Croatia lessons for brand Sri Lanka

Whilst many interpretations are made on the Budget 2023, if one analyses the media today, tourism has become the only saviour that can save Sri Lanka from the liquidity crunch. But many have forgotten that for a brand to perform in the market place we need to invest and give purpose to a brand. The world must understand that only with ‘input’ we can expect an ‘output’. Let me capture a best practice that might help Sri Lanka.  

Sri Lanka today

Whilst the macro data tells us that Sri Lanka must be on red alert we are now seeing what it has done to a Sri Lankan household. UNICEF reported that Sri Lanka has the highest acute malnutrition where for children under 5 years, almost 17% are suffering from chronic wasting – a disease that carries the highest risk of death. It is also reported by UNICEF that 5.7 million people which includes 2.3 million children require humanitarian assistance in Sri Lanka making the country be in the top 10 counties for malnourished children which is serious.  

The latest release by the University of Peradeniya states that 42% Sri Lankan households are in poverty. To be specific 9.6 million people. It is sad that top treasury officers who are now consultants are seen in the media stating that poverty is not an issue in Sri Lanka. Such officials must be made known that it is the taxpayers who pay their salary and in fact must be charged in court for distorting facts. It’s time that the Sri Lanka legal system exercises its ‘lethal hand’ as the brunt of the issues are faced by the common man whilst the 8-10% upper income segments have no change to their lifestyles.

What policymakers must understand is that food based nutrition is the best for children and pregnant mothers. If this is deprived it will hamper brain development. The policymakers must be accountable and responsible for the statements they make if not very soon such people will be taken to task by the taxpayers of Sri Lanka who are getting axed by 36% from November as announced by Inland Revenue.  

Household reality 

Whilst the above macro data gets splashed on different media, for the housewife these are only statistics. What she is up against is the reality of how she puts food on the table. Let me share some data at the consumer end. 

Over 50% of the households are stating that they cannot afford to purchase full cream milk powder and biscuits. To be specific 67% say that they cannot afford to buy cream biscuits and 50% plain biscuits. From the rhetoric we hear in Parliament, the majority are showmen fighting for their survival of the seat than to serve the public. 

We yet hear corruption allegations which are in millions of rupees like the coal scandal that COPE has addressed and financial irregularities like the sugar scandal of Rs. 16 billion, the fertiliser payment of $ 7 million to a Chinese party where Sri Lanka never saw and products and the Japanese light railway project that saw a minister removed and once again appointed by the current president. Sad for Sri Lanka.   

Deep dive 

If one does a deep dive, we see that almost 35% of the households are reducing the quality purchased of full cream milk powder, whilst 21% are moving to smaller packs whilst 18% have stopped the purchase of full cream milk powder (FCMP). The good news is that the number was higher at 27% the month before but now it has come down to only an 18% not purchasing FCMP. But this behaviour will only get worse as when a person with a 100,000 income gets taxed 6% and then in multiples the challenge at the household end will only further deteriorate. That is the reality and we have to accept this. 

Another important point to note is the quality of life that is fast declining. If we take the purchasing behaviour of shampoos, almost 24% households state that they have moved to cheaper brands and 10% state that they do not buy the category. Meaning they have gone back to using soap on their hair. This is very sad given that for brand marketers to rebuild this behaviour will take time. Only a brand marketer understands how hard it is to change consumer behaviour. 

If one takes the washing powder market, almost 14% have reduced the consumption whilst 21% have shifted to smaller packs and 3% say that they do not buy the category any more. This behaviour too will drastically change given the attack on the purchasing power of a household with the increasing taxes. The consumer behaviour of washing soap 22% of the household has moved to purchasing bulk packs to save on costs while 6% has moved out of the category. It will be interesting to see which category they have moved to. 15% of households have moved to cheaper brands which is obvious. 

 

Country perceptions 

 In this backdrop we are asking brand tourism to perform and get traction in the global market. If we ask people what the perception of Sri Lanka is out there – the top of mind concepts we will get are ‘where a terror organisation was there, the tsunami hit country, Easter attack and now the country that is bankrupt’. 

