Click Here to Go Directly to the Story



Full Table of Contents
Cover Story
Up Front
Editor's Memo
Readers Report
Corrections & Clarifications
Technology & You
Economic Viewpoint
Economic Trends
Industry Insider

Business Outlook
In Business This Week
Washington Outlook
International Business
International Outlook
Working Life
Industrial Management

The Corporation
BusinessWeek Lifestyle
BusinessWeek Investor
The Barker Portfolio
Inside Wall Street
Figures of the Week

E.BIZ SUPPLEMENT August 6 Table of Contents

International -- Readers Report
International -- Asian Business
International -- European Business
International -- Latin America
International -- Int'l Figures of the Week
International -- Editorials


Customer Service
Contact Us
Permissions & Reprints

Subscribe to BW

Take your career to
the next level

AUGUST 6, 2001


The Best Global Brands
Together with leading brand consultant Interbrand, we've ranked the leaders around the world

Printer-Friendly Version
E-Mail This Story

Related Items Cover Image: The Best Global Brands

Table: The World's 10 Most Valuable Brands

Table: Wielding a Mean Branding Iron

Table: Winners

Table: Losers

Table: Best in Class

Commentary: Valuing "Intangibles" Is a Tough Job, but It Has to Be Done

Commentary: Why Advertising Matters More Than Ever

Scoreboard: The 100 Top Brands (.pdf)

ONLINE EXTRA: Interactive Global Brands Scoreboard

Online Extra: Is Amazon Out of Its Depth?

Online Extra: How Colgate Chomps on the Competition

Online Extra: Starbucks: Keeping the Brew Hot

Online Extra: Samsung: No Longer Unsung

Online Extra: Taking an Image to a Higher Plane

Video: Gerry Khermouch and Chuck Brymer on What's in a Name: The Power and Mystique of Brands

Find More Stories Like This

Not long after she started her new job as head of Boeing Co.'s (BA ) marketing and public-relations department in 1999, Ford veteran Judith Muhlberg uttered the "B" word in a meeting of top executives. Immediately, a senior manager stopped her and said: "Judith, do you know what industry you're in and what company you've come to? We aren't a consumer-goods company, and we don't have a brand."

Boeing has come a long way since then. Today, branding matters in a big way at the aerospace giant. The company's first-ever brand strategy was formalized last year as part of an overall strategy to extend its reach beyond the commercial-airplane business. Now, everything from Boeing's logo to its plan to relocate its corporate headquarters from Seattle to Chicago has been devised with the Boeing brand in mind.

A belief in the power of brands and brand management has spread far beyond the traditional consumer-goods marketers who invented the discipline. For companies in almost every industry, brands are important in a way they never were before. Why? For one thing, customers for everything from soda pop to software now have a staggering number of choices. And the Net can bring the full array to any computer screen with a click of the mouse. Without trusted brand names as touchstones, shopping for almost anything would be overwhelming. Meanwhile, in a global economy, corporations must reach customers in markets far from their home base. A strong brand acts as an ambassador when companies enter new markets or offer new products. It also shapes corporate strategy, helping to define which initiatives fit within the brand concept and which do not.

That's why companies that once measured their worth strictly in terms of tangibles such as factories, inventory, and cash have realized that a vibrant brand, with its implicit promise of quality, is an equally important asset. A brand has the power to command a premium price among customers and a premium stock price among investors. It can boost earnings and cushion cyclical downturns--and now, a brand's value can be measured.

That's exactly what we have done in our first annual report card of the world's most potent brands. To help assess which companies are managing their brands with skill and which ones aren't, BusinessWeek has teamed up with Interbrand Corp., a pioneering brand consultancy in New York, to offer a ranking of 100 global brands by dollar value. The ranking by Interbrand, a unit of Omnicom Group Inc. (OMC ), is based on a rigorous analysis of brand strength.

The basic theory is that strong brands have the power to increase sales and earnings. Interbrand tries to figure how much of a boost each brand delivers, how stable that boost is likely to be in the future, and how much those future earnings are worth today. Many of the brand names in our table are also the name of the parent company. The assigned value, however, is strictly for the brand. Coca-Cola's (KO ) value is based on products carrying the Coke name, not on Sprite or Fanta.

