Battle of the Brand Leaders

This month, we explore how the best managers in the world navigate the strategic, economic, cultural and creative aspects of brand to win in the marketplace. What will the leaders who emerged on our 2014 Davis Brand Capital 25 (DBC 25) do in 2015 and beyond?  No matter where they ranked, these brand management leaders are among the best-of-the-best, and there is plenty to learn from them.

Weigh in on the conversation with us, and share your thoughts on Twitter. #battleofthebrands

STRATEGIC

Battle of the Colas 

The Davis Brand Capital 25 mirrors broad trends in the marketplace, and companies that strategically respond to those trends and insights stand out. While Coca-Cola Company poured in at #7, PepsiCo has not made the list since its #25 ranking in 2012. This highlights Coca-Cola’s competitive performance, best-in-class brand and comprehensive portfolio management.

The controversy over sugary drinks contributing to overwhelming obesity rates in the U.S. – plus recent weakness in the broader category – has caused the cola cold wars to heat up again. Coca-Cola and PepsiCo both recently launched new products that are sweetened with Stevia. Both are also marketing smaller cans of their products. The strategic decisions the cola giants made to test alternative formulas and packaging illustrate big brands smartly responding to broader shifts among consumers. Coke has even decided to complement their trademark red, and introduce green cans and labels to test consumer association of the product with healthier, more natural alternatives. And early research indicates positive consumer reactions to Coke Life.

In addition, Coca- Cola’s introduction of Fairlife milk to its brand portfolio holds promise for additional connections with broader health trends as sugary carbonated beverages flatten out or fizzle down with some consumers. If the company can succeed with a premium milk product, it may open the door to other seemingly disparate extension opportunities to offset declines in its core business.

On the other side of shopping aisle, Davis Brand Capital 25 company Procter & Gamble (#8) decided to cull its brand portfolio to improve operational, manufacturing and marketing efficiencies. Recent financial results are yet to reflect these changes, but streamlining operations and focusing on the core may pay off longer term. The increasing consumer interest in private label brands across a wide variety of CPG and personal care products suggests big changes for traditional brands. While private label growth has plateaued since 2011, consumers have not returned to big-name brands after the recession. Will other Davis Brand Capital 25 companies like Nestlé and Johnson & Johnson follow suit in culling their own brand portfolios, and adopt to shifting marketplace dynamics? If they do, what might we ask about the future of brands overall?

ECONOMIC

Battle of the Autos

Automotive made a strong showing in on the 2014 Davis Brand Capital 25. BMW ranked #6, moving up from its #12 spot in 2013. Toyota jumped seven spots to land at #9. And Volkswagen Group raised six spots to #17. BMW’s i3 and Volkswagen’s XL1 both demonstrated tremendous innovation strength, offering a glimpse of the future for green technology. And Toyota continued its upward momentum after stumbling in 2010, following high-profile product recalls.

At the intersection of industry and the environment, will BMW, VW and Toyota continue to push innovation in cleaner cars while oil prices are falling? In the short- to mid-term, we are likely to see oil prices that may lower demand for these vehicles. But will auto brands look to the longer-term vision and stay committed to their green technology innovation despite slower sales? Or, will other types of innovation emerge as the definitive play for the future?

As we look to the autonomous cars being advanced by Google (#2), Audi and BMW, it is vital to consider the potential socioeconomic impacts of this fledgling and disruptive technology. Will we see a reverse in demographic shifts towards the urban core if people can live in quieter exburbs, and then consum news and do their weekly shopping during the morning commute? What will it mean for commitments to good urban planning, modern public transit and their recent successes? How will the insurance industry or legal profession cope with the changes? Who will win in this space under a radically different regulatory environment? What will be the economic impact when millions who drive for a living are out of work?  There is a long list of questions like this, and more. Answers are far fewer at this point.

So far, no single company in the space is truly leading the conversation and debate over the industry’s future, and the potential implications for society. We are eager to see a content or thought leader emerge. 

CULTURAL

Battle of the Wearables

It is not surprising that technology is front and center of the Davis Brand Capital 25 and of the innovation conversation that is going on culturally. Technology companies provide utility, connecting with consumers in rich and meaningful ways, and often inspiring or playing off broader trends in the process. Wearables are the most recent example of technology’s interactive relationship with culture, and its power to profoundly impact our everyday lives.

Since their inception, smartphones convinced us that watches could be optional. Now companies like Samsung (#11) and Apple (#1) face the daunting challenge of convincing us to wear smartwatches. The obstacle for wearables in general is one of technology versus human adoption and personal preferences. New technologies need to “feel right,” meet a real need and use design to solve more problems than they create. They need to simplify life rather than complicate it. Never mind the new challenges of battery life and 24/7 monitoring of our movements and ad responses.

Samsung’s smartwatch launch was disappointing. And while analysts are predicting big things for Apple’s smart watch, it remains to be seen if consumers will embrace the concept. Will these products from leading brands succeed or flop in 2015? At the very least, they will look better than they have in the past, even as interfaces and utility get refined.

Speaking of design, successful luxury brands like LVMH (#20), know that in addition to technology, the role that design and fashion play in culture is significant. Keeping a brand relevant and resonating with cultural influences is critical for all brands – especially so for those with premium price tags. Integrating technology into the consumer experience of these luxury favorites is one way to increase their value. Foundation Louis Vuitton, a significant nod to culture that opened in Paris in January, stands out as a “cultural gift that could redesign LVMH’s image.” Although admittedly a brand that has a diverse portfolio well beyond fashion, LVMH has repeatedly been on the David Brand Capital 25 for a proven ability to integrate what’s new into what the consumer has long loved.

CREATIVE

Battle of the Networked

The companies listed in the Davis Brand Capital 25 manage their creative assets in a wide variety of ways. It is, in fact, the way brands leverage those assets that often times stand out in the mind of the consumer. The big-two mobile carriers both excel in translating functional utility into emotional appeals. AT&T leads the mobile carrier category, despite dropping five spots to #16 this year; Verizon gained momentum and reappeared on the ranking at #23 after falling off of the list in 2013. Both brands are known for interactive creative executions that demonstrate mobility and connectivity – showing their abilities, not just telling them. The increased competition in the burgeoning no-contract category suggests an even more intense rivalry between these market leaders in 2015.

Content marketing as a powerful creative strategy continues to garner resources and results. General Electric, up 2 spots to #5 this year, has developed a robust content strategy to highlight the global brand across categories. The company’s willingness to diversify the creative execution of its content – including data visualization, data-based storytelling and daring executions like “Badass Machines” – highlights GE’s  commitment to leading with content as an authentic way to connect with customers.

Downward pressures on the oil industry, negative consumer perceptions of “big oil,” and an increased focus on renewables in the public discourse likely played a role in ExxonMobil’s nine-point decline to #24. Despite this drop, the company’s Be an Engineer initiative is noteworthy for its cultural relevance, superb creative execution and potential to build brand strength moving forward. Energy – from redefinition to reduced consumption to renewable sources – strikes us as the stand-out issue of the future. The symbiotic auto-industry can learn much on the agenda-setting and content front from energy leaders like ExxonMobil.

All Davis Brand Capital 25 companies accomplished remarkable things in 2014. Collectively, though, we saw a concentration of capital — brand, trademarks, patents and other intangible forms of brand capital. In 2015 and beyond, these companies face compelling challenges and opportunities in each of these areas. What will they do with their capital? How will they share their brand wealth?

Keeping an eye on these organizations will provide valuable lessons. Unbound Edition continues to follow the world’s leading brand managers, sharing best practices and meaningful insights to help prepare you for what’s next.