DinarStandard Editors

Muslim World Consumer Brands, Mobile Tech & Islamic Finance, Hikma Pharma's R&D...

July Edition: In our July edition we are presenting the leading Consumer facing brands of the Top 100 Companies of the Muslim World.  Given the ever more importance of branding in helping companies differentiate and command premium (Interbrand values - Coca Cola's brand value to be $65 bill), we are presenting this updated benchmark.  Consumer brands from Turkey dominate this list, eg Arcelik, Vestel, Beko (Electronics) and Ulker (Confectionery). 

The reason for our focus on this?  To date none of the indigenous brands from Muslim majority countries have every made it to the Top 100 Global brand list (published by Interbrand) We hope this benchmark plays a small part in changing this fact.  There's already much positive momentum as the last two years seven of the DS100 companies have completely re-branded themselves.  We will soon also be covering some of the emerging brands in addition to the one's from the Top 100 Companies.

In our Innovation channel, Guest contributor Athar Mian, provides tremendous expert insights on Mobile technology innovation opportunities and the role of Islamic Finance.  Its specific focus on opportunities within Muslim world provides much direction for entrepreneurs in this pace to consider.  We are also proud to highlight this issue the exceptional achievement of Jordan originated Hikma Pharmaceutical, that through quality global R&D is becoming a global player.

In our continuing focus on the Muslim Lifestyle space we look at one of the most prominent global Muslim children's book publisher - India based, Goodword Books.

Finally, in Finance, given the growing focus on the agriculture sector globally, we look at how Agri-businessess in Malaysia are exploring creative financing.   From Malaysia we also present a profile of Ms. Tengku Rozidar, CEO of '1901 Hotdog' outlets on success in franchising. 

We hope you will find this issue valuable.  Look forward to your feedback.

    

Malaysia's Top 50 Brands

Brand Finance Plc, a brand valuation and strategy advisory firm, has published the first index of Malaysia's top 50 brands based on the attributed dollar value of their brand assets.

At number 1, Petronas - the Oil & Gas conglomerates brand, is the most valuable Malaysian brand and is worth USD 2.15bn (MYR 7.51bn) out of the total brand value of Malaysia's top fifty brands which is USD 17.26bn (MYR 60.19bn).  The top 10 Malaysian brands command more than 60% of the overall Top 50 brand value and overall the brands.  These top 10 are as follows:

For more, click here to download the full report in PDF.

The methodology used by Brand Finance Plc to calculate brand value is the 'royalty relief’ approach. It assumes a company does not own its own brand and calculates how much it would need to pay to license it from a third party. The present value of that stream of (hypothetical) royalty payments represents the value of the brand.

In a highly competitive local, regional and global marketplace there is a premium on brand's ability to differentiate and communicate their unique ability to satisfy customer needs. The report highlights that in such an environment sources of value creation have moved increasingly from tangible assets (such as plant and machinery) to intangible ones (such as brands,patents, customer databases and skilled workforce). This is an environment in which the scarce resources are not factories and goods, but rather talented people, good ideas and differentiated brands.

Reflecting this shift in the sources of value creation, the Brand Finance Global Intangible Study 2007 for globally listed companies shows that the percentage of value of intangible assetts has risen from 64% in 2001 to 66% in 2007.

However, in Malaysia, the recognition of intangible value is low compared to other countries. The report shows how ony 40% of Malaysia’s market value is derived from intangible assets, as compared to the US where 70% of US market value is derived from intangible assets.

However, there does seem to be an increased emphasis on improving these intangible assetts.  Reflecting this growing trend, the Association of Accredited Advertising Agents of Malaysia (4As) and Interbrand (global brand consulting firm) are collaborating for the first time to come up with another ranking of Top Malaysian brands.

This effort also highlighted the value of branding with the Interbrand strategy director Andrew Martschenko saying that two-thirds of the world’s wealth were attached to the top corporate brands in the West.  The 4As and Interbrand ranking would be announced on Nov 16.

