A rose by any other name may smell as sweet. But a brand is more than mere name recognition. A good brand can be decisive in differentiating products and services from an ever larger array of competitors. A great brand is a promise, a compact with a customer about quality, reliability, innovation, and even community. And while the concept of brand is intangible, brand equity is far from it.
With this issue, BusinessWeek teams up with Interbrand, the pioneering brand consultancy unit of Omnicom Group Inc. (OMC ), to launch our annual Best Global Brands. The goal: Calculate the contribution of brand equity to the bottom line.
In developing our ranking, we avoided the vagaries of consumer perception surveys, which can change on a whim. Instead, we undertook a rigorous financial analysis, putting the value of global brands into the quantitative context that managers have long used to evaluate assets like machinery and inventories. Interbrand's methodology calculates the net present value of the earnings a brand is expected to generate in the future. For the 100 Best Global Brands of 2001, that amounts to $1 trillion.
As the economy struggles, brand building and keeping the profile high have become more important than ever. During the last downturn, brands that prevailed resisted the temptation to trim their marketing budgets, an easy cost-cutting target.
Branding laggards have seen the light, and have begun bringing in marketing professionals who have honed their skills at companies involved in packaged goods, cars, entertainment, and other sectors where brand has long been front and center. Now, brand management includes everyone from executives to employees, perhaps the ultimate brand ambassadors. Brand equity has become such a valuable corporate asset that there is a strong argument for its use in corporate balance sheets, as is routinely done in Britain.
The Best Global Brands report was spearheaded by Assistant Managing Editor Joyce Barnathan, Senior Editor Mary Kuntz, and Marketing Editor Gerry Khermouch. Their efforts are supplemented online with an interactive scoreboard and additional features in the Aug. 6 issue of BusinessWeek Online.
We think the Best Global Brands provides a wealth of information for marketing in the new millennium. We hope you agree.
By Stephen B. Shepard, Editor-in-Chief