Online Extra: America Has Image Woes, Not Its Brands
Overall, American brands are holding their own in a tough global market, according to the latest branding ranking compiled for BusinessWeek by the marketing consultants at Interbrand Corp.
Yes, some like Ford (F ) and Kodak (EK ) have seen their brand value erode sharply. But far greater numbers of U.S. companies have increased their brand value -– a feat not for the squeamish in such an uncertain economic climate since it requires embracing innovation and heavy marketing.
From Levi's jeans to McDonald's restaurants to Marlboro cigarettes, a robust performance in many international markets actually helped offset corporate problems at home. The truth is, contrary to perceptions of an anti-U.S. backlash around the world tied to the Iraq war, consumers everywhere continue to embrace U.S. brands. The evidence suggests that desirable products and services, effectively marketed by honorable companies to consumers in ways they can understand, trump suspicions of American hegemony.
You have to go back beyond September 11 to the fall of the Berlin Wall in the early 1990s to understand what's happening. America's only-remaining-superpower status and go-it-alone attitude began alienating people from France to the Muslim world to China a decade ago. At the same time, the vast American entertainment and media machine has projected imagery that, while appealing to younger consumers, often has clashed with the values of the far more conservative societies.
A Pew Research Foundation survey in May of 16,000 people in 20 countries, plus the territories controlled by the Palestinian Authority, found that since last summer, favorable opinions of the U.S have slipped significantly. The declines ranged from a modest 5 percentage points in Britain (from 75% who feel favorably toward the U.S. in 2002 to 70% in 2003) to 10 points in Italy (from 70% to 60%), 16 points in Germany (61% to 45%), and 20 points in France (63% to 43%).
Only 46% of Indonesians expressed a favorable view of America, 25% of Russians, and a scant 1% of Jordanians polled, down from 25% in 2002. Similarly broad declines appeared when people were asked about their affinity for American culture.
BEHIND CLOSED DOORS.
Another researcher, RoperASW, tried to tie these trends specifically to American brands. The findings, released in July, seem troubling on their face. In countries as varied as Taiwan, Thailand, and Germany, declines in affinity for American culture were tied to declines in the proportion of consumers who said they used American brands and who rated American brands the best in their category.
Yet, look at the actual performance of American brands overseas, and it's hard to see any meaningful backlash. Demonstrations and boycotts in places like India and the Middle East, though widely reported, have had no significant impact on sales of American brands. In Egypt, for example, McDonald's (MCD ) in-store sales declined during the initial phase of the Iraq war –- but take-home business in that country grew, according to Ahmed Aboul-Gheit, the country's U.N. representative.
That seems to suggest that for a brief period it may have been politically incorrect in Egypt to be seen in a McDonald's restaurant. Yet, consumers' yearning for Big Macs and fries was simply sated more privately. McDonald's insists its sales in Egypt didn't decline.
As much as the 9/11 terrorist attacks may have fomented concerns about a world made more dangerous by technology, the event may have also encouraged people to turn to things that are comfortable and familiar to them, many experts believe. Tom Miller, the managing director at RoperASW, sees no danger of a huge consumer backlash or boycotts: "That's not going to happen," he says. His only concern: "There's reason to believe some American brands are exposed at the margins."
In other words, where U.S. brands compete with local brands at parity, the local brands may have the upper hand. Or the advantage may even go to European and Japanese brands. In a global market where a percentage point of growth can spell the difference between a good year and a bad year, the prospect of frittering away any growth opportunities is a genuine ground for concern.
However, an interesting dynamic is afoot in global markets, the RoperASW survey indicates. Aside from a handful of iconically American names, most consumers worldwide have difficulty recognizing their favorite brands' country of origin. Many are more inclined to call a brand "global" than "American" or "British" or "Japanese."
In other cases, the brands have become such a mundane part of people's lives that they fly under the geopolitical radar. "Most of our brands and products are everyday consumable brands and products," says A.G. Lafley, chairman of Procter & Gamble (PG ). "They're purchased near home. They're consumed at home. If you think about the other crises we have gone through, whether it was post 9/11 or the Gulf War in the early 1990s, there really isn't a very meaningful or very long-duration impact on our sales."
Part of it has to do with the emotional tie that a strong brand forges with its targeted consumer niche. Nike's (NKE ) message of individual empowerment, under the slogan "Just do it," can be a potent lure to exuberant youth from Amman to Argentina. "As a brand, our communications are more cohesive globally while maintaining the distinct flavor that's needed to connect with consumers on a very local basis," says Nike co-President Mark Parker.
It's easy to forget that even in countries that reject U.S. foreign policy or its social and cultural mores, consumers haven't rejected the ideals that the U.S. stands for: freedom, self-expression, technological progress. That may actually play in the favor of the brands that are most strongly identified as being American. Case in point: Levi's jeans, which are a worldwide symbol of American style as well as an emblem of some of the country's most coveted virtues. "I think the core values of Levi's -- democracy, freedom, independence -- certainly are viewed as the best of America," says Levi Strauss & Co. CEO Philip Marineau.
So what's the right roadmap for the stewards of major U.S. brands? Smart companies will stress their identity as a global citizen, experts say. Take Accenture (ACN ). Being perceived as a U.S. company "is a net good because of America's business acumen and technology skills," says Chief Marketing Officer Jim Murphy.
Yet, Accenture makes sure to have multiple nationalities represented on the project team that's in daily contact with an overseas client. Message: We are a member of the global village. "That piece of the brand-building is as important as the advertising," says Murphy.
Research by RoperASW suggests that, while foreign consumers may tilt from time to time toward local brands and institutions, most recognize that globalism brings them good things, too, in the form of greater choice of products.
At the same time, companies must recognize that consumer access to instantaneous information via satellite and the Internet makes maintaining a stellar corporate reputation more important than ever. Those that are seen as mistreating employees, despoiling the environment, or milking their foreign operations without giving anything back to the local society or economy are increasingly likely to encounter a hostile reception –- regardless of their country of origin.
Keith Reinhard, chairman of global ad agency DDB Worldwide, thinks the branding operations of many American companies are so powerful that they could use the strength of their brands to help restore luster to the "brand America." After all, Reinhard reasons, corporations are more in touch with the world's people than embassy-bound U.S. diplomats. Companies can act more nimbly than the government, and they can take a longer-term view. Many have a greater reservoir of credibility than the U.S. government itself, he argues.
A stretch, perhaps. But as the BusinessWeek/Interbrand survey shows, American brands continue to thrive, even in a more hostile world.
By Gerry Khermouch in New York, with bureau reports