WorldCity Business Magazine

The name game

by Joachim Bamrud

The world’s leading delivery and shipping company had a problem. While it was a household word in many countries around the globe, few people in the United States had heard of it.

That was an unusual predicament for a business that was headquartered in San Francisco and had been in existence for more than three decades. To be a truly global brand, DHL had to do something about its name-recognition problem in its own backyard.

“When you ask people in the U.S., they think of FedEx or UPS for delivery. Our brand was known in other parts of the world it was well known in Latin America but few people knew us here,” Karen Jones, vice president of brand, advertising and promotions for DHL, told participants at WorldCity’s DHL Connections seminar in late May. “So we spent $150 million to re-brand and build the brand.”

That investment in advertising and promotion in 2004 is being followed by another $100 million this year.

DHL understood what many companies are just finding out. Brands matter. A lot.

“We’re born in an environment that’s filled with brands so we all have an intuitive sense of branding,” said marketing consultant William Berenson, the former Latin America director of Landor Associates, a global branding firm, and now running his own firm Brand Architects in Miami. “By and large, brands can have a very powerful economic influence over our lives.”

Berenson, who helped carve an identity for a number of corporations, including Brazilian airline Varig, Argentine candy maker Arcor and Venezuelan oil giant PDVSA, said there’s no “cookie-cutter formula” for global branding. Marketing experts, corporate consultants and academics will wrangle for hours over the value of global branding, whether a single branding formula is effective across industries and sectors, and even if local or regional brands are as important as international ones.

But the experts will undoubtedly agree that brand recognition translates into significant economic power for the companies behind the products or services.

Think Coca-Cola. That’s the name that tops the BusinessWeek/Interbrand ranking of the world’s most powerful brands. The list put the value of the beverage company’s brand at $67.39 billion in 2004.

“Brands are gaining in value and importance every day,” Berenson told participants at the breakfast seminar. He said a third of value of the stock market is tied up in brand value.

Not only has brand value grown in magnitude, but the way corporate identification is leveraged has also shifted. Branded products may be manufactured by one company, shipped by another, warehoused by another and sold by yet another. “The owner of the brand owns none of those assets. Eventually, there will be companies that do nothing but manage brands.” Berenson predicted.

John Holcombe, president of Insights Marketing Group, said companies cannot simply launch a brand. They must also carefully manage it. And as they do, he suggested that they look at cultivating a relationship with the mass market.

Holcombe said most companies look for their niche among “the richest 20 percent of humanity that consumes 86 percent of all the goods and services in the world.” He noted that fewer than 20 of the 100 brands on the BusinessWeek/Interbrand list were really geared to a mass market.

“We are all literally chasing the same consumers all around the world. And that group isn’t growing in size,” said Holcombe, a Miami-based market research expert.

“The only market segment that’s growing around the world is the poor. Global brands need to figure out how to begin a dialogue with those consumers.”

In addition, Holcombe said, companies should take a lesson from the success of so-called B Brands, local brands produced with no marketing effort, such as Inka Cola in Peru which is giving Coke and Pepsi a run for their money. “Many of the global brands are getting their clocks cleaned by B brands,” he added.

Berenson also predicted that successful branding a way to distinguish similar products from one another may grow even more crucial as China’s influence continues to grow. “When the Chinese get into brands, watch out,” he said. “It’s going to rewrite the way we look at branding.”

Among other things, he added, branding may be crucial for manufacturers seeking to maintain their prices in the face of a flood of inexpensive Chinese products.

As for DHL, Jones said the re-branding effort, which featured humorous TV commercials that directly cited competitors FedEx and UPS while linking DHL to “U.S. iconic institutions” including professional sports teams like the Miami Dolphins and Florida Marlins is showing results. But the delivery company has no intention of resting on its success.

“Building a global brand is not something you do overnight. It’s a commitment. It’s a constant,” she said.