Wednesday, May 19, 2010

Are brands as valuable as they say?

I decided to write my latest article on brand valuations after reading a survey called The Top 100 Global Brands for 2010. It purported to show which global brands added the most profits for their owners and thus were the most valuable. Here are the top 21:

1 Google 2 IBM 3 Apple 4 Microsoft 5 Coke 6 McDonalds 7 Marlboro 8 China mobile 9 GE 10 Vodafone 11 ICBC Asia 12 HP 13 Walmart 14 Blackberry 15 Amazon 16 UPS 17 Tesco 18 Visa 19 Oracle 20 Verizon 21 SAP

The top UK brands were : 1. Vodafone 2. Tesco 3. HSBC 4. BP 5. Shell 6. O2 7. Barclays 8. Standard Chartered 9. Marks and Spencer 10. Smirnoff

Spain was represented by Movistar, BBVA, Santander and Zara.

I noted that 12 out of the top 21 were tech-related: computer/internet/mobile. Ever suspicious I began to have my doubts about the list with such concentration of names from one sector. For sure you would expect names like Google and Microsoft to be up there on the list but so many tech names had to be more than a coincidence.
Brands earn their keep by allowing their owners to charge a premium price for their product or service because they are highly thought, because they are perceived to be cool or simply because they are long-established and consumers feel comfortable with them (think Cadburys, Heinz). My suspicion is that the compilers of this list saw the high profits that these tech companies were making and put that down in large part to brand. But actually, in the technology arena, at least brand is actually less important. Why do you buy an iPod? Because it has an Apple logo on? No, because it is a clever, useful gadget. If Sony made a better one you'd buy that and Apple's profits would disappear. Same with Microsoft, no 4 on the list. It's actually not got that great a brand image and people buy their products because they practically have no choice.

When you move away from technology then brand becomes more genuinely important and you can't really argue with the high values given to such names as Coke, McDonalds and the luxury marques like Hermes. But hopefully the article will make people who read it a bit more wary of just accepting the claims of this report and others similar. We buy products and pay premium prices for lots of reasons and are not quite the unthinking slaves to branding that the marketing folks would have us believe. Here's my article:

1 comment:

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