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Considering Brand America
For about five years now I’ve been pondering the impact of the Bush administration’s foreign and business policies on what I think of as Brand America.
I’ve asked myself often, “What are the financial impacts – especially in brand terms – of government policies? Do consumers - especially consumers outside the United States – punish or reward American brands based on the actions of the government of the United States?�
Intuitively, the answer is a resounding YES. Everything I’ve learned about human nature since I was a Levi-clad kid in Cody, Wyoming tells me that people act based on how they feel, not what they know. For one thing, people are a lot clearer about how they feel than what they know. The head has never run a fair race with the heart.
Take a look at the "brand flag" I found on a New Zealand site. From my experience, Kiwis are not exactly the vociferous, unreasoning, malicious type. It is not unreasonable to wonder whether less laid-back types might be far more strident in their protests.
It doesn’t matter whether the local (insert country here) Coke bottling plant is across town or next door, Coca-Cola is an American brand. I doubt whether people living in any of the emerging economic power-players – like Brazil, Russia, India, or China – stop and remind themselves that their own countrymen bottled, transported, or sold the Coca-Cola in the machine at the gas station. Coke’s famous swooshing red curves might well have been taken right off the flag before they were applied to the can in terms of how the brand is linked to the flag. Two symbols, one country, one brand.
Whether you’re a Republican or a Democrat - a Liberal, Moderate, or a Conservative – if you know anything about branding or brand strategy, then you know that George W. Bush is America’s Brand-Manager-in-Chief, especially in the new global socio-political consciousness.
Once, people created distinctions between the American people and the American government. In surveys, people would say that they liked Americans but disliked the policies of our government. No more. From my experience, the American people and our products, services & brands are conflated into one mental melange. Our government, our people, and our brands have become one. Meaningful distinctions between these things seem to have evaporated.
If you think this thinking is poorly considered, remember the Congress’ action toward all things French when France refused to join the “Coalition of the Willing.� French fries were re-branded “Freedom Fries.� Sales of French-produced wine and other products plummeted. Even now, some people think that “buying France� is being unpatriotic.
When one considers that the outcome of the Revolutionary War might have been different without France (remember Lafayette?), you’ve got to wonder where all our good will and gratitude towards France went. Talk about brand equities, if France hadn’t shed the blood of its sons in our behalf, good King George may have hanged Washington, Adams, Jefferson, and all the other founding fathers who we hold in such esteem and affection. It’s clear that we live in a “What-have-you-done-for-me-lately?� world.
Do we really believe that consumers in other countries are so different from ourselves?
Former – even current - clients and friends sometimes express hostility toward me and my little company just because I’m an American. Where we used to experience only a slight disadvantage because we were Americans, we are now experiencing the competitive equivalent of being blacklisted, even on the turf of our closest friends and allies, like in Canada, for example. Do we deserve this? Maybe.
Many people in the rest of the world are both angry with us and afraid of us. Anybody who thinks that American business isn’t paying a price for its principles and actions might think about reconsidering their position. As a country, we’re acting on principles. While principles that don’t cost one anything are probably worth nothing, I believe that we ought to be mindful and aware of the price we’re paying.
As I’ve traveled abroad, I’ve been extraordinarily saddened and angered by this way of thinking that equates my political and social views with the government’s official policies and the actions of our state. I am a loyal and patriotic American. I love my country and I love my people. Right now, I find myself in the camp of the loyal opposition. Mr. Bush is my President; I respect him, but I sure don’t see the world like he does.
I’ve expressed my intuitive answer to the questions: “What are the financial impacts – especially in brand terms – of government policies? Do consumers - especially consumers outside the United States – punish or reward American brands based on the actions of the government of the United States?�
Is there any real evidence to support my opinion? I’m not an economist – and I’m sure that there is a great deal of data and information out there that might answer my questions far more clearly and persuasively than I have done – but here are some facts and figures that I’m considering as I take my thinking further:
Business Week Online currently has the Interbrand Top 100 Global Brands Scorecard up on its site. The interactive table there provides both ranking of the top 100 and specific information about changes in brand valuation since 2004.
To qualify as an Interbrand Top 100 firm, the brands had to meet two criteria: 1) they had to be global in nature (deriving 20% or more of sales outside their home country) and 2) publicly available marketing and financial data had to be available in order to base the brand valuation.
A majority (53) of the Interbrand 100 are U.S. firms. Of those 53 firms, 31 increased in overall brand valuation to the tune of $18,939 Million. Six more firms – including the venerable powerhouses Coca-Cola, Budweiser, Xerox, and Oracle – demonstrated no appreciable change in valuation. In brand-valuation terms, they broke even, something to which Americans do not aspire.
