Inter Brand Bgb 2007
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All brands are not created equal Best Global Brands 2007
If brands are managed correctly they can move seamlessly across geographies, creating demand for their goods and services around the world.
Best Global Brands 2007 Interbrand is delighted to once again publish our
choice and sustaining margins.
annual ranking of the Best Global Brands by brand value, in co-operation with BusinessWeek magazine.
We regard brand valuation as a proactive tool. The process of showing an organization the earnings attributable to
We’re proud that over the course of the past decade our Best
intangibles, assessing the role that the brand plays in purchase
Global Brands study has become the barometer of successful
decisions and the relative competitive strength of the brand
brand management. The environments in which brands
within its markets, focuses attention on building the brand’s
operate, and the challenges and opportunities they face, have
value. Indeed, our experience shows that by simply recognizing
changed dramatically during this time; however, we believe
the brand as an economic asset, like other business assets,
the one constant has been the notion that a brand has the
activity can be created, managed
ability to create significant economic value for the business it
and implemented to enable the brand to grow in value.
serves, and that we can measure the created value. It is now common knowledge that branding is fundamental to Interbrand pioneered the technique of measuring brands as
business success, which is why Best Global Brands
business assets twenty years ago and draws upon a wealth of
is one of the top published business rankings in the
valuation experience and brand expertise in producing this
world. At Interbrand we have always placed great
annual report. In this time, we have conducted some 5,000
emphasis upon the need for a balance between the logical and
valuations for brands around the world. The clearest output of
the creative. Brands, after all, live in our heads and
this exercise is the asset value of the brand to the organization.
our hearts. But ultimately, brands are value generators
But understanding what is driving this brand value is far more
for business. Increasingly, we need to understand how brands
important to the business. The insights gained through brand
deliver value and use this information to better inform business
analytics and measurement focus brand management around
decisions.
the elements that will effectively increase the brand’s value and allow it to fulfill its ultimate potential to the organization and its stakeholders. This reveals how a brand can drive revenue and profitability by influencing
In this year’s Best Global Brands report, we have focused on the business themes that we see as being intrinsically linked to brand value creation. In their own right these themes should encourage business leaders to act, but they also acutely reveal the tenets of growing the economic value of a brand, and thereby help to maximize the intangible wealth of an organization. As ever, we are delighted to lead the debate. We recognize, and indeed relish, the responsibility that it places upon us as an organization. We thank our partners at BusinessWeek for their constant support in providing the platform for broadcasting this study to the business community and look forward to sharing these insights and ideas with you for many years to come.
Regards,
Jez Frampton Group Chief Executive Interbrand
TABLE OF CONTENTS Page Chapter
Appendices
1. Insights on Global Branding
1
2. Best Global Brands 2007 Ranking
12
3. Lessons from the Risers and Decliners
20
4. How We Did It
44
5. Why the Ranking is Important
46
6. Frequently Asked Questions
49
7. About Interbrand
57
8. Contacts & Additional Information
58
1.
INSIGHTS ON GLOBAL BRANDING Our continued analysis of the world’s most valuable brands enables us to provide insight and diagnosis for any organization that is keen to manage and grow the value of its brand.
goods and services while securing future revenues. This, in turn, impresses the financial communities that enable investments in the future. This is the essence of brand value.
We’ve entitled this study ‘All brands are not created equal’ because even though every brand starts with a notional value of zero, the brands that succeed are born into an environment where they are seen as assets by their organizations. Leaders plan for their success by creating, managing and implementing strong strategic visions that make businesses stand out and command attention. The successful brands recognize and commit to this as a cycle of activity, prospering while they deliver economic value to the brand and their organization.
Whether you work for a global business, an international organization, or a company that is purely focused on its domestic or regional markets, everyone can learn lessons from the Best Global Brands. By studying leading market indicators, such as the MSCI World Index and the S&P 500, we can see that the Best Global Brands index has consistently outperformed the markets by a considerable margin.
The brands in our study are rightly recognized as leaders across the world, but as global brands they face unique challenges. While they have consumers who come from different cultures and geographies, they are driven by a desire to ‘own’ a singleminded global brand positioning. So they’re continuously challenged to sustain brand consistency across diverse geographies, cultures and market segments. In light of this challenge, organizations must commit to, and implement, focused and realistic brand strategies in multiple geographies. This demands that brands transform the information and input they receive along the way into activities that build a global reputation. It requires constant measurement to ensure that actions complement, and holistically push, the brand towards its strategic goals. The rewards are worth the effort. If brands are managed correctly they can move seamlessly across geographies, creating demand for their goods and services around the world. They can create magnetism, attracting the best talent to work for them. Most importantly, they’ll be able to achieve a premium for their
Best Global Brands 2007
1. Insights on Global Branding
80
INTERBRAND TOP 100 PORTFOLIO MSCI WORLD INDEX S&P 500 INDEX
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Interbrand Top 100 vs the leading market indicators
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2007
Such performance may be expected of category-leading companies, but the source of value is interesting and requires a closer look. How do these brands achieve a ranking within the top 100 most valuable brands in the world, and all the economic rewards that go with it?
What drives brand value? As we share our brand valuation process with you, we also want to highlight the insights that we see building brand value for the organizations profiled in this report. Put simply, brand valuation draws together a financial analysis, a role of brand analysis and a brand strength score to arrive at a financial brand value. The resulting value is important, but understanding the themes or forces behind this value is what really drives the brand’s performance. Effective brand management means orchestrating these forces to drive the business forward. To focus the study, we talk about these themes in isolation from one another. In truth, it’s the combination of these themes and ultimately their successful execution that creates value. We have shown particularly strong brands to exemplify each, but in reality a valuable brand will show some strength across all of the identified themes.
Best Global Brands 2007
PUT IT AT THE HEART
Brand Management Every organization with expertise in brand management understands the complexity that the execution of great brand management requires. Effective value creation comes to life in the hearts and minds of consumers. More often than not it requires a journey inside the organization: a journey that reveals the characteristics and behaviors that distinguish one organization from another. It requires an understanding that great brands are founded on hard numbers as well as imagination. This combination of analytic and creative business techniques is mirrored in the Interbrand product portfolio, which envelops rigorous business understanding with emotive execution to unlock the true potential of brands. At this point, the brand steps out of the marketing department’s domain and embraces everything the business does. Ultimate responsibility for delivering the brand to stakeholders rests with the whole company. HR, Finance, Operations, Marketing and Sales must all feel a sense of ownership of the brand so that it lives throughout the organization, and that’s why the leadership of the business must be the primary ambassadors for the brand. Great brand management sees the brand as a go-to-market strategy and action driver, not just a planning tool or theory. Each activity the company undertakes should holistically reinforce the idea of the brand itself. So the CEO should take ownership of the brand and act as its steward. Talking about brands in terms of financial value strengthens the bonds between marketing and the modern day demands for accountability to shareholders and business leaders.
Google Google is a particularly good exponent of this sort of brand management. From relatively obscure and humble beginnings, the company has grown dramatically, achieving 45% year over year growth in brand value since 2005. Despite rapidly expanding its offering beyond search to encompass a range of other added-value services (such as news, financial information and geo-mapping), Google has managed to maintain a sincere and consistent feel to everything that it does. But beyond its product portfolio, Google has revolutionized the way it screens employees to ensure that everyone who comes through its door is ‘Google-worthy’. Inevitably, it’s become bigger and more complex, but this has done nothing to dilute the recognition and desire that the business is still held together by Google ‘glue’. This is what makes Google the brand it is. This is why it has been able to break into the world’s 20 most valuable brands within just two years. Yahoo! by contrast, was born with similar potential, but lacks (or perhaps lost) this singular, unifying purpose. Its pursuit of co-branded partnerships may have seemed attractive in purely financial terms, but this detracted from the company’s sense of self, causing the brand to fade.
17,837
2007 Google
2006
+44%
12,376 0
5000
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Brand Value ($m)
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+16%
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Mo
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BMW Brand Value ($m) BMW is another great example. The business is directed by a clear value system that guides management actions. If actions 2007 4,866 +17% submitAudito the values, they’re recognized as being ‘on-brand’. This means they 2006 will cumulatively build the organization’s desired 4,165 long-term reputation (entering a team into the world of Formula Brand Value ($m) 1 is a good example). But if a proposal doesn’t match BMW’s values, like sponsoring a marathon, BMW appreciates that it risks fragmenting2007 what it wants the brand to stand for, so29,398 it won’t do +7% McDonald’s it, however compelling the idea. This doesn’t mean the brand 2006 is rigid, nor does it deny BMW opportunities; rather,27,501 it serves as a framework for decision-making, enabling the business to feel Brand Value ($m) confident that all its operational decisions are building the brand towards its long-term ambitions. This year BMW has once more 2007 33,696 +12% grownNokia its brand value by 10%. 1000
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Having successfully taken coffee retailing across the world, 2007 32,070 Howard SchultzBrand is reportedly wary of the message becoming Value ($m) Toyota stale, and is considering ways of maintaining a contemporary 2006 27,941 edge to the brand. We applaud the sense of leadership that 2007 33,696 +12% demands freshness to an already successful brand. Nokia an on-goingBrand Value ($m) Starbucks is 2006 now blessed with such a scale, infrastructure and 30,131 embedded role in people’s lives that any evolution of the brand Brand Value ($m) can be truly wrapped around its customers, rather than simply broadcast in 30 seconds and the Sunday circular.
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+21%
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Starbucks 2007 11,037 Starbucks has mastered the challenges of ensuring a consistent Apple Brand Value ($m) sense of ‘Starbucks’2006 permeates consumers’ worlds. From 9,130 its retail environments and non-traditional advertising policy, to 2007 4,866 +17% Value ($m) its fair Audi trade coffee, theBrand experience is unmistakably Starbucks. 2006 One brand transcends it all. The Starbucks brand4,165 is now worth over $3.5 billion dollars. To broaden its retail offer, but more 2007 5,165 Brand Value ($m) Zara communicate importantly to and provide the accessories for the 2006 4,235 ‘third space’, Starbucks now sells and recommends books that 2007 the bestsellers lists. invariably scale 29,398 +7%
0
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2007 Ford
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Brand Value ($m)
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2007 17,837 +44% In today’s there is a multitude of ways Google world, to say Brand Value ($m) we can reach2006people is an understatement. How does 12,376 a brand recognize the relative value of these opportunities? 2007 4,149 Value ($m)their stakeholders’ journeys so that The best brands follow Motorola Brand 2006 consistent and appropriate messaging they provide effective, 4,569 throughout 2007 the experience. Effective Touch 3,221 +16% Value ($m) PointBurberry Development is Brand about branding the customer experience. 2006 2,783 These experiences are sometimes within the brand’s domain (such as retail environments), but often they are not and 2007 10,087 Ikea Brand Value ($m) travel by word-of-mouth. How can a brand embrace these 2006 8,763 complexities to ensure that it comes out 2007 7,730 +18% on top and that its desired messages are getting through? Nintendo
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Ford
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IF YOU BRAND IT, THEY WILL COME
Demand Creation Ikea is another great example of Touch Point Development. The product design communicates the simple sense of Scandinavian style at affordable prices; but the store experience, with its themed spaces, restaurants and kids’ areas, further communicates and amplifies the Ikea brand proposition. Ikea’s brand value has risen 15% this year.
We’re exposed to thousands of brand messages every day. Estimates vary as to exactly how many, but what’s undeniable is that a vast surplus of brands are trying to engage with us. Indeed, it’s considerably more than any human being can cope with. So how does one brand successfully reach out and engage with us when another fails to do so? This is the principle of Demand Creation. It’s not simply about communication; it’s about making the right customer desire the brand’s products or services over and above all competitors, today and tomorrow, and ideally encouraging their friends to do the same. In short, it’s about making sure that a brand’s messages receive a warm, favorable and engaged welcome from its audience so that they’re then acted upon.
1. Insights on Global Branding
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Apple Brand Value ($m) Apple is the supreme master of Demand Creation. Consumers are now happy to own multiple iPods that are styled for 2007 3,874 Kodak functions: home, video or exercising. And in a world particular -12% 2006 4,406 the filled with technology, the expectation created around launch of the iPhone demonstrates the supreme desirability Brand Value ($m) this brand has created. With iPhone, Apple plays a double trick on its competitors. It transcends the problems of the highly 2007 4,254 products saturated communications environment by creating Pizza Hut with such extraordinary customer pull that there’s no need to -9% 2006 4,694 push. At the same time, the phenomenon of the product launch pulls free mediaBrand toward it, proliferating brand impressions and Value ($m) flooding media channels with branded messages. Essentially, it has created such a profound demand that the product itself 2007 4,149 generates a media blitz. It’s a high profile demonstration Motorola -9% 2006 of the convergence of technology. It was unthinkable some 4,569 years ago that Apple could make a phone. Consumers wouldn’t Brand Value ($m) have given the brand permission to do so. But now Apple can transcend the ‘old thinking’ of limited boundaries. In this sense the brand wherever its+15% 2007 has become its passport, to roam 10,087 Ikea proposition can be applied. 0
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Nintendo Nintendo was a brand that seemed to be losing its appeal with consumers but the launch of the Wii console and hugely successful DS range has heralded a significant bounce-back in consumer interest. The brand has rediscovered its ability to create demand for its products. While competitors focused on technology, Nintendo spotted the opportunity to theme the brand around the simple enjoyment of gaming. With new game consoles, Nintendo is actively targeting new consumer segments and has differentiated itself from traditional competitors. The Wii console, with its physically active and convincing interface, has created a real stir in the marketplace and is shifting attitudes towards the whole gaming category. Rather than being something that ‘teenage boys play’, Nintendo is encouraging people to think of gaming as an activity that can be enjoyed by anybody at any time. The supporting media communications have been instrumental in generating demand, showing the products being used by a broader demographic, including parents and thirty-somethings. Indeed, to a degree, Wii surpassed expectations. Stories of lines forming around the 2007 17,837 +44% blockGoogle when new products arrived were not uncommon this year. 2006 12,376 Consoles were selling on eBay for twice the retail price. 0
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The next challenge for Nintendo may well focus on the Brand Management theme: defining the relationship between the 2007 sub-brand Wii and the parent brand 3,221 hugely popular in order to +16% Burberry generate long-term value. 2006 Brand Value ($m)
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Think about what can be, not what might have been 2006
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Toyota A recent example is the confluence of environmental concerns 2007 4,149 and Motorola rising oil prices. Ten years ago any company talking about -9% 2006 these two issues in the automotive industry would have 4,569 largely been thought of as foolish or eccentric. SUV sales were growing, Brand Value ($m) cars were getting bigger, engines less efficient, and gas was cheap. In the wider world, the political climate was stable; global GDP growth2007 was moderate, the impact of China just emerging,+15% 10,087 Ikea and world oil2006 supplies high. As forward-looking brand managers, 8,763 Toyota considered these factors and built a scenario that now differentiates them from the pack. Recognizing the value of Brand Value ($m) leading the ‘green’ agenda, it positioned itself to capitalize on this significant driver of demand that has been accelerated by, 2007 11,037 and conjoined with, the rapid rise in gasoline prices. Brands +21% Apple cannot lead 2006 through reaction. They must anticipate the needs of 9,130 the future and be ready for it when Brand Value ($m) it arrives. The Toyota Prius has become a statement of environmental care, as well as achieving staggering sales in its own brand, 2007 right. But better still for the Toyota 5,165 +22% it castsZara a ‘green halo’ across its entire portfolio. 0
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As we’ve suggested, thorough brand management is deep and 2007 4,866 complex. Organizations need to understand what drives+17%their Audi 2006 market performance so that they can plot4,165 a path to generate and grow brand value. Winning brand managers simulate future Brand Value ($m) opportunities to anticipate the potential fields-of-play. They use models that reveal the range of possible outcomes instead of the allure2007 of a single big idea, and align resources 29,398 and investments +7% McDonald’s to scenarios with the highest likelihood of making an impact. 2006 27,501 Estimation, probabilities, risk – these are new additions to the branding Brand lexicon and a challenge for those content to play it all Value ($m) from the hip. Having foresight helps companies make informed choices about their brand and frees leaders up to make bold 2007 33,696 +12% moves with full knowledge of the implications – essential Nokia 2006 to thriving in a competitive environment. 30,131 5000
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1. Insights on Global Branding
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Zara 2007 4,149 ZaraMotorola is a paragon of planning efficiency. Focusing the -9% 2006 brand’s reputation for rapid product turnover and a 4,569 great in-store experience, Zara recognized the efficiency of Brand Value ($m) its retail stores as a media channel and consequently invested most of its spending there. By maintaining relevant design in its 2007 locations and keeping people coming back for10,087 more, Zara was+15% Ikea able to keep2006 its spending on traditional advertising channels 8,763 down to just 0.3% of sales, compared to competitors’ 3-4%. The results were theBrand envy of the industry with customers visiting Value ($m) Zara’s stores an average of 17 times per year, and with same store sales rising 5.5% in the 2007 11,037 +21% last year. Apple This breaks all records for moving fashion 2006 en masse from the catwalk to the main street.9,130
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The last 2007theme that we have identified as influencing 4,866 brand +17% Audi value creation is that of Planning Efficiencies. Essentially, this 2006 is understanding where and how to invest4,165 for the best return of brand value. It involves models that optimize competing Brand Value ($m) alternatives, resulting in solutions that cut spend in one area to reapportion it in another, or grow spend across the brand’s 2007to deploy resources and deliver brand29,398 domain value most +7% McDonald’s efficiently. If you get things working together,27,501 a little spending 2006 can go a long way.
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30000
35000
Make it clear, make it live and keep it moving Conclusions The fundamentals of brand value creation, exemplified by the top 100 Best Global Brands, show leading global organizations managing their brand’s value as a series of actions and initiatives that promote the brand agenda within the business. Whether these initiatives focus on a communication output or an internal program to engage employees with the brand, all of our evidence suggests that the brand strategy itself has the ultimate impact on the brand’s ability to create and build its value. But brands don’t operate in passive environments. They must live and respond to the world to stay relevant. Markets are dynamic; influences on the brand will constantly change, so any brand strategy needs to articulate its right to own a market position. Brands must manage their way through the influences and forces that determine the ownership of that market position. Brand management is a constant process. Activities are created to achieve distinction. They are managed and implemented, and then their success must be measured and used to influence future strategy. Brand valuation is a great measure of this success, but as our report has shown, each year some organizations do better than others. Those that do best recognize the dynamic needs of effective brand management and hardwire these actions. It becomes a cyclical process where there’s an acceptance that to truly own a strategic position in customers’ hearts and minds, activity must be ongoing and constant. As much as anything, this is an attitude towards understanding and continuous improvement.
Best Global Brands 2007
Brands which place high importance on managing the economic value of their intangible assets, and primarily their brands, consistently outperform basic economic measures.
2.
BEST GLOBAL BRANDS 2007 Ranking
12
Best Global Brands 2007
2007 rank
2006 rank
brand
country of origin
sector
2007 brand value ($m)
change in brand value
1
1
coca-cola
us
beverages
65,324
-3%
2
2
microsoft
us
computer software
58,709
3%
3
3
Ibm
us
computer services
57,091
2%
4
4
ge
us
diversified
51,569
5%
5
6
nokia
finland
consumer electronics
33,696
12%
6
7
toyota
Japan
automotive
32,070
15%
7
5
Intel
us
computer hardware
30,954
-4%
8
9
mcdonald’s
us
restaurants
29,398
7%
9
8
disney
us
media
29,210
5%
10
10
mercedes
germany
automotive
23,568
8%
11
11
citi
us
financial services
23,443
9%
12
13
hewlettpackard
us
computer hardware
22,197
9%
13
15
bmw
germany
automotive
21,612
10%
14
12
marlboro
us
tobacco
21,283
0%
15
14
american express
us
financial services
20,827
6%
16
16
gillette
us
personal care
20,415
4%
17
17
louis vuitton
france
luxury
20,321
15%
18
18
cisco
us
computer services
19,099
9%
19
19
honda
Japan
automotive
17,998
6%
20
24
google
us
Internet services
17,837
44%
best global brands 2007
13
2. best global brands
14
2007 rank
2006 rank
brand
21
20
samsung
22
21
23
sector
2007 brand value ($m)
republic of korea
consumer electronics
16,853
4%
merrill lynch
us
financial services
14,343
10%
28
hsbc
uk
financial services
13,563
17%
24
23
nescafé
switzerland
beverages
12,950
4%
25
26
sony
Japan
consumer electronics
12,907
10%
26
22
pepsi
us
beverages
12,888
2%
27
29
oracle
us
computer software
12,448
9%
28
32
ups
us
transportation
12,013
12%
29
31
nike
us
sporting goods
12,004
10%
30
27
budweiser
us
alcohol
11,652
0%
31
25
dell
us
computer hardware
11,554
-6%
32
33
Jpmorgan
us
financial services
11,433
12%
33
39
apple
us
computer hardware
11,037
21%
34
34
sap
germany
computer software
10,850
8%
35
37
goldman sachs
us
financial services
10,663
11%
36
35
canon
Japan
computer hardware
10,581
6%
37
36
morgan stanley
us
financial services
10,340
6%
38
41
Ikea
sweden
home furnishings
10,087
15%
39
42
ubs
switzerland
financial services
9,838
13%
40
40
kellogg’s
us
food
9,341
6%
best global brands 2007
country of origin
®
change in brand value
2007 rank
2006 rank
brand
country of origin
sector
41
30
ford
us
automotive
8,982
-19%
42
48
philips
netherlands
diversified
7,741
15%
43
44
siemens
germany
diversified
7,737
-1%
44
51
nintendo
Japan
consumer electronics
7,730
18%
45
45
harleydavidson
us
automotive
7,718
0%
46
46
gucci
Italy
luxury
7,697
8%
47
new
aIg
us
financial services
7,490
new
48
47
ebay
us
Internet services
7,456
10%
49
new
axa
france
financial services
7,327
new
50
49
accenture
us
computer services
7,296
8%
51
53
l’oréal
france
personal care
7,045
10%
52
50
mtv
us
media
6,907
4%
53
54
heinz
us
food
6,544
5%
54
56
volkswagen
germany
automotive
6,511
8%
55
55
yahoo!
us
Internet services
6,067
0%
56
57
xerox
us
computer hardware
6,050
2%
57
58
colgate
us
personal care
6,025
7%
58
61
chanel
france
luxury
5,830
13%
59
59
wrigley
us
food
5,777
6%
60
60
kfc
us
restaurants
5,682
6%
®
2007 brand value ($m)
change in brand value
best global brands 2007
15
2. best global brands
16
2007 rank
2006 rank
brand
country of origin
sector
2007 brand value ($m)
change in brand value
61
52
gap
us
apparel
5,481
-15%
62
65
amazon.com
us
Internet services
5,411
15%
63
63
nestlé
switzerland
food
5,314
8%
64
73
Zara
spain
apparel
5,165
22%
65
62
avon
us
personal care
5,103
1%
66
68
caterpillar
us
diversified
5,059
10%
67
67
danone
france
food
5,019
8%
68
74
audi
germany
automotive
4,866
17%
69
71
adidas
germany
sporting goods
4,767
11%
70
64
kleenex
us
personal care
4,600
-5%
71
72
rolex
switzerland
luxury
4,589
8%
72
75
hyundai
republic of korea
automotive
4,453
9%
73
81
hermès
france
luxury
4,255
10%
74
66
pizza hut
us
restaurants
4,254
-9%
75
80
porsche
germany
automotive
4,235
8%
76
78
reuters
uk
media
4,197
6%
77
69
motorola
us
consumer electronics
4,149
-9%
78
77
panasonic
Japan
consumer electronics
4,135
4%
79
82
tiffany & co.
us
luxury
4,003
5%
80
new
allianz
germany
financial services
3,957
new
best global brands 2007
2007 rank
2006 rank
brand
country of origin
sector
2007 brand value ($m)
change in brand value
81
85
Ing
netherlands
financial services
3,880
12%
82
70
kodak
us
consumer electronics
3,874
-12%
83
86
cartier
france
luxury
3,852
15%
84
76
bp
uk
energy
3,794
-5%
85
87
moët & chandon
france
alcohol
3,739
15%
86
79
kraft
us
food
3,732
-5%
87
83
hennessy
france
alcohol
3,638
2%
88
91
starbucks
us
restaurants
3,631
17%
89
84
duracell
us
consumer electronics
3,605
1%
90
88
Johnson & Johnson
us
personal care
3,445
8%
91
93
smirnoff
uk
alcohol
3,379
11%
92
92
lexus
Japan
automotive
3,354
9%
93
89
shell
netherlands
energy
3,331
5%
94
96
prada
Italy
luxury
3,287
14%
95
98
burberry
uk
luxury
3,221
16%
96
99
nivea
germany
personal care
3,116
16%
97
94
lg
republic of korea
consumer electronics
3,100
3%
98
90
nissan
Japan
automotive
3,072
-1%
99
new
polo rl
us
luxury
3,046
new
100
new
hertz
us
automotive
3,026
new
best global brands 2007
17
The best brands follow their stakeholders’ journeys so that they provide effective, consistent and appropriate messaging throughout the experience.
