how bad things are - it lost 25% of its brand value last year. If ever there were proof that growth and global expansion are the biggest enemies of brand equity, here is the perfect case study. It is better to grow at 10% a year for 100 years than at 30% a year for five. Then there is the growing tragedy at Citi. Ten years ago it was the biggest merger in the history of banking and one of the biggest brand architecture jobs on record. Today, most of those involved in the creation of Citigroup recognise that blending a private bank, investment bank, retail bank and insurance group into a single branded house has been a disaster. A dismal drop of 10% in brand value and a low momentum score suggest that the once mighty Citigroup may soon be broken up. Perhaps the biggest brand question posed by the BrandZ Top 100 involved Millward Brown Optimor itself. The combination of outstanding market research and a truly global piece of consumer research driven by some of the best brains in marketing means that the BrandZ Top 100 is the only truly accurate measure of brand equity. However, because of the lack of marketing, it continues to lag behind inferior rivals in terms of coverage. Despite using a dubious formula and methodology to work out its scores, Interbrand continues to represent the leading brand for valuation with the people that count - in the C Suite of Fortune 500 firms. You also have to give credit to Stephen Cheliotis at Superbrands. Despite using a method that has questionable validity, to say the least, he has marketed the hell out of the Superbrands and achieved global success with an arguably worthless league table.

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For the third year running, the big brand question is whether the BrandZ Top 100 will ever take its rightful place as the ultimate measure of brand equity. 30 SECONDS ON ... TOP BRANDS SURVEYS - Developed for WPP companies by Millward Brown Optimor, the BrandZ Ranking is based on data from the BrandZ database. - The annual study measures the brand equity of 50,000 global consumer-facing brands, and interviews more than 1m consumers around the world. - In addition to the BrandZ data, the Top 100 Ranking assesses brand value, contribution and momentum. - Interbrand's survey takes a variety of factors into account when ranking the value of its top Global Brands. - Each brand must derive at least a third of its earnings outside its home country, be recognisable outside of its customer base, and have publicly available data. - To compile the Superbrands survey, independent researchers put together a list of the UK's leading brands. From this, about 1450 are forwarded to the Superbrands Council. - Council members award a score to each brand: the top 725 are then voted on by a YouGov panel of more than 3000 people. The top 500 are 'Superbrands'.

The Reality in Ranking the Top Global Brands

Twenty plus years ago a widening disparity began to appear between the tangible net assets of a company and the actual price that would be paid to buy that company. This created a maelstrom of merger, acquisition and defence as companies scrambled to value their most precious assets - their brands. Interbrand emerged from this era as the industry leader in brand valuation and, since 1999, its joint publication with BusinessWeek of the top 100 global brands has solidified that position. Each Summer Interbrand tells us what the world's most valuable brands are and, unlike other marketing surveys, the managerial world listens. How does it do it? To cut a long story very short, Interbrand uses three sources of data to value a brand. First, the expected earnings the brand will generate for the next six years. Second, the percentage of earnings that can be attributed to the brand, as opposed to other decision-making factors such as location. Third, the relative strength of the brand. The higher the brand strength, the less risky the sixyear earnings predictions and the more likely they are to materialise. Combining these figures produces remarkably precise calculations. Last year, for example, Interbrand informed us that Intel's brand was worth $30.9 bn, down 4% from 2006. As marketers, we are typically afraid of numbers, especially big ones that are derived using super-complex financial calculations.

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The reality, however, is that despite the apparent precision and current dominance of Interbrand's top 100, I would argue that much of it is actually a load of old tosh. The problem with the top 100 is that the majority of the brands on the list did not work directly with Interbrand. Whereas the expected future earnings of a brand can be extrapolated from annual reports and the estimates of merchant banks, the brand data in the survey is often based on a series of educated guesses by a bunch of Interbrand employees. Peel away the complex calculations and impressive PR and ultimately you have a bunch of accountants using a simplistic seven-point scale that some bloke came up with years ago to score brands on which they have no consumer data. Even worse, the top 100 may feature global brands, but their presence is often the result of a single global rating for brand strength that ignores the manifest variations that most brands experience from market to market. It is hardly likely that IBM has the same brand strength in China as it does in the US, nor that the brand has the same magnitude of influence on decision-making in both markets. Yet IBM was most likely awarded a singular global rating for its multinational, multi-dimensional brand equity. These flaws may help to explain some of the peculiarities in the current top 100. In 2007, was CocaCola really the world's most valuable brand? If you had a choice between owning the Microsoft brand or the world's top 12 luxury brands (including Louis Vuitton, Chanel, Porsche and Armani, to name a third of them), would you really be better off going with software? And can Interbrand seriously exclude Wal-Mart completely from its list on the technicality that 90% of its revenues come from the US? Wal-Mart, not a strong, global brand? Come on. In fairness, Interbrand does, very quietly, acknowledge the flaws in its method, but argues that finding accurate international metrics for brand strength is all but impossible to do without clients engaging its services. There is another method. Enter WPPs Brand Z Top 100, an alternative brand valuation system that uses up-to-date international consumer data to value the world's leading brands. 30 SECONDS ON ... INTERBRAND'S TOP 100 GLOBAL BRANDS - Ford was the biggest loser in Interbrand's 2007 survey. Its value dropped from $11bn in 2006 to $8.9bn in 2007 - a 19% drop. - Coca-Cola was rated the most valuable brand at $65.3bn, followed by Microsoft in second place at $58.7bn. - The biggest winner was Google, which posted a 44% uplift in its value from $12.3bn in 2006 to $17.8bn. - Apple's value also rose from $9.1bn to $11bn on the back of the continued success of its iPhone. - The highest-ranked non-US brand was Finnish telecoms company Nokia, placed fifth in the table, with a value of $33.6bn. - The highest-placed UK brand was HSBC, which came 22nd in the table, with a valuation of $13.5bn 15

