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Interbrand together with Daily FT crowned the top 20 brands of
Sri Lanka and outlined how to take companies and the country global
By Uditha Jayasinghe
Top brands are synonymous with successful companies and Sri Lanka’s private sector showed its mettle at the inaugural Best Sri Lankan Brands Awards by showing it had the potential to become a global contender.
The pioneering initiative spearheaded by Interbrand, the world’s largest and most influential brand consultancy, in partnership with the Daily FT, was a resounding success with top companies vying for their share of laurels from all sectors.
The launch of Best Sri Lankan Brands was indicative of the strength of the country’s homegrown corporates and a growing understanding among business leaders about the significant role brands play in enhancing business performance.
Interbrand’s Sri Lanka partner MND Managing Director and CEO Michel Nugawela recapped the relationship between Interbrand and Sri Lankan companies, highlighting the growing consciousness of branding as an integral part of a company’s culture and its market presence.
“Over the past 20 years we have helped local companies define what they stand for and what they believe. We have created brand strategies that have helped them maintain their position in existing markets as well as break new ground in emerging categories. In 2015 December, we partnered Interbrand, the world’s most influential brand consultancy. There was a clear need in the market for a global player to bring its world-class strategy, analytics and design capabilities into the market, especially after 30 years of war. Now two years later we are very proud to stand here with Interbrand and celebrate the most valuable brands in Sri Lanka, especially because quite a few of them have been built by us,” he said.
He observed that over the past 20 years three key trends can be discerned: first there is very clearly a widening interest by CEOs for the widening role brands play in transforming businesses, secondly there is increasing understanding that people are at the centre of a business and companies require people to drive strategies and goals, and finally, this is also the reason Interbrand needed to come into the market, the initial growth burst after the war has once again reached a saturation point and logic dictates that the next phase actually has to be beyond Sri Lanka’s shores. For that, as Sri Lankan brands start to reach out regionally, they too aspire to be best global brands.
“We need to strengthen the value, the perception and the performance of Sri Lankan brands. The question arises that what is the value of a Sri Lankan brand globally? British Telecom conducted widespread research around the world in key markets and particularly Japan as it was a market they were interested in expanding into. They found the term ‘British’ actually stood for ‘old-fashioned’, ‘colonial’ and had nothing to do with ‘fast-moving’, ‘futuristic’ or any of the other associations that are critical to a telecom business. Based on that they contracted their name to BT,” Nugawela said.
The event was important for several reasons. One was that Interbrand included Sri Lanka in its best brands list. This is the most prestigious ranking of country brand tables in the entire world. The next thing that is very important is that these brands that make it into the best brands list, like the Sri Lankan brands, are valuated based on the same brand evaluation methodology of Interbrand’s best global brands.
“This is a global process, run by a global team and overseen by the Global Director of Brand Valuation of Interbrand in London. What it comes down to is this, the Interbrand list has no equal in Sri Lanka, it is the most prestigious list in the entire world and that is because Interbrand’s purpose is much, much higher, that is to grow the best Sri Lankan brands into the best global brands. Essentially what has happened through this valuation is that each of the brands that were long-listed as well as shortlisted were measured in terms of performance against the best global brands. So if you were diversified you were measured against the best globally diversified brands as well as diversified regionally. Your performance has been benchmarked and measured against the best in the world.”
“With Interbrand over the next few months and years, as we start strengthening our presence in Sri Lanka, you will be able to leverage their truly international, sector-specific content. There is no consultancy in the world that has this depth and breadth of experience and handling of global brands. This set of capabilities can be harnessed and combined with the best Sri Lankan brands to drive our growth into global markets. This will also create a platform for acclaimed experts to share their views on Sri Lanka.”
Despite having missed opportunities in the past, Sri Lanka still has the potential to leapfrog into a commanding position in development if it has the courage to change and grow, noted Interbrand India Managing Director Ashish Mishra.
