Brand and Deliver

Faced with globalization and growing competition, CFOs in Asia are turning to brand management as a way to thrive.

Interbrand’s study looked only at Osim’s two biggest business lines — health and hygiene — and valued the brand at S$203 million. Put simply, that represents the value of Osim’s relationship with its customers. It also demonstrates how much could be lost should the relationship turn sour, which is why Lee and his fellow managers at Osim work tirelessly to keep the brand in good health.

Every year, for example, Osim devotes exactly 10 percent of its revenue to marketing spend. “It’s a figure we came up with from trial and error over the years that we feel will sustain and grow our brand,” explains Lee. Nonetheless, he warns: “Branding is a very disciplined process. It’s no good spending millions of dollars on a marketing campaign if the other aspects of the brand aren’t supporting that spend.”

To that end, the firm educates its staff religiously on the “drivers of the brand”, such as what the name Osim stands for — well-being and positive thought — and what sort of health advice to tell customers in the sales process. The company also requires all staff, from the CEO down, to wear the standard Osim beige polo shirt at work. And it regularly conducts brand audits, checking, for example, that all stores have the correct color scheme and layout.

And the Brand Played On…

All admirable stuff, and yet some CFOs question the need to calculate brand value. L Krishna Kumar, CFO of Indian Hotels Company (IHC), a Rs5.7 billion-a-year (US$126 million) business that manages the Taj chain of up-market hotels, is one.

“Brand is very important to us. It helps to drive superior performance,” he says.”But we prefer to look at the value of the overall business rather than the value of the brand on its own.” In any case, adds Krishna Kumar, he could quite easily calculate brand value if he wanted to, by subtracting the replacement cost of IHC’s 65 properties from the firm’s current enterprise value.

Still, that’s not to say that IHC doesn’t pay close attention to its brand. Like hundreds of other companies across Asia, IHC finds itself in a position of increasing competition in its home market. Thanks to India’s economic liberalization, a booming economy, and a recent shortage of quality hotel rooms, the country has seen a surge of investment from the world’s major chains.

So far, Taj Hotels has managed to stave off the onslaught, even increasing its market share to between 25 and 30 percent of the luxury and business segments. Nonetheless, says Krishna Kumar, “with more and more brands operating in the market, it’s vital that we’re clear about what differentiates us.”

For that reason, Taj recently hired Landor Associates, a brand consultancy, to carry out a study of the Taj name. The idea is to articulate a new “brand architecture” for the group, setting out exactly which segments of the market the group is targeting, what sort of service levels to provide, and how to move into new segments such as budget business hotels and spa resorts. The group is also making a push into overseas markets and wants to present a unified brand image to the world.

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