Branded for life

What Philippine business has the savvy to become the next Starbucks? Which local product will make a splash on the international market akin to Apple’s iPod? In short, how can the Philippines create its own global brands?

We’ve heard a lot about branding these days, what with the Philippines promoting itself in an award-winning pavilion at the World Expo in Tokyo, and the usual bevy of beauties (Miss International Precious Lara Quigaman) and brawn (Manny Pacquiao) out there winning positive attention for the country. Martin Roll, head of VentureRepublic, a leading strategic advisory firm on branding in Asia, was here recently to launch his book Asian Brand Strategy, and to explain how the country could be doing more to make its brands attractive worldwide.

First of all, he believes every Asian country is capable of creating world-class brands. So why, then, are there only about a dozen success stories we keep hearing about? His book cites case studies on most of them, including Singapore Airlines, Amanresorts, Samsung, Jim Thompson, Jet Airways, Star Cruises and Hong Kong-based Giordano. But a handful in the Philippines are on the verge of breaking through internationally – including San Miguel, Jollibee and telecom giants Globe and Smart.

So what’s holding the Philippines back?

"It’s kind of a mindset," says Roll in a phone interview. "It doesn’t necessarily mean you can’t build good brands in the Philippines. If the boardroom has the right mindset to say, ‘We want to move up the value chain, we don’t want to just be a local commodity or item,’ then it can be done."

Roll is probably one of the few people who would say that the "loose" management style of Philippine CEOs is a big plus. Sure, Korea and Japan may be thumping the competition with their government-set guidelines and rigid management styles. But for the Philippines, looser may be better.

"I think that’s a huge advantage," he says of Filipino CEOs who might shoot from the hip more often than not. "It inspires that bit of anarchism that makes somebody come up and say, ‘Why don’t we just make it blue?’

"It’s not just about replicating, it’s also about the confidence of a nation," he continues. "It really depends on what you want to put into it. In that sense, the Philippines has to find its own unique identity or identities."

Roll’s book is an insightful study on why branding is so big in Asia – any why some brands capture the world’s imagination, and some don’t.

He tells about how when Singapore-based Creative Technology launched its Zen MP3 player, they offered it to customers for free or heavily discounted – but only if they turned in their iPods. Few were willing to do so, and Roll believes this is because in today’s consumer culture, strong brand attachment wins out over technology.

This is something that Roll refers to as "lifestyle branding." It means far more than just craving the hippest, most current technology and products. It’s when customers buy into the lifestyle, design and "brand culture" of the products they choose.

"We’re selling attributes and features, not technology," Roll explains. "We’re selling a community, that’s probably the best way to define it. You’re part of a global community that aspires to have that product. What you have brought to that product partly reflects part of your personality."

People now draw more comfort from their purchases than ever. You can see it clearly with the success of Ikea-style "home furnishing" places, LCD televisions, the explosion of MP3 music players and sophisticated gaming technology in Asia.

But you also see it locally, with companies like Jollibee (which is now discussed in Harvard Business School classrooms). The humble fast-food giant managed to beat McDonald’s on its home turf, and much of this has to do with people feeling attached to, and comforted by, a familiar local brand.

Nowadays, though, it’s not enough to just have the most current technology or manufacturing (though these, too, are essential). Companies have to understand that Asia is not a homogenous market, but full of overlapping cultural influences and developments.

He finds the term "Modern Asia" inaccurate. "I would call it ‘Old and New Asia.’ That’s what is so compelling about Asia. Like China – on one hand you have 5,000 years of history, and on the other you have some of the hippest cultural trends. Asia like no place else on earth has this ability to blend its cultural components. It’s absolutely at the forefront."

And with countries like China lifting travel restrictions and Japan allowing more cultural inflow from other Asian countries, Roll sees a big boom in regional travel over the next decade, and more cultural cross-breeding. The hospitality sector will also be a big player, as will regional fashion, music and movie branding: "It’s a very important driver that Asian managers don’t just look at what I would call Hollywood images, but look at their own cultures to drive trends and build brands. Once they become more confident they aspire to have those companies themselves. You see it in Korea, for example, in fashion."

All this insight has to start in the corporate boardroom, of course. And possessing this kind of knowledge is a must for CEOs who want to keep their customers "branded for life."

The first thing necessary for Philippine brands to go global is a strong vision on the part of CEOs. Roll tells another iPod story, citing Apple’s unconventional CEO Steve Jobs as a good example of how creative thinking can drive brand development. "If (Jobs) had asked his customers in 1996 what would you like to have one or two years from now, none of them would have asked to build an iPod. That takes a bit of creativity and daring in a company."

Then there’s tons of money for research and development. He notes that Korean and Japanese companies typically spend about eight percent of their profits on R&D, thinking ahead to the next big breakthrough in buying habits and technology. For instance, he notes that researchers found Koreans were spending more on computer games and related accessories combined than they did on movie receipts in 2004. This signaled a shift in the market, and a corresponding shift in product development followed.

With its roaring economy, he sees China as the next big brand wave, following the success of Japan and Korea. "The mindset among the Chinese is definitely to replicate and emulate what Samsung has been doing, Nike or whatever. They’re very eager and have that aspiration to move further than just being a manufacturer. China is definitely next when it comes to brand building."

Asian Brand Strategy is packed with interesting case studies and data, such as the Goldman Sachs report that China accounts for 12 percent of global luxury goods sales in 2004. (It came in second to Japan, which accounts for 29 percent.) Brand names are often a luxury, and this ties in to the desire for products that people can build their lives around – often remaining loyal to the companies that meet their needs.

Getting back to the Philippines, Roll – whose father was a well-known Scandinavian designer and whose background in advertising helped him focus creatively on the phenomenon of branding – says the country itself has so much to offer. It just needs to sell itself better.

"I would say, be a little more confident about what the Philippines has to offer. It’s obviously about cleaning up internally – the environment, corruption, some other internal issues. You probably have a few problems that could be overshadowing the Philippine newspapers and international media. But there are so many other parts and that have to be brought forward."

As for tourism, which is finally starting to pick up here again, he points to Malaysia and Thailand: "Fifteen years back, they had some of the same issues. Now they have a huge tourism industry. In many ways the Philippines is similar to other Asian countries. It just needs encouragement."

And that in itself is encouraging news.