Top 100 Brands Wield Power Over S&P 500

In the managerial pecking order within most firms, finance occupies a more central role than the flimsy business of marketing. Financial people use complex terms like derivatives' and collateralised debt obligations', and deal with multibillion-dollar/pound sums on a daily basis. Marketers are a simpler mob, occupying their time with more basic duties, such as brand building and customer satisfaction. However, when you think about it, shouldn't it be the other way round? Shouldn't the marketer, who builds the brand and works with the consumers who pay for everything, have a more exalted position than the manager who simply accounts for and invests the resulting income? Given the corporate shenanigans in the financial sector that have emerged in the past 12 months, doesn't it make more sense to trust the marketers who generate value, rather than the incomprehensible financial markets that just seem to lose it? This week's publication of the annual BrandZ Top 100 Global Brands provides empirical evidence that marketing does indeed beat finance. As you probably know, every year Millward Brown Optimor surveys more than 1m consumers across 30 countries to measure the equity of most of the major brands in the world. It uses this data to create the Top 100, detailed further on in this blog post. Since 2006, it has also used its data to buy a portfolio of shares in the firms that own the best-performing brands. Each April, Millward Brown Optimor reinvests the money based on that year's survey results, rather than using complex financial data or expert assessments of company potential. For the past three years, the BrandZ Top 100 portfolio has beaten the market. As you can see from the graph below, it has been enjoying a significant lead over the S&P 500 - the value weighted index of the 500 biggest companies listed on the US stock markets. During the good years, between April 2006 and April 2008, a $100,000 investment in the BrandZ portfolio would have generated almost $20,000 more in returns compared with the average.

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Strong brands enable you to charge a price premium over competitors. They also engender loyalty, which, in turn, ensures repeat purchase and better financial performance. Then there are the indirect benefits, such as employer branding, which ensures better employees can be acquired for less. They will also work harder and stay longer. As we marketers have known for many years, a strong brand is the single most important asset in any business. That is why it makes financial sense to invest in companies with the strongest brands. Interestingly, over the past 12 months, the BrandZ portfolio has continued to outperform the S&P 500. In April 2008, when the world officially began to enter recession, some might have expected it to falter. The fact that it did not illustrates another advantage of strong brands - they perform better than competitors in a downturn. Strong brands will also be best-placed to grow when the green shoots of recovery begin to appear. So, please allow me to be the first writer in the 3-year history of Branding Strategy Insider to offer some stock tips. They do not come to you from a mate in the City, or some complex and highly unreliable financial measurement system. They draw instead on a far more reliable source: Millward Brown Optimor's empirical data on which companies have the strongest brand equity in 2009. They are Nintendo, Bradesco, Nivea, Visa, and DHL.

Lessons from the Top 100 Global Brands

The economy may be in freefall and advertising forecasts bleak, but this year's Millward Brown Optimor BrandZ survey reveals the world's first $100bn brand - Google. While this news may be of little surprise and will provide cold comfort to struggling broadcasters (famously, the brand has never advertised on TV), the research does, however, underline the enduring 17

