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Friday, February 13, 2009

Mad(e) in America!

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American brands are dying much faster than ever, notes Pawan Chabra of 4Ps B&M...

Tales concerning the likes of the Lehmans and Merrills have made their way into the history books by now. The world has already witnessed stock market indices in many developed and developing economies touching newer lows in the face of the global slowdown! But the point worth noting here is that it is mostly the heritage American brands facing the heat of the slowdown moment... and perhaps only the well-established American brands are bearing the brunt of the meltdown.

4Ps B&M recently discussed the plight of the falling American brands (cover story dated 26 September-9 October 2008, titled ‘Some iconic American brands are dead… many more in trouble.’), and it was no coincidence that Brand Finance, after releasing its 2008 Brand Value Annual report, re-released its report with the corrected (eroded) values of the Top 100 Global and Top 100 US brands. And this was appropriate, because post-January 2008, US economy has been the key victim, badly hit by commodity price rise, credit crunch, rising unemployment and tumbling share prices at the bourses all across the continent. As Jeff Kagan, Telecom industry expert asserts, “Once established American brands can stumble, they need to reinvent themselves.”

And if the words of Brand Finance is to be believed, the current economic downturn has wiped-off a cumulatively thundering $67 billion from the list of Top 100 global brands. And as per the latest report, the world’s number one retailer and Fortune 500 No.1 Walmart has climbed three spots up the ladder to capture the top spot in the new listing of global brands. “Walmart has remained true to its core and has a history of being creative which has given it success even in this downturn,” points out John Crossman, President, Crossman & Company. Interestingly, amongst the top ten brands, Walmart was the ‘only’ brand that was able to appreciate in brand value. “Companies like Lehman Brothers and Citi never had strong brands; they are commodity companies (in this case, the commodity is credit) who are highly vulnerable to unanticipated events,” said Brent Scarcliff, Creative Director, Scarcliff, Salvador Inc.

The picture is getting clearer by the day, of the reasons why these traditional brands are suffering the most: clearly, it’s the lack of innovation. Apart from Walmart’s logo change campaign in July this year, there was hardly any innovative initiative from other brands to help them increase respective brand values. The logo change exercise of Walmart surely helped its brand, even in the face of this downturn and severe criticism on the grounds of ethics and in-store experience.

Then, we have brands like GM, Ford, Microsoft, Yahoo! and others, who have always been known as the strong brands in US, but their lackadaisical attitude towards brand building efforts and value maintenance has given them a big beating in the economic slowdown. “I would argue that Microsoft has been resting on its laurels rather than creating a strong brand,” Scarcliff added. It’s not only Microsoft though. Even Yahoo!, once the best search engine hasn’t done anything spectacular in the recent past which therefore enabled Google to run past in value. And then we have the speculations surrounding the GM-Chrysler merger which makes their respective brands even weaker given the low-success rate of a merger between two loss-makers in the auto industry [read the story on page 48, titled ‘Christ(ler), the GM Saviour].

One thing is clear though – American brands are falling in brand value, and emerging brands from the Third World are fast rising to dethrone them, slowdown, or no slowdown!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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