The Power of Brands: How to enhance your brand in Asia

"Establishing brand names that can pull markets is a strategy Asian firms ought to consider seriously when aspiring to expand not only within the country but beyond the national borders", says OPC lead consultant Dr Paul Temporal

Paul Temporal specialises in Asia strategy, brand strategy and market research. He is editor of Branding Asia dot Com, an advisory board member of the Asia Pacific Management Forum, and an Orient Pacific Century consultant. He consults for many Asian companies on brand strategy.

The Power of Brands

The Economist magazine called 1988 "The year of the brand". It was the year Phillip Morris took over Kraft in the US and Nestle bought Rowntree in Europe. Phillip Morris paid four times the value of the target company's tangible assets and Nestle over five times.

In 1988 just four brands were sold for US$50billion. Such incredible payments for "names" were a reflection of the value placed on the brands in terms of long term profit expectancy.

Since then the trend has continued and the power of brands to command colossal prices has become much more noticeable.

The question is, how is it that brands can deliver such spectacular rewards? The answer - it's all in the mind!

How brands influence people

The first thing to recognise when we talk about brands is that they are not just names, terms, symbols, designs or combinations of these, although it is true to say that such things can and o differentiate certain products and companies from others.

The additional ingredient that makes a successful brand is personality.

Today's leading brands are personalities in their own right and are well known in all societies and cultures as film heroes, cartoon characters, sports stars or great leaders.

In Asia, Coca Cola, Sean Connery, Nestle, Sony, Batman, Mercedes and Michael Jackson are equally well known. Thousands of people relate to brand personalities in the same way as they do to human personalities.

There is, of course, a psychological basis to this, and the psychology behind brands really stems from Carl Jung's work where he described the four functions of the mind - thinking, sensation, feeling and intuition.

The secret to successful branding is to influence the way in which people perceive the company or product, and brands can affect the minds of customers by appealing to those four mind functions, or combinations of them. This is how it happens.

Some brands appeal to the rational part of a person, to the elements of logic and good sense (the thinking dimension) such as toothpaste which prevents decay and cholesterol-free foods. Others appeal to the senses of smell, taste, sight and sound such as fashion and cosmetic products.

Some brands attract the emotional part of people appealing to the feelings' dimension to which consumers react with feelings of warmth, affection and belonging. Products such as Harley-Davidson motorcycles and companies like Benetton with its global village branding exemplify these.

Then there is the strange phenomenon of intuition. Some companies and products are attractive to people who intuitively feel comfortable with them, because they see these brands as an extension of themselves, a good fit to their personality, lifestyle, aspirations and behviour -- companies like the Body Shop, with its environmental approach.

Brands influence consumer decisions to buy in any of the above ways, or through combinations of them, sometimes with tremendous persuasive appeal.

The Marlboro brand personality is a good example of how a company understands and combines the physical and emotional elements that appeal to certain customers who live or would love to live a certain lifestyle. Products such as gold credit cards, watches or prestige items help people to express themselves to others by demonstrating that they are different and have achieved something. They act as extensions of the personality, so it really is "all in the mind", and the key to brand management and development is a clear understanding of what benefits the customer is looking for.

Ask consumers what comes to mind when they hear the name of a big brand such as BMW or Gucci and they will reply with a list of attributes which go far beyond the physical tangible aspects of product and delivery, but if there is one word which brings all these things together in people's mind, it is value.

Time and again, research shows that the real driving force behind market leadership is perceived value - not price or inherent product attributes. As long as a brand to offer customers superior perceived value, then good market performance will follow, which makes consistency a highly important feature of brand behaviour.

People prefer to buy brands

Brands are also successful because people prefer them to ordinary products. In addition to the psychological factors already mentioned, brands give consumers the means whereby they can make choices and judgements. Bases on these experiences, customers can then rely on chosen brands to guarantee standards of quality and service, which reduces the risk of failure in purchase.

