Two-thirds of Malaysia’s Top 30 brands drop in value but some have grown despite global recession

In times of economic uncertainty, marketing expenditure is usually the first to be affected as companies embark on cost-cutting measures to alleviate the downturn’s impact on their business. 

However, Malaysia’s Most Valuable Brands (MMVB) 2009, a joint study between 4As (Association of Accredited Advertising Agents), The Edge and global brand consultancy Interbrand, shows that although the global economic crisis has hit Malaysia’s top brands, some have continued to see growth through strong financial management and continued emphasis on brand building.

The results of the study, to be revealed tomorrow, show that two-thirds of the companies in the Top 30 saw a drop in brand value from last year. Some were harder hit than others, with three brands fell off the list completely.

Aside from strong and prudent financial management and continued investment in building their brands, Malaysian brands in this year’s MMVB also credited government measures to stimulate domestic spending for helping to mitigate the downturn’s impact on business as consumers tightened their belts.

This is the third year of Malaysia’s Most Valuable Brands awards, and the second year that 4As and The Edge are partnering to present it. Interbrand has compiled the list for all three years. To qualify for the award, a brand has to be owned by a company that is listed, whether in Malaysia or other stock exchanges. The brand has to originate in Malaysia and if not owned by a company listed on the Malaysian stock exchange, it has to be owned by a listed company that has been headquartered in Malaysia for at least 10 years. The brand also has to be consumer-facing. This includes corporate, product or retail brands but excludes holding companies where they are invisible to the end-purchaser.

The criterion of public listing is because the study is based on publicly-available information.

The MMVB valuation takes into account three categories — financial analysis, which forecasts current and future earnings specifically attributable to the brand; brand analysis, which measures how the brand influences customers at the point of purchase; and the brand strength analysis which determines a brand’s ability to secure long-term customer demand, such as loyalty and retention.

According to Datuk Vincent Lee, president of the 4As, companies are starting to see how closely brand value ties to their financials. He said that the economic downturn has only served to drive home the importance of branding among companies as they took a more proactive stance towards branding, instead of just paying lip service in 2007 when the study was launched.

“Clients I work with have started engaging the brand consultants and ad agencies in the boardroom. CEOs and company chairmen are asking what they can do to build brand value — they used to leave it to the marketing guys,” he said in a recent interview.

On the results of this year’s MMVB study, Stuart Green, Interbrand president for Asia-Pacific, says that on a global level, the economic crisis has caused a reset on a few levels. First, it has exposed the fundamental weaknesses in categories in terms of meeting emerging consumer trends. Secondly, it has exposed the infrastructural bad bets made by entire industries that have called into question the integrity of the players. And thirdly, it has reset the basis for choosing brands inside categories.

“The dramatic changes to the global economy over the past year have caused seismic shifts in categories and the fundamentals of many markets that will long outlast the recession. The most notable is financial services. However, we have seen less of an issue for many Asian financial institutions, including those in Malaysia,” he said in a recent email interview.

The MMVB 2009 awards ceremony will take place tomorrow night at the Mandarin Oriental Kuala Lumpur. The guest of honour is Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop.




This article appeared on the Media & Advertising page, The Edge Financial Daily, Nov 19, 2009.