by Stefan Pertz
Asian Brands are on the rise
Out of the 100 most valuable brands in 2007, 11 are from Asia. Toyota has improved, now occupying 6th place, one up from 2006, while Nintendo is the top performer, rising 7 places. In 2004, only eight Asian brands were in the ranking.
Long established brands are now challenged by companies from the East as they shed their image as OEM manufacturers and start building their own brands. This article will discuss how a number of Asian brands became successful in already-crowded markets by utilising the notion of “unbranding the competition”.
By branding their products, Asian companies are now claiming value space in the minds of buyers. As very few monopolies exist, each brand has to be seen as interconnected and competing with other brands. This allows brands to unbrand their competition.
I will first introduce the mechanics at work in “unbranding”, and then discuss how Asian brands utilise this to outpace competition. Lastly, I will address the threats that these brands face in order to sustain their growth and value.
Branding is a war fought in the minds of buyers
Everyone is talking about the power of a strong brand, branding and brand equity. It is important to clarify what a “brand” is and how the concept works.
Humans use communication, verbal and non-verbal, to transmit concepts, ideas and knowledge. This framework enables us to clearly identify items, products and even brands.
A word, logo or brand is a signifier, as it identifies something specific. It clearly defines any object or activity as what it is. Here’s where the postmodernism thought of Difference becomes useful.
When we hear or read a word, we instinctively know what it does not mean; We would also have an idea of what is not signified. For example, when we read the word “Male”, we all know what a male is and also know what the term does not mean: Female. Yet, we all have a clear image of what a female looks like when we read “male”. As a result, we only require one signifier to actually describe both.
As explained above, any signifier automatically points at any other aspect that is absent or opposite. Differance was initially applied to writing. Later, the idea of Differance was applied to “concepts”. Because of this evolution, I believe that Differance can also be applied to brands. If any company is branding their own products, Differance means that at the same time this company unbrands products from all other manufacturers. We are living in a global and interconnected world and every local action has a worldwide reaction.
The meaning of the prefix “un-” can be:
- not something (e.g. unequal);
- the opposite of something (e.g. unnecessary);
- the reverse of something (e.g. uncool);
- to deprive of something (e.g. unsubstantiated);
- or to release from something (e.g. undo).
I will use these meanings to elaborate on how Asian brands unbrand their competition. The Free Lexicon describes unbranded as a adjective, meaning something is not marked. Mobile phone users have the option to unbrand their handsets and you can unbrand your Internet Browser. Muji is described as a “Un-Brand” that proactively unbrands its products by not labelling them. Some people want to unbrand America. However, in this context the term means to fight against consumerism. All of the above describe processes. The adjective unbranded describes the state of an item after this process. Therefore, there is also a verb, to unbrand. In the present tense, this will identify the process of something being unbranded.
Branding is an idea in the minds of people
A brand is an intangible concept, stemming from a procedure to mark cattle. Each owner had a distinct mark to be branded into the skin of their cows so that they could differentiate their cattle from those of other owners.
Today, branding still works in the same manner. A brand is a sign, logo or emotional feeling that will tell the products of one manufacturer apart from another. Brands not only separate products from manufacturer A and B, but they also differentiate products from the same manufacturer (e.g. Toyota and Lexus). When two brand names are mentioned, every reader will actually have a personalised image of the brands in mind.
Complex as the human mind is, in the context of branding it is only able to grasp one idea per brand. Any brand can only stand for one idea or concept. This is why companies launch additional brands. This will ensure that the target audience will understand what the brand stands for; and what it does not. However, what a brand stands for is subject to individual interpretation and is influenced by many factors, such as cultural background, social status, education and disturbances in the communication process.
It takes a lot to create a successful brand. One needs to look at all the players in the branding process. Two in particular are customers and competitors. Branding is about finding the right position in the minds of people, delivering value according to expectations, staying relevant and excelling at the benefits delivered.
The more distinct the brand position, the lesser the chance that customers will chose another brand as a substitute. In certain markets it is crucial to look at the brand position very carefully as many positions may already be taken. Blockbuster is trying to re-brand itself. The statement that customers should stop calling it Blockbuster video (now Blockbuster Media) shows where a brand really resides: in the minds of the customers. The company also had the opportunity to launch a new brand, finding another position for their services.
Competitors must be observed carefully, before and after finding a suitable position. Once a brand position is found, it needs to be defended. This is not easy as competitors will counterstrike and respond to the brand’s moves.
