No free lunch: RCEP comes with huge brand accountability

GOURMET BRAND Baccha Coffee House in Singapore —KAREN DE ASIS

The “friendshoring” Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement among members of the Southeast Asian nations and select neighbors.

The trade bloc includes Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and Vietnam. The huge bloc covers about 30 percent of global gross domestic product, trade volume and population.

In the Philippines, RCEP was originally signed in late 2020 under President Duterte and ratified for implementation under President Marcos.

READ: As RCEP takes effect in PH, spotlight drawn on promise of free trade benefits

While lauded, this trade agreement is not without major challenges to local businesses as the market landscape turns into wide open competition not only from local brands but likewise, foreign brands that may have more substantial investments.

RCEP removes 90 percent of tariffs among member countries for 20 years. With open competition comes the accountability to invest significantly in branding and marketing strategy, driven by calculated, astute and critical thinking, aided by brand experts well-versed in open field competition.

Primed for branding

Many business owners are tepid toward branding, unaware that when commodities become brands, the opportunities and financial returns are limitless.

The Marketing Science Institute defines a brand as “the set of associations and behaviors on the part of the brand’s customers, channel members and parent corporation that permits the brand to earn greater volume or greater margins that it could not without the brand name, and that gives the brand a strong, sustainable and differentiated advantage over competitors.”

READ: Brands as a force for good

Brands are developed from business decisions of visionary owners and leaders, who rely on the strength of their products or services and are not driven by trade, social or political machinations.

Not all commodities or products and services are brands, but all commodities have a name or label. Beyond the label, consumers recall a brand upon mention of a category or even on whim.

Brands bring to mind a summation of positive, differentiated associations driven by a previous or current product usage, recalled through advertising, casual conversation, crowd sourcing, social media postings etc.

Brands become a conversation piece while commodities do not. Brands can last many generations so long as they remain relevant while commodities are highly dependent on pricing.

Engaged consumers recognize the value of brands and are willing to pay the price while commodities cannot trigger the same response from consumers.

Family-owned businesses whose products or services have lasted for more than three decades and enjoy a following among long-time consumers are ripe for branding. Many of these family businesses, however, often fail to attract new generations of consumers and become distressed businesses in later years.

RCEP challenges local businesses to rethink their strategy. For the enlightened, the visionary and courageous business owner, there is no option but to level up commodity products and services to become brands.

Doing business will become tighter as consumers will be flooded with commodity choices and price will be the only deciding factor. Branding makes consumers aware of any differentiated value or benefit surrounding the product or service. This is not possible with a commodity product or service.

How brands are built

Brands need a clear positioning and benefit in the minds of consumers. Young brand Airbnb, founded in 2007 by roommates Joe Gebbia, Brian Chesky and Nathan Blecharczyk, is Interbrand’s 2023 fastest-growing brand by value, ranked 46th and with a growth of 22 percent.

Airbnb brought a clear and differentiated meaning to the destination and lodging rental business, catering to the hedonistic and dream-like desires of travelers when it comes to lodging, whether usage is driven by business or leisure or both. Airbnb has developed 56 product categories not by the traditional classification of room or destination but based on travel preferences, making real what was originally a dreamy travel desire.

Some of the categories include accommodations in castles, iconic cities, lakefronts, deserts, tree houses, creative spaces and mansions. Airbnb not only engages in crowdsourcing user content on social platforms Facebook, Instagram, TikTok but continues to invest in 30-second national TV spots in selected countries.

Among its campaigns hinged on travel desires and product categories include camping, castles, amazing pools and OMG with a musical scoring by Bob Dylan’s “Shelter from the Storm.”

The brand story of Bacha Coffee promises its customers a coffee tasting experience that savors 100 percent Arabica coffee made from beans harvested in any of the 35 most reputable coffee-producing countries in the world.

The name Bacha was lifted from a majestic palace called Dar el Bacha in Marrackech, Morocco. Built in 1910, the name means house of the pasha, a high-ranking officer during the Ottoman empire.