    

Apple's i-Phenomenons and the Design factor

Apple's latest i-phenomenon -- the i-Phone has once again mesmerized the world of consumer electronics. Following the success of its sleek i-Pod music media players, the i-Phone is set to revolutionize the convergence of mobile devices - email, Internet, media player and mobile phone all packaged in one very impressive looking and functioning device.

The analysts and media, from Business Week, Harvard Business Review to The Economist, are all a-buzz trying to crack the Apple code on what makes it one of the most innovative companies in the world.   
 
Sure, as many say, its the Founder Steve Job's visionary leadership. But, the essence of his vision that sets Apple apart is his 'design thinking' mixed with the 'cool factor' that runs across every aspect of a users experience.  After-all, Mp3 music players were a plenty before i-Pods hit the market, but the i-Pod design and usability and its i-Tune tie-in galvanized the mobile music consumers.  Similarly, Nokia, Motorola, and Samsung have led the global mobile phone market, but are sweating the impact of i-Phone's ingeniousness. 
 
'Design Thinking' addressess business problems/needs with a non-traditional approach that involves intense user observance and employs creative problem solving involving people from various diverse tracks to develop 'out-of-the-box' solutions.  This approach applies to tangible products, user technologies, business services and even operations, and is fast becoming a key business growth driver.
 
IDEO is one of the most prominent consulting firms that specializes in this space and had also helped Apple design the first Macintosh mouse.  In a special edition on the Power of Design, BusinessWeek profiled IDEO as an innovative company that has "redefined good design by creating experiences, not just products.  Now its changing the way companies innovate."
 
To get some idea on what design thinking entails, I found a great presentation by Timothy Brown, CEO, IDEO given at MIT in which he covers their design thinking process of surveying the “landscape of innovation” focussing on people, their needs, technology and business, and their rapid prototyping methods to ideate and create solutions.
 
There will be a lot more we will focus on the process of design thinking.  In the meantime, the success of Apple's i-Phenomenon has once again re-iterated the importance of design thinking in every aspect of today's global competitive strategy.

What do you think about the power of design? Do share your thoughts by submitting your comments.

    

Where are the "Muslim" Brands? - BrandChannel.com

BrandChannel.com (produced by Interbrand - a global brand consultancy that also produces the BusinessWeek list of Top 100 Global Brands)  recently did an article on "Muslim" brands to which I contributed some point of views. 

Key points discussed in the article were around the distinction between brands that serve a global need and brands that serve unique "Muslim" needs.  The question about which brands from the Muslim world have the best option to go global was also brought up.    My view and that of some others was that - to be global, the brand has to have a global appeal and utility.   

It was also noted that Fast-moving consumer goods have the best possibility to become global brands.  This is true if you look at the Global Top 100 or the Leading Brands of the DS100 companies.

Some of the most prominent brands from the Muslim world are hence consumer products/ services that have a global appeal.  Which are some of the brands you think will first break into the Global Top 100? 

US Muslims Disposable Income Estimated at $170 billion: Report

Muslims have been in the United States for a long time but their recognition as part of the fabric of American society has been a frequent topic of discussion - especially after the tragedies of 9/11.  Issues of identity and belonging were probed and questions of whether Muslims could ever fit in to American society dominated debate.  But a recent NY Times article indicates that this is about to change - at least from business' point of view.   

Companies are now realizing that the Muslim market in the US alone has a combined disposable income well in excess of $170 billion a year.  On the basis of trade and profit, business and commerce have long contributed to intercultural understanding.  Today companies like McDonald’s, Walgreens, and Ikea (specifically their locations in the Detroit area) are learning to cater to their Muslim customers.  Picking up on the needs of American Muslim customers the marketing firm JWT recently concluded a survey of American Muslims and plans to encourage clients like Johnson & Johnson and Unilever to market to American Muslims. 

To illustrate how this recognition of the American Muslim market segment is part of a larger trend Marian Salzman, executive vice president and chief marketing officer of JWT, pointed to ads in the 1960s that featured Jewish products like Levy’s rye bread, which, she said, helped bring Jews in the US into mainstream advertising. 