Today's world is characterised by more complex technology, and this can be extremely confusing to people who are not technology minded. Brands can play an important role here by providing simplicity and reassurance to the uninitiated, offering a quick, clear guide to a variety of competitive products and helping consumers reach better, quicker decisions.

Product or corporate branding?

This is the question that most companies have to consider sooner or later, and there is no obvious answer, as success can be achieved by adopting either route, or a mixture of the two.

With product branding, the company gives each product a brand name and there is little or no attachment of the company relationship. Each brand has to compete on its own merit, such as Pizza Hut which normally operates without any endorsement from parent company Pepsico.

The trend nowadays seems to be going in the opposite direction, however, with many companies opting for either pure corporate branding or house branding. With corporate branding the company uses one brand - usually the company name - for all its products and services, as in the case of IBM. If a company uses what is often referred to as house branding, the individual products are separate identifiable brands but the overall company brand is used as an endorsement of origin and quality. This is often the preference for motor car manufacturers, the hospitality sector and financial institutions.

Corporate branding encompasses image and identity building, an activity now being pursued by many Asian companies.

Trying to build organisations with an inspirational mission to acquire and keep customers is currently a major objective for the new, successful organisations here. If done well, it certainly helps give consumers in many market segments consistent, controlled messages. It can also be beneficial in helping companies defend themselves against acquisition - or the reverse!

Brand values - hub of the corporate wheel

A company's advertising, promotion, changes in name, new logo design or other activities will not successfully build a brand unless there are certain well-defined values which are consistently communicated and demonstrated by the company which are recognised and appreciated by customers.

Once brand values have been identified, they should drive all other activities impacting on customers and be used to achieve consistency, which is so meaningful to consumers. All aspects of marketing and communications should reflect the brand values, as should company employees in demonstrating those values in their behaviour to customers.

The rewards of brand

Building a brand is a corporate strategic issue and not a short-term tactical activity.

For companies wanting to satisfy the needs of consumers and beat the competition, then building a brand provides an opportunity which, if realised, could do not only this but also defy the test of time - for brands have no limit to their life expectancy.

Many brands established in the 1930s are still the top brands in the late '90s. From Coca-Cola to Colgate, Kelloggs to Kodak, we see many examples of the big brands successfully having defended their number one position in their chosen markets and they, along with other famous names, have become synonymous with their industries.

Brand loyalty also means that companies achieve a greater consistency of demand through customer retention. Over time, good brand strategies generate the production volume which gives the economies of scale necessary to have a favourable impact in unit costs. In turn, this allows companies to achieve higher margins, putting them in a winning situation.

Brand resilience can help companies ride out stormy weather, as with Mercedes in 1982, when other car manufacturers around the world suffered disastrous sales, apart from Mercedes which continued to sell well: often up to 50 per cent more than other European competitors. And, because of the magnetic influence they have over purchasing behaviour, successful brands allow companies to charge premium prices for their products and services, which of course generate higher profits. Surveys indicate that brand leaders can return a margin four to six times that of the closest competitors.

Brands can even assist moves across industries to penetrate new markets. Dunhill is an excellent example of this. Formerly based in the declining-image industry of tobacco, Dunhill is now firmly established internationally in upmarket clothing, toiletries and fashion accessories.

The Asian challenge

Consumers in Asia are much more powerful in the '90s and this trend will continue into the next century. They have better knowledge, greater curiosity, are more discriminating and exercise their right to choose more carefully and ruthlessly than ever before.

Successful global companies recognise that the source of their prowess in world markets is branding, and that investment in plant, technology and people is no longer enough to guarantee long-term sustainable profits. Brand has become a vital strategic issue for Asian companies. In increasingly turbulent markets, brands are a key to customer loyalty, long-term survival and growth.

The challenge facing the young dynamic companies of Asia is to build powerful global brands that will deliver long-term success for the nation, through good and bad times.

Is branding on your agenda?

Paul Temporal