Baccha Coffee has since become a global brand and is taking Asia by storm with coffee rooms in the most opulent locations. Often with a long line of patrons, Baccha Coffee houses are located in Morocco, France, United Arab Emirates and Kuwait. More recently, it swiftly entered parts of Asia, among them Taiwan, Malaysia, Singapore and Hongkong.

In a mature market like the appliance industry is local brand Everest Appliances.

Branding began with Everest Aircondition back in 2014, when it had only 200 outlets. More than a decade later, despite massive competition from local, global and price brands, Everest now enjoys trade presence in more than 600 outlets nationwide and has extended to other product lines that include refrigerators, freezers, washing machines and other major home appliances.

It has always focused its brand story on providing appliances that ensure health and wellness of the family. For example, Everest Aircondition has built-in air filter for safe, clean and healthy air while Everest refrigerator has odor control filter that helps ensure fresh-smelling food.

Brands remain relevant through generations

Back in 2003, the brand BMW occupied the 19th spot in the World’s Most Valuable Brands ranking. In 2023, it moved up to the 10th spot in brand valuation.

The century-old brand originated in the German state of Bavaria. Its mantra has always been “sheer driving pleasure,” synonymous to BMW’s driving experience.

In a future world of green sustainability, BMW has updated its positioning to communicate that BMW is “offering the sheer pleasure of driving premium sustainable vehicles over the next 100 years.”

For more than 50 years from 1965, the BMW brand tagline has always been “the ultimate driving machine.”

Local brand EO-Executive Optical was a laggard commodity optical store back in 2008. It simply relied on foot traffic in malls. This was despite being in business for 40 years.

A crucial decision that year to brand EO-Executive Optical, which then had only 47 branches, has made it a dominant brand today with over 300 branches nationwide.

The brand focused on poor eyesight problems, presenting it in an empathetic, witty and humorous manner. For more than 10 years now, the selling line remains to be “love your eyes.” On some occasions, celebrity endorsers are used while retaining significant brand elements.

Adequate and sustained support through time

On and off digital space, through and beyond the pandemic, Nike, the world’s leading sports apparel and footwear brand, has remained consistent with its 40-year-old selling line “Just do it.”

The enduring tagline summarizes the brand story, pushing people to do their best, be at their best and pursue their dreams despite all the challenges and obstacles.

With the rise of digital social platforms, Nike has taken the opportunity to create crowdsourcing communities, triggered by curated images of their athletes, video sharing of brand followers working on their fitness, etc.

It is estimated that in 2023 alone, Nike had spent $4 billion globally on branding efforts across mainstream media, digital media space, events, influencer and celebrity endorsements while generating more than $51 billion in global revenue (statista.com).

Monitoring brand performance

The continued success of a brand relies heavily on tracking consumer needs, wants, preferences and behaviors. While compelling brand campaign executions create intrusive awareness and recall of the brand, undeniably there has always been science behind the most valuable and time-tested global brands.

However, not all companies that have encountered initial success believe in consumer research tracking. Often, these companies fail to understand that they must conclusively determine the factors that have made their brand resonate with consumers.

RCEP is both an opportunity and a challenge

Mergers and acquisitions (M&A) and public trading have always been the go-to business strategy of businesses that are in for the shorter ride.

As one businessman put it, “I will sell my business to whoever brings me the right price” not realizing that by becoming a dominant brand, the quoted brand price or value under an M&A can be obtained within a short span while continuing to fully own a brand and business that can be passed on from one generation to the next.

RCEP is certain to spur a lot of M&As. But while this is the case, the challenge is for the business owner to answer some of the following questions: Do I wish my family and bloodline to fully own the brand for generations to come? Do I wish the brand to have a dominant position in its category over a period of time? In case of M&A or public listing, am I prepared to lose my operational influence through time and be voted out of recommendations, which I believe wholeheartedly will spur brand growth? —CONTRIBUTED 

The writer is chief brand strategist at MKS Marketing Consulting, alumna of Oxford University SAID Graduate School of Business (strategic leadership and strategic marketing executive education program) and Stanford Graduate School of Business (strategic marketing executive education). She is a member of the Global Strategic Consulting Network. Feedback at [email protected].