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Published on October 1, 2007

A very complex methodology is used - stripping out operating costs and discounting future earnings, among other things - to come up with a final valuation of the brand as a financial asset.

There were a total of 100 global brands analysed. Let's look at which ones grew the most or lost the most in brand value in the past year. (See box.)

Loyal readers of this column might remember that we reviewed the same thing last year. If we go to last year's column, we find three very interesting things.

First, Google and Starbucks were also in the top five growth brands last year. Now, to make the top five in any given year is pretty darn good - to make it two years running is amazing.

These two brands excel in understanding and adapting to their customer needs. They never stop innovating and changing their product offering. Later, we will list some of the things they do to create success.

Second, Ford, Gap and Kodak were also in the top three last year for being the biggest losers in brand value.

What is going on with these companies? Kodak is fairly easy to understand: its main product - film - is seeing plummeting sales as the world continues its shift to digital photography.

But Ford and Gap are two companies in strong industries. However, they simply cannot understand their customers and fail to deliver products that are desirable to buy. Toyota grew 15 per cent last year (just missing out on the top five). Toyota actively seeks out its customers and builds automobiles that people want to buy. When was the last time you thought of buying a Ford?

Gap is a clothing retailer that lost touch with its consumers years ago and has struggled to find its footing. On the other hand, the No-2 growth company is Zara.

According to Wikipedia, "Zara is the flagship chain store for the Spanish Inditex Group, which also owns brands such as Massimo Dutti. Today, Inditex is probably the world's fastest-growing retailer with over 3,100 stores in over 70 countries (more than four times the 2000 figure), the Zara format taking around 1,000 of those stores. The group employs 32,000 people and 200 fashion designers, and an amazing 20,000 new stock [items] every year reach its stores. In March 2006, the group overtook Sweden's Hennes & Mauritz to become Europe's largest fashion retailer.

"Zara has a unique business model that has enabled it to expand and compete with quality brands at affordable prices. For instance, it is claimed that Zara needs just two weeks to develop a new product and get it to stores, compared with a nine-month industry average, and launches around 10,000 new designs each year. Zara has resisted the industry-wide trend towards transferring production to low-cost countries."

Unique business model … 20,000 new stock every year … two weeks to develop a new product and get it into stores … 10,000 new designs every year.

Sounds like a company that

listens and responds to its customers.

The third interesting point about this year's winners and losers is that one company appeared last year in the top five of growth brands, and this year in the list of biggest losers!

That company is Motorola.

We have talked in previous columns about Motorola. They designed a terrific product - the RAZR phone - made a sales killing with it, and then failed to adapt or change. They stayed too long with outdated technology, fooled by the strong sales, and suddenly got blasted when competition came up with superior products.

Let's summarise some lessons from this year's analysis of winning and losing brands.

l Have a long-term strategy and stick with it. Growth brands do not happen by accident. They are a result of a well thought-out approach. Read books on Starbucks and you will see how it knows exactly what it is doing, and why.

l Challenge the status quo. Despite having a long-term strategy, don't be afraid to ask questions and adapt it. Nothing should be set in stone. Starbucks is constantly creating new offerings, as is Zara. Losers (Ford, Gap, Motorola) fail to change but instead keep on doing what they have always done.

l Go global and local. Have a global vision of what your brand stands for and where you want to take it, but don't be afraid to change details of your plan to respond to local conditions. If people want Durian Frappucinos in Malaysia, give it to them. But don't change the fundamentals of your brand.

l Listen, listen, listen to your customers. You make money by satisfying customer needs, not by force-feeding a product you can create.

What do you want to bet that in next year's list we will see Google and Starbucks on top again, and Ford and Gap at the bottom? And on which list do you think Motorola will appear?

Eric Rosenkranz

Eric Rosenkranz's company e.three (www.ethree-asia.com) helps companies grow their brand value by developing long-term strategies that create satisfied customers. He can be contacted at (02) 343 1623 or er@ethree-asia.com.