Graham Hales, Executive Director, Europe & Asia, Interbrand Group

“We have pioneered brand valuation as a discipline. And according to our survey of world’s most valuable brands, Coca-Cola is the number one followed by Microsoft at number two and IBM at number three. Then come GE, Intel, Nokia, Disney, McDonalds, Marlboro and Mercedes.”

Graham Hales is one of Interbrand’s most experienced consultants. He joined Interbrand in 1997 to work in their brand innovation team, creating insights into brands to enable them to unlock their full potential. The following year he moved to the strategy team as a Senior Consultant, and was part of the team that created the brand for the merged entity of PricewaterhouseCoopers.

Hales became Executive Director of Interbrand in 2004, taking responsibility for client management functions and international business development. He is a columnist and media commentator on brands and their changing environment. Before joining Interbrand, Hales had spent eight years with various advertising agencies, handling clients like Carlsberg, Robinsons and Colman’s.

Founded in London in 1974, Interbrand is the world’s first and largest brand consultancy. Today it has 36 offices in 22 countries with a clientele comprising BMW, Samsung, Toyota, British Airways amongst others. In conversation with Sakshi Talwar of exchange4media, Hales shares what goes into building a powerful brand and more. Excerpts:

Q. How relevant is brand management in today’s marketplace? What is the strategic role of brand management in acquisitions and mergers?

Brands give you future revenue attached to your business. If you look at some of the huge brands in the global market, you will find that brands like Wrigleys and Coke were number one in their market back in 1920s. They still maintain that position today. If a brand is well managed, it gives you timeliness around the revenue stream as well. But it requires proper management of process attached to it. Brand is crucial to mergers and acquisitions. What you will find in any classic merger or acquisition is the way a prospective buyer evaluates that business. His decision will always be driven by the brand value in terms of its present worth and growth prospects.

It’s not about us being aggressive but providing clarity on what to be aggressive about. We pick up what we think about the organisation from the multitude of the different things that the business is engaged in. Then we consider what we want these things to build in terms of the total impression about the business. The role that brands play in an organisation is dependent on the market they are in. And what I found after working in such diverse markets is that the principles of branding are fundamentally the same all across.

We have done over 4,000 brand valuations. It’s a process that just can’t backfire as it is all about showing you what your brand value is. It’s an objective analysis, so people may or may not be happy about it. It’s the process that determines whether the brand is over performing or under performing. So you can actually adopt strategies that will help you build and increase the brand value. The process isolates the brand and looks at its relative strengths across various aspects in the market important to the brand. Once the problematic area is identified, it becomes easier to focus on money and material to provide for efficiency. We measure where a brand stands in its market, develop a strategy and then work on bringing that strategy to life.

What we encourage organisations to do is to understand what the competition is doing but not mimic them. Once I know about other players in the domain, I then need to identify what I want my reputation to be. Organisations say they want to be different but they end up replicating what everyone else is doing. One has to stop thinking about what the competition is doing and concentrate on what the customer wants. Only then one can get ahead of the competition.

For Samsung, we went through a brand valuation process to help them not just arrive at the actual figure of what their brand was worth, but also ascertain the economic asset of their business. We helped them understand how the brand created its value, where the brand was under-performing and where it was over-performing. They could then focus on specific areas and work on strategies to increase the brand value.

That’s a good thing about brands. There are some brands coming from nowhere and increasing their value significantly. Samsung is a great case study of earning a great brand value in a short span. Brands always have the potential to be growing quite quickly as long as they are very clearly focused on who they are and what their brand idea is.

You have got to make sure that your organisation actually lives the brand idea. The most tangible representation of any organisation’s brand is the way its people interact with the customers. We have an internal brand engagement piece that brings the people in line with the brand thinking, and then align the behaviour of the organisation to the brand idea. We work with the organisations to help them identify what it is that they should start doing, stop doing or continue doing in terms of practices and processes.

The concept of brand valuation is about understanding the intangible worth of the business. If you look at the market capitalisation of the business, there is a significant gap between the worth of tangible assets and their market value. The difference between the two are the intangible assets. The brand value process itself is a way of isolating what the economic asset value of that brand is to the business. And in the process of isolating the brand worth, it demonstrates how one can build up the value of that brand and increase the intangible assets within the overall portfolio. And if one looks at how businesses are operating, it is much easier to build the intangible assets rather than buying factories and waiting for them to grow in market value.

The making of any good brand starts from its idea. There are four key components that make for a successful brand idea. Firstly, it has got to be credible, something people can believe in. Secondly, it has to be an idea which is relevant to that marketplace. The third thing is differentiation. It’s got to be different enough to be distinctive so the brand can have its own territory. Lastly, it’s got to be strategic. Something that is future focused and something that is worthy of the ambitions of the people working in that organisation.

We have pioneered brand valuation as a discipline. And according to our survey of the world’s most valuable brands, Coca-Cola is the number one followed by Microsoft at number two and IBM at number three. Then come GE, Intel, Nokia, Disney, McDonalds, Marlboro and Mercedes.