The New Power Of Brands

IBM's sale of its PC division to China's Lenovo Group highlights one of the most distinctive characteristics of current-day capitalism. In a global economy based on commodity production, brand may be a corporation's most important asset. And brand management is an increasingly critical skill for a growing number of businesses around the world.

Chinese companies attempting to break into overseas markets are desperately trying to buy or build global brands. U.S., European, and Japanese companies seeking to move beyond price competition are beginning to rely on the emotional punch that great brands offer to win consumers and maximize margins. Creating a satisfying consumer experience by focusing not only on price but also on the look and feel of a product or service is the new competitive arena. Companies around the world that get it have an edge over those that don't.

One of the most important things that Lenovo is receiving in its deal with IBM is a lesson in brand management. The thin, black ThinkPad laptop is as much a marketplace icon as Apple Computer's (AAPL ) rounded, friendly iMac. Designed by Richard Sapper and marketed as a high-quality, powerful, expensive machine, the ThinkPad has been carefully nurtured by IBM. Some 15 million have been sold since the computer was introduced a decade ago.

Through its deal with IBM, Lenovo will attempt to learn how to create and manage this kind of elite brand. Other Asian companies, such as China's Haier and South Korea's Samsung Electronics, are taking another tack by trying to build their own global brands organically.

In the end, brand is all about culture. As prices fall for virtually all commoditized, manufactured goods, the real competition will be in winning the hearts and minds of consumers. Intellectual property lies more and more in a company's knowledge base of consumer tastes and preferences, not in chemical formulas or technology per se. Welcome to the world of tomorrow.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE