How Malaysia’s Most Valuable Brands came about
Saturday November 3, 2007
The Association of Accredited Advertising Agents Malaysia (4As) has commissioned Interbrand to do a study to identify the countryís 30 most valuable brands, culminating in the Malaysia's Most Valuable Brands (MMVB) gala night on Nov 16. 4As vice-president Tony Savarimuthu as well as Interbrand director (brand strategy) Andrew Martschenko and consultant Venetia Tay explain the initiative to associate editor M. HAFIDZ MAHPAR.
Why did the 4As commission the Malaysia's Most Valuable Brands survey?
Savarimuthu: We need to improve the ability of Malaysian brands to compete on the global stage. For this we need to establish a respected standard for Malaysian brands to emulate and this should comprise both global and local benchmarks.
This would allow emergent and aspiring brands to question what they are currently doing and to see if they are merely existing at the periphery of the brand world or making a difference in the lives of people. We canít have mediocre brand communications and then expect the consumer to respond.
Savarimuthu (left), 4As president Datuk Vincent Lee and
Martschenko (right) at a press conference on MMVB recently
Brand building is a systemic discipline – there is a process to it but when brands face the consumer we need to build an emotional connect through unique, brave and fearless communications. It needs to be an effective marriage of logic and magic. Logic in the thinking and magic in the delivery
Establishing the value of brands also helps us to observe the value system of each brand
The MMVB project is meant to provoke a national debate on the meaning and economic usefulness of brands. It’s something that we can’t take for granted as it has a direct relevance to the economy. Will this be an annual project?
Yes, if we have government funding to continue this. We plan to do the next one once financial year 2007 ends.
Why did the 4As choose to appoint Interbrand specifically?
We expect a high-level of discussion when the list of the Top 30 most valuable brands is released. While we don’t expect everyone to agree with the list or the values – the 4As needed to ensure that we used the world’s most widely respected and accepted source to do the valuation. Interbrand has valued over 4,100 brands across the globe and have been used by Fortune 500 companies.
They also issue the The Global 100 Top Brands with BusinessWeek magazine and have done the valuations for top brands in Singapore, China and Taiwan.
How do Malaysian brands compare versus Asia's top brands?
Our top brands would make the list if there were to be a Top Asian 100. Our top two brands are not far off from global brands such as Nissan and LG and compare well with Singtel
How does brand valuation help in nation-building?
Two-thirds of the world’s most valuable brands originate from the western economies. They drive the economic engine through trade, the services sector, provide jobs and are a source of national pride. The turnover of many global brands is higher than the GDP of may countries – this speaks volumes about the role and the economic power of brands.
Despite the many incentives given by the Government and the presence of many multinational advertising agencies in the country, why are there not more Malaysian brands that are truly international?
I think once we think that the world’s the stage and that we need to compete globally to survive or succeed – that will change. We are only restrained by our self-limiting beliefs and originally thought only of the domestic and neighbouring markets. Malaysian brand owners and entrepreneurs now belief that they can compete against much larger brands or at least believe they can fuel growth by being seen and accepted globally. Brands like Maybank, AirAsia, Petronas and Genting have made great strides in this respect
What are the main challenges for Malaysian companies in branding?
We need to have a disciplined approach, hire the right talent who can provide innovative leadership, work with marketing partners, agencies or individuals who truly know their brief and have real experience and resist the temptation to be safe. The main challenge is to step up and allow your brand to speak with a fresh, motivating voice and inspire consumers.
While Interbrand is well known for its annual global brand rankings, has it done many rankings lists for specific countries, particularly in Asia?
Andrew Martschenko and Venetia Tay: In addition to the Best Global Brands study, Interbrand has conducted country league tables in North and South America, Europe, Africa and Australia. Specifically, we have conducted studies in France, Mexico, Brazil, Australia, Russia, Spain, South Africa and Britain. In Asia, we have completed studies for China, Singapore and Taiwan.
Why is it important to value brands, and to what extent have South-East Asian companies embraced this?
Brands exist to create value for their owners and effective value creation begins in the hearts and minds of customers, partners, and employees. Many brands in Asia have embraced the value of their brands, but the most critical and challenging mindset change is to view brands as assets that require nurturing and investment rather than treating them as an expense item on the balance sheet.
What is the method used to value brands in the Malaysian survey, and is it similar to the methodology used for the global rankings done with BusinessWeek?
The method we used to value the brands in the Malaysia survey is the same as the methodology used for the BusinessWeek global rankings and the country specific rankings. However, country specific league tables may have slightly different criteria for inclusion. For example, in Taiwan and Singapore, a certain percentage of the revenues must be generated out of the country; this criterion does not exist for Malaysian brands.
What are the challenges in doing this survey?
A major component of this study relies on publicly available information, and the quality and consistency of the reported information by the individual companies can differ.
Why are private limited companies like Royal Selangor not included?
Interbrand’s brand valuation methodology requires specific financial information, which is only available for publicly listed companies through published annual reports. Consequently, private limited companies are generally not included for the purposes of this study due to the lack of credible, publicly available information. In a privately commissioned brand valuation exercise, a company would provide us with the necessary information.
What are the sectoral variances in brand valuations (say, valuing a product versus a service, or an industry versus another)?
These variances between industries are achieved by means of our proprietary role of branding analysis. The Role of Branding Index represents the percentage of intangible earnings that is attributable to the brand.
It is based on an assessment of the individual drivers that influence customer choice (in preference) to an alternative and the influence the brand has on each of them.
For example, we look at the role the brand plays in driving consumer preference. If we looked at fragrance products such as perfumes, consumers are willing to pay a greater premium and the brand subsequently plays a greater role. If you contrast this with bulk chemicals, the role of brand is not as significant and other drivers such as price and convenience have a greater impact.
Brand Finance recently published what is said to be the first list of Malaysia's top 50 brands. Will the Interbrand/4As list be seen as somewhat of an anti-climax?
Our aim of producing league tables is to raise awareness of branding and their financial contribution to a company’s overall value. We believe that the Brand Finance table adds to the discussion on the importance of branding.
How does Interbrand's methodology differ from other brand valuation firms'? What makes Interbrand the world's leading brand valuation firm?
We respect that there are several approaches to brand valuation available in the market today. From the marketplace perspective, Interbrand is recognised as the pioneer of and authority on brand valuation methodology. Over the past two decades we have valued more than 4,100 brands across various industries and geographies. We have refined the process over this period of time and produce the World’s 100 Most Valuable Brands (published in BusinessWeek) and have developed league for countries in North America,
Europe, Africa, Asia, and Australia. In addition, our valuation approach has been universally endorsed by the academics, accounting firms, tax authorities, regulators and industry.
Finally, why do a top 30 rather than a top 50 or top 100 list? Do you plan to do a more comprehensive study next time?
The number of brands in a league table may vary from market to market. To make the study both credible and meaningful, we believe that the top 30 brands was the appropriate cut-off.
For the brands that did not make the list, the study should serve as inspiration or meaningful benchmark. For the companies that did make the list it should be celebrated as an achievement as well as a barometer for future investment.
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