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The world’s top technology brands, headed by Apple, extended their influence yet more deeply into consumers’ lives as their dominance increased in the past year. Times were more difficult, though, for companies in sectors such as luxury goods, fashion, retail and global banking.
Global brand values continued to rise after their slowdown during the financial crisis, according to the latest annual BrandZ top 100 brand rankings compiled by Millward Brown, a research agency owned by WPP.
Successful companies not only provided goods and services that were distinct from those of competitors, but also found new ways to connect with customers and navigate the swirling waters of social media.
Peter Walshe, strategic director of BrandZ, says: “Branding is becoming more important. People are taking it more seriously and it is becoming more of a factor in driving value and success.”
But, he adds: “If you are going to grow a brand these days, you have to have something meaningfully different. You have to have something that fits into what consumers want, and you have then got to communicate and drive that.”
Steve Wilkinson, managing partner, UK and Ireland markets at EY, the professional services company, says: “In technology, there is still a lot of space to build brands. In the world of products and services, it’s probably more difficult than it has been for some time to build a globally consistent brand.”
The years 2007-12 were a “golden age” for branded consumer products, as emerging markets expanded, says Mr Wilkinson. Since then, a cooling in many economies has made it harder to maintain profitable growth. Nonetheless, the combined value of the top 100 brands in 2015 grew 14 per cent from $2.9tn to $3.3tn compared with the previous year, the fastest rate for four years, beating the average growth of 9 per cent a year since the rankings began in 2006.
During the recession, their combined value grew 8 per cent a year on average. The ranking combines financial measures with surveys of how consumers view brands.
US brands achieved 19.1 per cent overall growth and accounted for the entire top 10, whereas growth in continental Europe was just 1.5 per cent, reflecting sluggishness in cars and luxury goods. The UK was down 4.2 per cent. Asian brands recovered by 24.7 per cent, despite the emerging market slowdown. This was driven in part by the entry of Alibaba, the Chinese ecommerce company, at number 13 in the top 100, after its initial public offering. There were rises for Chinese portal Tencent, search engine Baidu and China Mobile. In 2006 there was just one Chinese brand (China Mobile) in the top 100; now there are 14.
Technology continued to dominate the top 10 global brands. Apple recovered its number one slot with a 67 per cent rise in brand value to $247bn, having previously held it from 2011 to 2013. Its growth was powered by the iPhone 6. Google slipped to second, although its brand value rose 9 per cent to $174bn. Facebook was the fastest riser, up 99 per cent, followed by Apple and Intel. Microsoft, which is making it easier for developers to adapt apps to Windows, was up 28 per cent.
Elspeth Cheung, global head of valuation for BrandZ, says technology companies are not only opening up their platforms, “they are trying to acquire a bigger slice of everyone’s life”. Apple is doing so through developments such as Apple Watch and the Apple Pay mobile payments venture. Google is looking beyond internet search to driverless cars, devices for the “smart home” and treatments associated with ageing.
The technology category accounted for just under a fifth of the top 100 brands and nearly a third of the total value. There was 17 per cent growth in telecoms, 9 per cent in beer, 8 per cent in soft drinks, 4 per cent in fast food and 3 per cent in cars, but zero in apparel. Luxury goods, affected by the emerging markets slowdown, were down 6 per cent, with falls at Gucci and Hermès. Retail, excluding the Alibaba effect, was up 2 per cent.
Total value of the technology category in the top 100 brands
In financial services, there was growth for insurance companies such as China Life and Ping An, and payments companies including PayPal and Visa. But global banks, down 2 per cent, continued to suffer the hangover from the financial crisis and multiple scandals.
Since the BrandZ rankings began, only 58 companies have stayed in the top 100. Some analysts think volatility will increase as technology exerts its disruptive influence. This year, there are seven newcomers, more than the long-term average of four.
These are: Alibaba, expanding in areas from taxi hailing to financial services; Huawei, the Chinese telecoms equipment maker challenging Apple and Samsung in premium smartphones; HDFC, the Indian bank; Telstra, the Australian telecoms company; Costco, the US retail warehouse; SoftBank, the Japanese telecoms company; and China Telecom.
The combined value of the top 100 brands in 2015
Millward Brown says the share price of its BrandZ strong brands portfolio — up 102 per cent since 2006 — has outperformed the S&P 500 at 63 per cent and the MSCI World Index at 30 per cent. It attributes the difference to the “power of brands”.
Brand managers face a more complex task, however, at a time when consumers judge products and services from what others say on social media rather than taking their cue from marketeers. They are also grappling with changing demographics, such as trying to tap into the power of older customers and understand the millennial generation’s shopping habits.
“You’ve got to be thinking about change, about innovating and improving what you have,” says Mr Walshe.
“It is about refining your brand proposition and making sure it is the best. It’s about paying attention to how consumers are using your product and the faster feedback that you get now. It’s about dealing with complaints honestly and quickly and not ignoring them.”
Ms Cheung says leaders need courage to act quickly, citing Chanel’s bold decision to cut its retail prices in Hong Kong and China and raise them in Europe to harmonise the regional price difference which allows unauthorised cross-border trading. Mr Wilkinson says, although in theory social media widen the scope for brands that offer a consistent global experience, consumers may think more locally, as in the example of craft beer.
“You widen your net, but your advocacy group [of engaged consumers] may be recommending a certain real ale or craft lager from Bavaria rather than drinking Heineken,” he says. “There is an argument that social media will be damaging for global brands.”
He adds that consumer products companies are having to make tougher choices about where to invest, because profits are not good enough to do everything. “You’ve got to make choices about whether to acquire or to innovate internally. You can’t invest everywhere, so where are the key markets? Are you going to do it with a global brand or something more locally relevant?”