17,837
2007 Google
2006
+44%
2006
12,376 0
5000
10000
15000
20000
3,221
2007 2006
+16%
1000
1500
2000
2500
3000
3500
7,730
+44%
Lessons from the Risers and DECliners 1000
2000
Brand Value ($m)
3000
12,3765000
5000
4000
6000
10000
15000
7000
4,866
2007
Burberry
+17%
3,221
2007 2006 2006
+16%
4,165
0
1000
Brand Value ($m)
0
500
2000
1000
3000
1500
2,7834000
2000
2500
3000
10000
15000
20000
6,55925000
5000
3000
10000
15000
Brand Value ($m)
0
4000
1000
5000
20000
2000
6000
7000
25000
4,165
3000
30000
4000
5000
10000
5000
0
10000
15000
15000
20000
0
5000
1500
10000
2000
15000
2500
20000
3000
25000
3500
30000
BMW
2006
4000
Brand Value ($m)
5000
0
6000
10000
Google Apple Motorola
500
19,617
Burberry Zara Ikea Google McDonald’s Nintendo Toyota Apple Burberry Nokia
Zara
12000
25000
BMW
Brand Value ($m)
McDonald’s
0
1000
2007 0Brand Value ($m) 2006
2000
3,631
2006
+17%
3,099 0
500
1000
1500
2000
2500
3000
Audi 3500
4000
Starbucks
Brand Value ($m)
Nokia
2000
0
4000
Brand Value ($m)
1000
0
0
($m) 2007 Brand Value5000 2006 0
2007 Brand Value ($m) 2000 2006 0 2007 Brand Value ($m) 500 2006 0 5000
8,982
2006 2000
4000
Brand Value ($m)
6000
8000
500
($m) 0Brand Value5000
10000
4,569
4,866 3,221
3000
4000
2000
5,165
2007 2006 2007 2006
8000
15000
12000
15000
4000
5000
20000
6000
1000
10000
32,070
11,037 7000
27,941
8000
3,221 30000
2,783
1500
2000
2500
15000
20000
25000
2000
27,501
6000
25000 9,130
3000
33,696 4,866
10000
5000 +17%
+16%
2000
3000
3000
4000
4000
10000 10000
5000
15000
5000 +22%
7,730
8000
27,501
25000
32,070 25000
20000
2000
1000
1500
10000
4,165
3000
2000 15000
4000
3,099
30,131 3500
2500 20000
3000 25000
30000
2000
10000
15000
4000
6000
0Brand Value ($m)5000
10000
20000
19,617
8000 15000
+17%
5000
0
Best Global Brands 2007
5000
0
500
2007 Brand Value ($m)
10000
15000
20000
25000
Zar
Ike
Motoro
Toyot
App
11,056
30000
10000
12000
+10% -19%
Ike
Zar
25000
+12%
App
3,631
30000
35000
+17%
Toyot
3,099 1000
1500
2000
2500
3000
21,612
BMW
2006
Pizza Hu
30,131
2006 Brand Value ($m)
20
+12%
+7%
Nokia
Starbucks
App
Motoro
35000
33,696
2006 2007
Koda
4000
25000
20000
2007 Brand Value ($m)
+7%
35000 +17%
29,398 8,982 27,501 21,612
Ike
Pizza Hu
30000 +15%
4,866
3,631 30000 33,696
25000
+18% 6000 +10%
7000
20000
20000
+17%
35000
27,941 10000
35000 +16% 12000 +12%
4,165 30000
6000 19,617
Ga
+15%
5,165 4000 21,612 5000 6,559 29,398
Koda
8000 +21%
3500
15000 15000
20000
30000
Motoro
+22%
30,1313000
4,235 2000
Ga
-9%
29,398 12000 +7% 10000 7,730 +18%
6,55925000
20000
4000
Pizza Hu
+21%
6000 +44%
8000
15000
3000
10000
2006 Brand Value ($m) 0
+44%
3500 +15%
10000
10000
5000
0
5000 +18%
17,837 5000
8,763
12,376
-9%
10,087 3000
4000
See pages 3-8 for more detail Ford BMW
12000
5000
4,2352500
6000
5000
2000
Koda
+15%
2,7834000
3000
McDonald’s 12000
-12%
20000
10000
2007 Brand Value ($m)
-19%
11,056 0
8000
3000
4000
5000
2007 5000 2006 0 2007 Brand Value ($m) 1000 2006 0
7000
4,149
2007 Brand Value ($m) 2006
0
2007
15000 9,130
2007 Brand Value ($m) 2006 2007 1000 2006 0 2007 Brand Value ($m) 1000 2006 0
11,037
10000
1500
2000
5000
0
4000 7,730 17,837
6000
6000
1000
0
2007 0Brand Value ($m) 1000 2006
4,694
4000
2000
2007 Brand Value ($m) 1000 2006 2007 Brand Value ($m) 2000 2006 0 2007 Brand Value ($m) 2006 0 2007 Brand Value ($m) 2006
3500
4,165
1000
2007 0Brand Value500 ($m) 2006
3000
10000
3000
2000
2007 Brand Value ($m) 2006 2007 2006
2006 Brand Value ($m)
Ford
5000
5000 +16%
4,254
8000
12,3765000
5000
2007 0Brand Value ($m) 5000 Toyota
10,087
2500
6000
3000
Brand Value ($m)
0
2007
-9%
6,559
2006 Brand Value ($m)
Starbucks
3,221
2000
2000
2007 0Brand Value ($m)1000
Nintendo 20000
20000
4,569 4,406
8,763 4000
0
0
-19% +10%
1500
2000
0
Ga
2,783
1000
2007 Brand Value ($m) 2006 2007 2006
2007 Audi
8000 +44%
Brand Value ($m)
2006 Brand Value ($m)
10000
15000
2007 Brand Value ($m) 2006
2006
Audi
8000
15000
Nintendo
35000
11,056
2000
4,149 3,874
2007 Brand Value ($m)1000
4000
21,612 0
Pizza Hut
30000
8,982
2007 2007 2006
0
0
Ikea
35000
Brand Value ($m)
Ford
2006 2007
5000
17,8377000
6000
10000
0
Burberry
8000
2007 section we will look for lessons that 3,631 In this can be learned from +17% more last year and those 2007 of the brands that have thrived in the 33,696 +12% 2006 3,099 Nokia that have struggled. What did the brands that prospered get so 2006 30,131 right and the brands that declined fail Brand Value ($m) to deliver? 1000
5000
2007 Brand Value ($m) 2006
2006
Starbucks
500
6,4164000
5000
12,376
The TOP Risers
30000
25000
25000
3000
4000
4000
Brand Value ($m)
0
Kodak
3000
-15%
Brand Value ($m)
0
Motorola
5000
20000
0
2006 2007
2000
2000
4000
Tangible asset growth is often a slow process that requires deep Brand Value ($m) and2007 resource-intensive long term planning. Intangible asset 21,612 +10% BMW growth, on the other hand, involves getting the best out of 2007 29,398 +7% 2006 19,617 McDonald’s something that the company already owns. It’s a 2006 case of managing these assets more effectively, 27,501 and it’s Brand Value ($m) an efficient method of adding very real value to business. 0
Google
1000
0
3000
All businesses are under immense pressure to provide results Value ($m) quickly.Brand The Best Global Brands study provides a compelling 2007 33,696 +12% case that those which place high importance on managing the Nokia 2007 economic value of their intangible assets, and primarily 4,866 +17% their 2006 30,131 Audi brands, consistently outperform basic economic measures. 2006 2000
2006
($m) 2007 Brand Value 1000
-9%
4,694
3000
27,501 5000
Gap
2000
+7%
0
-12%
5000
5,481
2000
+18%
1000
8000
4,254
2007 2007 2006
1000
7,730
0
4000
2006
29,398
Brand Value ($m)
3000
2007 Brand Value ($m)1000
2007
0
2000
5000
2007 2006
McDonald’s
2006
1000
3500
Brand Value ($m)
Nintendo
7000
4,406
Pizza Hut
8000
20000
Brand Value ($m)
Audi
6000
3,874
0
+18%
17,837
6,559
0
5000
Brand Value ($m)
2007 2006
0
4000
2007
2,783
3. 2006
3000
2006
2007
Google
2000
Kodak
Brand Value ($m)
Nintendo
1000
Brand Value ($m)
Burberry
500
-15%
6,416 0
Brand Value ($m)
0
5,481
2007 Gap
19,617
3500
4000
+10%
Za
+44%
Google
2006
Audi
0
5000
+17%
Gap
2006
12,376 10000
15000
2006 0
20000
0
3,221
2007
+16%
Burberry
2006
2007 McDonald’s
2006
2,783 500
1000
1500
2000
2500
3000
2006
1000
2000
3000
4000
12,3765000
5000
0
4,866
15000
20000
3,221
2000
500
1000
3000
1500
2,7834000
2000
2007 2006
Google
500
1000
3500
1500
2006
10000
2000
Brand Value ($m)
0
0
Nokia Audi
2007 2006
3000
1000
2000
2006
2006
10000
1000
BMW
2007
2007 2006
Nintendo 0
1000
Burberry Burberry
Nintendo
Nokia 0 Audi
0
Nokia
2007 2006
0
Brand Value ($m) 2007500 1000 5000 2006 0
BMW
Google
Audi
Audi
Starbucks
2007 2006
0
1000
2,783
3000
McDonald’s
400010000
McDonald’s
Ford
2000 1000
500
0 1000
0
Ford
2007 2006
5000 0
1000 2000
5000 0
20065000
Value ($m) 2007 0Brand 2007 5000 0 2006 Audi
5000 0
3000 15000
7000 15000
2006
Value ($m) 2007 0Brand 2007 0 5000 2006
1500
20000
+12%
4,866 5000 3000 3,631 3500+17%
4000
4000
4,8663,221 5000 30000+17%
35000 +16%
30,131
2500 3000 4000 4,165 2,783
3000 1500
2000
3500 5000
29,398 8,982 4000 2500
5000 3000
+7%
4000 15000
20000
19,617
15000 3000
29,398 7,730 2000030000 +7%
25000
15000
6000 20000
27,501
8000 25000
27,501 6,559
33,696
20000 4000
+7%
5000 25000 6000
15000
20000
10000 500
15000 1000
150020000
10000
15000
10000 1000
33,696 30000 30,131
25000
2000 25000 2500
20000
15000
3,099
33,696 30000 3000
30,131
25000 3000
30000
21,612 8,982
10000
4000
Kodak Kodak
Pizza Hut Pizza Hut Pizza Hut Pizza Hut
21,612 19,61720000
150006000
21,612 20000 8000
19,617
+10%
8000
Motorola Motorola
Ikea
Ikea
Apple Apple
5000
11,056
29,398 12000
1000
Apple
1000
0
1000
0
1000
2000
3000
0
1000
Zara +7%
4000
5000 15000
6,4168,763 6000 8000 6,416
2000 3000
4000
Value ($m) Brand Value ($m) 2007 Brand 2007 2000 2006 1000 2006
2000
4000
3000 6000
0 Gap 0 Brand Value ($m) Brand Value ($m)
1000 1000 2006 2006 0 0 2007 Brand 2007 Brand Value ($m) Value ($m) 1000
1000
2000
2000
0
1000
2000 2000
3000
0
Brand Value ($m) Brand Value ($m)
0
0
-12%
5,165 4,254 4000 5000 4000 4,694 5000
-9%
1000
2000
200010000
5000 7000
6000
9,130
-9%
5000
-9%
20000 4000
25000 30000 5000 4,569 4,406
10,087 30004000
40005000
10,087
5,165
8,763
10,08710000
+15%
6000
Value ($m) 2007 Brand2007 2000 2006
4000 1000
6000 2000
8000 3000
4000
6000
8000
2000 0
4000 1000
6000 2000
8000
2000
4000
6000
8000
11,037 10000
Value ($m) 2007 Brand2007 2000 2006
50004000
10000 6000
8000 20000
11,037 4,149 12000 10000 25000 30000+21%
4000
6000
0
10,087 10000 4,254 12000 +15% 4000 5000
8,763
2007 2007($m) Brand Value ($m) 2006 Brand Value 0
0 Motorola 0 Brand Value ($m) Brand Value ($m)
0
2000 0
4000 1000
9,130
15000
6000 2000
2007 Brand Value ($m) 2006 Brand Value ($m)
9,130
+21%
3000
10000
400012000
+22%
5,165 5000
4000
5,165 10,087 6000 +22% 5000
4,235
2000
3000
4,235
-12%
5000
+22%
6000
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5000
+15%
35000
-9%
12000 4,569
4000
Value ($m) 2007 Brand 2007 1000 2006
35000
12000 +21%
Best Global 5,165 Brands 2007 +22%
3000
0
10000
5,165
+15%
12000
4,694
400012000
4,235
2000
+21%
12000
27,941
9,130
8000
10000
+15%
35000
11,037 32,070+21%
8000
1000
0
11,037
9,130
Toyota
2006
10000
3000
-15%
6000
12000 +15%
4,235
8,763
+22%
12000
+15%
4000
0
+15% 6000
8000
2000
0 Pizza Hut 0 Brand Value ($m) Brand Value ($m)
12000
11,037-9%
4,569 27,941 10000
8000 8,763
5000
4,569 27,941
4,149 3,874 4000 8000
20003000
Zara
-9%
5000 5000
32,070
-9% 4,149 4000 25000 32,070 5000 30000 4,569
20000
15000 3000
10002000
4,694 6,416
4000 5000
3000 6000
4000
-9%
5000 10000
4000 4000
-9% +21%
+22% -9%
4,149
+15%
35000
12000
5000
4,2354,694
3000 15000
12000
5,165
8,763
3000 4000
2007 2007($m) Brand Value ($m) 2006 Brand Value 2006
10000 5000
-12%
4,254 10,087
4,149 2000 10000
5000
Value ($m) Brand Value ($m) 2007 Brand 2007 2000 2006 1000 2006 Kodak 0
4000 5000
4,254 5,481 4000 8000
Apple
Toyota 0
-12%
4,569
8000 4000
2007 2007 Brand Value ($m) 2006 Brand Value 2006($m) 2007 2006
4,406
3000 3000
5000
+21%
-12% 11,037 5000 10000
4000 8000
4,406
30000
-9% +15%
12000
8000
4,149
4000
3000 3000
2007 2006
27,941 7000
4,2354,694
1000
6000
11,037
4,254
2000
0
10000 8000
4,406 9,130
2000
Toyota 0
4000 8000
3,874 3000 4000
3000
-15%
32,070-15%
25000 4,406 9,130
3000 6000
2000
7000
6000
3,874 20000
-15%
4,694
80007000
3,874
-15%
10,087 7000 8000 10000
6000
-9% +22% +15%
4,2545000
3000 6,416 8,763 6000 6,416
-12%
5000
10,087
3,874 3000 6000
4000
4000
4,235
6000 5000
1000
2007 2006
-19%
5000
4,569
5,165
4000
-9%
12000
4,569
5000
Ikea
0
12000 10000
4,406
4000 4000
2000
5000
4000
3000
+21%
-19%
4,149 4000
2007 2007 2006 Brand Value 2006($m) Zara 0
4000
-9%
8000
3000
5,481 5000 6000
0
Brand Value ($m) Brand Value ($m)
2007 2006
4,694
11,037 3,874
-15%
5000
7000
3000
10000
2000 1000 2006 0 0 2007 Brand 2007 Brand Value ($m) Value ($m)
2007 2006
6000
-9%
12000
2000
4000 4000
Brand Value ($m) 2007 Brand Value ($m) 1000 2000 2006 1000 2006
Zara 0
4,694
10000 8000
5,481 4000 2000 5000
2000
5000
2000
5,481 3000
3000
Value ($m) 2007 Brand 1000 2000 2006
0
4000 10000
6,416
8000 6000
+15%
4,254
3000
5,481
5000
0
-12% +17%
4,254 4000
5000
8,982
2000
0
2007 2007 2006 Brand Value 2006($m)
Apple
-12%
5000
4000
3000
4000
2000
1000
0
0
Zara Zara
3,874 4000
5,481 3000 8000 3500
2500 6000
6000 4000
Brand 2007 Value ($m) Brand Value ($m) 1000 2000 2000 3000 2006 Toyota 0 0 2007 Brand 2007 Brand Value ($m) Value 2006($m)
0
Za -9%
5000
4,406
4,149
Brand Value ($m) 2007 1000 2000 2000 2006
Motorola
400025000
11,056 9,130
($m) Brand Value ($m) 2007 Brand Value 1000 2000 3000 1000 2006 2006
Apple 0
8000
4,569
3000
2000
Brand Value ($m)
2006 2006 2000 0 2007 Brand Value ($m)
+10%
25000 +10% 10000
Ikea
0
-15%
7000
3,631 10,087
3000
1000
0
2007 2006
2007 2006
2007 2006 4000 +17%
3000
2000
2000
4000 2000
0
Pizza Hut
2007 2006
2000
2007 Brand Value ($m) 2006
2007 2006
Apple +17%
25000 +10%
2000 0
2006 2006 2000 0 2007 Brand Value ($m)
35000 +12%
4,866
Motorola
Ikea
12000
400035000
2007 2006
Ikea
2007 2006
10000 30000
35000 3500 +12%
Motorola
30,131300004,165 35000
21,612
19,617 15000
Kodak
25000
20000 2000
10000
Gap
-19%
33,6963,631 +12%
1000
0
Zara
12000
25000 +18%
+12%
Brand Value ($m)
Brand Value ($m) Brand Value ($m)
2007
Gap
300020000
2000 4000
1000
0
2007 Brand Value ($m)
Ikea -19% +10%
11,056
30000 7000
2007 2006
8000
+10%
6000
200015000
2000
2000 1500
0
0
7000
3,874
2007 Brand Value ($m) 2006
Motorola
Gap
5000
3,099 8,763
5000 1000 2006 2006 0 0 2007 Brand Value ($m) Brand Value ($m)
3500
30,131
10000
+17%
1000
0
Apple
Kodak
6000
-15%
5000
4,406
1000
2007 Brand Value ($m)
Motorola
4000
11,056+7%
8,982 29,398 30000 25000 8000 27,501 10000
20000 6000
1500010000
+17%
4000 2500
4,165
3000 2000
15000 4000
1000 10000 2000
2000
30000 +44%
29,398 21,612
10000 2000
5000
8000
2007 500 2006 2007 2006
2006
25000
25000 4,165 3,099
Ford 0
200008000
4,866 3,631 +17%
6000
20000
2007 2007($m) Brand Value ($m) 2006 Brand Value 2007 2006
7000
27,501
Brand Value ($m) Brand Value ($m)
0
BMW
BMW
6,559 19,617
3000 2000
2007 2007($m) Brand Value ($m) 2006 Brand Value 0
+18% 25000 +10%
27,501
15000 6000 6,559 12,376
Starbucks
2006 0 20065000 2007 Brand Value ($m)
BMW
1500
20001000
500
Brand Value ($m) Brand Value ($m)
0
+7%
7,730 17,837 8000 +18% 25000
5000 10000
2000 10000
Brand Value ($m) Brand Value ($m)
0
7,730 10000 29,398 +18% 12000
4,866 33,696 +17%
Value ($m) Brand Value ($m) 2007 0Brand 2007 10000 5000 0 2006 5000 2006
Nintendo
2007 2006
Nokia
5000
-19% +10%
+18% 11,056 3500
6000 20000 7000
BMW
Nokia
Nokia
6,559
Ford
Kodak
7,730 21,612
21,612 7,730 7000 200008000
6000 15000
5000 15000
400010000
2000 0 10000 2006 0 2006 5000 2007 Brand Value ($m) Brand Value ($m)
Nokia
5000
4000 10000
5000
1000
Brand Value ($m) Brand Value ($m)
2007
35000
6,5598000 19,617
2007 2007 Brand Value ($m) 2006 Brand Value 2006($m) 2007 2006
McDonald’s
6000
30000 3500
35000 +12%
4,165 3,099
2006 0 2006 0 1000 500 2007 Brand 2007 Brand Value ($m) Value ($m) McDonald’s
2,783
4000
Value ($m) Brand Value ($m) 2007 0Brand 2007 5000 2006 0 1000 2006
Burberry
3,221 3000 4000 3500 +16% 30,131 8,982
2500 3000
2500
4000
33,696 3500 +16% 30000
4,165
2000
3000 5000
4000 +17%
100010000
0
0
35000
6,4164000
19,617
2007 Brand Value ($m) 2006
Pizza Hut
Gap
4,866
20000
30,131 3500+16%
1500
Gap
App -9%
Brand Value ($m)
Ikea
2006
30000
21,612 4,149
4000
2007
Pizza Hut
+17% +12%
3,221 2500 3000 20000 25000 2,783
Nokia
0
3,099
2007
+12%
4,694
5,481 5000
4000
3000
The DECLINERS
+10%
33,696 +16%
3,221 3000
25000 3000
3000
8000
30000
20000
3,221
15000
7000 +44% 27,501
25000 20000
3,631
2500 2,783
2007 2007 Brand Value ($m) 2006 Brand Value 2006($m)
2007 2006
Audi
15000 20000
5000
0
2006
+7%
2000
2007
+17%
25000 +18%
20000 +44% 30000
20000 2500
Brand Value ($m) 2007 10000 2000 3000 5000 2006
2000
4000
2000
7,730 +44%
0
2006
+7%
6,55925000
15000 2000
2000
10000
5000
6,416
2006
Kodak
Starbucks
25000 3000
3000
Brand Value ($m) Brand Value ($m)
35000 +16% 5000
2000
1000
0
Kodak
+18%
+12%
1000
20000 2000
2007 Brand Value ($m) 2006
2006
+17%
29,398
15000
2000 2000
Brand Value ($m) Brand Value ($m)
Starbucks 0
8000
5000
27,501
17,837
17,837 15000 5000 6000
2000 15000
1500
20000
10000 1500
5000 10000 2000 3000 2006 0 2006 2007 Brand 2007 Brand Value ($m) Value ($m)
Audi
8000
29,398 +44%
15000 20000
1500
1500 10000
1000
Value ($m) Brand Value ($m) 2007 0Brand 2007 10000 2000 5000 2006 2006
3000
Ike -12%
Brand Value ($m)
Motorola
3500
4000
15000
10000 1000
Brand 2007 Value ($m) Brand Value ($m) 5000 0 500 1000 2006 Ford 0 2007 Brand 2007 Brand Value ($m) Value ($m) 2006
Nintendo McDonald’s
Nintendo
12,376
500
500
4,165
17,837
12,376
10000 10000
3000
21,612
15000
10000 3000
2000
5000
2007 2007 2006 Brand Value 0 2006($m)
Nintendo
12,376
4,866
2,7834000 2500
3000
12,376
($m) Brand Value ($m) 2007 0Brand Value500 1000 1000 2006 0 2006
0
4,165
3000
10000 10000
2007 Brand 2007 Brand Value ($m) Value ($m) 2006 2007 2007 2006 Brand Value 0 2006($m)
3,221 30000
25000
2000
10000
5000 5000
0
7000
19,617
Brand 2007 Value ($m) Brand Value ($m)
BMW
6000
20000
2000
5000
0
33,696
17,837
Brand Value ($m) 2007 0Brand Value ($m) 5000 1000 2006 0 2006
2007 2006
5000
1500
1000
($m) 2007 0Brand Value 5000 5000 2006
2006 0 Starbucks
Burberry
4000
2007 Brand Value ($m) 2006
2007 2006
20000
2007
20000
6,559
2000
500
0
Google McDonald’s
Burberry
6000
15000
15000
2007 Brand Value ($m)
Google
12,3765000
7,730 7000
4000
BMW
+16%
+7%
10000 1000 15000
0
0
2007
+18%
4,866
Brand Value ($m)
0
3500
30,131
5000
0
15000 2000
33,696 4,254
20065000
Gap
30000 +44%
6,55925000
10000
3000
2007 0Brand Value ($m)
Audi
2007 2006
3000
17,837
20000
2007 Brand Value ($m) 2006
Burberry
Google
2500
15000
5000
2007 Brand Value ($m)
Google McDonald’s
2000
7,730
($m) 2007 0Brand Value 1000 2006
Nintendo
8000
+7%
5,481 30,131
2006
27,501
5000
0
400030000
10000 1000
2007
0
2,783
0
25000
5000 0
Brand Value ($m) Brand Value ($m)
5000
3,221 3000
2500
+17%
Brand Value ($m)
2007 Brand Value ($m) 2006
Nintendo
0
+16%
4,165
2007
McDonald’s
4,406
2007
Gap
8000
OTHER NOTABLE Performers 29,398 2006
27,501
2006
10000
1000
0
29,398 3,874
2007 2006
2006
20000 +44%
15000
12,376 5000
2007 Brand Value ($m) Burberry
7000
17,837
10000
2007 Brand Value ($m) 2006 2006
5000 7000
6000
2006
Pizza Hut
Brand Value ($m)
0
Audi
6000
2007 Nokia
+44%
6,559
2007
Burberry
+18%
17,837
2007 0Brand Value ($m)
Google
4000 5000
2007
0
3500
7,730
2007 2007 2006 0
3000 4000
3000
Brand Value ($m) Brand Value ($m)
Nintendo
2006
2000 2000
1000
Kodak
Brand Value ($m)
Google
1000
Motoro -15%
6,416
Brand Value ($m) Brand Value ($m)
Brand Value ($m)
0
4,165
5000
21
6000 +22%
+15%
Toyo
3. lessons from the risers and decliners
17,837
2007 Google
2006
+44%
12,376 0
5000
10000
15000
20000
Brand Value ($m)
3,221
2007
+16%
Burberry
2006
2,783 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
7,730
2007
+18%
Nintendo
2006 0
valued at $33.7bn this year, nokia’s 12% increase has been driven by a renewed focus on the brand. consumer insights have steered product design back on course. In short, it has rediscovered the theme of demand creation by focusing on simple, easy-to-use handsets that are sleek and stylish.
