Branding is very important for businesses. It is a management tool that can create value in business. However, currently the number of strong Asian brands is only a very small part of the strong brands in the world.
According to the assessment of economic experts around the world, Asian enterprises build a strong brand mainly by focusing on product quality at competitive prices. Until recently, these enterprises have only begun to pay some attention to a branding strategy, while American and European companies have long considered brand development as the focus of their business strategy.
Asian business leaders are largely dismissive of branding. Many Asian business leaders today view branding as just a veneer. One need only look at the “Bollywoodisation” of the Indian advertising industry to understand why branding in Asia is seen as a fad rather than a business. But that is a misconception.
Branding is more than just a sales tool
If we look at any of the world’s leading brands like Coca-Cola, BMW, American Express, Adidas, we can see that they all take their brands very seriously. All of these big companies see their brands as more than just a sales tool: they are management tools that can create value in their business. A strong brand can increase profits and shareholder returns.
The next generation of Asian businesses that want to make a mark in the global business environment must be brand-conscious. CEOs and CFOs must understand that branding strategies have the power to transform an entire business.
In business terms, there is one word that sums up the importance of brands: money. When writing The Business of Brands, the authors spoke to many of the CFOs of the world’s leading brands. And many of them said that the true value of a brand is its ability to maintain and grow its cash flows. Here is a key theme that emerged:
A strong brand can increase cash flow
Why are we more likely to pay $200 for a pair of Nike shoes than $50 for a no-name pair? Customers know the value of the brand and are willing to pay for it. A strong brand can increase your company’s cash flow by capturing market share and making a higher price acceptable.
A strong brand can speed up cash flow turnover.
Shortening the time gap between investment and return can increase shareholder value. Companies with strong brands can launch new products and services more quickly than those with weak brands, because the existing credibility of the brand facilitates customer acceptance. There is even evidence that a strong brand can stimulate innovation, acting as a “North Star” to guide research and development, thereby accelerating the return on investment in product development.
A strong brand can extend the product life cycle.
Many brands have real staying power, they have been famous for a long time and even keep up with the times. For example, Evian mineral water has been bottled since 1826 and Coca-Cola has been famous since 1887. Big and famous brands give people a guarantee: they feel secure with these brands. This is also partly why strong brands have a solid position in the market. Of course, maintaining a brand is not easy, a well-invested brand can become a goose that lays golden eggs.
A strong brand can reduce risks to cash flow
Protecting a company’s cash flow from the risks inherent in business is a headache for corporate CFOs. Strong brands have proven to reduce risk for a company. In turbulent times, a strong brand can be a source of stability. A strong brand can create barriers to entry for competitors, thereby reducing the competitive threat to cash flow.
Get more serious about branding
It is time for Asian business leaders to take branding seriously. Of course, branding is a complex, elusive thing, and it is easier to understand the physical aspects of a business than it is to understand the brand. As Jeremy Bullmore, a director at advertising giant WPP, puts it, “Branding is a complex, elusive, half-truth, half-truth. CEOs often struggle to think about it!”
Yet I don’t think many globally successful companies seriously question the importance of branding. Certainly, for leading businesses, branding is central to the matter.
For American Express, maintaining a strong and distinctive brand is crucial to the business model. “While there are many paths a financial advisory firm can take today, we will only do what supports our brand,” commented CEO Ken Chenault.
For BP, branding is the unifying force of the company’s diverse operations. “Because we don’t all have a common past, branding gives us a common future,” former brand director Michel van Eesbeeck told us.
For Dove, a strong brand has driven incredible growth – from an American soap maker in 1990 to a global personal care brand worth more than $2 billion today. “The persistence in creating a worthy brand position has been a key factor in Dove’s success,” says brand director Silvia Lagnado.
For Coca-Cola, branding is a top priority. Former CEO Douglas Daft commented, “The Coca-Cola brand is at the heart of our company, and branding is our master skill.”
For Nike, good products alone are not enough to ensure success. Phil Knight, the company’s founder, told us: “Focusing on the product is a necessary start, but it’s not enough. We have to fill in the gaps, starting with who our customers are and what the brand stands for.”
Even at IBM, when working with CIOs, they see branding as the key to success. “Every decision, whether you buy a jetliner or a can of Jell-O, has both a rational and an emotional component,” says marketing director Abby Kohnstamm.
These and similar companies see their brands as a lever for business development. Branding is not a fad, it is a real business. Only when Asian business leaders realize that brand development strategy must be a top priority in business operations will Asian brands gradually gain a foothold in the world market.
Manager
