Apple has surpassed Coke as the world’s No.1 brand, according to the international brand consulting firm Interbrand.
The company has been ranking brands in its annual reports since 2000, and this is the first year that Coca-Cola is not at the top of its list of 100 top global brands, released Monday.
Interbrand estimates the value of Apple’s brand at $98.3 billion US, an increase of 28 per cent over last year.
The 2013 report begins: “Every so often, a company changes our lives, not just with its products, but with its ethos. This is why, following Coca-Cola’s 13-year run at the top of Best Global Brands, Interbrand has a new No. 1 – Apple.” – Jezz Frampton
Wow, an article about the two top brands of my advertising world. In the Business Standard article Frampton was quoted saying that that Apple was “very much the poster child of the marketing community.” Now, I was under the impression that Apple was on the decline but they are the masters of planned obsoletion and keep us on our toes. I just wonder how the most “valuable” brand is calculated? This week in SEO class we talked about Assets. Not all assets are tangible so what is their worth? How could anyone even guess their brand’s value. To me it sounds like these numbers are made up. Is it possible that Apple’s numbers are skewed?
I found a great article that went more in depth to explain a brand’s value. Aswath Damodaran made a brand comparison to demonstrate a brand’s true value. “If you as a company tell me that you have a brand name, I’m going to ask you a question: ‘Do you have the power to charge a higher price for the same product?'” Damodaran said, “If your answer is no, I don’t think you have a brand. You may think you do, but I don’t think your brand has any value.” To prove the value of brand names, Damodaran compared two companies making similar products: Coca-Cola and Cott, makers of RC Cola. “Soda is water with a bunch of sugar and a lot of crap thrown in. You can put whatever you want on the outside of the can, but there is really no difference between a cola and another cola. You may say that Coca-Cola tastes different — that’s what 100 years of playing with your mind does to you,” he stated. The cola business, then, is all about branding, not the product, he stated.
“Damodaran valued Coca-Cola’s business at $79.6 billion, while the value of Cott was limited to $15.4 billion. To figure out the pricing premium, he simply subtracted Cott’s value from Coca-Cola’s value, arriving at a $64.2 billion total worth for Coke’s brand alone. That’s about 80% of the company’s value. Damodaran noted that the key number driving the valuation is the companies’ operating margins — Coca-Cola’s margin is 15.57%, while Cott’s is 5.28%. The typical company has an operating margin of 5-7%, so Coca-Cola’s margin is phenomenal. The bottom line: If Coca-Cola suddenly lost its brand name tomorrow, its operating margins would drop to around 5.28%, and it would lose $64.2 billion of value.” (Erica Swallow summarizing Damodaran)
So the image of the brand and it’s name is more important than the actual product. The consumers decide a brand’s worth. So today I guess we decided Apple beats Coke but who knows what will beat Apple tomorrow.