1000
2000
3000
In recent years, handset design has emerged as an increasingly important demand driver. competitors such as lg and samsung have created stylish products and gained market share, some of it at nokia’s expense. the brand’s ‘bounce back’ this year has been driven by a reinvigorated focus on product design and feature innovation. for example, the nokia n95 was hugely successful, integrating mail, web and music in a single handset. It has become the equivalent of the blackberry for the consumer market.
4000
5000
6000
brand
nokia
2007 country of origin
8000
finland
4,866
+17%
Audi
sector
consumer electronics 4,165
2006 0
brand value ($m)
33,696
1000
2000
rank 2006 rank 2007
3000
4000
5000
6 29,398
5
2007
McDonald’s
+7%
best27,501 global brands 2007
2006 5000
0
10000
15000
20000
25000
30000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
19,617 5000
0
10000
15000
20000
25000
Brand Value ($m)
3,631
2007
to maintain its leadership position, nokia should focus on defining a cohesive visual style to differentiate its entire offering, rather than being driven by individual models.
7000
Brand Value ($m)
Brand Value ($m)
nokia has not enjoyed quite as much success in the us, where motorola has been the dominant player. It will be interesting to see how this unfolds. nokia’s improvement in product and design innovation should challenge motorola’s raZr, but the recently launched apple iphone has the potential to change perspectives. the device has created a lot of excitement and it seems set to be popular with technology-savvy and fashionconscious consumers alike.
+17%
Starbucks
2006
3,099 0
500
1000
1500
2000
2500
3000
3500
4000
Brand Value ($m)
8,982
2007 Ford
2006 2000
Brand Value ($m)
22
best global best global brandsbrands 2007 2007
-19%
11,056 0
22
Piz
6,559
4000
6000
8000
10000
12000
M
Nokia has rediscovered the theme of Demand Creation by focusing on simple, easy-touse handsets that are sleek and stylish.
3. lessons from the risers and decliners
mcdonald’s resurgence picks up on all the themes of brand value creation, from demand creation through to brand management, modeling contingencies and planning efficiencies. while the brand is still on a journey, it has done many things right, and this is reflected in its 7% increase in brand value. firstly, it refocused corporately on being a single-brand company, mcdonald’s, by de-emphasizing pret a manger, divesting chipotle and beginning the process of selling boston market. this sense of focus is also demonstrated in the b2c brand through its consistent use of the global advertising theme, ‘I’m loving it’. the mcdonald’s brand continues to reinvent itself in the face of changing consumer preferences towards healthy eating. It has shown that being responsive to customers is critical to success. mcdonald’s is providing healthier alternatives and the nutritional profile of everything it offers. the introduction of new sandwiches, salads and fruit items to the menu has created a ‘halo’ effect that augments the traditional mcdonald’s offering. these items add a healthy ‘accent’ to the mcdonald’s image and create demand.
starbucks customers than parents who are merely there to keep their children company. Its coffee range has been ranked best in class in consumer reports. Instead of expanding its number of outlets (which do still continue to expand at 3-5% per year) the focus has been on improving the total customer experience. the changes have allowed mcdonald’s to open up a clear gap between itself and burger king,2007 which has not gone down the same 17,837 ‘healthy food’+44% road. Google 2006
12,376
mcdonald’s is successfully managing to move the brand along, Brand Value ($m) while not losing sight of what it has always stood for: quality, value and convenience. 0
5000
15000
20000
3,221
2007
+16%
Burberry
2006
2,783 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
brand
mcdonald’s 7,730
country of2007 origin
us
sector
restaurants
Nintendo
2006 0
brand value ($m)
1000
2000
Brand Value ($m)
but the success is deeper than simply creating demand. the brand has been managed and planned well too. the broader menu, coupled with remodeled/more stylish restaurants, is helping mcdonald’s to shift traditional perceptions of the brand and encourage existing customers to engage with it more frequently. rather than being a place where people go to grab a quick snack on the go, mcdonald’s is trying to attract diners who appreciate better quality, better tasting food and are willing to pay a premium for it. the range of high-quality coffees, for example, is more likely to appeal to
10000
rank 2006
3000
29,398
+18%
4000
5000
6000
7000
8000
9
2007
rank 2007
4,866
8
Audi
2006
+17%
4,165 best global brands 2007 0
1000
2000
3000
4000
5000
Brand Value ($m)
29,398
2007
+7%
McDonald’s
2006
27,501 0
5000
10000
15000
20000
25000
30000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
21,612
2007
+10%
BMW
24
best global brands 2007
Pi
6,559
2006
19,617 0
5000
Brand Value ($m)
10000
15000
20000
25000
M
The McDonald’s brand continues to reinvent itself in the face of changing consumer preferences towards healthy eating.
3. lessons from the risers and decliners
17,837
2007 Google
2006
12,376 0
audi’s success builds on a story of demand creation, brand management and planning efficiencies. by applying a consistent design philosophy based around quality, sophistication and performance, audi has developed a unique, distinctive personality in the marketplace. the brand is considered to be hip, cool and understated. In the mind of the consumer, audi is now a genuine alternative to bmw and mercedes-benz, with the brands going head-tohead in many categories.
with the refreshed a6 and a8 models, audi has succeeded in moving up the value chain and has created a buzz around its top-of-the-range saloon cars. the company also launched an suv at the high-end, which has been well-received.
5000
10000
15000
brand
audi
country of2007 origin
germany
3,221
+16%
Burberry
sector
automotive
2006 0
brand value ($m)
500
1000
1500
4,866
Brand Value ($m)
rank 2006 rank
2,783
2000
2500
3000
3500
74
20072007
7,730
68
Nintendo
2006
+18%
1000
2000
3000
4000
5000
6000
7000
8000
Brand Value ($m)
4,866
2007
+17%
Audi
2006
4,165 0
1000
2000
3000
4000
5000
Brand Value ($m)
29,398
2007
+7%
McDonald’s
27,501 5000
0
10000
15000
20000
25000
30000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
19,617 5000
0
10000
15000
20000
25000
Brand Value ($m)
3,631
2007
+17%
Starbucks
2006
3,099 0
500
1000
1500
2000
2500
3000
3500
4000
Brand Value ($m)
8,982
2007 Ford
2006
26
best global brands 2007
Pi
6,559 best global brands 2007
2006
the strength of the brand has enabled audi to stretch into the coupe and sports car segments; the hugely successful tt and the new r8 are testament to this. the design credentials of the tt and the performance credentials of the r8 cascade throughout the entire audi range and provide greater clarity to audi’s overall positioning in the marketplace. this portfolio strategy is a model example of how to use marketing and product development resources to efficiently generate brand value.
20000
Brand Value ($m)
0
audi has recently completed a design overhaul of its entire product line. this is a bold move, which modernizes the range with a consistent look, feel and attitude while still maintaining the valuable equity of “vorsprung durch technik”.
+44%
-19%
11,056 0
2000
Brand Value ($m)
4000
6000
8000
10000
12000
M
The design credentials of the TT and the performance credentials of THE R8 cascade throughout the entire Audi range and provide greater clarity to Audi’s overall positioning in the marketplace.
3. lessons from the risers and decliners
burberry has re-established itself as a credible fashion brand for a younger generation. It has successfully refreshed its image, while maintaining true to its ‘british’ heritage. a few years ago the burberry brand in the uk became confused after being adopted by football hooligans and minor celebrities. It quickly acquired associations of thuggishness and became a conspicuous emblem of new wealth, which repelled many of its traditionally loyal customers.
brand
burberry
country of origin
uk
sector
luxury
brand value ($m)
3,221
rank 2006
98
rank
20072007 2006
burberry has achieved this success by carefully managing customer perceptions and experiences at all touch points – in-store, online, through advertisements and sponsorship. It has positioned itself as young, modern and fashionable, while maintaining the ‘british’ essence of its appeal.
5000
+44%
best global brands 2007
12,376 0
however, since that set-back, the brand has revitalized itself and gone from strength to strength, appealing to new customers in new markets all over the world, regardless of the pr backlash around its factory closure in wales.
17,837
95
Google
10000
15000
20000
Brand Value ($m)
3,221
2007
+16%
Burberry
2006
2,783 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
7,730
2007
+18%
Nintendo
2006
Pi
6,559 0
1000
2000
3000
4000
5000
6000
7000
8000
Brand Value ($m)
It is a great example of touch point development, modeling contingencies and planning efficiencies.
4,866
2007
+17%
Audi
2006
4,165 0
1000
2000
3000
4000
5000
Brand Value ($m)
29,398
2007
+7%
McDonald’s
2006
27,501 0
5000
10000
15000
20000
25000
30000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
28
best global brands 2007
19,617 0
5000
Brand Value ($m)
10000
15000
20000
25000
M
Burberry has achieved success by carefully managing customer perceptions and experiences at all touch points.
3. lessons from the risers and decliners 17,837
2007 Google
2006
+44%
12,376 0
5000
10000
15000
20000
Brand Value ($m)
3,221
2007
+16%
Burberry
2006
2,783 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
7,730
2007
+18%
Nintendo
2006
Pi
6,559 0
1000
2000
3000
4000
5000
6000
7000
8000
Brand Value ($m)
4,866
2007
+17%
Audi
2006
4,165 0
1000
2000
3000
4000
5000
Brand Value ($m)
the lessons from ford are highly indicative of the themes of value creation. the brand lacks focus on demand creation, and its product range would indicate that it has not planned effectively to have a portfolio that is in tune with the movements of consumer attitudes and behaviors. the ford brand continues its long-term decline demonstrating how an iconic brand can lose its way. despite reasonable success in europe with the focus and mondeo, performance in the core us market has been less impressive and a permanent discount policy has eroded the value of the ford brand. heavy reliance on big suvs, pick-ups and its american heritage increasingly look out of touch with the needs of us car buyers. as gas prices remain high, demand for gasguzzling suvs has waned and the construction of factories in the us by foreign brands means that the “made in america” positioning is no longer differentiated.
29,398 theMcDonald’s mini is an example of a classic car with cult appeal that +7% re-launched2006 itself very successfully. the ford mustang carries an 27,501 equally strong following in the us. In the same vein as the mini, Brand Value the ($m) mustang as a flagship model and use ford could re-launch the momentum to rejuvenate the entire ford brand. 2007
to regain momentum, ford could learn from bmw’s experience. by applying a more holistic approach to managing the brand and sub-brands and using a handful of core principles to guide product design, ford could develop a distinctive positioning that resonates with consumers.
30
best global brands 2007
10000
15000
20000
25000
30000
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
brand
ford
country of2007 origin
us
21,612
+10%
BMW
sector
automotive
2006 5000
0
brand value ($m)
10000
8,982
Brand Value ($m)
rank 2006 rank
19,617
15000
20000
25000
30
20072007
3,631
41
Starbucks
2006
+17%
3,099best global brands 2007 0
ford, unlike the competition, has not invested in distinguishing itself in any meaningful way. toyota, for example, has become synonymous with quality, reliability and more recently for being ‘green’; bmw stands for precision and driving experience. ford lacks an equivalent differentiating position and is in search of a central meaning and sense of identity.
5000
0
500
1000
1500
2000
2500
3000
3500
4000
Brand Value ($m)
8,982
2007 Ford
2006
-19%
11,056 0
2000
Brand Value ($m)
4000
6000
8000
10000
12000
M
Heavy reliance on big SUVs, Pick-Ups and its American heritage increasingly look out of touch with the needs of US car buyers.
Best Global Brands 2007
31
3. lessons from the risers and decliners
the gap brand has failed to secure or own a positioning within the apparel marketplace. It is a story that indicates an inability to create demand for its brand. gap continues to feel the pressure from low price suppliers offering the same american staple of t-shirts, jeans and chinos. forays into a more fashionable positioning failed, and the brand was left with an irrelevant positioning and an overpriced product line. In the us, gap has further confused its consumers by offering less expensive, fun-oriented options at old navy and higher quality, more up-market items at banana republic. these 2007 17,837 +44% alternative stores – often located in Google close proximity to gap outlets –12,376 have cannibalized sales. 2006 0
5000
10000
15000
500
1000
1500
2000
gap
country of origin
us
sector
apparel
brand value ($m)
5,481
rank 2006
52
rank 2007
61 best global brands 2007
2500
3000
2006
2000
3000
4000
5000
6000
7000
1000
2000
3000
4000
2006
6000
7000
8000
3,874 -12%
4,406 0
1000
2000
3000
4000
5000
+17%
10000
15000
20000
25000
2006
-9%
4,694 0
1000
2000
3000
4000
5000
Brand Value ($m)
4,149
2007 Motorola
2006
-9%
4,569 0
1000
2000
3000
4000
5000
Brand Value ($m)
+7%
10,087
2007
+15%
Ikea
2006 30000
8,763 0
2000
4000
6000
8000
10000
12000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006 15000
20000
25000
30000
11,037
2007
35000
+21%
Apple
2006
30,131
best global brands 200710000 5000 0
4,254
2007 Pizza Hut
27,501
Brand Value ($m)
5000
2006
Brand Value ($m)
32
4000
2007
5000
McDonald’s
5000
3000
Kodak
8000
4,866
2007
0
2000
Brand Value ($m)
an Audi alternative strategy would be to follow the lead 2006 of fast-fashion retailers, like h&m or Zara, stocking 4,165 more of-the-moment fashion designs at lower price ($m) points. toBrand doValue this, it would need to differentiate itself from these brands, or reconsider its current corporate brand2007 architecture in some meaningful way. 29,398 0
1000
Brand Value ($m)
3500
to regain relevance with consumers, gap could learn 2007 7,730 from other mass-market fashion brands. abercrombie &+18% fitch, Nintendo for example, has used a deep understanding of the consumer 2006 6,559 to make its brand sexier. the company knows what makes its customersBrand ‘tick’ and offers a distinctive Value ($m) look and attitude that genuinely resonates. 1000
-15%
6,416 0
Brand Value ($m)
0
5,481
2007 Gap
20000
the brandBrand has trapped between several trends Valuebecome ($m) in the fashion market. consumers are increasingly looking to mix low priced basics (from the likes of Zara, target or wal-mart) with 2007 3,221 +16% Burberry expensive signature pieces from premium brands. gap is neither 2006 of these; it has lost its ability to segment2,783 and to identify its target customers. 0
brand
9,130 0
2000
Brand Value ($m)
4000
6000
8000
10000
12000
Gap continues to feel the pressure from low price suppliers offering the same American staple of tshirts, jeans and chinos.
3. lessons from the risers and decliners
the kodak brand has been too late to read the signals of the marketplace and is therefore another story that highlights a lack of demand creation. the kodak brand still feels rooted in traditional film. the company is trying to reinvent itself as being about digital imaging. unfortunately, a lack of any real point of difference, coupled with a relatively late entrance, has17,837 meant that 2007 +44% Google the brand has struggled to gain a significant foothold in 2006 12,376 the digital market. 0
5000
10000
15000
brand
kodak
country of origin
us
sector
consumer electronics
brand value ($m)
3,874
rank 2006
70
rankGap2007
2007
20000
Brand Value ($m)
0
500
1000
1500
2000
2500
3000
2006
0
2000
3000
1000
4000
2000
5000
7000
4000
5000
10000
15000
20000
+18%
25000
+7%
2000
3000
4000
5000
4,254 -9%
4,694 0
1000
2000
3000
4000
5000
Brand Value ($m)
4,149
2007 Motorola
2006
-9%
4,569 0
1000
2000
3000
4000
5000
Brand Value ($m)
10,087
2007
+15%
Ikea
2006
33,696
2006
8,763 0
+12%
2000
4000
6000
8000
10000
12000
10000
15000
20000
25000
30000
2006 35000
+21%
9,130 0
Brand Value ($m)
2000
4000
6000
8000
10000
12000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
best global brands 2007 5000 0
11,037
2007 Apple
30,131
Brand Value ($m)
-12%
Brand Value ($m)
2007
34
1000
2007
30000
Nokia
5000
8000
4,406
Pizza Hut
Brand Value ($m)
0
7000
Brand Value ($m)
27,501 0
6000
3,874
0
5000
McDonald’s
2006
5000
2006
8000
29,398
2007
4000
2006
6000
3000
3000
2007
3500
other brands have negotiated similarly large shifts in customer Value ($m) demandsBrand successfully in the past and kodak could learn from these experiences. Ibm’s move into business consulting, for example, was achieved through4,866 acquisition of 2007 +17% Audi pwc’s consulting business and supported 2006 4,165 by a strong global advertising campaign. Intel has similarly shifted from storage to processing and more recently Brand Value ($m) from desktop pcs to handheld devices. 1000
2000
Kodak
6,559 0
1000
Brand Value ($m)
Brand Value ($m)
the ‘kodak moment’ positioning which was created over many years, does not seem to be transferable to 2007 7,730 the digital world. Nintendo
-15%
6,416 best global brands 2007 0
despite launching innovative products such as the simple dock interface and, more recently, the printer with very affordable 2007 3,221 print cartridges, consumers have not embraced kodak as a +16% Burberry digital2006 brand because it lacks a cohesive 2,783 promise that the customer understands or cares about.
5,481
82
2006
2006
19,617 10000
15000
5,165
2007
20000
25000
+22%
Zara
4,235 0
1000
Brand Value ($m)
2000
3000
4000
5000
6000
Consumers have not embraced Kodak as a digital brand because it lacks a cohesive promise that the customer understands or cares about.
Best Global Brands 2007
35
3. lessons from the risers and decliners
pizza hut also tells a tale that lacks demand creation. 2007 17,837 +44% pizza hut is still one of the leading brands in the fast-food industry. as a whole has been under 2006 however, the industry 12,376 pressure as consumer preferences have shifted towards healthier alternatives. Brand Value ($m)
Google
0
5000
10000
15000
20000
brand
pizza hut
country of2007 origin
us
sector
restaurants
Gap
2006
0 brand value ($m)
1000
2000
3000
0
500
1000
1500
2000
2500
3000
+18%
Nintendo
In an age wholesome, natural, 2006 where customers demand quality, 6,559 nutritional food, pizza hut has held onto its outdatedBrand menu and restaurant format. It needs to return Value ($m) to basics by providing good pizzas, delivered in a more contemporary setting. 2007 0
1000
2000
3000
4000
5000
6000
7000
4,866
+17%
2006 4,165 ideas – the brand should look to mcdonald’s for some many of pizza hut’s customers are also customers of mcdonald’s, Brand Value ($m) after all. mcdonald’s has re-energized its brand by contemporizing a number of its restaurants 2007 cantly updating its menu to appeal 29,398 and signifi to a +7% McDonald’s broader demographic. 2006 0
1000
2000
3000
4000
5000
10000
15000
20000
33,696
+12%
2006 5000
10000
15000
20000
25000
2006
5000
-9%
4,694 1000
2000
3000
4000
5000
Brand Value ($m)
4,149
2007 Motorola
2006
-9%
4,569 1000
0
2000
3000
4000
5000
Brand Value ($m)
10,087
2007
+15%
Ikea
2006
8,763 0
2000
4000
6000
8000
10000
12000
Brand Value ($m)
11,037
2007
+21%
Apple
9,130 0
+10%
2000
4000
6000
8000
10000
12000
10000
15000
5,165
2007 2006
20000
+22%
Zara
19,617 25000
4,235 0
Brand Value ($m)
1000
2000
3000
4000
5000
6000
Brand Value ($m)
3,631
2007
+17%
Starbucks
2006
Brand Value ($m)
4000
4,254
0
35000
21,612
best global brands 2007 500 1000 0
3000
Brand Value ($m)
2007
36
2000
2006
30000
BMW
5000
1000
2006
Brand Value ($m)
0
-12%
2007
30,131 0
3,874
Pizza Hut
starbucksBrand could also provide some clues. the ubiquitous Value ($m) coffee chain understands the importance of ambience and environment in attracting and retaining loyal customers. 2007
8000
Brand Value ($m)
30000
Nokia
7000
4,406 best global brands 2007 0
5000
25000
6000
2006
27,501
0
5000
74
Kodak
8000
Audi
-15%
6,416
66
20072007
3500
7,730
2007
rank
4000
4,254
Brand Value ($m)
rank 2006
minor2007 changes to its product range (e.g. vegetarian 3,221 options) +16% Burberry and new services (e.g. deliveries and internet orders), have failed 2006 2,783 in all of its touch to revitalize the brand and it now looks tired points. the chain has struggled to maintain share of wallet Brand Value ($m) against new ‘fast casual’ competitors, which offer higher quality food in more attractive surroundings at a higher price point.