Branding, as in positioning or occupying a space in the mind of the consumers, may seem to be a simple concept. However, companies and brands are subject to competition, micro and macro environments and perceptions of consumers. Therefore branding, and with that un-branding, is no easy task.
Global trends: Information Revolution, Post Materialism, Emotions not Possessions
Consumers today are much better informed. Modern technology has pushed the horizon of awareness beyond local frontiers. We are now able to research any product category on a global basis. Purchasing B2B products is now a well thought through process. The accessibility of information and the multitude of channels used to communicate may pose threats to the message, unless addressed correctly.
Another global trend is the movement towards post materialism. Self actualisation and participation in shaping today’s world are becoming more and more important. Luxury has become available for many and we are now striving for other means of self actualisation. If everyone has all the material goods, people need to find new ways to express their ability to afford luxury. Experiences are the answer and smart brands have embraced this in their offerings.
How Asian companies unbrand their competitors
The following examples show how Asian companies have unbranded their competition. There are three generic differentiation strategies: cost leadership, differentiation and focus. Differentiation can be broken down further by utilising a finer framework that has 13 different strategies companies can adopt; herein only a selected few will be used as examples.
Osim – Offering luxury at home
Unlike other Asian companies, Osim focuses on marketing their product in order to become successful. Osim does not manufacture any products – they are contracted out – nor do they own their shops. OSIM’s history dates back to November 1980 with Ron Sim’s business of retailing an array of household goods such as knives and knife-sharpeners under R. Sim Trading Co. Their first healthcare-related products were hand-held massagers and foot reflexology rollers.
What made the company famous was the specialisation in a very small niche market: Healthcare products for the home. Luxury you can enjoy in the privacy of your own place. Osim gained fame for one group of products, the massage chair, which has since become a must-have item in households of affluent Asians.
With their massage chairs, Osim hit the mark, in line with global trends for personal luxury and the trend towards post materialism. Although one needs to obtain the massage chair first, it is the experience that people are after.
Osim has not only unbranded other chairs into non-relaxing and uncomfortable ones, but also unbranded spas and other institutions as being non-luxury, materialistic and less of an experience than they used to be.
Emirates – Preferred by business travellers
People travel for leisure or business. Depending on the purpose of the journey, they may select different carriers.
Emirates airlines entered the market in 1985. In this short period they managed to occupy the position of ‘preferred airline for business travellers’. Other airlines now have to find other differentiators. Malaysian Airlines for instance stands for the best cabin crew. Oasis offers budget long-haul flights.
Emirates’ branding, which is focused on punctuality and other factors important to business travellers has, based on the notion of unbranding, positioned all other airlines into non-business airlines. To occupy the minds of buyers, they need to find other spaces that they can occupy. These spaces need to be specific. Etihad is aiming at “being the best in its class”. However, as it has been unbranded by Emirates already, Etihad cannot claim preference from business travellers.
Burj El Arab – Attribute ownership is redefining the term luxury hotels
The sail-shaped hotel made a big impact when it opened in 1999. Built with components that were available to any other developer, it claimed the attribute of being “The first seven-star hotel in the World”. The star rating indicates the quality of the hotel and until now, there are no other seven-stars being completed.
By definition, the star rating for hotels indicates the quality of any hotel, even though the services provided are largely intangible and may vary. Automatically, the seven-star rating creates a perception in the minds of the public. The conclusion is that the Burj El Arab must be the absolute best hotel as there are no other seven-star hotels.
Room rates start from USD 1600 per night, yet this hotel is in line with the global trend of “luxury for everyone” and the occupancy rate is about 90%.
By branding itself as the most luxurious and first seven-star hotel, it simultaneously unbrands the competition. If this hotel is the epitome for luxury, no other hotel will be able to claim this attribute. In the Difference and unbranding view, all other hotels have now been unbranded as being non-luxury, their beds mere commodities.
Sepang – First in SEA, first from scratch
In 1998 the Formula One race series came to South East Asia for the first time. Unlike other European tracks, which have evolved from existing roads or runways, this racetrack was built from scratch. Not only has Sepang International Circuit managed to claim the attribute of being the first F1 Track in South East Asia, but the current perception is that Sepang is the benchmark for other tracks that will be built in the future. It is also the first F1 racetrack designed by Architekturbuero Herman Tielke, who repeated his success in Shanghai, Bahrain and Istanbul.
