Friday Nov 15, 2024
Friday Nov 15, 2024
Wednesday, 19 May 2021 00:00 - - {{hitsCtrl.values.hits}}
Brand Finance Lanka, the pioneering brand valuation and strategy firm, has released its 18th annual review of Sri Lanka’s most valuable brands.
While the total value of Sri Lanka’s most valuable brands in the year under review increased slightly by Rs. 15 billion or 2.6%, it still falls short of the total value recorded in 2019. This clearly illustrates the impacts that the Easter bombings and COVID-19 have had in successive years on brands operating in Sri Lanka.
Sri Lanka’s economic activity and consumer spending power waned over this period, and more established brands have benefited, as consumers have migrated to those that are familiar and trusted.
How we do it
Our valuations follow a process that tracks how marketing and other corporate managers’ specific actions result in changes to the perception of a brand (i.e., quality, price, positioning, personality, availability, etc.).
Through market research, we measure how much a brand’s action has impacted its familiarity, consideration and recommendation and how increased consideration leads to stakeholder behavioural change, ultimately leading to a favourable financial uplift due to new and increased purchases.
The process flow can be used in the opposite direction too, where changes in brand value can be used to explain what actions need to be taken by marketing and corporate managers to strengthen a brand’s ability to build value.
So, this is both a comprehensive summary of all activities performed during 2020 and a highly actionable tool for brand guardians on the way forward; the crucial point being that brands should never be viewed as solely an output of advertising. Instead, a brand is an asset that impacts all stakeholders with the ability to influence the entire business and can be directly linked to building business value.
Overview
2020 was, by all accounts, one of the most tumultuous years for all businesses. The Easter bombings in 2019 followed by COVID-19 had different impacts but resulted in similar outcomes: depression of the economy with a resultant reduction in consumer purchasing power. In such circumstances, the brands that a company owns, are, arguably, now even more critical than ever before to sustain and grow the business.
Brands can take decades to build. However, once built, they are resilient and can sustain a business during difficult times; this is what we see in this year’s results. Our analysis shows that those businesses that have systematically and strategically built strong brands have withstood the vagaries of uncertain times, performing significantly better than their weaker counterparts.
The winning brands
Amidst the turmoil, Dialog has retained its enviable position as the most valuable brand in Sri Lanka for the third consecutive year. However, it now has a serious competitor to contend with in SLT-Mobitel, which has catapulted into the top 10 through the merger of the two independently operated brands. Everything will now depend on the ability of SLT-Mobitel to deliver the services of a fully integrated technology service company, whilst leveraging brand and operational synergies, to be able to take on Dialog at the top of the table. A mere visual identity integration will not be sufficient.
Dialog is only slightly ahead of the No. 2 brand Bank of Ceylon with just Rs. 73 million separating them. People’s Bank has retained its position as the third most valuable brand even though its brand value decreased this year.
As part of our process, in addition to brand value, we measure brand strength. Dialog has been able to retain its position at the top of the value table because it is still the strongest among the 100 brands. Maintaining a brand strength score of 86 (out of 100), it has retained its Brand Finance AAA rating this year as well.
Since the late 90s, Dialog has continued to prove itself as the pioneer in technology by being quick to take new initiatives to move into digital innovations. The brand continues to show confidence in its growth strategy through key initiatives such as acquiring H One to supplement Dialog’s expansive suite of enterprise solutions and its partnership with Zoho to enable technology diffusion across all enterprise segments.
Keells has emerged as the second strongest brand with a score of 83 (out of 100), and, as a result, it saw a brand value growth of 29%. It has been able to leverage opportunities in online services during periods of lockdown in several parts of the country to maintain its growth momentum.
As more Sri Lankans shop for their staple food products in the ‘modern trade’, we have another top contender in Cargills Food City, which has made its debut in the top 10 this year.
Strong and weak sectors
The sector that showed the best performance in our table was supermarkets driven by Keells and Cargills Food City, while Arpico fared poorly. Procuring basic groceries became a challenge in most urban areas during lockdowns, and online delivery surged. As consumer movement was restricted, supermarket chains had to dust off their online platforms to serve customers with direct-to-home delivery. Brands that successfully leveraged technological advancements emerged as front runners in this year’s brand valuations. Keells and Cargills Food City responded well, with customers recognising this, evident through the 18% increase in overall brand value in the sector (excluding the new entrant, Lanka Sathosa).
Hospitality was the biggest loser of brand value at a drop of almost 36%. As holidays were cancelled and people were instructed to work from home, the hospitality sector reached an almost complete standstill, from both foreign and domestic travel, for the better part of 2020, until it began to pick up towards the latter part of the year. This had a massive negative impact on the sector’s financial outlook, driving down brand values across the board.
Another clear impact of COVID-19 was the crisis faced by the air travel industry. SriLankan Airlines was no exception to the global turmoil and recorded a decline in brand value by 15%, due to cancellations of many routes, significantly impacting its financial performance.
Future challenges
During times of uncertainty, building resilient brands should be what drives marketing decision making. This requires a long-term view by adopting a brand blueprint or a well-defined brand platform and better brand management processes with strategic decision-making where investments are made in only those areas that will result in superior returns.
One of the major challenges for marketers is to be more accountable not only for external changes around consumer perceptions but also for internal financial outcomes. By linking marketing with financial metrics, greater marketing accountability is established at the level of the board.
Although Sri Lanka is no stranger to rough patches, the road to recovery and hopes are pinned on how the country recovers from the current surge in virus cases and how quickly the global economy returns to normalcy.
The complete list of the most valuable brands and detailed analyses can be found in LMD’s Brands Annual 2021.
