Staff Reporters
Jun 6, 2016

The Top 10: Reaching the pinnacle, and staying there

The upper echelon may contain the same 10 companies as last year, but their shifting positions hint at strong currents in consumer preferences and culture.

The Top 10: Reaching the pinnacle, and staying there

The upper echelon may contain the same 10 companies as last year, but their shifting positions hint at strong currents in consumer preferences and culture.

1. Samsung

2015 ranking: 1 | Ad spend: US$1.1bn

Samsung retained its top spot in terms of customer perception, despite a tough year which saw mobile phone sales squeezed by Android competitors. Its full-year operating profit for 2015 was US$22.5 billion, compared to US$21.3 billion in 2014. Its mobile division made US$1,9 billion profit in 4Q2015, a 7.3-percent decline from the previous quarter. Its semiconductor business outperformed other units with an operating profit of US$2.4 billion, compared to US$2.3 billion y-o-y, but the company warned its mobile and semiconductor businesses were likely to see a sluggish start to 2016.

Samsung released Galaxy S6 Edge Plus and Note 5 in August 2015, beating new iPhones to the market by about a month. They debuted after lackluster sales of the premium Galaxy S6 prompted price cuts and rebates to customers buying on installments or a leasing plan. Samsung then wasted little time in launching the Galaxy S7 Edge in January 2016, largely to favourable reviews for its expandable storage, a dual-pixel camera, 3,600mAh battery and always-on display.

While it’s usually its mobile devices—the firm topped the list in nine of 13 markets we surveyed—that get the most attention, Samsung’s top ranking is cemented by its performance in consumer electronics. The Top 1000 Brands data shows it ranks in the top five in all but two markets for camcorders, cameras and refrigerators.

It also posts impressive results in TV, topping the list in 10 markets, and in home audio where it is in top five in 13 countries. For tablets, it is ranked second in 10 markets, each time being pipped to the top spot by Apple.

 

2. Apple

2015 ranking: 4 | Ad spend: US$666m

Apple jumped up two places to 2 in 2016 Top 1000 Brands list, showing that consumer perception doesn’t track the stock market or trading figures: Apple shares ended 2015 down by around 4 percent—its first annual drop since 2008.

The bad financial news continued into 2016 when the company reported a nearly 13-percent fall in quarterly sales to US$50.6 billion, the first time revenue at the world’s most valuable publicly-traded company had declined in 13 years.

That said, Apple can point to multiple successes on a product and marketing level over the past year: iPhone sales outperformed the wider market and Apple captured a 15-percent share of the smartphone market by volume.

In addition to iPhones, Apple’s services business and accessories (including Apple Watch) continues to grow at a solid pace, while the firm crossed an important milestone in the last calendar year with more than one billion Apple devices now active globally, across iMac, iPod, iPhone, iPad, Apple TV and Apple Watch.

But iPad and iMac growth is slowing, as it’s been true for the entire large-form segment, as consumers spend more time on smaller handheld devices. The natural question now for the company, in the wake of the one billion figure, is “where does it go next?”

According to CNET, it has to go across services and into new types of devices. “We’ve hit a wall for how many people might reasonably get smartphones: it can’t all be about iPhone. Or, it needs to be about new services, like Apple’s been exploring with Apple Music and Apple TV,” wrote the tech site.
Apple also seems to be struggling to persuade people to upgrade to its latest models. Tim Cook revealed last year that more than half of all iPhone users have yet to upgrade to 6s or 6s Plus.
What’s not in doubt, however, is the strength of its performance in this year’s survey: Apple topped the computer category in all but two markets and in 12 of 13 countries for tablets. For smartphones, it was first or second in all countries surveyed.

 

3. Sony

2015 ranking: 2 | Ad spend: US$396m

Sony slips to third this year, with Apple jumping up two rungs to take second place behind Samsung.

The Japanese electronics brand recently postponed its earnings release date to May, due to uncertainty over the supply chain from two earthquakes, which recently hit southwest Japan.

The company’s strongest and most high-profile product remains its popular PlayStation 4. The console brand has enjoyed a large lead in sales volume over the Xbox One, a rival platform owned by Microsoft, having sold 36.89 million units in its product lifetime. This year PlayStation, as a standalone brand, ranks at 19 in the Top 1000 list.

The unit’s upcoming PlayStation VR set is also highly anticipated, with analysts predicting market dominance, due to it having a much bigger addressable market of ‘ready-to-go’ consumers, compared to Oculus Rift and HTC Vive.

This is thanks to the PlayStation console’s install-base where the VR set is expected to enjoy 64-percent adoption.

The company has also embarked on a number of measures during the past year with its branded-product business lines, which include its mobile communications, imaging product and solutions, and home entertainment and sound segments.

These include cost-reduction initiatives, lower exposure in low-profit geographic regions, and reduction in advertising and promotion expenses, in a bid to improve its bottom line.

Looking at category rankings, Sony ranks at 2 for consumer electronics, but 9 for computer hardware and 15 for computer software.

