Typhoon Haiyan and Filipino Brand Equity

As I write this post, my heart continues to grieve the loss of my countrymen.  A few weeks ago, the strongest typhoon recorded in history decimated a large portion of the southern islands in the Philippine archipelago.  As the wreckage piled up, the government rushed to calculate the economic destruction, but can you truly value human life?

I continue to pray for the recovery of my countrymen as we band together to weather the storm after the storm.

But great lessons have emerged from after the storm regarding brand equity.  The first is about our current president, Mr. Benigno Aquino.  There is no stronger brand in Philippine politics the the Aquino brand.  From class we know that brands can outlast lifetimes and ownership, and that is true for the brand that is Aquino.  In fact the brand seems to grow with strength as personas pass away (Benigno Jr. was assassinated which catapulted his wife Cory to the presidency in 86 and when Cory Aquino died in 2009, the surge in popularity propelled her erstwhile aloof son Pnoy to his status today).  The Aquino brand was impregnable and apparently indestructible.  Despite seemingly incapable, Pnoy has weathered snafu after snafu in stride.  His presidency was tested early on when he bungled a rescue operation of Hong Kong hostages which resulted in almost ten of them murdered, captured live on CNN and world television.  But Pnoy endured because of the Aquino brand.  (Heck his sister has a multi billion U.S. dollar showbiz career and shes been married thrice, admitted on national TV of contracting several STD from her numerous sexual partners.  Not exactly recipe for fame in the pre dominantly conservative roman catholic nation).

Haiyan would test that brand equity.

Three days after the killer typhoon struck, the president was nowhere to be found.  Worse yet, when he surfaced, he berated local officials who sought aid and the marines to restore peace and order after rampant looting had emerged as the city of Tacloban descended into anarchy.  Lastly, his response to international coverage of the storm aftermath was altogether embarrassing, blaming CNN anchors like Anderson Cooper for not using the broadcast profession to uplift the lives of the people.   Pnoy's ratings are expected to plummet as his weaknesses as a leader have been exposed.  Can his brand equity survive?

On the other side of the spectrum we find Manny Pacquiao, the Philippines' former rockstar boxer who had his own fall from grace.  Manny just a short three years ago was on top of the world.  He had won a string of fights and was labeled the best pound for pound fighter in the world.  A split decision here and a knock down there and he was history.  His political career was in shambles as he aligned with the opposition to support a key anti life bill pushed by Pnoy.  Lastly, his decision to abandon his roman catholic faith left many Filipino Catholics smarting.  Pacquiao fought last night against Bam Bam Rios and demolished him.  From the social media response it looks as if his stock is on the uptrend once more.  During the fight, Filipinos, battle-weary and still grief-stricken saw flashes of the Manny of old, and not an old Pacquaio.  Pac was indeed back.  The Philippines has always had to look to their heroes in times of crisis and today, Manny was the hero that Pnoy failed to be in the wake of Haiyan.

If there's one thing i learned about brand equity after the killer typhoon raped and pillaged my country, its that brand value and equity, no matter how seemingly impregnable can be impaired and destroyed, even with the slightest of miscalculations.  Furthermore, brand equity lost can be gained back but only through hard work, as shown by the Pac Man.  He trained hard for this fight and we could tell, as the aging 34 year old pranced around a man 8 years his junior.

Lastly, from this i do hope that the brand equity of the Philippines, 2013's darling of the emerging markets can bounce back like Pac Man as we've fallen from grace.  In my field of work, our stock market has lost almost ten percentage points since Haiyan and the currency is reeling.  We can bounce back, for my countrymen, for my Philippines.  Be strong Philippines, we are made from sterner stuff.  Super storms come and earthquakes strike, but what endures is the Filipino spirit.
 

Brand Value?

The concept of brand valuation takes us back to the video of Rory Sutherland wherein he talks about intrinsic value.  I would like to bring back that saying that I unearthed from my highschool days that “if you bought it, you can’t say you got ripped off”.  Every time you purchase something, you perceived some value, over and above, no matter how miniscule, above the cost of goods sold.  And this is what brands will do, they are that over the top thing that catapults a pair of flip flops into a life style worth paying good money for. 

All these intangible goods, the same concept of intrinsic value as alluded to by Rory in his video are what brands provide for the consumer.  And even if you and I both purchased a cup of coffee at starbucks for 3 bucks, the $3 that we each parted with is no clear indication of how much we both really value that cup of joe.  The price agreed upon by the buyer and the seller is the floor and the sky really is the limit as to how much each of us can view that cup of coffee.  For others the intrinsic value is ten cents over and above the three bucks they paid for it and anything above the three dollars makes that purchase worthwhile.  Brands provide that over and above factor and it’s the brand that gives you the most sky’s the limit experience is the brand that will stand the test of time and span the globe.