Sepang International Circuit has unbranded all other tracks in South East Asia as me-too’s and latecomers. In addition, Wikipedia’s entry on the track states that the Sepang International Circuit is said to be the benchmark. This is important, as Wikipedia is user-generated content, reflecting the perception prevailing in the minds of the consumers. Therefore, all other tracks have now been unbranded by people into second-tier racetracks.
Petronas – The oil company that grew up with Malaysians
The brand of this Fortune 500 is built on the “Heritage” differentiator strategy. Everything the company does is based on the idea that Malaysians grew up alongside the company and that they will prosper together.
Oil was extracted from Malaysian soil since 1882. Malaysia became independent in 1963 and in 1974 Petronas was formed to ensure the nation had enough oil resources. With the majority aged between 15 and 64 years and a median age of 24.6 years, most Malaysians have grown up alongside Petronas.
The iconic symbol of Petronas, the Twin Towers, was built in 1992 with more than 60 percent of the construction material sourced locally. The architect stated on the official Twin Towers website: ‘I tried to express what I thought was the essence of Malaysia, its richness in culture and its extraordinary vision for the future. The building is rooted in tradition and Malaysia’s aspiration and ambition.’
In 2008, the Petronas commercial entitled Tan Hong Ming, won at the 2008 AdFest. It is a heart-warming insight into children’s innocence in the country’s multi-cultural society.
With this approach, Petronas is able to unbrand other petroleum companies into non-family members and non-Malaysian. By sharing the same cultural values and being omnipresent, Petronas managed to occupy the position of Heritage, despite being a very young company compared to the competition.
International oil companies continue to suffer from their 1980s and 1990s reputation as haughty and patronising business partners. Malcolm Brinded, head of Shell’s exploration and production, acknowledges this when he says foreign oil companies need to ask themselves, “How are we going to make this marriage work?” He describes Shell and other international oil companies as “much less paternalistic than in the partnerships of 20 years ago”.
Opportunities and threats for Asian brands
The examples used herein show that opportunities and threats exist for Asian companies to unbrand their competition. What they have in common is that these are product innovations, either in the form of new ways of doing business or new products. Asian companies can no longer rely on low cost as a guarantor of success. Branding products can ward off fierce competition in the region. To be successful in branding, the provision of the service or product provided has to exceed the expected service. In addition, companies need to anticipate and pre-empt the moves of their competition to formulate a sound strategy for unbranding.
In the case of Osim we have seen how a small company can grow into a multi-million global organisation within a short period of time. However, by 2005 scholars started to worry that the company had lost its focus. More and more products were added to the portfolio, diluting the image of the healthcare specialist.
Emirates is now faced with competition from Etihad, a carrier from the region poised to become “the best in its class”. But this approach is unlikely to unbrand Emirates as the leading business travel provider.
The success of the Burj El Arab has attracted other players to enter into the seven-star hotel market. Burj El Arab, though, will always be the first seven-star hotel. Unbranding the luxury attribute may only be possible by creating an eight- or nine-star hotel.
Sepang International Circuit’s brand could be overthrown by inventing something bigger, such as Singapore’s upcoming Grand Prix. It can claim a white space that no other racetrack currently occupies: There are four components in this a) street circuit in b) in a major city c) at night and d) in Asia. As of May 8, 82% of the tickets have been sold for the inaugural Singapore Formula 1 race, four months before the event.
Petronas has achieved a lot in its relatively short period of existence. The company has successfully unbranded the competition into untrustworthy players and non-family members. The company is now faced with issues beyond their control: e.g. rising oil prices and the notion of the Malaysian government to forbid foreigners to purchase petrol along their borders. Petronas now has to deliver on the promise that they are part of the family.
Look for the white space
It is clear that Asian companies can find white spaces to be utilised to their advantage. Instead of talking about branding products and services in isolation, such activity has to be seen as having an impact onto other brands and businesses. One should not only look at what its own product or service should be; companies should also find ways to unbrand their competition.
Both internal and external factors can pose threats or opportunities to any brand. After successfully unbranding the competition, the company must defend its position and counteract the moves of their competitor’s brands.
An advantage gained could be lost as unbranded brands may counter the activities of the new brand.
With these examples it demonstrates that it is possible to create powerful brands from the East within a short period. This should encourage more and more Asian brands to compete in the global market as there are still white spaces waiting to be claimed. Unbranding, or decommoditising, can work for Asian companies as many used to manufacturer commodities. Now the challenge is to turn these commodities into brands.