More than half the top global brands list is dominated by brands from North America. Germany, Netherlands, the UK and a few other countries managed to make the list as well but by and large South Asia was absent from the list, he observed but insisted that can change in just a matter of years if the conditions were right.
“Why does Sri Lanka have no brands in this list? There are reasons that go back many decades in history. One was the industrial revolution, which mostly passed us by. That was when the world leapfrogged in its evolution. We unfortunately bypassed the industrial revolution, which is why we moved from a historic position of pre-eminence, from being leaders to being followers. That is history. What is happening now is industrial revolution 2.0, changes that we see, the technology and digital interfaces, the new ways of doing things touching everyone is nothing short of a second and even bigger industrial revolution. If we missed the first one, it’s our strong desire that we shouldn’t really miss the second one. We need to outgrow, we need to leapfrog.”
Mishra touched on what he termed two broad things developing countries need to outgrow: one is their approach to brand building, which is commonly seen as part of marketing and not an integral part of the company’s functions. The second thing is at a more practical level companies must become more professional and organised in the way they do business. Interbrand has the potential to be of incredible help in both these areas as that is what they specialise in.
“It is about getting the benchmarking right to begin with, we need to compete. We don’t have a choice but to compete with the best brands around the world. Even if we don’t want to go to the global market global brands will come to our markets so the entire debate of whether we should compete with global brands is not a choice. You have to benchmark right, get our management and building of brands more correct because that is what global brands do. If you want to be worthy competitors you have no choice but to do it in a similar manner and here is an opportunity to seize the opportunity.”
In a fast-changing world businesses are increasingly realising that it is people who matter, even the futurists who described the evolution of globalisation remarked that the first phase of globalisation would be about armies conquering countries but globalisation 2.0 is about multinational corporations who went around conquering markets and globalisation 3.0, which the world has entered into now, is about individuals with high cognitive potential who sense opportunities and make connections. Therefore individuals will lead this era making people more important than ever, Mishra insisted.
“If it is people-centricity, then it is about understanding and sensitivity. Then we have strong legitimacy to do that well because we come from a strong background of being sensitive and empathetic as a culture, that’s where brands can anchor the discussion inside of the organisation. We do a lot of things inside an organisation that operate as silos but seldom do these different departments talk to each other on basic principles of efficiency and cooperation. Brands create value by anchoring all these elements.”
Brands are increasingly becoming a set of thousand gestures. They are evolving beyond just one advertisement or public relations piece. Hundreds of little things make brands and some of them can be happening somewhere else in the world. Therefore companies need to get brands right from the beginning.
“Coming after three decades of strife, Sri Lanka is moving to normalcy in recent years. Sri Lanka has a lot of catching up to do and to build its country brand. There is a lot that can happen through the nation-brand. Country branding can lead to anchoring Sri Lanka’s tourism policy, segmenting sectors and doing targeted tourism. Like in the case of typical business organisations, even in the case of nations, there is an opportunity to anchor things on the inside with external outcomes. This will drive value, create growth but we need to change. We need to change because growth and change are inseparable, you can’t grow without changing and you can’t change without growing.”
In a deeply competitive world countries that focus on brand building have an edge in not just getting themselves noticed but converting that recognition into tangible economic growth, believes Interbrand Germany Strategy Director, Nation Branding, Guido Van Garderen.
As an example he spoke about the branding done with New Zealand where different logos were integrated into one so that recognition could be improved significantly. The same strategies have been adopted by other countries as well to make their country more recognisable around the world.
“What is nation branding? Most people think it is about a logo but real nation branding is about figuring out what are your economic development plans, and you attach that to the brand strategy, bring it to life with experience strategy and then you go to all the touch points. Very simplified you are saying if you want economic impact then you do that through experiences.”
Increasing economic growth from a brand perspective means countries will have to focus on brand associations. Van Garderen gave the example of France and asked the audience to say the first thing that came to their minds when thinking of France. The answers were compared with the impressions given from other people around the world. Studies have found that the Eiffel Tower is the most common association, followed by wine, cheese, the city of Paris in general, bread and fashion.