Despite its ongoing quest for profitability, the company’s overall brand and standing remains strong in Asia, and it is a top three brand in markets such as Singapore, Australia, India, Hong Kong, Malaysia, Thailand and Vietnam.

In Taiwan, Sony is the number one brand, while it ranks at 2 in its home market of Japan.

 

4. Nestlé

2015 ranking: 3 | Ad spend: US$878m

Ranked at 4 in the overall list this year is Nestlé, down one spot from last year. It maintains its number one position for the food and household & personal care categories while in beverage it ranks at 2. 

It has been a bumpy year for the Swiss-headquartered food and beverage company, especially for its India business, though it remains one of the biggest spenders on advertising in the country. 

In May 2015, Indian food safety authorities banned the production and sale of its instant noodle brand Maggi amid claims they contained dangerously high levels of lead. The product recall cost the company US$67 million. It had to destroy 400 million packets of Maggi products and stop production. 

Sales resumed in India five months later in November. The company hired McCann Worldgroup for the relaunch which featured the tagline ‘Your Maggi is safe, has always been,’ with the agency’s India unit chief executive Prasoon Joshi in charge of the creatives for the campaign.

The company reported on 19 April that Maggi noodles now hold more than 50-percent market share in noodles category as per a Nielsen report, recovering nearly two-thirds of its former market share.

Last November also marked the company’s brave step in publicly disclosing that it had found forced labour in its supply chains in Thailand and that its customers were buying product made by unpaid and abused migrant workers.

Such proactive move was considered by many to be ‘groundbreaking’ and was part of the company’s own efforts toward ‘a new era of self-policing’ its own supply chains.

Oxfam’s 2016 Behind the Brands ranking saw Nestlé come in at 2, with the report noting that the brand stood out alongside Unilever for doing the most work to improve their supply chains, from reducing greenhouse gas emissions to helping workers improve their livelihoods.

 

5. Panasonic

2015 ranking: 5 | Ad spend: US$323m

Panasonic, like many of its brethren in corporate Japan, has not been having a good time of late.

The electronics giant recently pivoted from a strategy focused on scale, introduced two years ago, and is now seeking to bolster profit by pouring resources into core-growth operations instead.

In doing so, it is replacing its sales target of 10 trillion yen (US$90 billion) by fiscal 2018 with the goal of raising operating profit by roughly 50 percent to 600 billion yen (US$5.33 billion) by fiscal 2020. It is expected to post an operating profit of 410 billion yen (US$3.69 billion) for the just-ended fiscal 2015.

The brand will be investing in growing the business for its in-car information systems, lithium-ion batteries, food distribution and home appliances designed for Asian markets.

Around the region, Panasonic is currently ranked at 106 in South Korea, 5 in Hong Kong, 4 in Malaysia, 10 in the Philippines, 6 in Singapore and 7 in Australia. It maintains its number one position in its home market of Japan.

Panasonic’s appliances division for the Japanese market will be centred around stable earnings instead of betting on acquisitions. With underperforming units such as audiovisual equipment, the company will focus on boosting profits by lifting efficiency rather than increasing sales.

Pivoting from a strategy focused on scale, Panasonic now seeks to bolster profit by pouring resources into core-growth operations.

Despite some stumbles, its general brand equity remains strong in the region, ranked at 5 overall and 3 in the consumer electronics category this year. 

 

6. Nike

2015 ranking: 6 | Ad spend: US$40m

For athletic apparel brand Nike, there is no doubt that Asia is its future. It comes in at 6 overall in this year’s rankings, taking top spot in the retail category.

The company reported that its revenues grew an impressive 7.6 percent to US$8.03 billion during its latest earnings call. Sales in Japan jumped 60 percent to US$36 million in conjunction with a 23-percent revenue increase in China from the previous quarter. Its financial performance bodes well against what has not been smooth-sailing, especially when it comes to its portfolio of athlete endorsements. 

The sports giant has had some of its endorsement dominance, trimmed by challenger brand Under Armour, losing out on contracts with NBA star Stephen Curry and golfer Jordan Spieth which have helped the fledging brand record a 30 percent-jump in quarterly sales.

In March this year, Nike suspended ties with Russian tennis star Maria Sharapova after she failed a drug test. The brand also axed Manny Pacquiao from its stable after he described gay couples as “worse than animals”, branding the Filipino boxer’s remarks as “abhorrent”.

In addition, a class action lawsuit of US$5 million was filed against the brand in US District Court in April, alleging it of being deceptive and misleading in its labelling and marketing of items sold at its outlet stores.

But beyond its home market, China especially, will soon be a major driver of growth for the brand, as fitness and sports become a more mainstream and middle-class pursuit. 

The company is already reporting strong demand for its products across multiple categories from Nike basketball to Jordan, to Running, to Men’s and Women’s training.

The NBA predicts that roughly 300 million people in China play basketball, with Kobe Bryant, a Nike-sponsored athlete, holding court as one of the most revered basketball athletes in the country.

For a global brand that wields an estimated annual marketing budget of more than US$3 billion, that just means there’s plenty of room in Asia to grow. 