Some big household brands won't turn up in our ranking at all. Only global brands, generally defined as selling at least 20% outside of their home country or region, are included. That eliminates some familiar names such as Gatorade, whose sales are overwhelmingly in the U.S. In addition, each brand must have enough publicly available data for Interbrand to make a reliable assessment. That knocks out private companies such as Mars Inc. and even some publicly traded ones that don't break out enough data.

In other cases, it's too difficult to separate the strength of the brand from other factors. That's the case with airlines, where schedules and hubs often leave travelers with little choice when buying tickets, no matter what their feeling about a particular airline. Interbrand ranked some corporations, including Johnson & Johnson (JNJ ) and Procter & Gamble Co. (PG ), based on their portfolios of brands. The portfolio ranking follows the table of 100 brands.

DE RIGUEUR. This kind of rigorous assessment of brand value has been required for more than a decade in Interbrand's original market, Britain, where measures of brand value often must be included on corporate balance sheets. Some experts believe that the U.S. and other countries should also require companies to break out brand valuations for investors. While other rankings rely on surveys of fleeting consumer perceptions, we believe our analysis will provide a reliable benchmark for comparison in years to come.

The ranking reflects the important developments of the past year and shows just how much they cost in brand value. Fewer than half of the 74 brands for which Interbrand had a 2000 valuation showed a gain in value in 2001. Mighty Coca-Cola is still the world's most powerful brand, but the name lost 5% of its value last year, according to Interbrand's calculations, as it struggled against its longtime rival Pepsi (PEP ), ranked at No. 44. If No. 2 Microsoft (MSFT ) hadn't been mired in antitrust troubles and an overall technology slowdown--causing it to shed 7% of its brand value--it would have cruised into the top spot on the list.

The dot-com meltdown claimed a lot of casualties. Yahoo! (YHOO ), at No. 59, and (AMZN ), at No. 76, while still formidable brands, nevertheless lost 31% each of their brand value amid widespread uncertainty about their ability to deliver earnings in the future. Still, the news wasn't all bad. No. 88-ranked Starbucks (SBUX ) was the biggest gainer in percentage terms, adding 32% in value to its fast-growing brand, which now encompasses 4,435 stores on three continents as well as branded coffee paraphernalia, music, and candy.

To see just how much--and how fast--a mismanaged brand can lose value, take a look at No. 8-ranked Ford. Everyone knows that Ford Motor Co. (F ) has had a tough year. Between the Firestone tire fiasco and a series of embarrassing quality gaffes, little has gone right for the Detroit carmaker. Investors certainly have been hurt: First-half earnings from continuing operations are down 91% from a year ago. But what does the blow to Ford's reputation really cost? When a brand is tarnished, its power to attract customers and command top prices diminishes--and so its value drops. That's what the numbers show for Ford. By Interbrand's calculations, the carmaker's name is worth $30.1 billion today--$6.3 billion less than last year.

SEA CHANGE. Numbers such as these make it clear why companies in all industries are suddenly becoming more vigilant brand stewards. Branding used to be practiced by companies that sold packaged goods to consumers--and almost no one else. Developing a brand included advertising, package design, and maybe a few promotions and was seen as far less central to the corporate mission than serious stuff such as floating debentures, quickening inventory turns, or boosting capacity utilization.

That was in a different millennium. As the new one unfolds, brands have been taking center stage in a sweeping shift that some compare to the wave of mass marketing that occurred in the years following World War II. Pharmaceutical companies, which have been liberated to promote their products directly to consumers, have been spending hundreds of millions to create entirely new brands such as Viagra and Claritin. Branding efforts in the financial services sector have taken off as that industry has consolidated and as federal legislation has knocked down the walls that used to separate banks from brokerage houses. Professional services companies such as Andersen Consulting, rebranded as Accenture, have realized that conveying a sense of trust and shared mission is as important as technical competence in winning multimillion-dollar contracts. Universities, government agencies, entertainment properties, and even individuals--Michael Jordan, Martha Stewart, Madonna--have come to be regarded as brands: Their names stand for an implicit promise of quality, innovation, or reliability.

ON A MISSION. That's why executives who earned their stripes at consumer-goods powerhouses such as Procter & Gamble and PepsiCo Inc. are suddenly turning up in the top ranks of companies that have nothing to do with detergent or snack foods. Back in 1994, General Motors Corp. (GM ) was one of the first when it turned to Ronald L. Zarella, former president of Bausch & Lomb Inc. (BOL ), to teach it brand management. Citigroup (C ), on the way to building Citibank into the 13th-ranked brand on our list, recruited a slew of marketing professionals from H.J. Heinz (HNZ ), Philip Morris (MO ), and other consumer-products companies.