5,481
2006
3,099 1500
2000
2500
3000
32,070
2007
3500
4000
+15%
Toyota
27,941 0
5000
Brand Value ($m)
10000
15000
20000
25000
30000
35000
In an age where customers demand quality, wholesome, natural, nutritional food, Pizza Hut has held onto its outdated menu and restaurant format.
3. lessons from the risers and decliners
the motorola story is an interesting one. having successfully created demand for the raZr, it seems to have sat back on its laurels. more efficient planning for the motorola brand itself could2007 have delivered a stronger corporate 17,837 brand, which in its +44% Google own right could return 2006 12,376 more value. 0
5000
10000
15000
motorola would be well advised to carry out data mining to gain a deep understanding of what drives its consumers and to keep on top of emerging trends. 2006
20000
motorola is fundamentally an engineering company, rather than a consumer-focused brand. In recent years, it has enjoyed 2007with one-off products, but has failed3,221 success to develop+16% a Burberry pipeline to maintain upward 2006 of exciting replacement products 2,783 momentum. the raZr, for example, was highly successful at launch and Brandsignifi Value ($m) cantly raised the profile of the brand. however, the company failed to launch any “blockbuster” handsets before the raZr approached the end of its lifecycle. 2007 500
1000
1500
2000
2500
3000
3500
7,730
+18%
Nintendo
6,559 In the2006 ever-changing world of consumer electronics, it’s important to invest in developing a strong corporate brand, Brand Value ($m) rather than product brands. Investing in product brands is risky, because they can be quickly superseded by superior offerings as 2007 technology evolves. motorola’s falling brand value to the 4,866is due +17% Audi close association between the corporate brand and the raZr 2006 4,165 phone. as raZr has lost relevance with consumers, so too has motorola.Brand Value ($m) 0
1000
0
2000
3000
1000
4000
2000
5000
6000
3000
7000
4000
5000
0
10000
15000
20000
25000
2006
10000
15000
20000
25000
30000
21,612
2006
3,874
2000
4,149
Brand Value ($m)
rank 2006
3000
4000
-12%
5000
69
2007
rank 2007 Pizza Hut
4,254
77
-9%
2006
4,694 brands 2007 best global 1000
0
2000
3000
4000
5000
Brand Value ($m)
4,149
2007 Motorola
2006
-9%
4,569 1000
0
2000
3000
4000
5000
Brand Value ($m)
10,087
2007
+15%
Ikea
2006
8,763 0
2000
4000
6000
8000
10000
12000
Brand Value ($m)
11,037
2007
+21%
Apple
2006
9,130 0
+10%
2000
4000
6000
8000
10000
12000
10000
15000
5,165
2007 2006
20000
+22%
Zara
25000
4,235 0
Brand Value ($m)
1000
2000
3000
4000
5000
6000
Brand Value ($m)
3,631
2007
best global brands 2007
+17%
Starbucks
2006 1000
1500
2000
2500
3000
32,070
2007
3500
4000
+15%
Toyota
2006
3,099
Brand Value ($m)
1000
0 brand value ($m)
19,617 5000
500
8000
Brand Value ($m)
2007
0
7000
consumer electronics4,406
35000
BMW
38
6000
sector
2006
Brand Value ($m)
0
5000
us
Kodak
customer insight is at the heart of the successful branding. 5000
4000
country of2007 origin
30,131
0
3000
motorola
30000
Nokia
2000
brand
5000
motorola could take some lessons from nokia, which 2007 29,398 +7% has managed its brand architecture very successfully over the years.2006 the nokia masterbrand remains the focal point for the 27,501 consumer and is always more prominent than the handset Brand Value ($m) sub-brands. similarly, bmw, through disciplined management of brand assets, has created a masterbrand that supports and enhances 2007 individual model brands. 33,696 +12%
1000
Brand Value ($m)
8000
McDonald’s
-15%
6,416 0
Brand Value ($m)
0
5,481
2007 Gap
27,941 0
5000
Brand Value ($m)
10000
15000
20000
25000
30000
35000
Motorola has failed to develop a pipeline of exciting replacement products to maintain upward momentum. As RAZR has lost relevance with consumers, so too has Motorola.
3. Lessons from the Risers and Decliners
Conclusions The turnaround brands all show a rise in their brand value because they have understood and adopted the theme of brand value creation and the brand management practices associated with this. The principal strength is evidently Demand Creation: a simple theme that requires the brand to move and evolve with consumer attitudes and behaviors and create a motivating strategy that it delivers against. Once demand is created, management processes need to be put in place to ensure the brand lives through all its touch points, and that the business plans ahead effectively and efficiently to build value into its brand. The themes are intrinsically linked, and to master them all takes leadership and an organization-wide commitment to building the value of the brand. As we’ve seen, the rewards are high. Correspondingly, the brands that have suffered a decline in brand value seem to have lost the ability to create demand. They have all been hugely successful businesses and brands in the past and the future is there for them to dictate. The turnaround brands all show a sense of understanding consumers’ needs and desires, and rediscovering the appetite to meet their customer promise. After all, what is a brand if not a promise to the customer? The brands that have failed to do this need to rediscover the connection with their markets and focus on the themes of brand value creation.
40
Best Global Brands 2007
Brands are important assets requiring proactive and consistent investment, management, and measurement.
Best Global Brands 2007
41
Having foresight helps companies make informed choices about their brand and frees leaders up to make bold moves in the full knowledge of the implications.
4.
HOW WE DID IT
Criteria For Consideration
Methodology
Using our database of global brands, populated with critical information over the past 20 years of valuing brands and more than 30 years of consulting with organizations, Interbrand formed an initial consideration set. All were then subject to the following criteria that narrowed candidates significantly:
The Interbrand method for valuing brands is a proven, straightforward and profound formula that examines brands through the lens of financial strength, importance in driving consumer selection and the likelihood of ongoing branded revenue. Our method evaluates brands much like analysts would value any other asset: on the basis of how much they’re likely to earn in the future. There are three core components to our proprietary method:
• There must be substantial publicly available financial data • The brand must have at least one-third of revenues outside of its country-of-origin • The brand must be a market-facing brand • The Economic Value Added (EVA) must be positive • The brand must not have a purely b2b single audience with no wider public profile and awareness These criteria exclude brands such as Mars, which is privately held, or Wal-Mart, which is not sufficiently global (it does business in some international markets but not under the Wal-Mart brand).
Financial Analysis Our approach to valuation starts by forecasting the current and future revenue specifically attributable to the branded products. The cost of doing business (operating costs, taxes) and intangibles such as patents and management strength are subtracted to assess what portion of those earnings is due to the brand. All financial analysis is based on publicly available company information. Interbrand culls from a range of analysts’ reports to build a consensus estimate for financial reporting. Role of Brand Analysis A measure of how the brand influences customer demand at the point of purchase is applied to the intangible earnings to arrive at Branded Earnings. For this study, industry benchmark analysis for the role brand plays in driving customer demand is derived from Interbrand’s database of more than 5,000 prior valuations conducted over the course of 20 years. In-house market research is used to establish individual brand scores against our industry benchmarks.
44
Best Global Brands 2007
Brand Strength Score This is a benchmark of the brand’s ability to secure ongoing customer demand (loyalty, re-purchase and retention) and thus sustain future earnings, translating branded earnings into net present value. This assessment is a structured way of determining the specific risk to the strength of the brand. We compare the brand against common factors of brand strength, such as market position, customer franchise, image and support.
FINANCIAL ANALYSIS
BRAND VALUE CALCULATIONS
Forecasted current and future revenue specifically attributable to the brand.
ROLE OF BRAND ANALYSIS A measure of how the brand influences customer demand at the point of purchase.
Role of Brand Analysis
Branded Revenues Intangible Earnings Brand Earnings Year 1
Year 2
Year 3
Year 4
Year 5
BRAND STRENGTH ANALYSIS A benchmark of the brand’s ability to secure ongoing customer demand (loyalty, repurchase, retention).
Brand Strength Analysis = Discount rate
BRAND VALUE
Best Global Brands 2007
45
5. WHY THE RANKING IS IMPORTANT Significance of the ranking The Best Global Brands study provides a brand value that is a top-line measure of economic performance driven by the brand, stating what the brand is worth overall and among competitors. Brand value brings to marketing what “revenue goals” or “financial hurdle rates” bring to other aspects of the business. The payoff comes when one looks behind the number – a single number only tells you so much. It’s important to understand what drives brand value: intangible earnings (the cash flow of a business not associated with tangible assets such as equipment or materials), the role of brand (a measure of how much brand influences purchasing decisions) and brand strength (a benchmark of a brand’s relative risk compared to competitors). Understanding the drivers of brand value can inform management action, from overall business strategy to specific marketing tactics. It’s an easy-to-understand metric to help brand owners determine where they are, where they’re going and how to get there. It helps to make branding a more important aspect of global business management.
46
Best Global Brands 2007
It tells you whether you are investing adequately in your brand. Putting an economic value on a brand (overall and by segment) can help make a strong business case for marketing investments, overall and across a company’s portfolio. It tells you whether you have a marketing strategy that positions your brand around the right messages. Your customers make decisions every day between you and your competitor; analyzing the role of brand in those decisions helps focus your strategy on the attributes that differentiate your brand from others and strengthen your relationship with your best customers, ensuring future earnings. It tells you whether you have the right short-term tactics to drive value. By analyzing the strength of your brand, you can target marketing campaigns to the most valuable customers and against your most formidable competitors, driving short-term sales. There are many insights from this ranking, but the core message is clear: brands are important assets requiring proactive and consistent investment, management, and measurement.
Best Global Brands 2007
47
APPENDICES
48
Best Global Brands 2007
6. FREQUENTLY ASKED QUESTIONS
The purpose of this section is to address the questions that you might be asking in relation to the Best Global Brands.
Contents What is brand value? Why value brands? How does Interbrand derive the value of brands? What was the basis of the financial assessments? What was the basis for the marketing assessments? What was BusinessWeek’s role in the Best Global Brands ranking? Why are certain brands not on the list? Certain obvious global brands are missing. Were they considered? Within certain large industry sectors there are no brands that appear on the list. Why? A number of insurance companies appear on the league table for the first time – why is this? What % of the branded business needs to be outside the home country to be considered global? Was this the only test for being global? Was there a limit to the number of brands included from any one industry? Are there any brands that have a sufficient brand value but did not make the list? How did you take account of the fact that brands are run through franchisees? What is the relationship between the following terms: brand awareness, brand equity, brand share and brand value? Do the valuations reflect the underlying state of the economy? How should one understand the brand value as a % of market capitalization? How does brand value rank against ad spending? Is it possible to recognize brand value on a balance sheet? What is Interbrand’s view on brands appearing on balance sheets? Why is Interbrand an expert in assessing brand value? Does Interbrand conduct other brand studies? What is the difference between the valuations in Best Global Brands and consulting valuations for clients?
50 50 50 51 51 52 52 52 52 53 53 53 53 54 54 54 54 54 55 55 55 56 56 56
Best Global Brands 2007
49
6. Answers to the most frequently asked questions
What is brand value?
How does Interbrand derive the value of brands?
Brand value is the dollar value of a brand, calculated as Net Present Value (NPV) or today’s value of the earnings the brand is expected to generate in the future. Like any other financial value, brand value is at a point in time based on the assumptions and information available at that point in time. Brand value is calculated according to the most widely accepted and used valuation principles. This makes brand value comparable to business – and all NPV-based asset values.
Our valuation approach is a derivative of the way businesses and financial assets are valued. It fits with current corporate finance theory and practice. There are three key elements and they are detailed below:
The valuations of brands appearing in the Best Global Brands (BGB) are calculated in their current use to their current owner. They, therefore, do not necessarily represent the potential purchase, extension or licensing value of the brands. Why value brands? The purpose of these valuations is to demonstrate to the business community that brands are very important business assets and in many cases the single most valuable company asset. We also aim to show that branding and marketing are key business issues that have direct shareholder value impact. Through six years of publishing Best Global Brands in BusinessWeek magazine we have created the world’s most significant and influential brand and marketing study. In fact, PRWeek magazine produced a study that showed the BusinessWeek/Interbrand Best Global Brands ranking was the third most sought-after benchmark report by CEOs and CFOs.
50
Best Global Brands 2007
Financial Forecasting We identify the revenues from products or services that are generated with the brand. From these Branded Revenues we deduct operating costs, applicable taxes and a charge for the capital employed to derive Intangible Earnings. Intangible Earnings are the earnings that are generated by all of the business’s intangibles such as brands, patents, R&D and management expertise. This is a prudent and conservative approach as it only rewards the intangible assets after the tangible assets have received their required return. The concept of Intangible Earnings is therefore similar to value-based management concepts such as economic profit or EVA (Economic Value Added is Stern Stuart’s branded concept). Based on reports from financial analysts we prepare a forecast of Intangible Earnings for six years. Role of Branding Since Intangible Earnings include the returns for all intangibles employed in the business, we need to identify the earnings that are specifically attributable to the brand. Through our proprietary analytical framework called Role of Branding, we can calculate the percentage of Intangible Earnings that are entirely generated by the brand. In some businesses (e.g. fragrances or packaged goods), the Role of Branding is very high as the brand is the predominant driver of the customer purchase decision. However, in other businesses (in particular b2b) the brand is only one purchase driver amongst many and the Role of Branding is
therefore lower. For example, people are buying Microsoft not only because of the brand but mostly because the company has an installed base of 80% of the market and it would be for most users extremely difficult to switch their existing files to a new software platform. In the case of Shell people buy not only because of the brand, but also because of the location of the petrol stations. For each of the brands (and categories) we have assessed the Role of Branding.
against a notional ideal and score it against common factors of brand strength. The ideal brand is virtually ‘risk free’ and would be discounted at a rate almost as low as government bonds or a similar risk free investment. The lower the Brand Strength the further it is from the risk-free investment and so the higher the discount rate (and therefore the lower the net present value).
The Role of Branding is derived as a percentage – thus if it is 50%, we take 50% of the Intangible Earnings as Brand Earnings. If it is 10%, we only take 10% of the Intangible Earnings.
Published annual reports were used to examine the revenues, earnings and balance sheets of the brand-owning companies. Analyst reports from JPMorgan Chase, Citigroup and Morgan Stanley are used as the basis for identifying the specific brand revenues and earnings and for forecasting future earnings.
What was the basis of the financial assessments?
Brand Strength What was the basis for the marketing assessments? For deriving the net present value of the forecast Brand Earnings, we need a discount rate that represents the risk profile of these earnings. There are two factors at play: firstly, the time value of money (i.e. $100 today is more valuable than $100 in five years because one can earn interest on the money in the meantime); and secondly, the risk that the forecast earnings will actually materialize. The discount rate represents these factors as it provides an asset-specific risk rate. The higher the risk of the future earnings stream, the higher will be the discount rate. To derive today’s value of a future expected earnings stream it needs to be ‘discounted’ by a rate that reflects the risk of the earnings actually materializing and the time for which it is expected. For example, $100 from the Coca-Cola brand in five years requires a lower discount rate than $100 from the Fanta brand in five years, as the Coca-Cola brand is stronger and therefore more likely to deliver the expected earnings. The assessment of Brand Strength is a structured way of assessing the specific risk of the brand. We compare the brand
Unlike other brand value league tables, Interbrand does not rely on a single source of marketing information. Using a single brand study would limit the type of information (usually limited to perceptual data) and the type of customer (usually general public) that can be considered. Because many leading brands operate in specific customer segments (especially b2b), only considering the general public can be very restrictive. Instead, Interbrand refers to a wide array of primary and secondary sources which are applicable to each brand. These include amongst others Datamonitor, ACNielsen, Gartner and Hall & Partners. Moreover, Interbrand utilizes its network of brand valuation experts from offices around the world to ensure that the league table considers the brands from a global perspective. What was BusinessWeek’s role in the Best Global Brands ranking? BusinessWeek did not influence the selection of brands or the determination of any of the values. Their role was to publish
Best Global Brands 2007
51
6. Answers to the most frequently asked questions
the study and to tie the reported performance of brand value to some of the wider issues affecting these brands. They also provided the specific one-line comments that appear in the table. Interbrand is not responsible for these and they do not necessarily represent our views.
Certain obvious global brands are missing. Were they considered?
Why are certain brands not on the list?
BBC – A unique organization since it’s a government-owned corporation that is not supposed to generate a profit. There are, however, parts of it which are commercial and which do generate profits but these are still the minority of the business.
This is a frequent question especially from companies who would expect their brands to be on the list. There are five reasons: - The brand is not sufficiently global - The brand has a pure b2b single audience and has no wider public profile and awareness - The company does not produce public data that enables us to identify the branded business (the company has multiple brands or has unbranded production) - The brand is not big enough (brand value below $3.0 billion falls below the 100 brand ranking) - The business is driven by a number of intangible factors and it is difficult to separate the brand from the rest
In each case there was a reason why they could not be evaluated based on purely public data.
Red Cross – As a not-for-profit, it’s not possible to value the brand based on an earnings model. This would be true of other global not-for-profit brands such as Greenpeace, National Geographic or Unicef. It is however possible to assess the financial value of such brands but using a different kind of model. Mars – This is a privately held and highly secretive organization. Other privately held brands such as IKEA are included since appropriate financial data are publicly available. Within certain large industry sectors there are no brands that appear on the list. Why? Airlines – There has clearly been significant investment in airline brands (and many of them are, by definition, global) but they are still operating in situations where the brand plays only a marginal role. In most cases, the customer decides based on price, route, schedule, corporate policy or frequent flyer points. The brand may often only have a real impact when all these other items are at parity. We have assessed the brand value for airlines by using internal data to strip out the impact of these other factors. But from purely public information this is difficult to do reliably.
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Telecoms – Although there are many large telecom brands that are highly valuable, at present none of these brands fulfill our ‘global’ criteria. Pharmaceuticals – There are no pharmaceutical brands in this year’s league table. Pfizer and Novartis – which were both included in the 2006 table – have been excluded following a review of our approach. Our review concluded that brands should only be included where they resonate with consumers on a global level. In the pharmaceutical industry, it is the product brand rather than the corporate brand with which the consumer builds a relationship. The lack of global recognition of pharmaceutical companies is fundamentally driven by regulatory differences around the world: in the US, for example, pharmaceutical companies are able to communicate and advertise directly to consumers, whereas in the EU this is forbidden. A number of insurance companies appear on the league table for the first time – why is this? Three insurance companies – AIG, AXA and Allianz – have entered the league table this year. Whilst insurance has traditionally been seen as a commodity product, the major players have invested significantly in differentiating themselves over the last year by using a range of brand-building measures. For example, they have developed centralized brand management functions to ensure global consistency of message delivery and they have used global sponsorship to significantly increase reach and recognition. These measures have raised the profile of the brands, turning them into household names.
the home country to be considered global? In most cases one-third, however if the home country of the brand is small (e.g. the Netherlands) we required a higher percentage. For US brands, the overseas sales ratio can be smaller due to the size of the US market, which is nearly as big as all of Europe. Applying the one-third overseas sales requirement would penalize US brands for being successful in their domestic market. Was this the only test for being global? No, we also wanted evidence that the brand was established in a wide number of markets around the world. At the very least it needed to have a substantial presence in at least one country in each of the following 4 regions: North America, Latin America, Europe and Asia-Pacific. It also needed to be managed consistently as a global brand. As an example, Wal-Mart is a valuable brand however it is not consistently branded as Wal-Mart around the globe. Was there a limit to the number of brands included from any one industry? No, however, one of the requirements of a leading global brand is that it is in fact leading. The mark of leadership is not just about market share but also about behaving as a leader – setting trends, quality standards, authority, etc. Thus, there are brands that are in the top three of their category’s market share but did not make the cut; and there are brands that are not top three that did make the global ranking. The rules described are guidelines and ultimately each brand was assessed for inclusion on its own merits.
What % of the branded business needs to be outside
Best Global Brands 2007
53
6. Answers to the most frequently asked questions
Are there any brands that have a sufficient brand value but did not make the list? There are certainly strong national brands that have a value exceeding $3.0 billion but which did not make the list because they do not meet our global criteria. This would be true of many of the financial services and telecom brands, but also surprisingly true of a lot of food, beer and retail brands. How did you take account of the fact that brands are run through franchisees? This was an issue with all the food retail brands – McDonald’s, Pizza Hut, KFC and Starbucks. We based our valuation on the earnings that the brand owner makes from the brand and an estimate of the earnings that the franchisees make from the brand (what is called a total-system view). As in all other valuations, these earnings were then reduced to take account of a return for the use of the tangible and other intangible assets. What is the relationship between the following terms: brand awareness, brand equity, brand share and brand value? Brand value is the only measure that looks at the economic benefit of the brand to its owner. In other words, it is an end in itself. Brand awareness and brand equity are a means to an end. Brand awareness is simply knowledge that a brand exists, thus brand awareness may prompt customers to consider buying a product. Brand equity is a measure of customer perceptions of a brand; thus it may give a customer reason to prefer a product over the alternatives. Brand share is simply the market share achieved by the brand. Thus brand awareness, equity and share are all measures of what a customer thinks or does, it is not an assessment of the economic value created by those thought or actions. Do the valuations reflect the underlying state of
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Best Global Brands 2007
the economy? Yes – in two ways. The forecasts are prepared with an overall view on economic growth at a point in time. The formula for converting the Brand Strength Score into a discount rate is tied to the underlying government bond yield. How should one understand the brand value as a % of market capitalization? The market capitalization represents the market’s valuation of all the equity of a company. In theory, the market capitalization is the value of all tangible and intangible assets owned by the company less all the debt owed by the company. The brand value/market capitalization relationship can be read in a number of ways: - If the brand value percentage of market capitalization is low, it suggests that the business is driven by other kinds of assets (tangible and intangible) and that the brand is relatively unimportant. It could also mean that the business is failing to leverage the brand as much as it should be and that investors should be concerned about that. - If the brand value percentage of market capitalization is high, it suggests that the business is driven by the brand and that investors should take care of how the brand is being managed since this will have a very direct effect on shareholder value. It could also mean that the business is under-valued by the market and that they are failing to reflect the true value of all the assets of the business of which the brand is one (but only one). The comparison of brand value to market capitalization is mainly useful for mono-branded businesses as the market capitalization relates to all company assets. For companies that own and operate under many different brands, such as Nestlé and J&J, a comparison with market capitalization
is less useful.
What is Interbrand’s view on brands appearing on balance sheets?
How does brand value rank against ad spending? It is not really appropriate to try to correlate these two. Brand value is a measure of the output from a series of brand investments and initiatives over a long period of time. Advertising is one element in a wide spectrum of communications companies employ. Other communications include sponsorships, online, point of sale, customer service, and so on. In some cases brands are built with very little or no advertising as in the case of Starbucks where retail space and employees are the key communications channels. Is it possible to recognize brand value on a balance sheet? Several accounting standards – such as International Accounting Standards (IAS) 36 and 38, US GAAP, FASB 141, UK FRS 10 – allow and/or require the recognition of acquired goodwill, including brands on the balance sheet. The standards clearly identify brands as intangible assets with an infinite economic life. This means unlike other intangible assets (e.g. patents, databases) or goodwill (e.g. training, workforce) brand value does not have to be amortized through the income statement. However, they are subject to an annual impairment test and their carrying value needs to be reduced if the value declined. The technique is consistent with the way in which Interbrand has assessed brands for balance sheet inclusion – though of course using more extensive and proprietary data.