If we examine the perception of some other cities/countries: Delhi is fast but surely earning a reputation as the rape capital of the world due to the continuous media reports on the behaviour of its people of alleged rape attacks. Many forget that perception is reality even though factually we do not know the validity of these reports that appear in the media these perceptions drive consumer behaviour.

Japan is associated with technology solutions stemming from the automobile industry, Kabul with suicide bombings, Cuba on the Fidel Castro dictatorship, Sudan for the African civil war, whilst the US is yet perceived for giving leadership to the world whilst the UK for colonial tradition, to name a few. The scary question is, what is Sri Lanka getting labelled for? Has there been a reality check done so that we can sketch the future goal? As of now we are just driving organic growth rather than a trajectory’s desired brand image. Did we know that Sri Lanka’s brand value got hit so hard in 2018 that even countries like Algeria and Ukraine beat us on the global stage as per Brand Finance?

I still remember when I was driving brand Dettol our desired image statement we wanted was that “a family that uses Dettol falls ill less often”. Then we behaved in the market place with delivery so that we earned this right from a consumer. I repeat we must earn the right with delivery and not by glitzy advertising. 

Simon Anholt, the nation branding expert who has advised over 59 global leaders on building the image of nations, comments: “Your reputation as a country is what you earn over time. You cannot just fabricate it with sexy advertising and promises that the country does not live up to. This is the brutal truth we must accept as we look at Re building Sri Lanka. Let me take the example of a country, Croatia, to explain this concept. 

Why Croatia?

 Croatia is a Central European and Mediterranean country with a population of 4.5 million people and a GDP per capita of $ 18,331. Croatia has an image as one of the most successful incoming destinations in the Mediterranean and is ranked ninth in terms of the rate of growth of its national brand as per Brand Finance.

The Croatia nation brand was valued at $ 30 billion in 2011 and placed the ninth fastest growing value by 21.2% and was termed as being one of the only two European countries to make the ‘Most Improved’ list. This performance is commendable because most other European countries lost in value in the Nation Branding Index. 

What is nation branding?

 Very simply, the Nation Brand Index measures the power and the appeal that a country has globally. Conducted annually, it uses the works of top policy advisor and consultant to many governments, Simon Anholt. But a key principle in nation branding is that what is required is not sexy advertising on a window-dressed platform. Nation branding is emanating credible statements on a consistent basis so that a country earns a reputation that it deserves.

Croatia – unplugged

 Croatia built the brand by focussed behaviour demonstrated at the ground end. It was never through advertising. It was by being a corporate citizen in the global stage where if someone says ‘I have deleted Croatia in the celestial key board’ people all over the world will protest and say they want it back. That is the acid test. Let me capture the essence of what Croatia did.  

1) Exports

 Croatia received very different ratings on the various scores that go into the Nation Brand ranking. While the country’s brand equity and infrastructure rankings remain low, strong economic growth and the prospect of EU membership raised the country’s economic rating. Hence the economic factor has played a major role in the uplift of the nation’s brand value.

In late 1997, the Croatian Chamber of Economy started the Project to Visually Mark Croatian Products with Croatian Quality and Croatian Creation labels. The Croatian Quality label is given to 110 Croatian products whose properties meet high world standards. With regard to multilateral cooperation, special attention is paid to the EU as the most important foreign trade partner, because full membership of this European integration is the main strategic goal of Croatia. 

Therefore, branding is also seen as crucial to Croatia because it has realised that timelines for acceptance into the European Union and ability to compete against their neighbours for investment in part depends on how they are perceived by more developed European countries. 

We saw a stable increase from 1993 to 2008 and during the period of 2008 to 2009 there is a decrease in the trend and this is mainly due to the economic crisis. But from 2010 onwards we can see a stable increasing trend which will have a positive impact on the country’s brand value. 

2) Governance

 Even though Croatia’s brand equity was hurt by the lasting associations of the country with the brutal Yugoslav wars in the 1990s, and the unwillingness of post-war governments to cooperate in the prosecution of war crimes suspects, the country has worked hard in building their brand image.

Croatia today has a very high Human Development Index. The International Monetary Fund classified Croatia as an emerging and developing economy, and the World Bank identified it as a high income economy. Croatia is a member of the United Nations, the Council of Europe, NATO, the World Trade Organization, CEFTA, and a founding member of the Union for the Mediterranean. Croatia is an acceding state of the European Union, with full membership expected in July 2013. 

