I came across this brilliant paper produced by Millward Brown Optimor called "BrandZ Ranking" today when I was doing research at Yankee Group. I decided to do my part in promoting it and WOMing it because I am a big fan of it. Compare this with BW's Top 100 Brands 2005.
Photo by Stan Trac
The Top 10 Brands:
GE (General Electric)
Microsoft
Coca-Cola (1)
China Mobile
IBM
Apple
McDonald’s
Nokia
Marlboro
The combined value of all brands in the BrandZ Top 100 increased by 21%, from $1.6 trillion in 2007 to $1.94 trillion in 2008, more than twice the increase experienced the previous year. Google tops the list again with a brand value of $86.1bn, followed by GE at $71.4bn, and Microsoft at $70.8bn. The biggest risers in the ranking include Apple at $30bn with the biggest dollar increase in the Top 100 list, and BlackBerry, that entered the BrandZ Ranking at number 51 thanks to a brand value increase of 390%.
Interesting trends from this year’s BrandZ Ranking include:
1. Established Asia vs Emerging Asia — Chinese brands continue to get stronger according to the new BrandZ Ranking. Seven brands in this year’s Top 100 come from mature Asian economies: Japan, Korea, and Hong Kong. Their aggregate brand value increased by only 7% in the last year (to $111bn). In contrast, the value of the four Chinese brands that made this year’s BrandZ Top 100 increased by 51% (to $124bn). China Mobile, Bank of China, China Construction Bank and ICBC are only just starting to expand beyond China so they have considerable potential for further growth.
2. Continued Rise of the BRICs — Emerging markets play a key role in driving growth for international brands, for example Apple and Gucci. In addition, the new BrandZ Ranking shows that domestic brands from emerging economies are gaining momentum. Chinese brandsperformed strongly and Russian-based mobile operator MTS entered the ranking at number 89. MTS is the first Russian brand to make the Top 100 list with a brand value of $8.1bn. Other BRIC brands to watch in future brand rankings include Lukoil, Beeline, and Baltika from Russia, ICICI from India, as well as Brahma, Petrobras, and Bradesco from Brazil.
3. Technology Boom — The technology sector (including mobile operators), which accounted for 28 of the Top 100 brands, outperformed all other categories in this year’s BrandZ Ranking, with a brand value growth of $187.5bn. This is more than half of the Top 100’s total increase.
My Take:
The Strong Brand Portfolio seems like an interesting idea and well reasoned investing strategy. It makes sense to me. It's not quite fundamental analysis or technical analysis. Brands will ensure company's profitability through the bad times as demonstrated by the graph on page 5. Many of these strong brands are also glamor stocks which means they will increase dramatic during good times. So it seems pretty sound. Many of these brands are also excellently managed companies with great business models.
For apparel (since I was in fashion for a bit), I am curious why Nike is number one. In my mind, Nike is not premium product anymore. It is almost a commodity. Then again, what's hotter than commodities right now? I don’t know a single person that doesn’t own a Nike item. Premium is something like Under Armor, Puma, or Adidas. It’s not something that everyone one has and comes out of an air conditioned sweat shop.
In the 1990s, sneakers like Nike’s could sell for hundreds of dollars. That’s a craze that I don’t think will return, just like Michael Jordan won’t. Sneakers like Starburys which are good quality and stylish sell for $15. Nike is also too big that it won’t be able to grow at the speed it did in the past. It still tries to be innovative with cool and innovative products. It still spends a lot on sponsorship and R&D. It even works with the hottest companies such as Apple to make products. But it is hard to be in its position where it is trying to be everything to everyone. It’s trying to appeal to mass market with its broad range of products, and thus quality suffers. It’s trying to appeal to shareholders with its low and questionable production methods, and so PR suffers. It’s trying appeal to the upper class by designing high quality and innovative products, but it has poor quality and cheap goods under its name. It’s certainty a difficult position to be in. It has to be careful or it might end up like Gap, completely lost and undifferentiated as a brand with high overheads. Which CEO are they on now?
For the time being, Nike seems to be doing enough things right to continue being on top. Simply put, you can’t be Wal-mart, the friend of low, mid-income folk, and be Whole Foods, the friend of high-income, green Prius drivers at the same time. Other thoughts, Lululemon should be on that list by next year. Puma should be higher. Zara and H&M should be switched. Guess should also be on that list. Next should be off the list.
I can't believe Tim Hortons is #5 in Fast Food. That's amazing. I haven't seen a single shop outside of Canada though... Thinking about Tim Horton's on Bloor St. right now. Ice Cap!
For Retail, Amazon is lower than Target? Are you kidding? Isn't Target at the going out of business stag party with Circuit City and Blockbuster? Anyways my point is Amazon is ranked too low.
What's ICBC?
Report:
No comments:
Post a Comment