Why do companies that sell to other businesses, rather than directly to consumers, need to manage their brands? For the same reason that Coke and P&G do: to give themselves a leg up in the marketplace. Just look what it did for No. 3-ranked IBM (IBM ). Branding played a huge role in the computer maker's remarkable reinvention in the 1990s under Chairman Louis V. Gerstner Jr. One of Gerstner's first moves was to bring in a marketing czar steeped in branding, Abby Kohnstamm, his longtime associate at American Express Co. (AXP ) Together, Gerstner and Kohnstamm reasserted the primacy of the brand in an organization that had degenerated into warring product groups. In a move that shocked Madison Avenue, Kohnstamm in 1994 consolidated all of Big Blue's advertising at a single agency, Ogilvy & Mather Worldwide Inc. Her goal was to give the far-flung company a unified and consistent message across all its products, services, and geographic markets.

After it took over, Ogilvy positioned IBM as a wise partner that could guide companies through their transformation into nimble, Net-savvy players. When Internet mania was in full swing, IBM's slice-of-life ads lampooned the excesses of Web culture. And when the dot-coms imploded, IBM was well positioned as "a voice of reason--not about hype, but about steering a clear course," according to Maureen McGuire, IBM's vice-president for integrated marketing communications worldwide. Not surprisingly, in a year in which most technology brands took a bath in terms of their valuation, IBM held nearly steady, at $53 billion.

For technology marketers, IBM has become the model. Witness German software giant SAP (SAP ), a brand that came in at No. 43 in our ranking. A massive but muddled advertising campaign in 1999 had left employees just as confused as customers about what the company's brand stood for. SAP hired a marketing veteran from Sony Corp. (SNE ), Martin Homlish, to orchestrate its next moves. "It became clear to us that technology marketing is not just talking about your technology," says Hasso Plattner, SAP's co-CEO. "You need a clear message."

When Homlish arrived at SAP as chief marketing officer, he and the seasoned marketing executives that he recruited first set about establishing a coherent message for the company. "The first mission was to have a mission," says Susan Popper, senior vice-president for global advertising and an ad-agency veteran. "We had to move from a product-driven to a brand-driven culture."

Homlish insisted that all the company's product names, logos, brochures, and Web pages have a consistent look: "speaking SAPanese," he calls it. To make that easier to accomplish, he borrowed a page directly out of the IBM playbook and consolidated all global advertising at Ogilvy & Mather. So far, the marketing pros seem to be succeeding: SAP was that rare phenomenon--a technology company with a brand that actually increased in value over the past year, posting a 3% gain.

A strong brand not only helps customers understand an organization but it also imparts a sense of mission inside the company. Since employees embody the brand to consumers, it's vital that they understand and embrace brand values. "If they can't articulate to the outside world what the brand is all about, then who can?" says Shelly Lazarus, chairman of Ogilvy & Mather, whose clients, in addition to IBM and SAP, include American Express and Ford, both in the top 20 in our brand ranking. "Once an enterprise understands what the brand is all about, it gives direction to the whole enterprise. You know what products you're supposed to make and not make. You know how you're supposed to answer your telephone. You know how you're supposed to package things. It gives a set of principles to an entire enterprise."

UPWARDLY MOBILE? When managers have a clearly articulated sense of the brand, it can also help to guide basic strategy. When Boeing, No. 63 in our ranking, thought about expanding into areas beyond its core aircraft operations, top executives thought carefully about what, exactly, the Boeing brand stood for. Once the organization defined itself as a global aerospace-technology company instead of just an airplane builder, moving into satellites and aircraft services became easy decisions.

Likewise, a strong commitment to its brand strategy helped Samsung Electronics Co. (SSNLF ), whose Samsung brand ranked No. 42 on our list, make the tough decision to ditch Wal-Mart Stores Inc. (WMT ) as a major retailer of its products. Samsung, which gained 22% in brand value last year, is trying to move up the value chain. Selling Samsung products at Wal-Mart made sense back when the South Korean electronics company aspired to churning out low-end electronic gadgets. Now, however, the company is attempting to move into more innovative, higher-margin items, such as voice-activated mobile phones that double as digital music players and personal digital assistants. Those are products that many consumers may be trying for the first time, thus giving a new brand like Samsung a big opportunity. "That transition and our strategy to move upmarket very aggressively are the main reasons why our brand improved rapidly," says Eric Kim, Samsung's marketing chief. Having its products appear in a mass-market discounter such as Wal-Mart hampered Samsung's attempts to build a premium image.