“What is interesting here is that the brand associations with France help the economy. Wine and cheese are huge export products, the Eiffel Tower gets millions of tourists and fashion is a billion-dollar industry. Now on average France has 6.2 associations, so it’s not only about the associations themselves, it’s about the quality of the associations and also the number of associations. I have also done this game for a country like Liberia but it has only 1.2 associations and even these are very negative associations. So nation branding builds positive associations that help economies. So then the question arises, if you can add one more image to the current association of Sri Lanka, what would help the economy? Now that is nation branding.”
When the same process was done with Kenya, it was decided that they wanted to keep a logo linked to tourism and at the same time they wanted to be associated with a new aspect such as the Silicone Valley of Africa so they called it the ‘Serengeti Valley’. The logo also links to ICT as it is a logo which can be typed in.
“But there are so many brands out there that we really have to organise for impact otherwise you just don’t get noticed. How do you stand out from the crowd? In the case of Kenya, like with New Zealand, there were many logos but they also realised it’s about how the country relates to its visitors and investors and tourists. So all the creative agencies were aligned behind one logo to improve recognition, and it made the marketing budget more efficient.”
“We have to impress through experiences. But what is an experience? An experience is a moment that leaves an impression. So if I say I’m going to Sri Lanka then that is quite an abstract statement. What does it really mean? It’s made up of many moments of plucking tea or seeing an elephant, going to see historic sites, visiting a small fruit market. In time all these experiences will coalesce into an impression. What is interesting is that all these little experiences will peak into a high point that we refer to as an impression. People will never forget how they feel. So how does Sri Lanka make people feel? Relating experiences back to who we want to be is real brand strategy, that will accelerate growth and that is real nation branding.”
The Best Sri Lankan Brands 2017 Awards event's Gold partner was CHEC Port City Colombo and its other partners were the Export Development Board, Colombo Stock Exchange, Sri Lanka Ports Authority, SriLankan Airlines, Hilton Colombo, Business Class, OfficeMax, Citrus Events and Classic Funtime.
– Pix by Daminda Harsha Perera,Upul Abayasekera, Ruwan Walpola and Lasantha Kumara
Daily FT Chief Executive and Editor Nisthar Cassim, speaking at the Best Sri Lankan Brand Awards ceremony, said that the entry of Interbrand and the launch of the Best Sri Lankan Brands list was a big boost for the country.
Following are his remarks.
Eight years ago when the Daily FT was launched, we were ahead of the need curve then. At that time some asked do we need a standalone daily business newspaper and why? They said the business sections of the national dailies were enough.
Eight years later the Daily FT is a must-read. Today it is a successful post-war brand in Sri Lanka.
In the same way, as we prepared for the launch of the Best Sri Lankan Brands List, there were similar questions. Do we need another awards scheme? Do we need a new list and what is special about this new list?
Like we identified eight years ago that the country would need an objective and independent daily business and financial newspaper in post-war Sri Lanka, the Daily FT today believes in the need for a global standard and more importantly a credible Best Brands list.
For this, there is only one credible and reputed global firm - Interbrand. Therefore the Daily FT and Wijeya Newspapers Ltd. are excited to partner Interbrand along with MND Ltd.
The entry of Interbrand and the launch of the Best Sri Lankan Brands list is a big boost for the country as well. We believe the timing is right as Sri Lanka re-profiles itself to be a true hub opening up more, embracing new FTAs and economic partnerships.
In this unfolding future the annual Interbrand Daily FT Best Sri Lankan Brands list will become a definitive guide, and the country’s reference list for any global investor or organisation interested in Sri Lanka.
Therefore, I thank everyone of you for joining us today to be part of this new journey to make Sri Lanka a hub for Best Brands and very soon make it into Interbrand’s prestigious 100 Best Global Brands list.