Challenges for marketers will determine the level and sophistication of their understanding.  Addressing the various cultural groups of the American Muslim segment as well will remain a challenge along with the area of Halal standards but the news is certainly encouraging.  DinarStandard pointed to the emergence of the Muslim Lifestyle Market™ in a January 2005 article.  We look forward to following the continuing recognition and development of the Muslim Lifestyle Market™ globally. 

'Second Life' - Taking The Virtual Economy to Another Level

'Second Life' is an online 3D digital world where its 4 million+ registered users create their Avatar (online virtual persona) and explore this virtual world meeting people, playing games, shopping and even buying virtual land which allows them to open a business, build their own virtual paradise, and more!  In fact, one woman made $1 million buying and selling virtual Second life land. 

Second Life was started by Linden Labs of California, USA and now literally boasts its own economy (currency, land values, economic data).

The buzz and potential around the site is beginning to sound like that of Google a few years ago.  Businessess are actually buying virtual islands to promote their brands, products and services.  IBM has now acquired 24 Second Life "Islands." Other big companies with a presence include General Motors, Toyota Motors, Dell, Cisco Systems, Sun Microsystems and Reuters Group.

Invariably many Muslims may shy away from such a site by asking, “How distracting is such an indulgance from the realities of life?”  No doubt much immoral activity such as virtual second affairs etc. happen.  These do not reflect Muslim values. I have had interesting debates on this with friends and family.  Is it better to stay away from SecondLife or should it be seen as an opportunity to engage and foster good values?

As a business opportunity - with 4 million virtual residents and an amazing array of innovative marketing options, 'Second Life' just cannot be ignored.  If in the process, good values can be communicated and supported then better yet.  In some ways it’s not too different from the real world.

Branding Nations and the Corporate Sector Role

Two recent interactive events tackled branding for Pakistan and the Middle-East separately.

A gathering of about 100 Pakistan professionals living in the US last weekend (organized by a think-tank AOPP) tackled the possibility of a ‘Brand Pakistan.’  In an interactive working session, which Dinar Standard helped to facilitate, the role of consumer products on a Nation’s brand was also discussed.  After all, so much of a national identity in a consumer’s mind is formed by the consumer brands associated with that country.  Think of Japan and invariably it’s Sony, Panasonic, Toyota and other consumer technology brands that give Japan its high-tech identity; or Italy being known as the center of fashion and style, and so on.

However, leading nation branding experts, such as Simon Anholt, point to the more complex nature of nations as brands vs. products as brands.  Mr. Anholt contends that consumer product driven identities tend to also stereotype countries which then become a disadvantage for its other product categories.  He regards Cultural identity an essential component in a country’s brand image for a fuller more durable understanding of the country and its values.  After all, Italy is also known for Michaelangelo, Leonardo, Galileo and its Italian cuisine, while Japan has a rich art tradition, cuisine and its own unique philosophy.

As for Pakistan, both aspects – its few industrial identities (textiles, sporting goods, emerging IT sector) and its rich culture (Mughal heritage, cuisine, art/music) – seem to be overshadowed by its role in the ‘War on Terror.’   An opportunity does exist for the corporate community as well other members of Pakistan’s society to highlight its cultural and industrial identities to balance its struggling brand. 

Most countries of the Muslim world face a similar challenge as well.  A Davos styled World Economic Forum on the Middle East at Sharm-El Shaikh, Egypt, a few weeks ago hosted a similar Brand Middle East working session where business and political leaders across the Muslim world participated.   The Forum took initial steps to launching a private sector-funded branding campaign for the Middle East under the banner "Red tape out, Red carpet in" promoting the ‘Middle East’ as a destination for tourism and inward investment.   Dubai as a shopping, financial and trade center and Egypt as a leading tourism destination lead as the most successful Arab global nation brands.  It’s also important to highlight the role of Dubai's emerging global brands and investments in shaping its identity (Emirates, Jumeirah, DPWorld, Etisalat.)

