Charting a Course
Tracing the 18 year journey of the Brands Annual and developments in the local branding landscape
When Sri Lanka’s first brand league table was published by LMD in collaboration with Brand Finance in 2004, the corporate sector was yet to fully embrace the concept of branding and treat it as an important component of its operations or financials.
Over the 18 year voyage, we have chronicled how the perception of the concept has evolved amid the various challenges facing the country.
Since the launch of the first Most Valuable Brands rankings, Sri Lanka’s business landscape has witnessed numerous changes driven by both local and global developments.
In the inaugural rankings published in LMD in 2004, we noted that brand valuation had been a “hot topic for quite some time in the local marketing arena” while several international business journals had already published such valuations.
Against the backdrop of studies highlighting the role of ‘brand economics,’ Brand Finance pointed to the potential for Sri Lankan companies to add value to their businesses by adopting a strategic approach of identifying their key value drivers.
Furthermore, it stressed the need to leverage intangible brand assets, elaborating that “this will be the key to survival in a more difficult business environment and as businesses strive to optimise their returns to shareholders.”
However, Brand Finance asserted that many of Sri Lanka’s leading corporates were yet to recognise the value of branding in their marketing operations in the following years.
With brand evaluation being a ‘fledgling science’ in the country at the time, Brand Finance Lanka’s Managing Director Ruchi Gunewardene explained that investing in and maintaining a vital asset such as the brand would prove to be critical to boosting corporate revenue, improving margins and expanding future cash flows as the market matured.
The inaugural and second editions of the standalone Brands Annual were published in 2009 and 2010 respectively, when the local and business landscapes were contending with the fallout from the 2007/08 global financial crisis – a time when many corporates were cutting back on what they deemed to be nonessential.
However, the importance of branding continued to be stressed – especially given that in the April 2009 edition of LMD, then Chairman of Singer (Sri Lanka) Hemaka Amarasuriya explained that not prioritising such activities would be a mistake.
As the economic challenges continued, 2011 appeared to bring about changes to the prevailing state of affairs where branding was concerned with LMD noting that “while the status quo prevails on the surface at least, the movers and shakers this year come from the ranks of what Brand Finance refers to as the ‘new brigade’.”
Doubling down on this the following year, Gunewardene emphasised that challenging conditions would “drive consumers to look for more value from their brands in their everyday purchases.” As such, brands with high equity would be at an advantage as consumers were “likely to turn to them before considering alternative brands,” he added.
The 10th edition of Brand Finance Lanka’s brand league tables – and fifth edition of the standalone Brands Annual special edition – saw the 10 most valuable brands double in value since its launch as we highlighted the role of effective brand management in business strategies.
As the nation continued its transition from war to peace (or the absence of war), corporates witnessed an appreciation of their brand value in the 2014 issue of the Brands Annual.
However, Gunewardene cautioned that this would lead to new challenges in the form of businesses struggling to maintain the momentum with many finding it difficult to grow as consumer spending became more saturated.
Given this, the role of differentiation was highlighted in making brands memorable while honing the ability to predict the future would be the key to branding success.
With brands facing an evolving landscape with the advent of e-commerce and ‘age of intelligence’ as Gunewardene referred to it, we noted that businesses would not be able to cater to the aspirations of the new generation unless imagination was at the heart of their approach.
Moreover, columnist Lulu Raghavan pointed out the importance of the HR aspect – i.e. ensuring that employees act as brand ambassadors to “understand, embrace and deliver the brand,” as in the case of IBM.
In 2016, the Brands Annual observed that “we’re living in the age of brands – and brands make for a powerful source of highly valuable intangible assets.”
To this end, Gunewardene noted that there had been a paradigm change in how business value was created as Apple (the most valuable company in the world at the time) manufactured its best-selling products in China and did not own any manufacturing plants.
Given this, businesses were focussing on core capabilities that would differentiate their products and services from others, rather than prioritising investments in tangible assets such as factories and buildings.
The case for highlighting intangible assets such as brand value was emphasised in the following edition when the top 10 most valuable brands in Sri Lanka were worth more than Rs. 250 billion combined – nearly 10 percent of the value of the nation’s 10 leading listed companies’ total tangible assets in the 2015/16 version of the LMD 100, which stood at 2,524 billion rupees.
In addition to this, Gunewardene mentioned that in the annual global rankings published by London-based Brand Finance, new tech brands were rapidly surpassing legacy brands, resulting in a transformation of the business and branding landscapes.
Over the next three years, the Brands Annual special edition continued to focus on evaluating the country’s brand landscape.
In 2018, Brand Finance Lanka’s Managing Director noted that apart from companies listed on the Colombo Stock Exchange (CSE), conglomerates enjoyed a notable presence on the exchange through their complex business models – and as such, the way in which their corporate brands were leveraged warranted consideration.
And in the following two years, he shed light on how the marketing function was gaining more acceptance in boardrooms with many senior management teams and directors acknowledging the importance of linking their marketing investments to business outcomes through value creation.
This revelation led to brand valuation studies being undertaken for both listed and unlisted brands, as brand value and marketing ROIs have become important measures of performance.
And finally, the latest edition of the Brands Annual highlighted the importance of intangible assets such as brands in the context of a global pandemic with far-reaching impacts on economic activity in the short and long terms.
Indeed, Gunawardene stressed that the “Most Valuable Brands index is no longer a mere public ranking but a dynamic tracking system that companies use to monitor performance and facilitate accountability from their marketing teams.”