Samsung has good reason to worry about protecting and enhancing its brand integrity. Companies that don't do so run the risk of seeing their brands degenerate into mere commodities that customers shop for strictly on the basis of price. That drift can lop off millions in brand value and market capitalization, sometimes with astonishing speed. Philip Morris Cos. found that out back in 1993 when it slashed the price of its flagship Marlboro cigarette brand on what came to be known as Marlboro Friday.

That tacit acknowledgement that the rise of discount brands was burning into Marlboro's market share led investors to fear that the big brands were losing their pricing clout. The result: an immediate plunge in stock prices for consumer-goods companies across the board. The episode "really raised the bar on accountability," recalls Jan Lindemann, global director for brand valuation at Interbrand. "It was the point at which marketing directors and brand managers realized that what they did had a direct effect on shareholder value. Marketing departments had to recognize that brands and brand managers were going to be held more accountable."

Marlboro Friday turned out to be a wake-up call, not a death knell for big brands. At many companies, the soul-searching that followed ushered in a period of increased marketing budgets, stepped-up product innovation, and experiments with more compelling ways to reach consumers. Companies have learned the importance of the customer experience. They're scrutinizing every customer contact and every activity, from call centers to the way the company's trucks are painted to the selection of magazines in the lobby, to make sure they are in sync with the core values of the brand.

PERKING MERRILY. Perhaps no brand has done a better job of that than Starbucks. In 20 years, the Seattle company has grown from 18 coffee shops to 4,435. Over that entire period, it has spent maybe $20 million on traditional advertising, a pittance next to the $30 million that Pampers, ranked below it at No. 92, spent just last year. Instead, Starbucks plowed potential ad money into employee benefits. It was one of the first companies to offer part-timers stock options and health benefits. Why? Because for the Starbucks brand, the experience the consumer has in the store is crucial. A disgruntled employee or dirty restroom would break the pact Starbucks has with its customers. "If we want to exceed the trust of our customers, then we first have to build trust with our people," says Howard Schultz, Starbucks' chairman. "Brand has to start with the culture and naturally extend to our customers."

Employee benefits as a marketing tool? Why not, if that's what the brand requires. Besides, conventional advertising is no sure thing. As the dot-com bubble proved, massive advertising is not the same as brand-building. At the height of the boom, startups spent tens of millions of investor dollars familiarizing Web users with such new brands as, eToys, and In the end, too many of the dot-com ads never got around to telling consumers what the brands stood for--or even what products or services the company offered. Now, many of those names are disappearing, along with the sock puppets and airborne gerbils that were their mascots.

Brand gurus predict that demands on brands will only increase in the coming decades. The 72 million members of Generation Y, who are now reaching their mid-20s, have exhibited the most social activism since the baby boomers in the 1960s. They are likely to base much of their consumption on the values they ascribe to the companies providing goods and services, predicts brand consultant Marc Gobé, author of Emotional Branding: The New Paradigm for Connecting Brands to People. This means that companies will have to make a far greater effort to ensure that the values communicated to consumers are consistent with its internal values. If it is not, they will be exposed. "You can fool some of the people some of the time--until they have a bad experience with your brand," warns David F. D'Alessandro, CEO of John Hancock Financial Services Inc. and author of Brand Warfare: 10 Rules for Building the Killer Brand. Those that make good on their promises, though, will be rewarded with a more loyal consumer base--and a brand that steadily grows in value. As managers are learning, a brand is not just an abstract concept. It's a treasured corporate asset.

By Gerry Khermouch in New York, with Stanley Holmes in Seattle and Moon Ihlwan in Seoul

Click to buy an eprint or reprint of a BusinessWeek or BusinessWeek Online story.

Back to Top

Market Info
DJIA 9834.68 -66.70
Nasdaq 1875.05 -5.46
S&P 500 1137.03 -5.63

Create / Check Portfolio
Launch Popup Ticker

Stock Lookup

Enter name or ticker