What makes the Mohammad Ali brand worth $50 million?

Mohammad Ali, the greatest boxer and athlete of all time, recently sold the marketing rights to his name and image for $50 million. What’s amazing is that it’s been 15 years since ‘the greatest’ retired.   The influence to this day of Mohammad Ali’s dramatic career record of 56 wins - 37 by knockout - and 5 losses, and a most entertaining personality who "floated like a butterfly and stung like a bee" shows the value of a brand and in particular the strength of his own.

So when thinking of what makes such a powerful brand, I remembered the three key elements needed for a successful image that I had learned during my PR industry days.  These were Performance, Communication, and Exposure. Against all three, Ali certainly was exceptional.  First, his Performance showed that he walked the talk and delivered exceptionally in his field.  Second, his ability to Communicate in an entertaining and principled style captivated his audience. Finally, he gained global Exposure by performing internationally in such memorable events as 'The Rumble in the Jungle' (Zaire) and 'The Thrilla in Manila' (Philipines).

Not everyone can reach Mohammad Ali's stature, but there's certainly much to be learned from his career both at a personal level as well as corporate.   Oh and by-the-way, in the $50 million contract, he did not allow the marketing company to use his name with any tobacco or alcohol related products or services.

New Ranking Highlights the importance of Branding

The special report on Global Brands released by the FT on April 3, 2006 is a fascinating read.  The report coincides with the launching of the Brandz Top 100 most valuable global brands ranking which offers business leaders and entrepreneurs a much needed benchmark on the value of brands in an overall business plan.  For us at Dinar Standard the FT report highlights many of the issues companies in the Muslim World need to consider when developing their brands - the foremost being recognizing the actual value of branding for a business.

In fact, the ranking methodically derives a monetary value to the pure contribution a brand plays in driving current and future earnings to the company.   For example, the pure value of the brand as an asset for Microsoft (#1 in the ranking) is $62 billion!, and for relative newcomer Google (#7) it's $37 billion!  As the report correctly points out, “Brands are among a business’s most valuable assets.”  This is the reason the most successful corporations today have Brand managers, branding strategies, and a very strategic approach to managing their reputation and image.

Companies in the Muslim World have a vast array of opportunities to take advantage of the forces of globalization to introduce their products and services to open markets around the world.  What needs to happen is that the decision to approach broader markets outside home countries has to be part and parcel of the business plan – not an incidental choice.  Once this decision is made brands that have cross-border appeal can be crafted. 

Even by focusing on the Muslim World companies can leverage a number of cultural affinities across borders to enhance their brands’ appeal to differing markets. Companies like Orascom Telecom have already shown us this is possible.  The launch of Al Jazeera International (see the cover story in this month’s issue of Fast Company magazine) is another example that this can happen even in markets that might at first be seen as completely different or even hostile to a particular company. 

We are confident that more will do so in the near future.

Facing true Competition, Proton collaborates with Chinese carmaker

The pride and joy of Malaysian industrialization, the indegineous national car Proton, is no longer enjoying the government protection and subsidies it has been so used to.  Malaysian government is removing various taxes that have been in place for foreign automobiles entering Malaysian market.

So in preparation for free market competition, Proton is in talks with Chinese carmaker Chery about a strategic alliance that would involve manufacturing in both countries.  This search follows the collapse of negotiations earlier in January with Volkswagen.  The deal being discussed would give Chery a manufacturing platform in Malaysia and would allow Proton cars to be produced in the fast-growing Chinese car market.  Other competitive measures include cutting costs, dropping prices and expanding its export markets in Europe, MiddleEast and Asia. 

A mutually beneficial partnership with Chinese automaker Chery will certainly make a whole lot of sense (Chery, by-the-way is planning to enter the US market in 2007).  The skills and expertise that can be gained from the Chinese in producing low-cost automobiles to market globally, and having access to the worlds largest market, can certainly help Proton stand-up on its own four wheels and face global competition.