Croatia has established diplomatic relations with 174 countries. As of 2009, Croatia maintains a network of 51 embassies, 24 consulates and eight permanent diplomatic missions abroad. Furthermore, there are 52 foreign embassies and 69 consulates in the Republic of Croatia. The population is covered by a basic health insurance plan provided by statute and optional insurance. In 2009, annual healthcare related expenditures reached 20.6 billion kuna (Euro 2.75 billion). Healthcare expenditures comprise only 0.6% of private health insurance and public spending. In 2010, Croatia spent 6.9% of its GDP on healthcare. 

3) Culture

 Croatia represents a blend of four different cultural spheres. As of 2009, Croatia had 23 professional theatres, 14 professional children’s theatres, and 27 amateur theatres visited by more than two million viewers per year. The professional theatres employ 1,100 artistes.

There are 24 professional orchestras, ensembles and choirs in the country, attracting an annual attendance of 323,000. There are 117 cinemas with attendance exceeding 3.5 million. Croatia has 175 museums, visited by nearly 2.2 million people in 2009. Furthermore, there are 1,685 libraries in the country. It shows people’s positive attitude towards aesthetics. 

4) People

 Croatia has established a high level of human development and gender equality in terms of the Human Development Index and it also promotes disability rights. Literacy in Croatia stands at 98.1%. A worldwide study about the quality of living in different countries published by Newsweek in August 2010 ranked the Croatian education system at 22nd, to share the position with Austria. Primary education in Croatia starts at the age of six or seven and consists of eight grades. 

In 2007 a law was passed to increase free, non-compulsory education until 18 years of age. Compulsory education consists of eight grades of elementary school. Secondary education is provided by gymnasiums and vocational schools. As of 2010, there were 2,131 elementary schools and 713 schools providing various forms of secondary education. Primary and secondary education is also available in languages of recognised minorities in Croatia.

There are 84 elementary level and 47 secondary level music and art schools, as well as 92 schools for disabled children and youth and 74 schools for adults. Croatia has also produced inventors and two Croatians received the Nobel Prize. Such factors will have a positive impact on the overall nation brand value. 

5) Tourism

 Since the conclusion of the Croatian War of Independence, the tourist industry has grown rapidly, recording a fourfold rise in tourist numbers, with more than 10 million tourists each year. Tourism dominates the Croatian service sector and accounts for up to 20% of Croatian GDP. Annual tourist industry income for 2011 was estimated at € 6.61 billion. 

After 2000, we can see a stable increase in the number of tourists visiting the country, which is a positive factor in building brand Croatia. 

Way forward – Sri Lanka 

So what should Sri Lanka do?

 1) A national marketing committee must be set up to understand how a strong nation brand comes into play, may be based on the works of Anholt-Roper. 

2) Thereafter, one must bite the bullet and understand how the world perceives Sri Lanka in these six dimensions. 

3) Sri Lanka must engage the expertise of a personality like Simon Anholt so that he can guide the policymakers that this is not a strategy but it has to be earned with conscious decision making based on the current perceptions the world has on Sri Lanka.

4) All key stakeholders must understand the importance and take ownership of the importance of Sri Lanka becoming a strong brand globally with a reputation ‘earned’ and not financially procured. 

5) There must be a quarterly monitoring system so that corrective action can happen. Which must be monitored by the President of the country personally. 

6) We must identify the risks associated that can harm the brand. For instance, when Columbia wanted to change the perception people had as the ‘kidnapping capital of the world,’ then it had to ensure that such occurrences would not happen again. 

Conclusion

 At the end of the day, the brand custodians are the people and it is only the people of the country who can take it forward. If not, our actions only keep hurting the brand Sri Lanka, which is very sad when there is so much good going for Sri Lanka.

(The writer is a Brand Marketer professionally and works for a South Asian Artificial Intelligence (AI) company Clootrack Software Labs – Sri Lanka, Maldives and Pakistan. He was the former Chairman Sri Lanka Export Development Board, Sri Lanka Tourism and was the Commissioner General of World Expo in Italy.)