We support the stance of the different accounting standards which recognize the value of brands on the balance sheet. Interbrand has been leading the debate on this issue for many years. However, current accounting standards allow only for the recognition of acquired brands, not internally developed brands. Also, the impairment test for brands on the balance sheet allows only for a potential value reduction but not increase. The acquisition criterion means that the Gucci brand is recognized on the balance sheet of PPR as an intangible asset while the Louis Vuitton brand does not show up on the balance sheet of LVMH. We conclude that the recognition of acquired brands on the balance sheet is a step in the right direction for providing shareholders with better information about the assets they have invested in. However, it’s still not sufficient, as the value of internally generated brands cannot be disclosed despite making up the vast majority of the most valuable brands around the world. As the need for some formal statement about brand value (and the value of other intangible assets) is becoming increasingly important we would advocate some type of statement in the annual report on the intangible business assets including brands. Whether this happens in the traditional balance sheet or whether it happens in a new ‘Statement of Intangible Value’ would be a secondary concern. N.B. There is a precedent for this in the way in which the Cash Flow Statement was developed to complement, but not replace, the Profit & Loss Account.
Best Global Brands 2007
55
6. Answers to the most frequently asked questions
Why is Interbrand an expert in assessing brand value? In 1988, Interbrand developed and introduced the first valuation of a portfolio of brands that used a brand-specific valuation approach. Since then we have continuously updated and improved our valuation approach to make it the global industry standard of brand valuation. The Interbrand brand valuation methodology is the widest endorsed and used valuation approach around the world. Interbrand alone has valued more than 5,000 brands in all industries worldwide. Our valuations have been endorsed by leading academic institutions including Harvard, Thunderbird, Columbia, Emory and St. Gallen. Our valuation approach has the highest depth of applications including strategic brand management, marketing budget allocation, marketing ROI, portfolio management, brand extensions, M&A, balance sheet recognition, licensing, transfer pricing and investor relations. Our valuations have been audited for inclusion on the balance sheet by all leading accounting firms. Also, many tax authorities and law courts around the world have accepted our valuation approach. Does Interbrand conduct other brand studies? We have established national brand value league tables in Switzerland, France, Spain, Australia, Singapore, China, Taiwan, Mexico, Canada and Brazil. These follow an identical valuation process but only look at locally owned brands. A US specific study would be redundant due to the great overlap with the global table – 53 out of 100 are US-based.
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Best Global Brands 2007
What is the difference between the valuations in BGB and consulting valuations for clients? The valuation methodology is the same, however, the level of detail and the data input significantly differ. The BGB valuations are mostly consolidated top-line assessments based on publicly available marketing and financial data. We recognize segment differences for diversified brands by product or service but not geography or any other classification (e.g. financial services or technology). As the valuations are based on publicly available data, they are only as reliable as the data that the brand-owning companies publish about themselves (in annual reports, analysts briefings, press articles, syndicated market research etc.). Consulting valuations are based on detailed customer segmentations, as well as in-depth marketing and financial analyses. They have a much higher level of accuracy and granularity. The purpose of a consulting valuation goes well beyond assessing financial worth. It identifies and quantifies value drivers, and helps the company to manage its brand to increase the shareholder value of the underlying business. However, if clients undertake consulting valuations we are in a much better position to identify publicly available data that are likely to align the BGB valuation with the consulting valuation. In cases where companies make our consulting valuations publicly available, for example through a note in the balance sheet, these values will also be published as the BGB ranking value.
Thank you.
7. ABOUT
Brand Value Management comprises three distinct, yet interrelated, phases: Evaluate, Create, and Manage – three phases where the brand and market opportunities are painstakingly examined, creatively brought to life, and thoroughly and holistically coordinated.
BRAND RESEARCH
BRAND VALUATION
BRAND IMPLEMENTATION
BRAND CULTURE
Brand
TE UA
The Brand Value Management model is a closed loop with neither a specific beginning nor definite end. The model begins at a different point for every brand, based on business need. However, one aspect does remain constant: once in progress, the model actually accelerates, by generating synergies and capturing new opportunities through carefully crafted and integrated activities. It becomes an inexhaustible source of energy and competitive advantage for every brand.
BRAND PROTECTION
AL EV
Brands do not become and remain successful on their own. Nor are they ensured ongoing leadership without proactive, diligent and detailed management. Interbrand works collaboratively with clients to consistently and continually evaluate, create and manage their brand assets. We do this by employing the following model.
Interbrand is a wholly owned subsidiary of the Omnicom Group, the industry leader in Marketing Communications.
NA GE
The Interbrand Brand Value Management ModelTM
MA
Creating and managing brand value
BRAND OPPORTUNITY
BRAND STRATEGY
BRAND DESIGN VERBAL IDENTITY
C R E AT E
For over 30 years, Interbrand has worked with leading global brands to create and manage brand value through an integrated set of offerings. We offer brand and business strategy, brand valuation, quantitative and qualitative research, retail design, brand architecture and portfolio optimization, naming, corporate identity design, packaging design, communications creation and online digital asset management tools. Interbrand has 34 offices in more than 20 countries around the globe and clients from among the most respected businesses.
Best Global Brands 2007
57
8. CONTACT US
General inquiries: Jez Frampton Group Chief Executive Officer Tel UK: +44 (0)20 7554 1000 Tel US: +1 212 798 7777 [email protected] Graham Hales Global Chief Communications Officer Tel UK: +44 (0) 20 7554 1169 Tel US: +1 232 798 7581 [email protected] Media inquiries: Lisa Marsala Global Communications Manager Tel: + 212 798 7646 [email protected]
Additional information on brands www.interbrand.com www.brandchannel.com
If brands are managed correctly they can move seamlessly across geographies, creating demand for their goods and services around the world.
Best Global Brands 2007 Interbrand is delighted to once again publish our
choice and sustaining margins.
annual ranking of the Best Global Brands by brand value, in co-operation with BusinessWeek magazine.
We regard brand valuation as a proactive tool. The process of showing an organization the earnings attributable to
We’re proud that over the course of the past decade our Best
intangibles, assessing the role that the brand plays in purchase
Global Brands study has become the barometer of successful
decisions and the relative competitive strength of the brand
brand management. The environments in which brands
within its markets, focuses attention on building the brand’s
operate, and the challenges and opportunities they face, have
value. Indeed, our experience shows that by simply recognizing
changed dramatically during this time; however, we believe
the brand as an economic asset, like other business assets,
the one constant has been the notion that a brand has the
activity can be created, managed
ability to create significant economic value for the business it
and implemented to enable the brand to grow in value.
serves, and that we can measure the created value. It is now common knowledge that branding is fundamental to Interbrand pioneered the technique of measuring brands as
business success, which is why Best Global Brands
business assets twenty years ago and draws upon a wealth of
is one of the top published business rankings in the
valuation experience and brand expertise in producing this
world. At Interbrand we have always placed great
annual report. In this time, we have conducted some 5,000
emphasis upon the need for a balance between the logical and
valuations for brands around the world. The clearest output of
the creative. Brands, after all, live in our heads and
this exercise is the asset value of the brand to the organization.
our hearts. But ultimately, brands are value generators
But understanding what is driving this brand value is far more
for business. Increasingly, we need to understand how brands
important to the business. The insights gained through brand
deliver value and use this information to better inform business
analytics and measurement focus brand management around
decisions.
the elements that will effectively increase the brand’s value and allow it to fulfill its ultimate potential to the organization and its stakeholders. This reveals how a brand can drive revenue and profitability by influencing
In this year’s Best Global Brands report, we have focused on the business themes that we see as being intrinsically linked to brand value creation. In their own right these themes should encourage business leaders to act, but they also acutely reveal the tenets of growing the economic value of a brand, and thereby help to maximize the intangible wealth of an organization. As ever, we are delighted to lead the debate. We recognize, and indeed relish, the responsibility that it places upon us as an organization. We thank our partners at BusinessWeek for their constant support in providing the platform for broadcasting this study to the business community and look forward to sharing these insights and ideas with you for many years to come.
Regards,
Jez Frampton Group Chief Executive Interbrand
TABLE OF CONTENTS Page Chapter
Appendices
1. Insights on Global Branding
1
2. Best Global Brands 2007 Ranking
12
3. Lessons from the Risers and Decliners
20
4. How We Did It
44
5. Why the Ranking is Important
46
6. Frequently Asked Questions
49
7. About Interbrand
57
8. Contacts & Additional Information
58
1.
INSIGHTS ON GLOBAL BRANDING Our continued analysis of the world’s most valuable brands enables us to provide insight and diagnosis for any organization that is keen to manage and grow the value of its brand.
goods and services while securing future revenues. This, in turn, impresses the financial communities that enable investments in the future. This is the essence of brand value.
We’ve entitled this study ‘All brands are not created equal’ because even though every brand starts with a notional value of zero, the brands that succeed are born into an environment where they are seen as assets by their organizations. Leaders plan for their success by creating, managing and implementing strong strategic visions that make businesses stand out and command attention. The successful brands recognize and commit to this as a cycle of activity, prospering while they deliver economic value to the brand and their organization.
Whether you work for a global business, an international organization, or a company that is purely focused on its domestic or regional markets, everyone can learn lessons from the Best Global Brands. By studying leading market indicators, such as the MSCI World Index and the S&P 500, we can see that the Best Global Brands index has consistently outperformed the markets by a considerable margin.
The brands in our study are rightly recognized as leaders across the world, but as global brands they face unique challenges. While they have consumers who come from different cultures and geographies, they are driven by a desire to ‘own’ a singleminded global brand positioning. So they’re continuously challenged to sustain brand consistency across diverse geographies, cultures and market segments. In light of this challenge, organizations must commit to, and implement, focused and realistic brand strategies in multiple geographies. This demands that brands transform the information and input they receive along the way into activities that build a global reputation. It requires constant measurement to ensure that actions complement, and holistically push, the brand towards its strategic goals. The rewards are worth the effort. If brands are managed correctly they can move seamlessly across geographies, creating demand for their goods and services around the world. They can create magnetism, attracting the best talent to work for them. Most importantly, they’ll be able to achieve a premium for their
Best Global Brands 2007
1. Insights on Global Branding
80
INTERBRAND TOP 100 PORTFOLIO MSCI WORLD INDEX S&P 500 INDEX
60
40
20
% change since 2000 0
-20
-40
-60 2000
2001
Interbrand Top 100 vs the leading market indicators
2002
2003
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2007
Such performance may be expected of category-leading companies, but the source of value is interesting and requires a closer look. How do these brands achieve a ranking within the top 100 most valuable brands in the world, and all the economic rewards that go with it?
What drives brand value? As we share our brand valuation process with you, we also want to highlight the insights that we see building brand value for the organizations profiled in this report. Put simply, brand valuation draws together a financial analysis, a role of brand analysis and a brand strength score to arrive at a financial brand value. The resulting value is important, but understanding the themes or forces behind this value is what really drives the brand’s performance. Effective brand management means orchestrating these forces to drive the business forward. To focus the study, we talk about these themes in isolation from one another. In truth, it’s the combination of these themes and ultimately their successful execution that creates value. We have shown particularly strong brands to exemplify each, but in reality a valuable brand will show some strength across all of the identified themes.
Best Global Brands 2007
PUT IT AT THE HEART
Brand Management Every organization with expertise in brand management understands the complexity that the execution of great brand management requires. Effective value creation comes to life in the hearts and minds of consumers. More often than not it requires a journey inside the organization: a journey that reveals the characteristics and behaviors that distinguish one organization from another. It requires an understanding that great brands are founded on hard numbers as well as imagination. This combination of analytic and creative business techniques is mirrored in the Interbrand product portfolio, which envelops rigorous business understanding with emotive execution to unlock the true potential of brands. At this point, the brand steps out of the marketing department’s domain and embraces everything the business does. Ultimate responsibility for delivering the brand to stakeholders rests with the whole company. HR, Finance, Operations, Marketing and Sales must all feel a sense of ownership of the brand so that it lives throughout the organization, and that’s why the leadership of the business must be the primary ambassadors for the brand. Great brand management sees the brand as a go-to-market strategy and action driver, not just a planning tool or theory. Each activity the company undertakes should holistically reinforce the idea of the brand itself. So the CEO should take ownership of the brand and act as its steward. Talking about brands in terms of financial value strengthens the bonds between marketing and the modern day demands for accountability to shareholders and business leaders.
Google Google is a particularly good exponent of this sort of brand management. From relatively obscure and humble beginnings, the company has grown dramatically, achieving 45% year over year growth in brand value since 2005. Despite rapidly expanding its offering beyond search to encompass a range of other added-value services (such as news, financial information and geo-mapping), Google has managed to maintain a sincere and consistent feel to everything that it does. But beyond its product portfolio, Google has revolutionized the way it screens employees to ensure that everyone who comes through its door is ‘Google-worthy’. Inevitably, it’s become bigger and more complex, but this has done nothing to dilute the recognition and desire that the business is still held together by Google ‘glue’. This is what makes Google the brand it is. This is why it has been able to break into the world’s 20 most valuable brands within just two years. Yahoo! by contrast, was born with similar potential, but lacks (or perhaps lost) this singular, unifying purpose. Its pursuit of co-branded partnerships may have seemed attractive in purely financial terms, but this detracted from the company’s sense of self, causing the brand to fade.
17,837
2007 Google
2006
+44%
12,376 0
5000
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20000
Brand Value ($m)
3,221
2007
+16%
Burberry
2006
2,783 0
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7,730
2007
+18%
Nintendo
2006
Pizz
6,559 0
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4,866
2007
+17%
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2006
4,165 0
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Mo
17,837
2007 Google
2006
Gap
2006
12,376 0
5000
5,481
2007
+44%
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3,221
2007 2006
+16%
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7,730
2007 2006
+18%
6,559 2000
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BMW Brand Value ($m) BMW is another great example. The business is directed by a clear value system that guides management actions. If actions 2007 4,866 +17% submitAudito the values, they’re recognized as being ‘on-brand’. This means they 2006 will cumulatively build the organization’s desired 4,165 long-term reputation (entering a team into the world of Formula Brand Value ($m) 1 is a good example). But if a proposal doesn’t match BMW’s values, like sponsoring a marathon, BMW appreciates that it risks fragmenting2007 what it wants the brand to stand for, so29,398 it won’t do +7% McDonald’s it, however compelling the idea. This doesn’t mean the brand 2006 is rigid, nor does it deny BMW opportunities; rather,27,501 it serves as a framework for decision-making, enabling the business to feel Brand Value ($m) confident that all its operational decisions are building the brand towards its long-term ambitions. This year BMW has once more 2007 33,696 +12% grownNokia its brand value by 10%. 1000
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30000
30,131 0
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+10%
19,617 5000
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0
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3,631
2007 2006
3,099 1000
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-19%
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Pi
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M
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+22%
6000
27,501
Having successfully taken coffee retailing across the world, 2007 32,070 Howard SchultzBrand is reportedly wary of the message becoming Value ($m) Toyota stale, and is considering ways of maintaining a contemporary 2006 27,941 edge to the brand. We applaud the sense of leadership that 2007 33,696 +12% demands freshness to an already successful brand. Nokia an on-goingBrand Value ($m) Starbucks is 2006 now blessed with such a scale, infrastructure and 30,131 embedded role in people’s lives that any evolution of the brand Brand Value ($m) can be truly wrapped around its customers, rather than simply broadcast in 30 seconds and the Sunday circular.
12000
+21%
Brand Value ($m)
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21,612
2007
+10%
BMW
2006
19,617 5000
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Brand Value ($m)
3,631
2007
+17%
Starbucks
2006
3,099 0
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Brand Value ($m)
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Starbucks 2007 11,037 Starbucks has mastered the challenges of ensuring a consistent Apple Brand Value ($m) sense of ‘Starbucks’2006 permeates consumers’ worlds. From 9,130 its retail environments and non-traditional advertising policy, to 2007 4,866 +17% Value ($m) its fair Audi trade coffee, theBrand experience is unmistakably Starbucks. 2006 One brand transcends it all. The Starbucks brand4,165 is now worth over $3.5 billion dollars. To broaden its retail offer, but more 2007 5,165 Brand Value ($m) Zara communicate importantly to and provide the accessories for the 2006 4,235 ‘third space’, Starbucks now sells and recommends books that 2007 the bestsellers lists. invariably scale 29,398 +7%
0
8,982
2007 Ford
-9%
6,559
0
Brand Value ($m)
20000
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Brand Value ($m)
0
+17%
-9%
4,694
2007 17,837 +44% In today’s there is a multitude of ways Google world, to say Brand Value ($m) we can reach2006people is an understatement. How does 12,376 a brand recognize the relative value of these opportunities? 2007 4,149 Value ($m)their stakeholders’ journeys so that The best brands follow Motorola Brand 2006 consistent and appropriate messaging they provide effective, 4,569 throughout 2007 the experience. Effective Touch 3,221 +16% Value ($m) PointBurberry Development is Brand about branding the customer experience. 2006 2,783 These experiences are sometimes within the brand’s domain (such as retail environments), but often they are not and 2007 10,087 Ikea Brand Value ($m) travel by word-of-mouth. How can a brand embrace these 2006 8,763 complexities to ensure that it comes out 2007 7,730 +18% on top and that its desired messages are getting through? Nintendo
0
Starbucks
Brand Value ($m)
5000
4,254
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-12%
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McDonald’s
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Touch Point Development 2006
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3,874
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EveRY Single Experience Counts 0
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-15%
6,416
Best Global Brands 2007 2007
8,982
Ford
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-19%
+15%
35000
IF YOU BRAND IT, THEY WILL COME
Demand Creation Ikea is another great example of Touch Point Development. The product design communicates the simple sense of Scandinavian style at affordable prices; but the store experience, with its themed spaces, restaurants and kids’ areas, further communicates and amplifies the Ikea brand proposition. Ikea’s brand value has risen 15% this year.
We’re exposed to thousands of brand messages every day. Estimates vary as to exactly how many, but what’s undeniable is that a vast surplus of brands are trying to engage with us. Indeed, it’s considerably more than any human being can cope with. So how does one brand successfully reach out and engage with us when another fails to do so? This is the principle of Demand Creation. It’s not simply about communication; it’s about making the right customer desire the brand’s products or services over and above all competitors, today and tomorrow, and ideally encouraging their friends to do the same. In short, it’s about making sure that a brand’s messages receive a warm, favorable and engaged welcome from its audience so that they’re then acted upon.
1. Insights on Global Branding
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7000
8000
Apple Brand Value ($m) Apple is the supreme master of Demand Creation. Consumers are now happy to own multiple iPods that are styled for 2007 3,874 Kodak functions: home, video or exercising. And in a world particular -12% 2006 4,406 the filled with technology, the expectation created around launch of the iPhone demonstrates the supreme desirability Brand Value ($m) this brand has created. With iPhone, Apple plays a double trick on its competitors. It transcends the problems of the highly 2007 4,254 products saturated communications environment by creating Pizza Hut with such extraordinary customer pull that there’s no need to -9% 2006 4,694 push. At the same time, the phenomenon of the product launch pulls free mediaBrand toward it, proliferating brand impressions and Value ($m) flooding media channels with branded messages. Essentially, it has created such a profound demand that the product itself 2007 4,149 generates a media blitz. It’s a high profile demonstration Motorola -9% 2006 of the convergence of technology. It was unthinkable some 4,569 years ago that Apple could make a phone. Consumers wouldn’t Brand Value ($m) have given the brand permission to do so. But now Apple can transcend the ‘old thinking’ of limited boundaries. In this sense the brand wherever its+15% 2007 has become its passport, to roam 10,087 Ikea proposition can be applied. 0
+16%
00
0
+18%
00
0
+17%
00
0
+7%
1000
2000
3000
4000
5000
1000
2000
3000
4000
5000
1000
2000
3000
4000
5000
2006
000
8,763
0
2000
4000
6000
8000
10000
12000
Brand Value ($m)
Nintendo Nintendo was a brand that seemed to be losing its appeal with consumers but the launch of the Wii console and hugely successful DS range has heralded a significant bounce-back in consumer interest. The brand has rediscovered its ability to create demand for its products. While competitors focused on technology, Nintendo spotted the opportunity to theme the brand around the simple enjoyment of gaming. With new game consoles, Nintendo is actively targeting new consumer segments and has differentiated itself from traditional competitors. The Wii console, with its physically active and convincing interface, has created a real stir in the marketplace and is shifting attitudes towards the whole gaming category. Rather than being something that ‘teenage boys play’, Nintendo is encouraging people to think of gaming as an activity that can be enjoyed by anybody at any time. The supporting media communications have been instrumental in generating demand, showing the products being used by a broader demographic, including parents and thirty-somethings. Indeed, to a degree, Wii surpassed expectations. Stories of lines forming around the 2007 17,837 +44% blockGoogle when new products arrived were not uncommon this year. 2006 12,376 Consoles were selling on eBay for twice the retail price. 0
5000
10000
15000
20000
The next challenge for Nintendo may well focus on the Brand Management theme: defining the relationship between the 2007 sub-brand Wii and the parent brand 3,221 hugely popular in order to +16% Burberry generate long-term value. 2006 Brand Value ($m)
11,037
2007
+12%
+21%
Apple
2006
000
9,130 0
2000
4000
6000
8000
10000
12000
2,783
Brand Value ($m) 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
5,165
2007
+10%
+22%
Zara
2006
000
0
1000
2000
3000
7,730
2007
4,235
+18%
Nintendo
4000
5000
6000
2006
Pi
6,559
Brand Value ($m) 0
1000
2000
3000
4000
5000
6000
7000
8000
Brand Value ($m)
32,070
2007
+17%
+15%
Toyota
2006
00
0
5000
10000
15000
20000
25000
4,866
2007
27,941
+17%
Audi 30000
35000
2006
4,165
Brand Value ($m) 0
1000
2000
3000
4000
5000
Brand Value ($m)
-19%
29,398
2007
+7%
McDonald’s
000
2006
Best Global Brands 2007
27,501 0
5000
Brand Value ($m)
10000
15000
20000
25000
30000
M
17,837
2007 Google
2006
+44%
2006
12,376 0
5000
10000
15000
20000
3,221
2007
Think about what can be, not what might have been 2006
+16%
1000
1500
2000
2500
3000
2006
3500
2000
3000
Modeling Contingencies Brand Value ($m)
7,730
+18%
1000
4000
5000
6000
7000
10000
3000
15000
10000
15000
4000
20000
20000
25000
25000
30000
30000
35000
21,612
2007 2006
2000
3000
4000
5000
4,254
2007
-9%
4,694 1000
2000
3000
4000
5000
Toyota A recent example is the confluence of environmental concerns 2007 4,149 and Motorola rising oil prices. Ten years ago any company talking about -9% 2006 these two issues in the automotive industry would have 4,569 largely been thought of as foolish or eccentric. SUV sales were growing, Brand Value ($m) cars were getting bigger, engines less efficient, and gas was cheap. In the wider world, the political climate was stable; global GDP growth2007 was moderate, the impact of China just emerging,+15% 10,087 Ikea and world oil2006 supplies high. As forward-looking brand managers, 8,763 Toyota considered these factors and built a scenario that now differentiates them from the pack. Recognizing the value of Brand Value ($m) leading the ‘green’ agenda, it positioned itself to capitalize on this significant driver of demand that has been accelerated by, 2007 11,037 and conjoined with, the rapid rise in gasoline prices. Brands +21% Apple cannot lead 2006 through reaction. They must anticipate the needs of 9,130 the future and be ready for it when Brand Value ($m) it arrives. The Toyota Prius has become a statement of environmental care, as well as achieving staggering sales in its own brand, 2007 right. But better still for the Toyota 5,165 +22% it castsZara a ‘green halo’ across its entire portfolio. 0
0
+10%
10000
15000
1000
0
2000
3000
20000
25000
5000
4000
6000
8000
10000
12000
2000
4000
6000
8000
10000
12000
1000
2000
3000
5000
6000
4,235 0
Brand Value ($m)
4000
2000
2006
19,617
4000
Brand Value ($m)
3,631
2007
+17%
Starbucks
2006 1000
1500
2000
2500
3000
32,070
2007
3500
4000
27,941 0
Brand Value ($m)
+15%
Toyota
2006
3,099 500
1000
0
5000
BMW
5000
-12%
4,406
Pizza Hut
8000
Brand Value ($m)
0
8000
Brand Value ($m)
2000
5000
0
7000
2006
As we’ve suggested, thorough brand management is deep and 2007 4,866 complex. Organizations need to understand what drives+17%their Audi 2006 market performance so that they can plot4,165 a path to generate and grow brand value. Winning brand managers simulate future Brand Value ($m) opportunities to anticipate the potential fields-of-play. They use models that reveal the range of possible outcomes instead of the allure2007 of a single big idea, and align resources 29,398 and investments +7% McDonald’s to scenarios with the highest likelihood of making an impact. 2006 27,501 Estimation, probabilities, risk – these are new additions to the branding Brand lexicon and a challenge for those content to play it all Value ($m) from the hip. Having foresight helps companies make informed choices about their brand and frees leaders up to make bold 2007 33,696 +12% moves with full knowledge of the implications – essential Nokia 2006 to thriving in a competitive environment. 30,131 5000
6000
3,874
0
6,559
0
5000
Brand Value ($m)
2007
0
4000
2006
Nintendo
0
3000
2007
Brand Value ($m)
1000
2000
Kodak
2,783
0
1000
Brand Value ($m)
Burberry
500
-15%
6,416 0
Brand Value ($m)
0
5,481
2007 Gap
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
8,982
2007 Ford
2006
-19%
11,056 0
2000
4000
6000
8000
10000
12000
Brand Value ($m)
Best Global Brands 2007
1. Insights on Global Branding
17,837
2007 Google
2006
+44%
2006
12,376 0
5000
10000
15000
20000
Make ReSOURCES CO-OPeRATE, NOT COMPETE
3,221
2007
2006
+16%
1000
1500
2000
2500
3000
3500
2006 2000
3000
Value ($m) PlanningBrand Efficiencies
+18%
4000
5000
6000
7000
2000
5000
10000
3000
15000
4000
20000
25000
30000
33,696
2007 2006 10000
+12%
15000
20000
25000
30000
4000
5000
4,254 -9%
4,694 1000
2000
1000
0
35000
3000
4000
5000
0
2000
3000
4000
5000
2000
4000
6000
8000
10000
12000
2000
4000
6000
8000
10000
12000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
2006
19,617 5000
10000
15000
5,165
2007
20000
+22%
Zara
25000
4,235 0
Brand Value ($m)
1000
2000
3000
4000
5000
6000
Brand Value ($m)
3,631
2007
+17%
Starbucks
2006
3,099 1000
1500
2000
2500
3000
32,070
2007
3500
4000
27,941 0
5000
Brand Value ($m)
8,982
2007 Ford
2006
-19%
11,056 4000
Brand Value ($m)
Best Global Brands 2007
6000
8000
10000
12000
+15%
Toyota
2006
Brand Value ($m)
3000
Zara 2007 4,149 ZaraMotorola is a paragon of planning efficiency. Focusing the -9% 2006 brand’s reputation for rapid product turnover and a 4,569 great in-store experience, Zara recognized the efficiency of Brand Value ($m) its retail stores as a media channel and consequently invested most of its spending there. By maintaining relevant design in its 2007 locations and keeping people coming back for10,087 more, Zara was+15% Ikea able to keep2006 its spending on traditional advertising channels 8,763 down to just 0.3% of sales, compared to competitors’ 3-4%. The results were theBrand envy of the industry with customers visiting Value ($m) Zara’s stores an average of 17 times per year, and with same store sales rising 5.5% in the 2007 11,037 +21% last year. Apple This breaks all records for moving fashion 2006 en masse from the catwalk to the main street.9,130
Brand Value ($m)
2000
2000
2007
0
30,131
0
1000
0
5000
Nokia
500
-12%
4,406
Pizza Hut
8000
Brand Value ($m)
0
8000
Brand Value ($m)
1000
0
7000
2006
The last 2007theme that we have identified as influencing 4,866 brand +17% Audi value creation is that of Planning Efficiencies. Essentially, this 2006 is understanding where and how to invest4,165 for the best return of brand value. It involves models that optimize competing Brand Value ($m) alternatives, resulting in solutions that cut spend in one area to reapportion it in another, or grow spend across the brand’s 2007to deploy resources and deliver brand29,398 domain value most +7% McDonald’s efficiently. If you get things working together,27,501 a little spending 2006 can go a long way.