So how then do you put a dollar value on that?  The simple answer is, you can’t.  I may love paying three bucks for a cup of coffee for several reasons.  Perhaps the barista is extra cute and I get a kick out of seeing her everyday.  Perhaps I enjoy the extra zing from Starbucks that I don’t get from D&D, whether or not its truly biological or psychological.  There can be a million things and no exact dollar value that’s why there is but a bevy of different ways of measuring and attempts to put a number or brand value. 

But just because its all but impossible to put a number on it doesn’t mean we shouldn’t try.  I think that there various attempts presented in the paper are good proxies for measuring brand value and each may have their strengths and drawbacks.  But in the end there may be true measure for brand value it does have a value as manifested in the share price of stock as opposed to more tangible measures.  Just because its almost impossible to measure, doesn’t mean that we should stop trying.  Brand value is real.  Its like the dew, its hard to see and its hard to feel, but you know its there.  And in the morning, it’ll manifest itself on leaves and the flowers, just like brand value will manifest itself in the sales of a companies offering.  

Going about it all wrong in chasing the loyal ones

After reading the mismanagement of customer loyalty article, i can't help but feel a bit gladwelly about the whole reading.  Yes i did it, i used gladwell to describe a feeling.  But really, Malcolm is the master of looking at the glass and say, its not half empty, its not half full, its something else that he'll see in his mind which will totally make sense.  The article really reminded me of his book Outliers.  Outliers explains a radical way of looking at things and at success and in short he's telling us we're going about measuring and trying to gauge success, potential and talent all wrong.  The article does the same.

Brand's inherently provide value to consumers.  They stand for something.  For some people its quality.  For others it convenience.  But for whatever reason that you almost instinctively reach out for that particular product in a sea of competition on the shelf, you do so because you like what you get, each and every time.  And this is where brand loyalty comes in.

When you identify with a particular brand, everything else seems to get blurred in the background.  And this is honestly how i shop.  I buy Nike sneakers, always and forever.  After i wear out my running shoes, i head down to the closest mall (in the Philippines malls are like parks, they're at every corner) to check out the wall of the sporting goods store named Toby's.  Its a massive wall of different runners segregated by weight, cushion, support etc.  As a Nike addict, I only seem to see the Swoosh standing out as the other fade into the background.  And as always, i don't pick the shoe, it picks me.

Companies have forever attempted to single out the loyal apostles from the herds and shoppers out there.  One thing i noticed throughout the text book was that at each step of the way of formulating our marketing plan, we are always told: resources are going to be scarce, plan accordingly.  True, we will probably want the moon and the stars when it comes to a launch, but will it be an efficient outlay?  Will the dollars spent bring in much more in return?  Should we bend over backwards to get these clients if they're not in it for the long haul?  Of course not.  Thus, the study presented in the Mismanagement of Customer Loyalty sheds light on how to find our target and to seek them out.  In hindsight, of course it makes sense to target customers based on profit and not revenue, but when you're so used to doing one thing, its oftentimes hard to think differently.  Hence, the Gladwell moment.  But in any case, the study helps show companies who to invest in and by how much, and who simply to cut lose and forget about them.

As companies continuously strive to retain customers, grow market share and boost profits, the article allows for a new way of viewing who we should be running after and who, as we say in the Philippines (although the phrase is obviously lost in translation) waste our saliva on.  (It sounds so much better in my language).    

Sometimes brand is better than new

The topic and case of Cullinarian got me thinking about an advertisement i saw a couple of years ago for BMW pre-owned cars.  The tagline read "sometimes brand is better than new".  The witty ad does seem to capture pricing behavior for premium products likes BMW.  The brand reflects quality and prestige and thus price discounts are not expected, unless of course you are buying a second hand Bimmer.  And even then, you'd be willing to part with a hefty sum of money to own a piece of that German driving machine.

In the Philippines, its very rare that you have discounts on elite brands like BMW or Rolex.  Just like BMW, Rolex watches are sold in second hand stores.  What is really prevalent nowadays are second-hand hand bag stores in Manila.  I've seen these stores in Hong Kong as well but I've yet to spot any in the few recent visits I've had in New York.  These stores look just like a regular high end boutique shop along 5th avenue.  The thing is, the hand bags sold there are second hand Louis Vuitton pieces and the like.  Some brands I've never even heard off, but the grape vine does say you can purchase a small car with them.

When you've commanded a certain degree of prestige as a brand and you strive to protect this image as elite, price discounts may play a lesser role in moving sales even to the point of not being used at all.  In this case I do see VP Janus' apprehension to pricing discounts.  Imagine your brand is so renowned that a second hand vehicle of yours costs way more than a brand new Japanese make!  Don't car's depreciate exponentially when you roll it off the parking lot of the dealership?  And yet, as the ad says "sometimes brand is better than new".

In many cases prices are more about the perceived value or intrinsic value it can convey than the actual cost of goods sold.  This phenomenon occurs more so in premium products and thus promotions may be in the form of gift promotions so as not to damage the brand's reputation.