Building brands is a difficult and long-drawn out process but one that provides high returns for companies, insists Interbrand London Global Director Brand Valuation Mike Rocha.
Rocha also emphasised on the different ages of branding and where Sri Lanka was at the moment and how local companies needed to grow their brands to branch out onto a global stage.
Living business asset
“We are talking about brands today but what exactly is a brand? There are lots of definitions and for us a brand is a living business asset brought to life across all touch points, which if properly managed, creates identification, differentiation and value. There are lots of different elements to that definition but what I really want to focus on is this idea of a brand as a living business asset. Your brand is like your factory, your buildings, plants, machinery and employees that are business assets and like them your brand must be managed, systematically and carefully, over time.”
Interbrand defines different ages of branding. The first is the age of identity, which is the most traditional form that centres on creating a name, a logo and a visual identity for the brand. In the age of identity, brands help customers navigate a cluttered marketplace by assisting them to identify the product and speed up their decision-making process. The brand is valuable to a consumer because it helps them choose efficiently. One of the key goals in the age of identity is differentiation, that is to stand out and be distinctive and easily recognisable in the market.
“What do we have to measure the identity? Ultimately we are interested in awareness. How many people recognise us? So we need to drive awareness. Typically branding is seen as an extension of marketing, its role is to drive awareness, so companies tend to focus on one-way broadcasting communication such as advertising. Our role as custodians of brands is creating and managing that identity.”
Ages of branding
“The next stage of branding is value and I believe that is where Sri Lanka is. This is where brands are starting to be seen as business assets, business leaders start to think about how to manage this asset systematically over time. In the age of value we see much more significant investments in understanding the customer. This means significant research on customers and much more two-way dialogue mechanisms being put in place to encourage feedback from customers and processes inside the company to ensure that feedback is used to shape future products and services.”
In the age of value people are put at the centre of the business, Rocha said, which results in businesses taking a considered and consistent approach to the creation of value through strong brands by really understanding the role that the brand really plays within the organisation. How does the brand drive business results? What are the levers that can be pulled to get better business performance? How can companies create a brand to have a higher price premium in the market?
“The role of brand strategy is to bring business strategy to life. Branding stops being part of a marketing function and becomes something that is very closely aligned with business strategy and brand strategy that influences everything that a business does, not just as communication but its products, services, people, behaviour, the channels it goes to market and how it sells. This is a holistic approach that influences much more of what a business does.”
Branding professionals then move from being mangers of identity to measuring and managing value. Rocha went on to say that if consumers had invested in the companies that had been ranked by Interbrand since 2000 they would have received better returns than the picks made by the Morgan Stanley World Index, clearly showing how companies that concentrate on brand building had an edge in the global market and achieved better business results.
Two elements that Interbrand looks at in its evaluation is firstly the role of a brand, said Rocha. That is the influence of the brand in driving choice, the more powerful the brand the more influence it will have over how people choose. Brand strength is the primary diagnostic framework. This is where Interbrand really digs into a brand and starts to think about where its strong points are and what needs to be done next. Four internal factors and six external factors are also considered by Interbrand. The former is also deemed extremely important by Interbrand and without strong internal branding they consider it impossible to have a strong external brand. Interbrand evaluates brands on external information only to ensure a level playing field for all brands and to maintain objectivity.
Brand valuation
Rocha also detailed how Samsung came to Interbrand in 1998 when it was primarily a business-to-business chip manufacturer. Samsung desperately wanted to break into the consumer market but was struggling against competitors such as Sony and Nokia, who at the time were leading Asian markets. Samsung wanted an evaluation of their brand and the resulting work done by Interbrand helped them bridge the gap between being a chip manufacturer and a consumer brand. It also helped to shift the mindset within Samsung, which was very engineering-oriented, to understand the importance of branding in the process of device creation.
