Branding for the future for Singaporean companies (Part 1)

I learnt of some interesting findings from the recent Brand Finance Forum held in SMU last week.

Singaporean companies still have a long way to improve the value of their intangible assets like branding, according to the Brand Finance Annual Report for 2009 on Singapore's intangible assets and brands.

Singapore may have jumped three places to the 24th position in terms of intangible contribution to enterprise value, leading countries like Taiwan and South Korea, but its share of listed value contributed by intangibles has actually decreased to 11%, down from 52% in 2007. This is definitely a far cry from the global average of 40%.

On top of that, 93% of brand value for Singapore is concentrated in the top 50 brands like household names such as SIA (an anomaly in an industry where many airlines are failing), Keppel Corp, Semb Corp and DBS (rather surprising given their recent fiascos with their non-profit partners). Our top 10 brands now account for 56% of the total brand portfolio value in Singapore. What does this show?

It means that there are vast disparities in the branding effectiveness of our top brands - which are mainly home-grown MNCs who have been in the industry for several decades - and that of our mainstream companies - consisting mainly of SMEs and start-ups. Despite the efforts of IE Singapore and Spring Singapire, there is definitely so much room for our SMEs to grow and further strengthen their brand values.

So what should we do to strengthen the brands of Singaporean companies?

At the macro level, the government and industries should:

• Rebuild public confidence in the key sectors driving the economy such as real estate, banking & financial services, tourism, and construction. There's a very good reason why 209 brands fell out of the top 500 banking brands worldwide and that's due to the collapse of public confidence in these financial behemoths

• Promote and advertise the availability of government loans (especially from IE Singapore and Spring Singapore) to help local companies develop and expand upon their brand values

• Leverage on national branding effects such as "Buy Singapore" concepts where one can leverage on our good reputation in areas like medical innovation, technological reliability etc.

At the micro level, companies should:

• Understand and identify the key drivers of their brand value, and allocate more resources to strengthening them. This also means using new methodologies like assessing brand energy levels, and the brand cloud which tracks the brand effectiveness of rivals and complements relative to the company's brand

• Maintain strong communication to convince management and shareholders to continue investing in intangibles and branding during the downturn, and not be too quick to cut branding budgets or devote too much resources to the tangibles (i.e. products and services, R&D). Even if you have the most effective piece of technology in the world (or so you think), it will matter little if people perceive your brand to be inferior to others. Brand values have to be communicated effectively and constantly to both internal and external stakeholders

• Acquire companies abroad with strong brand values and similar synergies, for local companies that have strong cash-flow and have large cash surpluses. After all, in the current downturn, many companies are going on the cheap. Just as much as we do our bargain hunts during the Great Singapore Sale, companies should go on the prowl for bargain offerings

• Internationalise or go regional. Serving a market of 450 million is better than serving a market of 4.5 million. With the strengthening of the ASEAN Common Market and the growing reputation of Singaporean companies in places like China, India and the Middle East, the stage is set to strengthen and communicate brand values to these large markets

Let's look at a couple of good case studies in the next post...