 

7. LG

2015 ranking: 7 | Ad spend: US$323m

Despite a global drop in TV and smartphone sales, LG is well-cushioned by its strong presence across the consumer electronics category. In the past year, demand for home appliances has been rising steadily in Asia, driven by Asia’s rising middle class. According to GfK Asia, home appliances grew by 4.1 percent in terms of sales value while small appliances grew by 6.3 percent year-on-year in the 12 months leading up to September 2015. 

LG has ridden this trend and reported increased revenues of 13 percent from its appliance division over the same period. The Korean electronics manufacturer has since invested heavily in breaking new technological ground in this arena with products such as its Twin Wash washing machine. The machine that allows users to wash two separated loads of laundry at once was supported by a major marketing push inspired by hit musical West Side Story

Outside its home market, where it is ranked at 2 after Samsung, LG is strongest in Indonesia (at 4) and India (at 5). Understandably, it is most challenged in Japan (at 210) where Sony and Panasonic reign supreme.

 

8. Canon

2015 ranking: 8 | Ad spend: US$160m

The rise and rise of the smartphone has resulted in a global 12-percent slump in digital camera sales, dragged down by a 22-percent decline in the compact camera market. Canon, however, has managed to rank at 8 two years running and maintain flat sales numbers on its interchangeable lens cameras. Canon’s most recent launch targets sports photographers and video enthusiasts, two areas where smartphone cameras are weakest. While Canon works considerably with influencer networks and photography communities to promote its products in individual markets, overall its regional branding seems to lack cohesiveness and a distinctive voice. 

The company, however, has downgraded its net profit forecast for 2016 by 9 percent due to China’s economic slowdown and the yen’s strength. 

The brand, best known for its cameras, has been steadily diversifying its portfolio into all things images. Last year, it acquired family photo-sharing app Lifecake and launched a campaign around the platform last November with agency Razorfish. Canon has also been pushing its wireless printer range, Pixma, with a campaign exhorting users to have physical, not just digital, copies of their favourite images. 

Canon continues to be strongest in Malaysia and the Philippines where the brand ranks at 6 in both countries’ lists. Canon has managed to improve its standing this year in key markets such as India and Japan; moving up one spot in India to 14 and leaping four places in Japan to 7 since 2015. It, however, has slipped a spot in China where it ranked at 11 last year. The brand is weakest in Taiwan at 15 in the country’s rankings. 

 

9. Chanel

2015 ranking: 9 | Ad spend: US$160m

Clocking in its fifth year at 9, the privately-owned French luxury company is firmly ensconced in the top 10. Unlike other luxury firms that have banked on China, Chanel’s appeal in the world’s most populous nation seems unassailable by adverse economic winds. It remains the most desirable luxury brand in China, a fact backed up by a 2016 study by Promise Consulting and BNP Exane. Buoyed by support from China, the firm registered 38-percent rise in annual profit in September last year. 

While the brand is primarily identified with fashion retail, a category in which it ranks at 3 overall, it has received a boost from its growing beauty brand. This year, Chanel ranks at 5 in personal care. 

Chanel also stands out for its successful YouTube strategy. Its subscribers are north of 540,000, more than double that of rival Christian Dior which clocks in at 262,000 subscribers. Chanel’s video feed mixes conceptual mini-film ads with documentaries about the brand’s heritage and designs, as well as how-to beauty videos. 

The brand’s art director Karl Lagerfeld successfully blends pop culture and technology with classic aesthetics. He produced a classic quilted suit that combined hand embroidery with selective laser sintering for The Met exhibit on tech and fashion (which debuted on 5 May this year). 

Outside China, Chanel’s strongest markets are Taiwan (3), South Korea (4) and Thailand (6). India continues to be the only market in which the brand falls out of top 100. 

 

10. Adidas

2015 ranking: 10 | Ad spend: US$202m

Another top 10 stalwart, Adidas is holding on at 10 for the fifth consecutive year. While the brand trails behind rival Nike in most markets, it is catching up fast in China, where it ranks at 9 and Nike at 6. While both brands have their fingers in multiple categories, including men’s and women’s shoes, perfume and personal care, in the sportswear subcategory, Adidas trumps Nike in China. In 2015, Adidas edged its market share in China up to 13.8 percent, a hair’s breadth away from Nike’s 14.3-percent share, according to Euromonitor.

Part of Adidas’ success in Asia’s biggest market is a shift in its marketing away from hardcore sports towards sports as a lifestyle choice with brand ambassadors Eason Chen and Fan Bingbing. To reach young Chinese women, the brand worked with TBWA China to launch the #mygirls campaign. Based on the research that Chinese women were only interested in raising their heart rates if friends were involved, the perfectly coiffed ladies bouncing around in the ad aimed at turning sports into a lifestyle choice. 

A more recently launched campaign shows that the conversation may have already moved on. Taglined ‘I’m here to create,’ the campaign starred actress Ning Chiang, tennis star Coco Xu, track champion Liu Hong and China’s national women’s volleyball team—all young, female athletes. 

Besides China, Adidas is strongest in the Philippines (7) and Indonesia (9). Its weakest markets are South Korea (20) and Hong Kong (20). 

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