5000
6000
3,874
0
6,559
0
5000
Brand Value ($m)
7,730
0
4000
2006
2007
0
3000
2007
2,783
Nintendo
1000
2000
Kodak
Brand Value ($m)
0
1000
Brand Value ($m)
Burberry
500
-15%
6,416 0
Brand Value ($m)
0
5,481
2007 Gap
10000
15000
20000
25000
30000
35000
Make it clear, make it live and keep it moving Conclusions The fundamentals of brand value creation, exemplified by the top 100 Best Global Brands, show leading global organizations managing their brand’s value as a series of actions and initiatives that promote the brand agenda within the business. Whether these initiatives focus on a communication output or an internal program to engage employees with the brand, all of our evidence suggests that the brand strategy itself has the ultimate impact on the brand’s ability to create and build its value. But brands don’t operate in passive environments. They must live and respond to the world to stay relevant. Markets are dynamic; influences on the brand will constantly change, so any brand strategy needs to articulate its right to own a market position. Brands must manage their way through the influences and forces that determine the ownership of that market position. Brand management is a constant process. Activities are created to achieve distinction. They are managed and implemented, and then their success must be measured and used to influence future strategy. Brand valuation is a great measure of this success, but as our report has shown, each year some organizations do better than others. Those that do best recognize the dynamic needs of effective brand management and hardwire these actions. It becomes a cyclical process where there’s an acceptance that to truly own a strategic position in customers’ hearts and minds, activity must be ongoing and constant. As much as anything, this is an attitude towards understanding and continuous improvement.
Best Global Brands 2007
Brands which place high importance on managing the economic value of their intangible assets, and primarily their brands, consistently outperform basic economic measures.
2.
BEST GLOBAL BRANDS 2007 Ranking
12
Best Global Brands 2007
2007 rank
2006 rank
brand
country of origin
sector
2007 brand value ($m)
change in brand value
1
1
coca-cola
us
beverages
65,324
-3%
2
2
microsoft
us
computer software
58,709
3%
3
3
Ibm
us
computer services
57,091
2%
4
4
ge
us
diversified
51,569
5%
5
6
nokia
finland
consumer electronics
33,696
12%
6
7
toyota
Japan
automotive
32,070
15%
7
5
Intel
us
computer hardware
30,954
-4%
8
9
mcdonald’s
us
restaurants
29,398
7%
9
8
disney
us
media
29,210
5%
10
10
mercedes
germany
automotive
23,568
8%
11
11
citi
us
financial services
23,443
9%
12
13
hewlettpackard
us
computer hardware
22,197
9%
13
15
bmw
germany
automotive
21,612
10%
14
12
marlboro
us
tobacco
21,283
0%
15
14
american express
us
financial services
20,827
6%
16
16
gillette
us
personal care
20,415
4%
17
17
louis vuitton
france
luxury
20,321
15%
18
18
cisco
us
computer services
19,099
9%
19
19
honda
Japan
automotive
17,998
6%
20
24
us
Internet services
17,837
44%
best global brands 2007
13
2. best global brands
14
2007 rank
2006 rank
brand
21
20
samsung
22
21
23
sector
2007 brand value ($m)
republic of korea
consumer electronics
16,853
4%
merrill lynch
us
financial services
14,343
10%
28
hsbc
uk
financial services
13,563
17%
24
23
nescafé
switzerland
beverages
12,950
4%
25
26
sony
Japan
consumer electronics
12,907
10%
26
22
pepsi
us
beverages
12,888
2%
27
29
oracle
us
computer software
12,448
9%
28
32
ups
us
transportation
12,013
12%
29
31
nike
us
sporting goods
12,004
10%
30
27
budweiser
us
alcohol
11,652
0%
31
25
dell
us
computer hardware
11,554
-6%
32
33
Jpmorgan
us
financial services
11,433
12%
33
39
apple
us
computer hardware
11,037
21%
34
34
sap
germany
computer software
10,850
8%
35
37
goldman sachs
us
financial services
10,663
11%
36
35
canon
Japan
computer hardware
10,581
6%
37
36
morgan stanley
us
financial services
10,340
6%
38
41
Ikea
sweden
home furnishings
10,087
15%
39
42
ubs
switzerland
financial services
9,838
13%
40
40
kellogg’s
us
food
9,341
6%
best global brands 2007
country of origin
®
change in brand value
2007 rank
2006 rank
brand
country of origin
sector
41
30
ford
us
automotive
8,982
-19%
42
48
philips
netherlands
diversified
7,741
15%
43
44
siemens
germany
diversified
7,737
-1%
44
51
nintendo
Japan
consumer electronics
7,730
18%
45
45
harleydavidson
us
automotive
7,718
0%
46
46
gucci
Italy
luxury
7,697
8%
47
new
aIg
us
financial services
7,490
new
48
47
ebay
us
Internet services
7,456
10%
49
new
axa
france
financial services
7,327
new
50
49
accenture
us
computer services
7,296
8%
51
53
l’oréal
france
personal care
7,045
10%
52
50
mtv
us
media
6,907
4%
53
54
heinz
us
food
6,544
5%
54
56
volkswagen
germany
automotive
6,511
8%
55
55
yahoo!
us
Internet services
6,067
0%
56
57
xerox
us
computer hardware
6,050
2%
57
58
colgate
us
personal care
6,025
7%
58
61
chanel
france
luxury
5,830
13%
59
59
wrigley
us
food
5,777
6%
60
60
kfc
us
restaurants
5,682
6%
®
2007 brand value ($m)
change in brand value
best global brands 2007
15
2. best global brands
16
2007 rank
2006 rank
brand
country of origin
sector
2007 brand value ($m)
change in brand value
61
52
gap
us
apparel
5,481
-15%
62
65
amazon.com
us
Internet services
5,411
15%
63
63
nestlé
switzerland
food
5,314
8%
64
73
Zara
spain
apparel
5,165
22%
65
62
avon
us
personal care
5,103
1%
66
68
caterpillar
us
diversified
5,059
10%
67
67
danone
france
food
5,019
8%
68
74
audi
germany
automotive
4,866
17%
69
71
adidas
germany
sporting goods
4,767
11%
70
64
kleenex
us
personal care
4,600
-5%
71
72
rolex
switzerland
luxury
4,589
8%
72
75
hyundai
republic of korea
automotive
4,453
9%
73
81
hermès
france
luxury
4,255
10%
74
66
pizza hut
us
restaurants
4,254
-9%
75
80
porsche
germany
automotive
4,235
8%
76
78
reuters
uk
media
4,197
6%
77
69
motorola
us
consumer electronics
4,149
-9%
78
77
panasonic
Japan
consumer electronics
4,135
4%
79
82
tiffany & co.
us
luxury
4,003
5%
80
new
allianz
germany
financial services
3,957
new
best global brands 2007
2007 rank
2006 rank
brand
country of origin
sector
2007 brand value ($m)
change in brand value
81
85
Ing
netherlands
financial services
3,880
12%
82
70
kodak
us
consumer electronics
3,874
-12%
83
86
cartier
france
luxury
3,852
15%
84
76
bp
uk
energy
3,794
-5%
85
87
moët & chandon
france
alcohol
3,739
15%
86
79
kraft
us
food
3,732
-5%
87
83
hennessy
france
alcohol
3,638
2%
88
91
starbucks
us
restaurants
3,631
17%
89
84
duracell
us
consumer electronics
3,605
1%
90
88
Johnson & Johnson
us
personal care
3,445
8%
91
93
smirnoff
uk
alcohol
3,379
11%
92
92
lexus
Japan
automotive
3,354
9%
93
89
shell
netherlands
energy
3,331
5%
94
96
prada
Italy
luxury
3,287
14%
95
98
burberry
uk
luxury
3,221
16%
96
99
nivea
germany
personal care
3,116
16%
97
94
lg
republic of korea
consumer electronics
3,100
3%
98
90
nissan
Japan
automotive
3,072
-1%
99
new
polo rl
us
luxury
3,046
new
100
new
hertz
us
automotive
3,026
new
best global brands 2007
17
The best brands follow their stakeholders’ journeys so that they provide effective, consistent and appropriate messaging throughout the experience.
17,837
2007 Google
2006
+44%
2006
12,376 0
5000
10000
15000
20000
3,221
2007 2006
+16%
1000
1500
2000
2500
3000
3500
7,730
+44%
Lessons from the Risers and DECliners 1000
2000
Brand Value ($m)
3000
12,3765000
5000
4000
6000
10000
15000
7000
4,866
2007
Burberry
+17%
3,221
2007 2006 2006
+16%
4,165
0
1000
Brand Value ($m)
0
500
2000
1000
3000
1500
2,7834000
2000
2500
3000
10000
15000
20000
6,55925000
5000
3000
10000
15000
Brand Value ($m)
0
4000
1000
5000
20000
2000
6000
7000
25000
4,165
3000
30000
4000
5000
10000
5000
0
10000
15000
15000
20000
0
5000
1500
10000
2000
15000
2500
20000
3000
25000
3500
30000
BMW
2006
4000
Brand Value ($m)
5000
0
6000
10000
Google Apple Motorola
500
19,617
Burberry Zara Ikea Google McDonald’s Nintendo Toyota Apple Burberry Nokia
Zara
12000
25000
BMW
Brand Value ($m)
McDonald’s
0
1000
2007 0Brand Value ($m) 2006
2000
3,631
2006
+17%
3,099 0
500
1000
1500
2000
2500
3000
Audi 3500
4000
Starbucks
Brand Value ($m)
Nokia
2000
0
4000
Brand Value ($m)
1000
0
0
($m) 2007 Brand Value5000 2006 0
2007 Brand Value ($m) 2000 2006 0 2007 Brand Value ($m) 500 2006 0 5000
8,982
2006 2000
4000
Brand Value ($m)
6000
8000
500
($m) 0Brand Value5000
10000
4,569
4,866 3,221
3000
4000
2000
5,165
2007 2006 2007 2006
8000
15000
12000
15000
4000
5000
20000
6000
1000
10000
32,070
11,037 7000
27,941
8000
3,221 30000
2,783
1500
2000
2500
15000
20000
25000
2000
27,501
6000
25000 9,130
3000
33,696 4,866
10000
5000 +17%
+16%
2000
3000
3000
4000
4000
10000 10000
5000
15000
5000 +22%
7,730
8000
27,501
25000
32,070 25000
20000
2000
1000
1500
10000
4,165
3000
2000 15000
4000
3,099
30,131 3500
2500 20000
3000 25000
30000
2000
10000
15000
4000
6000
0Brand Value ($m)5000
10000
20000
19,617
8000 15000
+17%
5000
0
Best Global Brands 2007
5000
0
500
2007 Brand Value ($m)
10000
15000
20000
25000
Zar
Ike
Motoro
Toyot
App
11,056
30000
10000
12000
+10% -19%
Ike
Zar
25000
+12%
App
3,631
30000
35000
+17%
Toyot
3,099 1000
1500
2000
2500
3000
21,612
BMW
2006
Pizza Hu
30,131
2006 Brand Value ($m)
20
+12%
+7%
Nokia
Starbucks
App
Motoro
35000
33,696
2006 2007
Koda
4000
25000
20000
2007 Brand Value ($m)
+7%
35000 +17%
29,398 8,982 27,501 21,612
Ike
Pizza Hu
30000 +15%
4,866
3,631 30000 33,696
25000
+18% 6000 +10%
7000
20000
20000
+17%
35000
27,941 10000
35000 +16% 12000 +12%
4,165 30000
6000 19,617
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5,165 4000 21,612 5000 6,559 29,398
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8000 +21%
3500
15000 15000
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30,1313000
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Ga
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6,55925000
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+21%
6000 +44%
8000
15000
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10000
2006 Brand Value ($m) 0
+44%
3500 +15%
10000
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5000
0
5000 +18%
17,837 5000
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See pages 3-8 for more detail Ford BMW
12000
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4,2352500
6000
5000
2000
Koda
+15%
2,7834000
3000
McDonald’s 12000
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20000
10000
2007 Brand Value ($m)
-19%
11,056 0
8000
3000
4000
5000
2007 5000 2006 0 2007 Brand Value ($m) 1000 2006 0
7000
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2007 Brand Value ($m) 2006
0
2007
15000 9,130
2007 Brand Value ($m) 2006 2007 1000 2006 0 2007 Brand Value ($m) 1000 2006 0
11,037
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1500
2000
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0
4000 7,730 17,837
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2007 0Brand Value ($m) 1000 2006
4,694
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2007 0Brand Value500 ($m) 2006
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10000
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5000
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4,254
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2007 0Brand Value ($m) 5000 Toyota
10,087
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6000
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0
2007
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6,559
2006 Brand Value ($m)
Starbucks
3,221
2000
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2007 0Brand Value ($m)1000
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0
0
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2,783
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2007 Brand Value ($m) 2006 2007 2006
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8000 +44%
Brand Value ($m)
2006 Brand Value ($m)
10000
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2007 Brand Value ($m) 2006
2006
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8000
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2007 Brand Value ($m)1000
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2007 2007 2006
0
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2006 2007
5000
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10000
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2007 section we will look for lessons that 3,631 In this can be learned from +17% more last year and those 2007 of the brands that have thrived in the 33,696 +12% 2006 3,099 Nokia that have struggled. What did the brands that prospered get so 2006 30,131 right and the brands that declined fail Brand Value ($m) to deliver? 1000
5000
2007 Brand Value ($m) 2006
2006
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500
6,4164000
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The TOP Risers
30000
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0
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3000
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2006 2007
2000
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Tangible asset growth is often a slow process that requires deep Brand Value ($m) and2007 resource-intensive long term planning. Intangible asset 21,612 +10% BMW growth, on the other hand, involves getting the best out of 2007 29,398 +7% 2006 19,617 McDonald’s something that the company already owns. It’s a 2006 case of managing these assets more effectively, 27,501 and it’s Brand Value ($m) an efficient method of adding very real value to business. 0
1000
0
3000
All businesses are under immense pressure to provide results Value ($m) quickly.Brand The Best Global Brands study provides a compelling 2007 33,696 +12% case that those which place high importance on managing the Nokia 2007 economic value of their intangible assets, and primarily 4,866 +17% their 2006 30,131 Audi brands, consistently outperform basic economic measures. 2006 2000
2006
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2007 2006
3000
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Value ($m) Brand Value ($m) 2007 Brand 2007 2000 2006 1000 2006 Kodak 0
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2007 2007 Brand Value ($m) 2006 Brand Value 2006($m) 2007 2006
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5000
4000
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Brand 2007 Value ($m) Brand Value ($m) 1000 2000 2000 3000 2006 Toyota 0 0 2007 Brand 2007 Brand Value ($m) Value 2006($m)
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Brand Value ($m) 2007 1000 2000 2000 2006
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2006 2006 2000 0 2007 Brand Value ($m)
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2007 2006
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2007 2006
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Brand Value ($m)
Brand Value ($m) Brand Value ($m)
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2007 Brand Value ($m)
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2007 2006
8000
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Value ($m) Brand Value ($m) 2007 0Brand 2007 10000 5000 0 2006 5000 2006
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4000 10000
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2007 2007 Brand Value ($m) 2006 Brand Value 2006($m) 2007 2006
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2006 0 2006 0 1000 500 2007 Brand 2007 Brand Value ($m) Value ($m) McDonald’s
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Value ($m) Brand Value ($m) 2007 0Brand 2007 5000 2006 0 1000 2006
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Brand Value ($m)
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2006
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2007 2007 Brand Value ($m) 2006 Brand Value 2006($m)
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Brand Value ($m) Brand Value ($m)
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2000 15000
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1500
1500 10000
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Value ($m) Brand Value ($m) 2007 0Brand 2007 10000 2000 5000 2006 2006
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Brand Value ($m)
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3500
4000
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Brand 2007 Value ($m) Brand Value ($m) 5000 0 500 1000 2006 Ford 0 2007 Brand 2007 Brand Value ($m) Value ($m) 2006
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Brand 2007 Value ($m) Brand Value ($m)
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6000
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2007 2006
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20000
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2007 Brand Value ($m)
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10000 1000 15000
0
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2007
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Brand Value ($m)
0
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2007 0Brand Value ($m)
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2007 Brand Value ($m)
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2006
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Brand Value ($m)
2007 Brand Value ($m) 2006
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0
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2007
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2007
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8000
OTHER NOTABLE Performers 29,398 2006
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2006
10000
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0
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2007 2006
2006
20000 +44%
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7000
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6000
2007 Nokia
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2007
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2007 0Brand Value ($m)
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2007
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Brand Value ($m) Brand Value ($m)
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2006
2000 2000
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6000 +22%
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3. lessons from the risers and decliners
17,837
2007 Google
2006
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20000
Brand Value ($m)
3,221
2007
+16%
Burberry
2006
2,783 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
7,730
2007
+18%
Nintendo
2006 0
valued at $33.7bn this year, nokia’s 12% increase has been driven by a renewed focus on the brand. consumer insights have steered product design back on course. In short, it has rediscovered the theme of demand creation by focusing on simple, easy-to-use handsets that are sleek and stylish.
1000
2000
3000
In recent years, handset design has emerged as an increasingly important demand driver. competitors such as lg and samsung have created stylish products and gained market share, some of it at nokia’s expense. the brand’s ‘bounce back’ this year has been driven by a reinvigorated focus on product design and feature innovation. for example, the nokia n95 was hugely successful, integrating mail, web and music in a single handset. It has become the equivalent of the blackberry for the consumer market.
4000
5000
6000
brand
nokia
2007 country of origin
8000
finland
4,866
+17%
Audi
sector
consumer electronics 4,165
2006 0
brand value ($m)
33,696
1000
2000
rank 2006 rank 2007
3000
4000
5000
6 29,398
5
2007
McDonald’s
+7%
best27,501 global brands 2007
2006 5000
0
10000
15000
20000
25000
30000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
19,617 5000
0
10000
15000
20000
25000
Brand Value ($m)
3,631
2007
to maintain its leadership position, nokia should focus on defining a cohesive visual style to differentiate its entire offering, rather than being driven by individual models.
7000
Brand Value ($m)
Brand Value ($m)
nokia has not enjoyed quite as much success in the us, where motorola has been the dominant player. It will be interesting to see how this unfolds. nokia’s improvement in product and design innovation should challenge motorola’s raZr, but the recently launched apple iphone has the potential to change perspectives. the device has created a lot of excitement and it seems set to be popular with technology-savvy and fashionconscious consumers alike.
+17%
Starbucks
2006
3,099 0
500
1000
1500
2000
2500
3000
3500
4000
Brand Value ($m)
8,982
2007 Ford
2006 2000
Brand Value ($m)
22
best global best global brandsbrands 2007 2007
-19%
11,056 0
22
Piz
6,559
4000
6000
8000
10000
12000
M
Nokia has rediscovered the theme of Demand Creation by focusing on simple, easy-touse handsets that are sleek and stylish.
