BOSS, March 2003
Paul Temporal is a world expert on branding and customer relations. He has written numerous books on the subjects and has worked with a wide range of companies, including SingTel, Motorola, Fraser and Neave, and Raffles International, to create and manage brand strategies.
His 1999 book, Branding In Asia, was a regional bestseller and helped define brand-building issues in Asia. His 2002 book, Advanced Brand Management, looks at how Asian companies can use branding strategies such as brand stretching and brand architecture to help manage brand value. He speaks to BOSS about the unique challenges of brand management in Asia.
Q: In the books you have written, you have followed two themes – customer relationship management (CRM) and branding. How do they connect?
Paul Temporal: I believe branding relies completely on customer perceptions. Companies may create and own bands but it is customers that build them. So any company embarking on a customer relationship management programme must have a powerful brand strategy.
If you don’t know where you want to take your brand and what identity you want it to have, then communicating with customers and building strong relationships with them become much more difficult.
Brands don’t really exist, except in people’s minds. A brand is a relationship, so the two areas are inseparable.
Q: How do you define a successful brand? What does a good brand mean to customers?
PT: There are many ways of assessing successful brands, including measures of brand equity, such as brand/customer associations, and brand value, using financial measures. These are useful devices, but you have to be careful that you don’t miss the point.
Brands are only successful when they establish strong emotional connections with consumers Rational attempts to build brand usually fail because rational things, such as features and attributes, invite comparisons and can be copied easily. Emotional associations cannot.
A good brand is like a trusted friend – the customer can always count on the brand to deliver on its promises, and will even forgive it when it makes mistakes.
Q: Which Asian companies are the best brand managers? How have they got there?
PT: An example of good brand manager is Singapore Airlines. By the end of 2002, it had spent more than US$28 million just on training to deliver its brand promise – and that’s in a recession.
Another example, and a very interesting case, is Samsung. It has virtually reached global brand status through innovation, consumer understanding and quality products.
The Banyan Tree Hotels & Resorts has also done well, and it underscores the point about an emotional connection. It is completely focused on its core emotional brand values of romance and intimacy.
The key to good brand management is to pay meticulous attention to every touch-point with the customer. You have to provide a great customer experience all the time, and to do that, the strategy has to reach every corner of the company.
Q: What is “brand culture”?
PT: When a company tries to develop and maintain a good corporate image, it has to create a suitable culture. This means, for example, that if the corporate brand stands for innovation, then everyone in the company has to know what it means to their everyday work and how they can contribute to the brand.
That’s why great brands like Intel spend a lot of time and energy helping people understand how they can contribute to improving brand image.
Intel has training courses, videos and other resources for staff in training kits so everyone knows how he can contribute to the brand values. Some companies tie recognition and pay to performance on the brand values; that’s how important a brand culture is.
Q: You say a large part of brand management is working out what you are really offering. Can you elaborate on this?
PT: Today’s powerful brands establish brand visions in terms of what they want to represent to their customers. This might sound simple but it can require some hard thought.
The reinvention of Land Rover is a good example. They took the rational attributes of the product, as determined by research, and turned them into emotional personality characteristics. The product was seen as “robust”, for instance. This was turned into a characteristic of “guts and determination”. They realised, in other words, that they weren’t selling vehicles. They were selling adventure and freedom.
Q: Are there significant Asian examples?
PT: To be honest, there are not many Asian examples that are particularly significant. There are three key reasons for this. First, many Asian companies have been too concerned with short-term thinking rather than long-term brand building. They are reluctant to spend on intangible items like brands.
Second, Asian companies have a mistaken belief that branding is merely advertising and design.
Third, there is too much concentration on rational branding – what a product does rather than how it makes customers feel.
Q: You have written about the case of Malaysia’s Perdana as a CRM programme that was particularly successful, even though it coincided with the 1997 financial crisis. Why was it successful?
PT: What the company did was to start looking at things from the customer’s point of view. This does require a huge investment, and simply by doing it, companies can transform their customer relationships.
The Perdana case was also significant because it was executed as a total package, with research on potential buyers, customer feedback mechanisms and cross-selling of related products.
Q: In tough times, brand spending is one of the first areas companies cut. How do you argue against this?
PT: Brands are valuable strategies assets and need to be invested like assets. Although brands are intangible assets, they can be worth multiples of the net asset value in the balance sheet.
For example, Nestle paid six times the net asset value of Rowntree to obtain a portfolio of brands that would bring endless streams of profit over the years.
Also, in bad times, there is the opportunity to keep talking to customers while other competitors do not. You will gain brand loyalty and market share from this when good times return. It’s not a matter of how much you spend, but how wisely you spend it.
Q: You argue that a good brand can be stretched to cover a wide range of products, but you also point to cases where it hasn’t worked. How can the limits of successful brand stretching be established?
PT: It depends entirely on whether consumers accept the brand extension or not. Nike has been successful in extending he brand from footwear to sports clothing, and even to a line of heart monitors for athletes. But an attempt to move into casual clothing for older people was unsuccessful.
My view is the more you stray away from your core brand vision and values, the less successful you are likely to be.
Q: Are there examples of Asian companies successfully developing international brands? What barriers do these companies face?
PT: The big powerful brands monopolise markets so the challenge for Asian companies is to find niche areas in world markets where consumer needs are not satisfied. A particular problem for Asian companies trying to sell in the US and Europe is that they are often seen as producing poor-quality products. It took Japanese companies 30 years to shift that view.
A very interesting case is China’s top white goods manufacturer, Haier. Its CEO, Zhang Ruimin, took a state enterprise making shoddy goods, made quality the imperative, and produced a company that is now number one in its home market and had US$5 billion in sales worldwide in 2000. In China, the brand is so popular that people pay a premium for it. But the brand is not a household name in the rest of Asia.
The question is whether Haier’s brand perception can be carried overseas. Zhang has cut straight to his goal of getting into the top five makers of white goods in the US market. The company has tried to bypass “country of origin” issues by building factories in America, and now uses the label “Made in the USA”.
Haier has recognised that the price-commodity trap is waiting, and is trying hard to avoid competing on price and promotion through a focus on quality, design and giving consumers what they want. It is still too early to say if Haier will achieve its goal of becoming a global brand like Toyota or Sony, but it is worth watching closely.
Q: How can a company best measure the value of its brand?
PT: There is a range of techniques. One method is called royalty relief, which involves valuing a brand as if a third party owned it and you had to pay royalties on it. The problem is that it provides little understanding on how and where the brand is creating value.
Another technique is the economic-use method, which integrates consumer research and competitive analysis with the brand’s forecast earnings.
But companies must track their brands continuously, and not just against their competitors. For example, a telecommunications company tracking its service quality might measure itself not only against other telcos but also against other good service brands.
Q: What is the future for branding in Asia?
PT: For Asian companies, the issue is the consequences of failing to develop a successful brand. And if a branding campaign seems expensive, then think of the long-term cost of not doing it. In the end, here are no real alternatives. Good branding means survival and success.