power of strong brands. It also serves as a timely reminder that pulling back marketing support may well provide a quick fix to a company's bottom line, but is often to the long-term detriment of the business. Despite the turbulence in the global economy, the value of the top 100 brands has risen by 2% in the past year to $1.95tn. A total of 85 of the top 100 brands remain in the table from last year. By category, the biggest faller was insurance (-48%) followed by cars (-22%) and financial institutions (-11%). On the flip side, mobile operators experienced the biggest growth in brand value (+28%), followed by soft drinks (+24%) and coffee (+18%). There are also reasons to be cheerful -in the UK-, which is outperforming the broader market. The value of the top 10 UK brands has grown by 11% over the past year, compared with a 2% rise for all global brands. UK brands also account for half the growth in the global mobile category - the strongest brand category in the world. Vodafone and O2 together account for more than a quarter of that category-wide growth. The recession is clearly not having a negative impact across all brands and categories; one of the big positive trends is the growth in popularity of activities undertaken at home that traditionally would have been done elsewhere. The ease and convenience of online shopping, for example, has been the driving force behind brands such as Amazon (+85%) and eBay (+16%). Similarly, the value of coffee brands has risen as consumers ditch their costly skinny latte fixes on the go, choosing to indulge at home instead. Nescafe (+23%) and Nespresso (+27%), the coffee-pod brand fronted by George Clooney, have both benefited from this trend. A similar shift can also be seen in the personal care category, with dental brands in particular doing well as consumers look to save money by avoiding potentially costly trips to the dentist. Elsewhere, while many commentators have heralded the recession as a wake-up call for consumers living in debt, Visa entered the rankings for the first time at number 36. The biggest climber is, surprisingly, a bank. China Merchants Bank increased in value by 168% this year. Additionally, despite the constant stream of bad news, consumers continue to be addicted to their Black-Berrys - the brand posted the biggest percentage rise in value on 2008, doubling in its total. Discount brands have also made inroads to the rankings, and discount retailer Aldi has made its first appearance in the top 100 with a 49% increase in brand value. Lower-priced clothing brands have also fared well, with H&M experiencing a growth in brand value of 8% on the back of some impressive designer collaborations. However, there is little doubt that the pervasive gloom of the financial markets is having a bearing on consumers' purchasing habits. While the decline in sales of organic food has been well documented, consumers are rewarding themselves with treats such as fast food, cigarettes and alcohol. In line with this, McDonald's (+34%), Marlboro (+33%) Budweiser (+23%) and Johnnie Walker (+42%) all experienced solid growth. Peter Walshe, director of BrandZ, says: 'McDonald's is a brand that people kept writing off, but it has kept its brand values while vastly improving the experience, and this has been key to its success.' As ever, consumers' purchasing decisions remain contradictory, and an interest in health and personal well being also continues to be a strong trend. For example, Bud Light overtook its full-calorie stablemate to become the number-one beer brand. Moreover, while McDonald's famously never reveals 18

sales figures for its salad items, its continued focus on menu innovation is seen by many as key to its revitalization. Elsewhere, the financial sector returned some interesting data, notably that consumer sentiment is remarkably similar year on year, despite the ravages of the global recession and growing distaste over the size of bankers' bonuses. As a sector, financial institutions declined 11% year on year. 'I suspect most consumers divorce their own relationships and dealings with their banks from the broader economy,' says Walshe. For an industry facing up to claims that the economic downturn may not be cyclical, but a long-term 'correction' of the over-inflated advertising market, the latest BrandZ data provides welcome reading. It is well established that in times of turbulence consumers turn to brands they trust, and it is vital that recognition of this extends to the boardroom. Brand valuations: What's in it for marketers? When times are tough, companies that invest in their brands can protect their businesses and help them grow. The rankings prove that strong brands continue to outperform weaker ones in terms of both market share and share price. 'That brands have held up better than any other part of the business shows the power of investing in them,' says Peter Walshe, director of BrandZ. The research shows brands are a valuable asset and, crucially, expresses the success of branding in financial terms that carry weight with non-marketers in the boardroom. Strong brands create competitive advantages by reducing business risk, lowering the cost of entry into new categories, boosting staff retention and assisting with licensing in other territories. What makes a strong brand? A simple way to think about the brand relationship is to imagine it as the progression of a love story, from dating through to bonding. Millward Brown Optimor identifies five stages in the brand/consumer relationship. * Presence those who are aware of the brand * Relevance those who do not reject the brand for being too expensive or cheap * or for not meeting their needs * Performance those who do not find the brand lacking in their experience of it * Advantage those who believe the brand * to be better in some way than its rivals * Bonding those who find the brand has more advantages than other brands Methodology BrandZ is the world's biggest study into what people think about the brands they buy. The brand ranking uses data from BrandZ (a WPP-commissioned database of 443 categories in 30 countries, covering thousands of brands). For the purpose of its BrandZ ranking, Millward Brown Optimor values brands in three steps.

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First, it establishes a company's intangible earnings and allocates them to individual brands and countries of operation, based on publicly available financial data from Bloomberg, Datamonitor and Millward Brown Optimor's own research. Second, it determines the portion of intangible earnings attributable to brand alone, as opposed to other factors such as price. This uses research-based loyalty data from the BrandZ database.

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