3. lessons from the risers and decliners
mcdonald’s resurgence picks up on all the themes of brand value creation, from demand creation through to brand management, modeling contingencies and planning efficiencies. while the brand is still on a journey, it has done many things right, and this is reflected in its 7% increase in brand value. firstly, it refocused corporately on being a single-brand company, mcdonald’s, by de-emphasizing pret a manger, divesting chipotle and beginning the process of selling boston market. this sense of focus is also demonstrated in the b2c brand through its consistent use of the global advertising theme, ‘I’m loving it’. the mcdonald’s brand continues to reinvent itself in the face of changing consumer preferences towards healthy eating. It has shown that being responsive to customers is critical to success. mcdonald’s is providing healthier alternatives and the nutritional profile of everything it offers. the introduction of new sandwiches, salads and fruit items to the menu has created a ‘halo’ effect that augments the traditional mcdonald’s offering. these items add a healthy ‘accent’ to the mcdonald’s image and create demand.
starbucks customers than parents who are merely there to keep their children company. Its coffee range has been ranked best in class in consumer reports. Instead of expanding its number of outlets (which do still continue to expand at 3-5% per year) the focus has been on improving the total customer experience. the changes have allowed mcdonald’s to open up a clear gap between itself and burger king,2007 which has not gone down the same 17,837 ‘healthy food’+44% road. Google 2006
12,376
mcdonald’s is successfully managing to move the brand along, Brand Value ($m) while not losing sight of what it has always stood for: quality, value and convenience. 0
5000
15000
20000
3,221
2007
+16%
Burberry
2006
2,783 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
brand
mcdonald’s 7,730
country of2007 origin
us
sector
restaurants
Nintendo
2006 0
brand value ($m)
1000
2000
Brand Value ($m)
but the success is deeper than simply creating demand. the brand has been managed and planned well too. the broader menu, coupled with remodeled/more stylish restaurants, is helping mcdonald’s to shift traditional perceptions of the brand and encourage existing customers to engage with it more frequently. rather than being a place where people go to grab a quick snack on the go, mcdonald’s is trying to attract diners who appreciate better quality, better tasting food and are willing to pay a premium for it. the range of high-quality coffees, for example, is more likely to appeal to
10000
rank 2006
3000
29,398
+18%
4000
5000
6000
7000
8000
9
2007
rank 2007
4,866
8
Audi
2006
+17%
4,165 best global brands 2007 0
1000
2000
3000
4000
5000
Brand Value ($m)
29,398
2007
+7%
McDonald’s
2006
27,501 0
5000
10000
15000
20000
25000
30000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
21,612
2007
+10%
BMW
24
best global brands 2007
Pi
6,559
2006
19,617 0
5000
Brand Value ($m)
10000
15000
20000
25000
M
The McDonald’s brand continues to reinvent itself in the face of changing consumer preferences towards healthy eating.
3. lessons from the risers and decliners
17,837
2007 Google
2006
12,376 0
audi’s success builds on a story of demand creation, brand management and planning efficiencies. by applying a consistent design philosophy based around quality, sophistication and performance, audi has developed a unique, distinctive personality in the marketplace. the brand is considered to be hip, cool and understated. In the mind of the consumer, audi is now a genuine alternative to bmw and mercedes-benz, with the brands going head-tohead in many categories.
with the refreshed a6 and a8 models, audi has succeeded in moving up the value chain and has created a buzz around its top-of-the-range saloon cars. the company also launched an suv at the high-end, which has been well-received.
5000
10000
15000
brand
audi
country of2007 origin
germany
3,221
+16%
Burberry
sector
automotive
2006 0
brand value ($m)
500
1000
1500
4,866
Brand Value ($m)
rank 2006 rank
2,783
2000
2500
3000
3500
74
20072007
7,730
68
Nintendo
2006
+18%
1000
2000
3000
4000
5000
6000
7000
8000
Brand Value ($m)
4,866
2007
+17%
Audi
2006
4,165 0
1000
2000
3000
4000
5000
Brand Value ($m)
29,398
2007
+7%
McDonald’s
27,501 5000
0
10000
15000
20000
25000
30000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
19,617 5000
0
10000
15000
20000
25000
Brand Value ($m)
3,631
2007
+17%
Starbucks
2006
3,099 0
500
1000
1500
2000
2500
3000
3500
4000
Brand Value ($m)
8,982
2007 Ford
2006
26
best global brands 2007
Pi
6,559 best global brands 2007
2006
the strength of the brand has enabled audi to stretch into the coupe and sports car segments; the hugely successful tt and the new r8 are testament to this. the design credentials of the tt and the performance credentials of the r8 cascade throughout the entire audi range and provide greater clarity to audi’s overall positioning in the marketplace. this portfolio strategy is a model example of how to use marketing and product development resources to efficiently generate brand value.
20000
Brand Value ($m)
0
audi has recently completed a design overhaul of its entire product line. this is a bold move, which modernizes the range with a consistent look, feel and attitude while still maintaining the valuable equity of “vorsprung durch technik”.
+44%
-19%
11,056 0
2000
Brand Value ($m)
4000
6000
8000
10000
12000
M
The design credentials of the TT and the performance credentials of THE R8 cascade throughout the entire Audi range and provide greater clarity to Audi’s overall positioning in the marketplace.
3. lessons from the risers and decliners
burberry has re-established itself as a credible fashion brand for a younger generation. It has successfully refreshed its image, while maintaining true to its ‘british’ heritage. a few years ago the burberry brand in the uk became confused after being adopted by football hooligans and minor celebrities. It quickly acquired associations of thuggishness and became a conspicuous emblem of new wealth, which repelled many of its traditionally loyal customers.
brand
burberry
country of origin
uk
sector
luxury
brand value ($m)
3,221
rank 2006
98
rank
20072007 2006
burberry has achieved this success by carefully managing customer perceptions and experiences at all touch points – in-store, online, through advertisements and sponsorship. It has positioned itself as young, modern and fashionable, while maintaining the ‘british’ essence of its appeal.
5000
+44%
best global brands 2007
12,376 0
however, since that set-back, the brand has revitalized itself and gone from strength to strength, appealing to new customers in new markets all over the world, regardless of the pr backlash around its factory closure in wales.
17,837
95
10000
15000
20000
Brand Value ($m)
3,221
2007
+16%
Burberry
2006
2,783 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
7,730
2007
+18%
Nintendo
2006
Pi
6,559 0
1000
2000
3000
4000
5000
6000
7000
8000
Brand Value ($m)
It is a great example of touch point development, modeling contingencies and planning efficiencies.
4,866
2007
+17%
Audi
2006
4,165 0
1000
2000
3000
4000
5000
Brand Value ($m)
29,398
2007
+7%
McDonald’s
2006
27,501 0
5000
10000
15000
20000
25000
30000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
28
best global brands 2007
19,617 0
5000
Brand Value ($m)
10000
15000
20000
25000
M
Burberry has achieved success by carefully managing customer perceptions and experiences at all touch points.
3. lessons from the risers and decliners 17,837
2007 Google
2006
+44%
12,376 0
5000
10000
15000
20000
Brand Value ($m)
3,221
2007
+16%
Burberry
2006
2,783 0
500
1000
1500
2000
2500
3000
3500
Brand Value ($m)
7,730
2007
+18%
Nintendo
2006
Pi
6,559 0
1000
2000
3000
4000
5000
6000
7000
8000
Brand Value ($m)
4,866
2007
+17%
Audi
2006
4,165 0
1000
2000
3000
4000
5000
Brand Value ($m)
the lessons from ford are highly indicative of the themes of value creation. the brand lacks focus on demand creation, and its product range would indicate that it has not planned effectively to have a portfolio that is in tune with the movements of consumer attitudes and behaviors. the ford brand continues its long-term decline demonstrating how an iconic brand can lose its way. despite reasonable success in europe with the focus and mondeo, performance in the core us market has been less impressive and a permanent discount policy has eroded the value of the ford brand. heavy reliance on big suvs, pick-ups and its american heritage increasingly look out of touch with the needs of us car buyers. as gas prices remain high, demand for gasguzzling suvs has waned and the construction of factories in the us by foreign brands means that the “made in america” positioning is no longer differentiated.
29,398 theMcDonald’s mini is an example of a classic car with cult appeal that +7% re-launched2006 itself very successfully. the ford mustang carries an 27,501 equally strong following in the us. In the same vein as the mini, Brand Value the ($m) mustang as a flagship model and use ford could re-launch the momentum to rejuvenate the entire ford brand. 2007
to regain momentum, ford could learn from bmw’s experience. by applying a more holistic approach to managing the brand and sub-brands and using a handful of core principles to guide product design, ford could develop a distinctive positioning that resonates with consumers.
30
best global brands 2007
10000
15000
20000
25000
30000
33,696
2007
+12%
Nokia
2006
30,131 0
5000
10000
15000
20000
25000
30000
35000
Brand Value ($m)
brand
ford
country of2007 origin
us
21,612
+10%
BMW
sector
automotive
2006 5000
0
brand value ($m)
10000
8,982
Brand Value ($m)
rank 2006 rank
19,617
15000
20000
25000
30
20072007
3,631
41
Starbucks
2006
+17%
3,099best global brands 2007 0
ford, unlike the competition, has not invested in distinguishing itself in any meaningful way. toyota, for example, has become synonymous with quality, reliability and more recently for being ‘green’; bmw stands for precision and driving experience. ford lacks an equivalent differentiating position and is in search of a central meaning and sense of identity.
5000
0
500
1000
1500
2000
2500
3000
3500
4000
Brand Value ($m)
8,982
2007 Ford
2006
-19%
11,056 0
2000
Brand Value ($m)
4000
6000
8000
10000
12000
M
Heavy reliance on big SUVs, Pick-Ups and its American heritage increasingly look out of touch with the needs of US car buyers.
Best Global Brands 2007
31
3. lessons from the risers and decliners
the gap brand has failed to secure or own a positioning within the apparel marketplace. It is a story that indicates an inability to create demand for its brand. gap continues to feel the pressure from low price suppliers offering the same american staple of t-shirts, jeans and chinos. forays into a more fashionable positioning failed, and the brand was left with an irrelevant positioning and an overpriced product line. In the us, gap has further confused its consumers by offering less expensive, fun-oriented options at old navy and higher quality, more up-market items at banana republic. these 2007 17,837 +44% alternative stores – often located in Google close proximity to gap outlets –12,376 have cannibalized sales. 2006 0
5000
10000
15000
500
1000
1500
2000
gap
country of origin
us
sector
apparel
brand value ($m)
5,481
rank 2006
52
rank 2007
61 best global brands 2007
2500
3000
2006
2000
3000
4000
5000
6000
7000
1000
2000
3000
4000
2006
6000
7000
8000
3,874 -12%
4,406 0
1000
2000
3000
4000
5000
+17%
10000
15000
20000
25000
2006
-9%
4,694 0
1000
2000
3000
4000
5000
Brand Value ($m)
4,149
2007 Motorola
2006
-9%
4,569 0
1000
2000
3000
4000
5000
Brand Value ($m)
+7%
10,087
2007
+15%
Ikea
2006 30000
8,763 0
2000
4000
6000
8000
10000
12000
Brand Value ($m)
33,696
2007
+12%
Nokia
2006 15000
20000
25000
30000
11,037
2007
35000
+21%
Apple
2006
30,131
best global brands 200710000 5000 0
4,254
2007 Pizza Hut
27,501
Brand Value ($m)
5000
2006
Brand Value ($m)
32
4000
2007
5000
McDonald’s
5000
3000
Kodak
8000
4,866
2007
0
2000
Brand Value ($m)
an Audi alternative strategy would be to follow the lead 2006 of fast-fashion retailers, like h&m or Zara, stocking 4,165 more of-the-moment fashion designs at lower price ($m) points. toBrand doValue this, it would need to differentiate itself from these brands, or reconsider its current corporate brand2007 architecture in some meaningful way. 29,398 0
1000
Brand Value ($m)
3500
to regain relevance with consumers, gap could learn 2007 7,730 from other mass-market fashion brands. abercrombie &+18% fitch, Nintendo for example, has used a deep understanding of the consumer 2006 6,559 to make its brand sexier. the company knows what makes its customersBrand ‘tick’ and offers a distinctive Value ($m) look and attitude that genuinely resonates. 1000
-15%
6,416 0
Brand Value ($m)
0
5,481
2007 Gap
20000
the brandBrand has trapped between several trends Valuebecome ($m) in the fashion market. consumers are increasingly looking to mix low priced basics (from the likes of Zara, target or wal-mart) with 2007 3,221 +16% Burberry expensive signature pieces from premium brands. gap is neither 2006 of these; it has lost its ability to segment2,783 and to identify its target customers. 0
brand
9,130 0
2000
Brand Value ($m)
4000
6000
8000
10000
12000
Gap continues to feel the pressure from low price suppliers offering the same American staple of tshirts, jeans and chinos.
3. lessons from the risers and decliners
the kodak brand has been too late to read the signals of the marketplace and is therefore another story that highlights a lack of demand creation. the kodak brand still feels rooted in traditional film. the company is trying to reinvent itself as being about digital imaging. unfortunately, a lack of any real point of difference, coupled with a relatively late entrance, has17,837 meant that 2007 +44% Google the brand has struggled to gain a significant foothold in 2006 12,376 the digital market. 0
5000
10000
15000
brand
kodak
country of origin
us
sector
consumer electronics
brand value ($m)
3,874
rank 2006
70
rankGap2007
2007
20000
Brand Value ($m)
0
500
1000
1500
2000
2500
3000
2006
0
2000
3000
1000
4000
2000
5000
7000
4000
5000
10000
15000
20000
+18%
25000
+7%
2000
3000
4000
5000
4,254 -9%
4,694 0
1000
2000
3000
4000
5000
Brand Value ($m)
4,149
2007 Motorola
2006
-9%
4,569 0
1000
2000
3000
4000
5000
Brand Value ($m)
10,087
2007
+15%
Ikea
2006
33,696
2006
8,763 0
+12%
2000
4000
6000
8000
10000
12000
10000
15000
20000
25000
30000
2006 35000
+21%
9,130 0
Brand Value ($m)
2000
4000
6000
8000
10000
12000
Brand Value ($m)
21,612
2007
+10%
BMW
2006
best global brands 2007 5000 0
11,037
2007 Apple
30,131
Brand Value ($m)
-12%
Brand Value ($m)
2007
34
1000
2007
30000
Nokia
5000
8000
4,406
Pizza Hut
Brand Value ($m)
0
7000
Brand Value ($m)
27,501 0
6000
3,874
0
5000
McDonald’s
2006
5000
2006
8000
29,398
2007
4000
2006
6000
3000
3000
2007
3500
other brands have negotiated similarly large shifts in customer Value ($m) demandsBrand successfully in the past and kodak could learn from these experiences. Ibm’s move into business consulting, for example, was achieved through4,866 acquisition of 2007 +17% Audi pwc’s consulting business and supported 2006 4,165 by a strong global advertising campaign. Intel has similarly shifted from storage to processing and more recently Brand Value ($m) from desktop pcs to handheld devices. 1000
2000
Kodak
6,559 0
1000
Brand Value ($m)
Brand Value ($m)
the ‘kodak moment’ positioning which was created over many years, does not seem to be transferable to 2007 7,730 the digital world. Nintendo
-15%
6,416 best global brands 2007 0
despite launching innovative products such as the simple dock interface and, more recently, the printer with very affordable 2007 3,221 print cartridges, consumers have not embraced kodak as a +16% Burberry digital2006 brand because it lacks a cohesive 2,783 promise that the customer understands or cares about.
5,481
82
2006
2006
19,617 10000
15000
5,165
2007
20000
25000
+22%
Zara
4,235 0
1000
Brand Value ($m)
2000
3000
4000
5000
6000
Consumers have not embraced Kodak as a digital brand because it lacks a cohesive promise that the customer understands or cares about.
Best Global Brands 2007
35
3. lessons from the risers and decliners
pizza hut also tells a tale that lacks demand creation. 2007 17,837 +44% pizza hut is still one of the leading brands in the fast-food industry. as a whole has been under 2006 however, the industry 12,376 pressure as consumer preferences have shifted towards healthier alternatives. Brand Value ($m)
0
5000
10000
15000
20000
brand
pizza hut
country of2007 origin
us
sector
restaurants
Gap
2006
0 brand value ($m)
1000
2000
3000
0
500
1000
1500
2000
2500
3000
+18%
Nintendo
In an age wholesome, natural, 2006 where customers demand quality, 6,559 nutritional food, pizza hut has held onto its outdatedBrand menu and restaurant format. It needs to return Value ($m) to basics by providing good pizzas, delivered in a more contemporary setting. 2007 0
1000
2000
3000
4000
5000
6000
7000
4,866
+17%
2006 4,165 ideas – the brand should look to mcdonald’s for some many of pizza hut’s customers are also customers of mcdonald’s, Brand Value ($m) after all. mcdonald’s has re-energized its brand by contemporizing a number of its restaurants 2007 cantly updating its menu to appeal 29,398 and signifi to a +7% McDonald’s broader demographic. 2006 0
1000
2000
3000
4000
5000
10000
15000
20000
33,696
+12%
2006 5000
10000
15000
20000
25000
2006
5000
-9%
4,694 1000
2000
3000
4000
5000
Brand Value ($m)
4,149
2007 Motorola
2006
-9%
4,569 1000
0
2000
3000
4000
5000
Brand Value ($m)
10,087
2007
+15%
Ikea
2006
8,763 0
2000
4000
6000
8000
10000
12000
Brand Value ($m)
11,037
2007
+21%
Apple
9,130 0
+10%
2000
4000
6000
8000
10000
12000
10000
15000
5,165
2007 2006
20000
+22%
Zara
19,617 25000
4,235 0
Brand Value ($m)
1000
2000
3000
4000
5000
6000
Brand Value ($m)
3,631
2007
+17%
Starbucks
2006
Brand Value ($m)
4000
4,254
0
35000
21,612
best global brands 2007 500 1000 0
3000
Brand Value ($m)
2007
36
2000
2006
30000
BMW
5000
1000
2006
Brand Value ($m)
0
-12%
2007
30,131 0
3,874
Pizza Hut
starbucksBrand could also provide some clues. the ubiquitous Value ($m) coffee chain understands the importance of ambience and environment in attracting and retaining loyal customers. 2007
8000
Brand Value ($m)
30000
Nokia
7000
4,406 best global brands 2007 0
5000
25000
6000
2006
27,501
0
5000
74
Kodak
8000
Audi
-15%
6,416
66
20072007
3500
7,730
2007
rank
4000
4,254
Brand Value ($m)
rank 2006
minor2007 changes to its product range (e.g. vegetarian 3,221 options) +16% Burberry and new services (e.g. deliveries and internet orders), have failed 2006 2,783 in all of its touch to revitalize the brand and it now looks tired points. the chain has struggled to maintain share of wallet Brand Value ($m) against new ‘fast casual’ competitors, which offer higher quality food in more attractive surroundings at a higher price point.
5,481
2006
3,099 1500
2000
2500
3000
32,070
2007
3500
4000
+15%
Toyota
27,941 0
5000
Brand Value ($m)
10000
15000
20000
25000
30000
35000
In an age where customers demand quality, wholesome, natural, nutritional food, Pizza Hut has held onto its outdated menu and restaurant format.
3. lessons from the risers and decliners
the motorola story is an interesting one. having successfully created demand for the raZr, it seems to have sat back on its laurels. more efficient planning for the motorola brand itself could2007 have delivered a stronger corporate 17,837 brand, which in its +44% Google own right could return 2006 12,376 more value. 0
5000
10000
15000
motorola would be well advised to carry out data mining to gain a deep understanding of what drives its consumers and to keep on top of emerging trends. 2006
20000
motorola is fundamentally an engineering company, rather than a consumer-focused brand. In recent years, it has enjoyed 2007with one-off products, but has failed3,221 success to develop+16% a Burberry pipeline to maintain upward 2006 of exciting replacement products 2,783 momentum. the raZr, for example, was highly successful at launch and Brandsignifi Value ($m) cantly raised the profile of the brand. however, the company failed to launch any “blockbuster” handsets before the raZr approached the end of its lifecycle. 2007 500
1000
1500
2000
2500
3000
3500
7,730
+18%
Nintendo
6,559 In the2006 ever-changing world of consumer electronics, it’s important to invest in developing a strong corporate brand, Brand Value ($m) rather than product brands. Investing in product brands is risky, because they can be quickly superseded by superior offerings as 2007 technology evolves. motorola’s falling brand value to the 4,866is due +17% Audi close association between the corporate brand and the raZr 2006 4,165 phone. as raZr has lost relevance with consumers, so too has motorola.Brand Value ($m) 0
1000
0
2000
3000
1000
4000
2000
5000
6000
3000
7000
4000
5000
0
10000
15000
20000
25000
2006
10000
15000
20000
25000
30000
21,612
2006
3,874
2000
4,149
Brand Value ($m)
rank 2006
3000
4000
-12%
5000
69
2007
rank 2007 Pizza Hut
4,254
77
-9%
2006
4,694 brands 2007 best global 1000
0
2000
3000
4000
5000
Brand Value ($m)
4,149
2007 Motorola
2006
-9%
4,569 1000
0
2000
3000
4000
5000
Brand Value ($m)
10,087
2007
+15%
Ikea
2006
8,763 0
2000
4000
6000
8000
10000
12000
Brand Value ($m)
11,037
2007
+21%
Apple
2006
9,130 0
+10%
2000
4000
6000
8000
10000
12000
10000
15000
5,165
2007 2006
20000
+22%
Zara
25000
4,235 0
Brand Value ($m)
1000
2000
3000
4000
5000
6000
Brand Value ($m)
3,631
2007
best global brands 2007
+17%
Starbucks
2006 1000
1500
2000
2500
3000
32,070
2007
3500
4000
+15%
Toyota
2006
3,099
Brand Value ($m)
1000
0 brand value ($m)
19,617 5000
500
8000
Brand Value ($m)
2007
0
7000
consumer electronics4,406
35000
BMW
38
6000
sector
2006
Brand Value ($m)
0
5000
us
Kodak
customer insight is at the heart of the successful branding. 5000
4000
country of2007 origin
30,131
0
3000
motorola
30000
Nokia
2000
brand
5000
motorola could take some lessons from nokia, which 2007 29,398 +7% has managed its brand architecture very successfully over the years.2006 the nokia masterbrand remains the focal point for the 27,501 consumer and is always more prominent than the handset Brand Value ($m) sub-brands. similarly, bmw, through disciplined management of brand assets, has created a masterbrand that supports and enhances 2007 individual model brands. 33,696 +12%
1000
Brand Value ($m)
8000
McDonald’s
-15%
6,416 0
Brand Value ($m)
0
5,481
2007 Gap
27,941 0
5000
Brand Value ($m)
10000
15000
20000
25000
30000
35000
Motorola has failed to develop a pipeline of exciting replacement products to maintain upward momentum. As RAZR has lost relevance with consumers, so too has Motorola.
3. Lessons from the Risers and Decliners
Conclusions The turnaround brands all show a rise in their brand value because they have understood and adopted the theme of brand value creation and the brand management practices associated with this. The principal strength is evidently Demand Creation: a simple theme that requires the brand to move and evolve with consumer attitudes and behaviors and create a motivating strategy that it delivers against. Once demand is created, management processes need to be put in place to ensure the brand lives through all its touch points, and that the business plans ahead effectively and efficiently to build value into its brand. The themes are intrinsically linked, and to master them all takes leadership and an organization-wide commitment to building the value of the brand. As we’ve seen, the rewards are high. Correspondingly, the brands that have suffered a decline in brand value seem to have lost the ability to create demand. They have all been hugely successful businesses and brands in the past and the future is there for them to dictate. The turnaround brands all show a sense of understanding consumers’ needs and desires, and rediscovering the appetite to meet their customer promise. After all, what is a brand if not a promise to the customer? The brands that have failed to do this need to rediscover the connection with their markets and focus on the themes of brand value creation.