These “no-appreciable-change� scenarios seem a bit odd to me. According to Interbrand, Coke’s valuation declined by $131 Million, but still showed a zero-change position in brand valuation. Ah…the wonders of rounding.
But 14 of the 53 (26.41%) U.S. Interbrand Top 100 firms’ brand valuations declined, racking up a brand-valuation loss of over $10 Billion. Some of these brands are consumer brands that have historically performed well in global markets: Marlboro, Pizza Hut, Heinz, Microsoft, Hewlitt-Packard, Levi, Ford, Kodak, Disney. I wonder how much impact Brand America has had on their individual brand valuations?
Interbrand’s data demonstrates a Net $8,691 Million valuation improvement upwards. This is equal to a 2.588% valuation improvement over 2004. I’d love to be able to put this number in a meaningful context, but I don’t have the data. The net improvement seems a bit low to me, but at least it’s not a decline.
One interesting tidbit: of the six new entries into the Global Brand 100, only two of them were U.S. brands – Google and UPS. South Korea equaled our performance.
For those of you who might think that the value of a brand is inconsequential in long-term economic performance, please reconsider.
Building a global brand requires huge investment. Equities amass over very long arcs of time. To increase brand value requires thinking that spans generations, not years. All those metrics that matter to a capitalist society like dividends paid, profit, capitalization, and revenues generated all depend on a robust brand. Current performance relies on decades of investment in executing the right strategies in the right markets at the right time. As a people, when we ignore the valuation of corporate brands, we do so at our peril. We must consider the impact of Brand America on American brands.
I have often wondered why the Brand America issue has not emerged as a key issue on the American political scene. Why are we focusing on gay marriage and flag burning when the sustainability of our way-of-life as it is supported by American enterprise and innovation is shuffled to the margins? I am baffled especially that the traditional party of American business – the GOP – has not attended themselves to this issue. If Republicans are the party of big business, as some claim they are, then they surely seem asleep at the switch when it comes to this issue.
Global business and the brands that signal their identities fuel international trade. Robust international trade flourishes most in a context of comity and peace. Peace helps ensure that peace lasts, too. While trade is no guarantee of peace, it sure doesn't pay to attack your customers or your vendors. Not if you want trade to flourish. To flourish, Brand America’s brand equities can and should be focused and re-invigorated. We must stand for things (liberty, justice, fairness, respect, peace, dignity, etc.) and not just against things (terrorism).
In brand terms, we must not allow our enemies to continue to reposition or flank Brand America. We are a decent, honorable, and just people. We deserve a Brand America with those equities.
Posted on July 12, 2006 12:14 PM | Permalink
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Comments
What I see is probably the world doing the same thing as Americans did with the French wine, as you mentioned.
-Scenario one - France did not support the War, so don't buy anything French.
Followed by...
-Scenario two - The US is invading Iraq (and boycotting French Wine), so don't buy anything American.
Unfortunately, when this sort of thing happens, it's the worker that gets hit (the countrymen) the hardest. It's the employee who may lose a job due to dropping profits, or face harasement from his/her neighbours for working at the Coca-Cola factory. It's also the business owner, much like yourself, that has to face some hostility because you're American. It's also the consumer (such as I) where I have to make decisions between brand loyalty and issues of morality (I do not support the war, so do I buy the Coke that is made by a corporation based in a country that is behind the war?)
Personally, I do buy the Coke. I do because the guys who made, bottled, shipped and overcharged me for the Coke have nothing to do with the nation's Government and its (often bad) decisions. Yet, a lot of people may not see it that way.
Boycotts on a nation do hurt, much like the ban on Canadian Beef from the US due to BSE. Different circumstances? Yes (or maybe, depending if there are political motives, besides health motives), but when something that used to be in demand becomes boycotted, it hurts. (In the BSE case, it was the farmers who had perfectly healthy cattle and could not export it, costing them big.)
So while Brand America needs some work to regain its reputation in the global market, the consumers need to do some work on their part. We may not agree with the politics of a nation, but that does not mean that we need to put strain on the worker to prove a point.
It’s the first time I have seen the flag you cite, Neill, and I live in New Zealand. I can only imagine it is known only within a tiny, fringe group. The Chrysler 300 sells down here, and gets plenty of kudos (or is it because Chrysler is essentially German?); and New Zealanders are quite happy to buy American-owned brands such as Wattie’s (Heinz) and Citrus Tree (Coca-Cola). If anything, the boycott does not exist because generally few American goods are sold here; if they were prevalent, they could get noticed, and the country’s general opposition to the war on terror could well inspire a movement against the US.
Interesting blog. The zinger is your sentiment: "We must stand for things (liberty, justice, fairness, respect, peace, dignity, etc.) and not just against things (terrorism)." Spot on!