Interbrand
Interbrand
To propose a branding strategy and related marketing program that shows promise of
sustained success, an understanding of the brand rating and ranking approach used by a
major global branding report is required. Interbrand is an organization focused on creating
and managing brand value. According to its website, “Interbrand started in 1974 when the
world still thought of brands as just another word for logo. We have changed the world’s
view of branding and brand management by creating and managing brands as valuable
business assets” (Interbrand, 2010).
Interbrand’s rating and ranking approaches analyzes the ongoing investment and
management of the brand as a business asset. This method considers several ways in which
a brand touches and provides an organization with benefits. The results of the methodology
The ISM Journal of International Business ISSN: 2150-1076, Volume 1, Issue 3, July, December 2011
Global Brand Management: Nike’s Global Brand – Larson 5
are used to guide brand management, thus organizations use these results to make business
decisions. There are three components of Interbrand’s assessment: the branded products or
services’ financial performance, the role of brand in the purchase decision process, and the
strength of the brand (Interbrand, 2010).
Interbrand focuses on economic profit to determine financial performance. To determine
economic profit, taxes are removed from net operating profit. From the economic profit, a
capital charge is removed to account for the capital used to generate the brand’s revenues;
the capital charge rate is set by an industry weighted average cost of capital (WACC). Once
the economic profit is determined, it is analyzed for a forecasted five-year period and for a
terminal value. According to Interbrand’s Best Global Brands Report, “The terminal value
represents the brand’s expected performance beyond the forecast period. The economic
profit that is calculated is then multiplied against the role of the brand to determine the
branded earnings that contribute to the valuation total, as noted earlier” (p. 11).
The role of the brand focuses on the consumer’s decision to purchase because of the brand;
this does not include other influencers such as price or product features. Interbrand analyzes
the portion of the demand for a product or service that would be in excess of the demand of
a similar unbranded product. Brand percentage is multiplied by the economic profit which
results in the amount of branded earnings. Branded earnings are then applied to the brand
valuation total. Brand value results are determined by Interbrand by establishing brand
earnings, multiplying brand earnings by brand strength, and discounting the total to present
value (Interbrand, 2010)..
Brand strength is more complex than establishing economic profit and brand earnings.
According to Interbrand (2010), “Brand strength measures the ability of the brand to secure
the delivery of expected future earnings. Brand strength is reported on a 0 to 100 scale
(where 100 is perfect) as determined by an evaluation across 10 dimensions of brand
activation” (p.11). The 10 components of Interbrand’s brand strength score contribute
equally to assessing the brand’s ability to generate value. The 10 dimensions focus on all
aspects of the brand (products, people, partners, positioning) to create a holistic view of
brand evaluation. An update has been made to these components to include corporate
citizenship, audience fragmentation, product design, social media, and return on investment
(ROI) (Interbrand, 2010).
Interbrand determines brand strength based on the following 10 dimensions: commitment,
protection, clarity, responsiveness, authenticity, relevance, presence, understanding,
consistency, and differentiation. These 10 dimensions will be used to establish an evaluation
of Nike’s current marketing and brand strategy. According to Interbrand’s Best Global Brands
Report (2010), the 10 dimensions are defined as follows:
The ISM Journal of International Business ISSN: 2150-1076, Volume 1, Issue 3, July, December 2011
Global Brand Management: Nike’s Global Brand – Larson 6
Commitment: “A measure of an organization’s internal commitment or belief in
its brand. Commitment is the extent to which the brand receives support in terms
of time, influence and investment” (p.6). An example of a brand that did not
demonstrate commitment in 2010 was British Petroleum (BP), when an oil well in
the Gulf of Mexico continued to spew oil over a three month period damaging
the economy and the environment.
Protection: “This component examines how secure a brand is across a number of
dimensions – from legal protection and proprietary ingredients to design, scale or
geographical spread” (p.6). An example of protection can be seen with Kleenex
and Apple. Kleenex has become the name by which tissue is known and Apple
polices its i-prefix names to ensure no use of like names are being used.
Clarity: “The brand’s values, positioning and proposition must be clearly
articulated and shared across the organization, along with a clear view of its
target audiences, customer insights and drivers” (p.7). Organizations such as
Proctor and Gamble (P&G) and Unilever allocate budget to focus on research and
invest in highly skilled resources.
Responsiveness: “The component looks at a brand’s ability to adapt to market
changes, challenges, and opportunities. The brand should have a desire and
ability to constantly evolve and renew itself” (p.7). In this dimension, many
organizations have responded to customer concerns such as a desire to see
sustainable products like fuel efficient cars.
Authenticity: “This component is about how soundly a brand is based on an
internal capability. Authenticity asks if a brand has a defined heritage and a well-
grounded value set, as well as if it can deliver against customer’s expectation”
(p.8). An example of authenticity are those brands which have stayed the course
on what differentiated them in the first place, brands such as Chanel and Gucci.
Relevance: “This component estimates how well a brand fits with customer
needs, desires, and decision criteria across all appropriate demographics and
geographies” (p.8). Organizations such as the Gap have integrated mobile into its
brand experience by developing a mobile shopping platform that uses video
interviews, Twitter, and provides the ability to purchase products via the mobile
device.
Presence: “This measures the degree to which a brand feels omnipresent and
how positively consumers, customers and opinion formers discuss it in both
traditional and social media” (p.8). Starbucks is an example that integrates
different elements of social media such as blogs, YouTube, Facebook, and Twitter
to elevate its presence.
The ISM Journal of International Business ISSN: 2150-1076, Volume 1, Issue 3, July, December 2011
Global Brand Management: Nike’s Global Brand – Larson 7
Understanding: “Not only must customers recognize the brand, but there must
also be an in-depth understanding of its distinctive qualities and characteristics,
as well as those of the brand owner (p.9)”. Apple is immediately recognized by
consumers via its distinctive, clean, smooth lines of products. Apple’s product
design communicates the innovative vision of the company.
Consistency: “This measures the degree to which a brand is experienced without
fail across all touchpoints and formats” (p.9). Organizations such as McDonald’s
have adapted to local markets by being consistent about inconsistency.
McDonald’s adapts products to appeal to local markets.
Differentiation: “This is the degree to which customers perceive the brand to
have a positioning that is distinct from competition” (p.9). An example would
include the Apple iPhone and its third-party applications. Apple “apps” as they
are called are created by third-parties for the iPhone device. Other smartphone
brands such as Google and Blackberry have had to keep up with the innovation
created by Apple.
The 10 dimensions that Interbrand uses to determine brand strength will be used in the
analysis of Nike’s current marketing and brand strategy.