“We showed where the gaps were and gave clear recommendations on where they could start. We also embedded a KPI system so that the mindset shift could be better mapped. Over time this has gained more traction to the point that now brand valuation is at the heart of Samsung’s strategy. They have a Vision 2020 where they have stated that they want to be a top five global brand. We work with them every year going through the process of measuring and coming up with recommendations that will help strengthen the brand in a rapidly-changing environment.”
Rocha also gave three key lessons that Interbrand learnt from their experience in working with Samsung for almost two decades.
“First be very clear in what you want to stand for in marketing. Second never stand still and the final learning is take the long view. Interbrand has been working with Samsung for at least 20 years and it’s clear for all brands that to build powerful brands that drive a competitive advantage there has to be a long-term endeavour.”
1.A brand’s country of origin must be Sri Lankan as the Best Sri Lankan Brands table recognises the most valuable Sri Lankan brands, not those with other countries of origin.
2.To maintain reputational integrity and avoid conflicts of interest, Interbrand does not levy or accept payments to list brands in its table. This is not a practice Interbrand accepts.
3.There must be substantial publicly available financial information, either printed and circulated or published online to ensure transparency and comparability, and in turn enhance the usefulness of the valuations to wider stakeholder groups.
There are three key components in all of our valuations:
1.Role of Brand analysis is an analysis of the role the brand plays in the purchase decision. The role of brand understands purchase behaviour: the brand’s influence on the generation of demand through choice.
2.Role of Brand measures the portion of the purchase decision that is attributable to the brand, relative to other factors (for example, purchase drivers like price, convenience or product features). The Global Role of Brand Index (RBI) quantifies this as a percentage. Customers rely more on brands to guide their choice when competing products or services cannot be easily compared or contrasted, and trust is deferred to the brand (e.g. computer chips) or where their needs are emotional, such as making a statement about their personality (e.g. luxury brands).
RBI tends to fall within a category-driven range but there remain significant opportunities for brands to increase their influence on choice within those boundaries or even extend the category range where the brand can change consumer behaviour.
3.Brand Strength is an analysis of the competitive strength of the brand. Brand Strength measures the ability of the brand to create continuity of demand into the future through loyalty and therefore to reduce risk. In doing this it considers internal and external factors.
Brand Strength measures the ability of the brand to create loyalty and therefore to keep generating demand and profit into the future. Brand Strength is scored on a 0-100 scale, based on an evaluation across 10 key factors – Clarity, Commitment, Governance, Responsiveness, Authenticity, Relevance, Differentiation, Consistency, Presence and Engagement – that Interbrand believes make a strong brand.
Performance on these factors is judged relative to other brands in the industry and relative to other world-class brands. The strength of the brand is inversely related to the level of risk associated with the brand’s financial forecasts (a strong brand creates loyal customers and lowers risk and vice versa).
A proprietary formula is used to connect the Brand Strength Score to a brand-specific discount rate.
4.The roles of Brand and Brand Strength are combined with an analysis of the financial performance of the branded products or services to measure the brand’s ability to create economic value for its owner.
This measures the overall financial return to an organisation’s investors or its economic profit. Economic profit is the after-tax operating profit of the brand minus a charge for the capital used to generate the brand’s revenues and margins.
A brand can only exist and therefore create value if it has a platform on which to do so. Depending on the brand, this platform may include for example manufacturing facilities, distribution channels and working capital.
Interbrand allows for a fair return on this capital before determining that the brand itself is creating value for its owner. We build a set of financial forecasts over five years for the business, starting with revenues and ending with economic profit, which then forms the foundation of the brand valuation model.
A terminal value is also created, based on the brand’s expected financial performance beyond the explicit forecast period. The capital charge rate is determined by reference to the company’s weighted average cost of capital.
Brand value
The brand-specific discount rate is used to discount brand earnings back to a present value, reflecting the likelihood that the brand will be able to withstand challenges and deliver the expected earnings into the future. This is equal to brand value.