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Brands are important assets requiring proactive and consistent investment, management, and measurement.
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Having foresight helps companies make informed choices about their brand and frees leaders up to make bold moves in the full knowledge of the implications.
4.
HOW WE DID IT
Criteria For Consideration
Methodology
Using our database of global brands, populated with critical information over the past 20 years of valuing brands and more than 30 years of consulting with organizations, Interbrand formed an initial consideration set. All were then subject to the following criteria that narrowed candidates significantly:
The Interbrand method for valuing brands is a proven, straightforward and profound formula that examines brands through the lens of financial strength, importance in driving consumer selection and the likelihood of ongoing branded revenue. Our method evaluates brands much like analysts would value any other asset: on the basis of how much they’re likely to earn in the future. There are three core components to our proprietary method:
• There must be substantial publicly available financial data • The brand must have at least one-third of revenues outside of its country-of-origin • The brand must be a market-facing brand • The Economic Value Added (EVA) must be positive • The brand must not have a purely b2b single audience with no wider public profile and awareness These criteria exclude brands such as Mars, which is privately held, or Wal-Mart, which is not sufficiently global (it does business in some international markets but not under the Wal-Mart brand).
Financial Analysis Our approach to valuation starts by forecasting the current and future revenue specifically attributable to the branded products. The cost of doing business (operating costs, taxes) and intangibles such as patents and management strength are subtracted to assess what portion of those earnings is due to the brand. All financial analysis is based on publicly available company information. Interbrand culls from a range of analysts’ reports to build a consensus estimate for financial reporting. Role of Brand Analysis A measure of how the brand influences customer demand at the point of purchase is applied to the intangible earnings to arrive at Branded Earnings. For this study, industry benchmark analysis for the role brand plays in driving customer demand is derived from Interbrand’s database of more than 5,000 prior valuations conducted over the course of 20 years. In-house market research is used to establish individual brand scores against our industry benchmarks.
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Brand Strength Score This is a benchmark of the brand’s ability to secure ongoing customer demand (loyalty, re-purchase and retention) and thus sustain future earnings, translating branded earnings into net present value. This assessment is a structured way of determining the specific risk to the strength of the brand. We compare the brand against common factors of brand strength, such as market position, customer franchise, image and support.
FINANCIAL ANALYSIS
BRAND VALUE CALCULATIONS
Forecasted current and future revenue specifically attributable to the brand.
ROLE OF BRAND ANALYSIS A measure of how the brand influences customer demand at the point of purchase.
Role of Brand Analysis
Branded Revenues Intangible Earnings Brand Earnings Year 1
Year 2
Year 3
Year 4
Year 5
BRAND STRENGTH ANALYSIS A benchmark of the brand’s ability to secure ongoing customer demand (loyalty, repurchase, retention).
Brand Strength Analysis = Discount rate
BRAND VALUE
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5. WHY THE RANKING IS IMPORTANT Significance of the ranking The Best Global Brands study provides a brand value that is a top-line measure of economic performance driven by the brand, stating what the brand is worth overall and among competitors. Brand value brings to marketing what “revenue goals” or “financial hurdle rates” bring to other aspects of the business. The payoff comes when one looks behind the number – a single number only tells you so much. It’s important to understand what drives brand value: intangible earnings (the cash flow of a business not associated with tangible assets such as equipment or materials), the role of brand (a measure of how much brand influences purchasing decisions) and brand strength (a benchmark of a brand’s relative risk compared to competitors). Understanding the drivers of brand value can inform management action, from overall business strategy to specific marketing tactics. It’s an easy-to-understand metric to help brand owners determine where they are, where they’re going and how to get there. It helps to make branding a more important aspect of global business management.
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It tells you whether you are investing adequately in your brand. Putting an economic value on a brand (overall and by segment) can help make a strong business case for marketing investments, overall and across a company’s portfolio. It tells you whether you have a marketing strategy that positions your brand around the right messages. Your customers make decisions every day between you and your competitor; analyzing the role of brand in those decisions helps focus your strategy on the attributes that differentiate your brand from others and strengthen your relationship with your best customers, ensuring future earnings. It tells you whether you have the right short-term tactics to drive value. By analyzing the strength of your brand, you can target marketing campaigns to the most valuable customers and against your most formidable competitors, driving short-term sales. There are many insights from this ranking, but the core message is clear: brands are important assets requiring proactive and consistent investment, management, and measurement.
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APPENDICES
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6. FREQUENTLY ASKED QUESTIONS
The purpose of this section is to address the questions that you might be asking in relation to the Best Global Brands.
Contents What is brand value? Why value brands? How does Interbrand derive the value of brands? What was the basis of the financial assessments? What was the basis for the marketing assessments? What was BusinessWeek’s role in the Best Global Brands ranking? Why are certain brands not on the list? Certain obvious global brands are missing. Were they considered? Within certain large industry sectors there are no brands that appear on the list. Why? A number of insurance companies appear on the league table for the first time – why is this? What % of the branded business needs to be outside the home country to be considered global? Was this the only test for being global? Was there a limit to the number of brands included from any one industry? Are there any brands that have a sufficient brand value but did not make the list? How did you take account of the fact that brands are run through franchisees? What is the relationship between the following terms: brand awareness, brand equity, brand share and brand value? Do the valuations reflect the underlying state of the economy? How should one understand the brand value as a % of market capitalization? How does brand value rank against ad spending? Is it possible to recognize brand value on a balance sheet? What is Interbrand’s view on brands appearing on balance sheets? Why is Interbrand an expert in assessing brand value? Does Interbrand conduct other brand studies? What is the difference between the valuations in Best Global Brands and consulting valuations for clients?
50 50 50 51 51 52 52 52 52 53 53 53 53 54 54 54 54 54 55 55 55 56 56 56
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6. Answers to the most frequently asked questions
What is brand value?
How does Interbrand derive the value of brands?
Brand value is the dollar value of a brand, calculated as Net Present Value (NPV) or today’s value of the earnings the brand is expected to generate in the future. Like any other financial value, brand value is at a point in time based on the assumptions and information available at that point in time. Brand value is calculated according to the most widely accepted and used valuation principles. This makes brand value comparable to business – and all NPV-based asset values.
Our valuation approach is a derivative of the way businesses and financial assets are valued. It fits with current corporate finance theory and practice. There are three key elements and they are detailed below:
The valuations of brands appearing in the Best Global Brands (BGB) are calculated in their current use to their current owner. They, therefore, do not necessarily represent the potential purchase, extension or licensing value of the brands. Why value brands? The purpose of these valuations is to demonstrate to the business community that brands are very important business assets and in many cases the single most valuable company asset. We also aim to show that branding and marketing are key business issues that have direct shareholder value impact. Through six years of publishing Best Global Brands in BusinessWeek magazine we have created the world’s most significant and influential brand and marketing study. In fact, PRWeek magazine produced a study that showed the BusinessWeek/Interbrand Best Global Brands ranking was the third most sought-after benchmark report by CEOs and CFOs.
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Financial Forecasting We identify the revenues from products or services that are generated with the brand. From these Branded Revenues we deduct operating costs, applicable taxes and a charge for the capital employed to derive Intangible Earnings. Intangible Earnings are the earnings that are generated by all of the business’s intangibles such as brands, patents, R&D and management expertise. This is a prudent and conservative approach as it only rewards the intangible assets after the tangible assets have received their required return. The concept of Intangible Earnings is therefore similar to value-based management concepts such as economic profit or EVA (Economic Value Added is Stern Stuart’s branded concept). Based on reports from financial analysts we prepare a forecast of Intangible Earnings for six years. Role of Branding Since Intangible Earnings include the returns for all intangibles employed in the business, we need to identify the earnings that are specifically attributable to the brand. Through our proprietary analytical framework called Role of Branding, we can calculate the percentage of Intangible Earnings that are entirely generated by the brand. In some businesses (e.g. fragrances or packaged goods), the Role of Branding is very high as the brand is the predominant driver of the customer purchase decision. However, in other businesses (in particular b2b) the brand is only one purchase driver amongst many and the Role of Branding is
therefore lower. For example, people are buying Microsoft not only because of the brand but mostly because the company has an installed base of 80% of the market and it would be for most users extremely difficult to switch their existing files to a new software platform. In the case of Shell people buy not only because of the brand, but also because of the location of the petrol stations. For each of the brands (and categories) we have assessed the Role of Branding.
against a notional ideal and score it against common factors of brand strength. The ideal brand is virtually ‘risk free’ and would be discounted at a rate almost as low as government bonds or a similar risk free investment. The lower the Brand Strength the further it is from the risk-free investment and so the higher the discount rate (and therefore the lower the net present value).
The Role of Branding is derived as a percentage – thus if it is 50%, we take 50% of the Intangible Earnings as Brand Earnings. If it is 10%, we only take 10% of the Intangible Earnings.
Published annual reports were used to examine the revenues, earnings and balance sheets of the brand-owning companies. Analyst reports from JPMorgan Chase, Citigroup and Morgan Stanley are used as the basis for identifying the specific brand revenues and earnings and for forecasting future earnings.
What was the basis of the financial assessments?
Brand Strength What was the basis for the marketing assessments? For deriving the net present value of the forecast Brand Earnings, we need a discount rate that represents the risk profile of these earnings. There are two factors at play: firstly, the time value of money (i.e. $100 today is more valuable than $100 in five years because one can earn interest on the money in the meantime); and secondly, the risk that the forecast earnings will actually materialize. The discount rate represents these factors as it provides an asset-specific risk rate. The higher the risk of the future earnings stream, the higher will be the discount rate. To derive today’s value of a future expected earnings stream it needs to be ‘discounted’ by a rate that reflects the risk of the earnings actually materializing and the time for which it is expected. For example, $100 from the Coca-Cola brand in five years requires a lower discount rate than $100 from the Fanta brand in five years, as the Coca-Cola brand is stronger and therefore more likely to deliver the expected earnings. The assessment of Brand Strength is a structured way of assessing the specific risk of the brand. We compare the brand
Unlike other brand value league tables, Interbrand does not rely on a single source of marketing information. Using a single brand study would limit the type of information (usually limited to perceptual data) and the type of customer (usually general public) that can be considered. Because many leading brands operate in specific customer segments (especially b2b), only considering the general public can be very restrictive. Instead, Interbrand refers to a wide array of primary and secondary sources which are applicable to each brand. These include amongst others Datamonitor, ACNielsen, Gartner and Hall & Partners. Moreover, Interbrand utilizes its network of brand valuation experts from offices around the world to ensure that the league table considers the brands from a global perspective. What was BusinessWeek’s role in the Best Global Brands ranking? BusinessWeek did not influence the selection of brands or the determination of any of the values. Their role was to publish
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6. Answers to the most frequently asked questions
the study and to tie the reported performance of brand value to some of the wider issues affecting these brands. They also provided the specific one-line comments that appear in the table. Interbrand is not responsible for these and they do not necessarily represent our views.
Certain obvious global brands are missing. Were they considered?
Why are certain brands not on the list?
BBC – A unique organization since it’s a government-owned corporation that is not supposed to generate a profit. There are, however, parts of it which are commercial and which do generate profits but these are still the minority of the business.
This is a frequent question especially from companies who would expect their brands to be on the list. There are five reasons: - The brand is not sufficiently global - The brand has a pure b2b single audience and has no wider public profile and awareness - The company does not produce public data that enables us to identify the branded business (the company has multiple brands or has unbranded production) - The brand is not big enough (brand value below $3.0 billion falls below the 100 brand ranking) - The business is driven by a number of intangible factors and it is difficult to separate the brand from the rest
In each case there was a reason why they could not be evaluated based on purely public data.
Red Cross – As a not-for-profit, it’s not possible to value the brand based on an earnings model. This would be true of other global not-for-profit brands such as Greenpeace, National Geographic or Unicef. It is however possible to assess the financial value of such brands but using a different kind of model. Mars – This is a privately held and highly secretive organization. Other privately held brands such as IKEA are included since appropriate financial data are publicly available. Within certain large industry sectors there are no brands that appear on the list. Why? Airlines – There has clearly been significant investment in airline brands (and many of them are, by definition, global) but they are still operating in situations where the brand plays only a marginal role. In most cases, the customer decides based on price, route, schedule, corporate policy or frequent flyer points. The brand may often only have a real impact when all these other items are at parity. We have assessed the brand value for airlines by using internal data to strip out the impact of these other factors. But from purely public information this is difficult to do reliably.
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Telecoms – Although there are many large telecom brands that are highly valuable, at present none of these brands fulfill our ‘global’ criteria. Pharmaceuticals – There are no pharmaceutical brands in this year’s league table. Pfizer and Novartis – which were both included in the 2006 table – have been excluded following a review of our approach. Our review concluded that brands should only be included where they resonate with consumers on a global level. In the pharmaceutical industry, it is the product brand rather than the corporate brand with which the consumer builds a relationship. The lack of global recognition of pharmaceutical companies is fundamentally driven by regulatory differences around the world: in the US, for example, pharmaceutical companies are able to communicate and advertise directly to consumers, whereas in the EU this is forbidden. A number of insurance companies appear on the league table for the first time – why is this? Three insurance companies – AIG, AXA and Allianz – have entered the league table this year. Whilst insurance has traditionally been seen as a commodity product, the major players have invested significantly in differentiating themselves over the last year by using a range of brand-building measures. For example, they have developed centralized brand management functions to ensure global consistency of message delivery and they have used global sponsorship to significantly increase reach and recognition. These measures have raised the profile of the brands, turning them into household names.
the home country to be considered global? In most cases one-third, however if the home country of the brand is small (e.g. the Netherlands) we required a higher percentage. For US brands, the overseas sales ratio can be smaller due to the size of the US market, which is nearly as big as all of Europe. Applying the one-third overseas sales requirement would penalize US brands for being successful in their domestic market. Was this the only test for being global? No, we also wanted evidence that the brand was established in a wide number of markets around the world. At the very least it needed to have a substantial presence in at least one country in each of the following 4 regions: North America, Latin America, Europe and Asia-Pacific. It also needed to be managed consistently as a global brand. As an example, Wal-Mart is a valuable brand however it is not consistently branded as Wal-Mart around the globe. Was there a limit to the number of brands included from any one industry? No, however, one of the requirements of a leading global brand is that it is in fact leading. The mark of leadership is not just about market share but also about behaving as a leader – setting trends, quality standards, authority, etc. Thus, there are brands that are in the top three of their category’s market share but did not make the cut; and there are brands that are not top three that did make the global ranking. The rules described are guidelines and ultimately each brand was assessed for inclusion on its own merits.
What % of the branded business needs to be outside
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6. Answers to the most frequently asked questions
Are there any brands that have a sufficient brand value but did not make the list? There are certainly strong national brands that have a value exceeding $3.0 billion but which did not make the list because they do not meet our global criteria. This would be true of many of the financial services and telecom brands, but also surprisingly true of a lot of food, beer and retail brands. How did you take account of the fact that brands are run through franchisees? This was an issue with all the food retail brands – McDonald’s, Pizza Hut, KFC and Starbucks. We based our valuation on the earnings that the brand owner makes from the brand and an estimate of the earnings that the franchisees make from the brand (what is called a total-system view). As in all other valuations, these earnings were then reduced to take account of a return for the use of the tangible and other intangible assets. What is the relationship between the following terms: brand awareness, brand equity, brand share and brand value? Brand value is the only measure that looks at the economic benefit of the brand to its owner. In other words, it is an end in itself. Brand awareness and brand equity are a means to an end. Brand awareness is simply knowledge that a brand exists, thus brand awareness may prompt customers to consider buying a product. Brand equity is a measure of customer perceptions of a brand; thus it may give a customer reason to prefer a product over the alternatives. Brand share is simply the market share achieved by the brand. Thus brand awareness, equity and share are all measures of what a customer thinks or does, it is not an assessment of the economic value created by those thought or actions. Do the valuations reflect the underlying state of
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the economy? Yes – in two ways. The forecasts are prepared with an overall view on economic growth at a point in time. The formula for converting the Brand Strength Score into a discount rate is tied to the underlying government bond yield. How should one understand the brand value as a % of market capitalization? The market capitalization represents the market’s valuation of all the equity of a company. In theory, the market capitalization is the value of all tangible and intangible assets owned by the company less all the debt owed by the company. The brand value/market capitalization relationship can be read in a number of ways: - If the brand value percentage of market capitalization is low, it suggests that the business is driven by other kinds of assets (tangible and intangible) and that the brand is relatively unimportant. It could also mean that the business is failing to leverage the brand as much as it should be and that investors should be concerned about that. - If the brand value percentage of market capitalization is high, it suggests that the business is driven by the brand and that investors should take care of how the brand is being managed since this will have a very direct effect on shareholder value. It could also mean that the business is under-valued by the market and that they are failing to reflect the true value of all the assets of the business of which the brand is one (but only one). The comparison of brand value to market capitalization is mainly useful for mono-branded businesses as the market capitalization relates to all company assets. For companies that own and operate under many different brands, such as Nestlé and J&J, a comparison with market capitalization
is less useful.
What is Interbrand’s view on brands appearing on balance sheets?
How does brand value rank against ad spending? It is not really appropriate to try to correlate these two. Brand value is a measure of the output from a series of brand investments and initiatives over a long period of time. Advertising is one element in a wide spectrum of communications companies employ. Other communications include sponsorships, online, point of sale, customer service, and so on. In some cases brands are built with very little or no advertising as in the case of Starbucks where retail space and employees are the key communications channels. Is it possible to recognize brand value on a balance sheet? Several accounting standards – such as International Accounting Standards (IAS) 36 and 38, US GAAP, FASB 141, UK FRS 10 – allow and/or require the recognition of acquired goodwill, including brands on the balance sheet. The standards clearly identify brands as intangible assets with an infinite economic life. This means unlike other intangible assets (e.g. patents, databases) or goodwill (e.g. training, workforce) brand value does not have to be amortized through the income statement. However, they are subject to an annual impairment test and their carrying value needs to be reduced if the value declined. The technique is consistent with the way in which Interbrand has assessed brands for balance sheet inclusion – though of course using more extensive and proprietary data.
We support the stance of the different accounting standards which recognize the value of brands on the balance sheet. Interbrand has been leading the debate on this issue for many years. However, current accounting standards allow only for the recognition of acquired brands, not internally developed brands. Also, the impairment test for brands on the balance sheet allows only for a potential value reduction but not increase. The acquisition criterion means that the Gucci brand is recognized on the balance sheet of PPR as an intangible asset while the Louis Vuitton brand does not show up on the balance sheet of LVMH. We conclude that the recognition of acquired brands on the balance sheet is a step in the right direction for providing shareholders with better information about the assets they have invested in. However, it’s still not sufficient, as the value of internally generated brands cannot be disclosed despite making up the vast majority of the most valuable brands around the world. As the need for some formal statement about brand value (and the value of other intangible assets) is becoming increasingly important we would advocate some type of statement in the annual report on the intangible business assets including brands. Whether this happens in the traditional balance sheet or whether it happens in a new ‘Statement of Intangible Value’ would be a secondary concern. N.B. There is a precedent for this in the way in which the Cash Flow Statement was developed to complement, but not replace, the Profit & Loss Account.
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6. Answers to the most frequently asked questions
Why is Interbrand an expert in assessing brand value? In 1988, Interbrand developed and introduced the first valuation of a portfolio of brands that used a brand-specific valuation approach. Since then we have continuously updated and improved our valuation approach to make it the global industry standard of brand valuation. The Interbrand brand valuation methodology is the widest endorsed and used valuation approach around the world. Interbrand alone has valued more than 5,000 brands in all industries worldwide. Our valuations have been endorsed by leading academic institutions including Harvard, Thunderbird, Columbia, Emory and St. Gallen. Our valuation approach has the highest depth of applications including strategic brand management, marketing budget allocation, marketing ROI, portfolio management, brand extensions, M&A, balance sheet recognition, licensing, transfer pricing and investor relations. Our valuations have been audited for inclusion on the balance sheet by all leading accounting firms. Also, many tax authorities and law courts around the world have accepted our valuation approach. Does Interbrand conduct other brand studies? We have established national brand value league tables in Switzerland, France, Spain, Australia, Singapore, China, Taiwan, Mexico, Canada and Brazil. These follow an identical valuation process but only look at locally owned brands. A US specific study would be redundant due to the great overlap with the global table – 53 out of 100 are US-based.
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What is the difference between the valuations in BGB and consulting valuations for clients? The valuation methodology is the same, however, the level of detail and the data input significantly differ. The BGB valuations are mostly consolidated top-line assessments based on publicly available marketing and financial data. We recognize segment differences for diversified brands by product or service but not geography or any other classification (e.g. financial services or technology). As the valuations are based on publicly available data, they are only as reliable as the data that the brand-owning companies publish about themselves (in annual reports, analysts briefings, press articles, syndicated market research etc.). Consulting valuations are based on detailed customer segmentations, as well as in-depth marketing and financial analyses. They have a much higher level of accuracy and granularity. The purpose of a consulting valuation goes well beyond assessing financial worth. It identifies and quantifies value drivers, and helps the company to manage its brand to increase the shareholder value of the underlying business. However, if clients undertake consulting valuations we are in a much better position to identify publicly available data that are likely to align the BGB valuation with the consulting valuation. In cases where companies make our consulting valuations publicly available, for example through a note in the balance sheet, these values will also be published as the BGB ranking value.
Thank you.
7. ABOUT
Brand Value Management comprises three distinct, yet interrelated, phases: Evaluate, Create, and Manage – three phases where the brand and market opportunities are painstakingly examined, creatively brought to life, and thoroughly and holistically coordinated.
BRAND RESEARCH
BRAND VALUATION
BRAND IMPLEMENTATION
BRAND CULTURE
Brand
TE UA
The Brand Value Management model is a closed loop with neither a specific beginning nor definite end. The model begins at a different point for every brand, based on business need. However, one aspect does remain constant: once in progress, the model actually accelerates, by generating synergies and capturing new opportunities through carefully crafted and integrated activities. It becomes an inexhaustible source of energy and competitive advantage for every brand.
BRAND PROTECTION
AL EV
Brands do not become and remain successful on their own. Nor are they ensured ongoing leadership without proactive, diligent and detailed management. Interbrand works collaboratively with clients to consistently and continually evaluate, create and manage their brand assets. We do this by employing the following model.
Interbrand is a wholly owned subsidiary of the Omnicom Group, the industry leader in Marketing Communications.
NA GE
The Interbrand Brand Value Management ModelTM
MA
Creating and managing brand value
BRAND OPPORTUNITY
BRAND STRATEGY
BRAND DESIGN VERBAL IDENTITY
C R E AT E
For over 30 years, Interbrand has worked with leading global brands to create and manage brand value through an integrated set of offerings. We offer brand and business strategy, brand valuation, quantitative and qualitative research, retail design, brand architecture and portfolio optimization, naming, corporate identity design, packaging design, communications creation and online digital asset management tools. Interbrand has 34 offices in more than 20 countries around the globe and clients from among the most respected businesses.
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8. CONTACT US
General inquiries: Jez Frampton Group Chief Executive Officer Tel UK: +44 (0)20 7554 1000 Tel US: +1 212 798 7777 [email protected] Graham Hales Global Chief Communications Officer Tel UK: +44 (0) 20 7554 1169 Tel US: +1 232 798 7581 [email protected] Media inquiries: Lisa Marsala Global Communications Manager Tel: + 212 798 7646 [email protected]
Additional information on brands www.interbrand.com www.brandchannel.com
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