01 November 2007

Westfield tops global property brand charts.

Global property companies are increasingly acknowledging the value of their brand as a primary value driver.

Certainly DIFFUSION's experience working with companies Grosvenor and the Simon Property Group seems to demonstrate that building a brand centric culture will increasingly yield better bottom line results.

UK brand valuation company Brand Finance, acknowledged as one of the world's leading brand valuation companies, rated Australian property group Westfield at the top of its recent global property brand index report with a brand value of US$1.0bn (A$1.1b) alongside fellow Australians Stockland, the Goodman Group, GPT and Mirvac in its top 30.

According Brand Finance's estimates brand value contributes up to 3% of what they define as enterprise value (defined as the combined market value of the entity and debt of a business less cash and cash equivalents), and averages 1.6% of enterprise value. While it's report states this is low compared to heavily branded FMCG categories like Coca Cola, it describes the resulting brand values as "still highly material".

What's apparent with the index and in a sense explains the rise and rise of property brands like Westfield is that our perceptions are usually based on the brand's functional attributes - such as access and location. Something that Westfield has concentrated on with it's deliberate nodal location strategy (see map above). This is best illustrated by drawing from HG Well's War of the Worlds, which described how the Martian fighting machines would dominate an area by combining into a group. This is pretty much what Westfield does - visibility and dominance - and why the brand has proved so pernicious in the daily lives of people in Australia, New Zealand the US and soon the UK.

Interestingly, Brand Finance raises two questions I think companies like Westfield and other dominant property groups need to grasp:

1. What brand architecture will prove to be most effective in the future?
2. How can a coherent and effective brand message be communicated ?

As far as DIFFUSION is aware, none of these major property groups have a head of brand addressing these important issues, instead continuing to rely on their marketing and investor relations departments to be the sole determinants. The absence of a real brand strategy is palpable.

In a recent visit to Tokyo, DIFFUSION was struck by how its shopping malls had evolved to become much more experiential, with customer service emphasised at every touch point. Something that is mostly ignored by the majority of western mall owners, more content to wring as much income from both retailers and consumers through a turnstile mentality. Sure Westfield might have magazines and a valet service, but why do some of its suburban malls want to start charging for Sunday parking? Doesn't this run counter to functional attributes of the brand, like access.

It's a simple thing really. And I might add a third question:

3. What is the brand promise?

DIFFUSION hopes it will be seeing some answers at the mall soon.

Symbolic obsolescence defines this century.

The concept of symbolic obsolescence is so new that it has barely crept into our lexicon, but is already affecting brands and their consumption.

I could find some mention of the term in an a number of design journal articles dating back to 1994 and you will be able to do your own search of references, but I couldn't even find a dictionary definition.

So here's mine:

Symbolic obsolescence: the perception that something is obsolete (noun)

Symbolic obsolescence is not attached to planned or functional obsolescence, which is usually determined by the brand owner. However, it is likely that the brand owner can take some responsibility for its occurence because of the rapidity of continuous product or service rollouts. Often these are disguised as improvements but in many cases, the improvements are so minor or competitively mimic others. Symbolic obsolescence occurs because consumers perceive that their status as is either a group or individually is affected (usually seeking to elevate it) by not acquiring the product or service. In a effect it's a contemporary update on the old saying "keeping up with the joneses", something explored by English philosopher Alain de Botton in his book, Status Anxiety.

Symbolic obsolescence is already part of modern consumption. Whether it's the Titanium card, the newest credit card from American Express or in Apple's update to its hugely popular iPod range, the iPod Touch. Let me demonstrate what I mean by way of review.

Here's a review from popular blog Endgaget:

It's hard to argue that there isn't beauty in simplicity, especially when it comes to consumer electronics. But there's such thing as too simple -- and sometimes too simple can turn into crippled. Most of our complaints about the touch have to do with what it lacks -- not in general, but when compared its big brother, the iPhone. Had the iPod touch come out first, the lack of a hardware volume switch, integrated speaker, and all those apps might have been perfectly passable, but now the expectations have been set, and we can't see how taking things away from users can possibly add value. Everyone in this industry is trying to give their customers more, but with the iPod touch Apple gave its customers less in what should have been the best iPhone alternative on the market. This time around, in Apple's obsession to edit, they managed to leave some of the best stuff on the cutting room floor.

or this from Wall Street Journal tech critic Walt Mossberg:

Apple says the Touch was meant mainly to present typical iPod features, not to replicate the iPhone, and it included the Web browser only so users could get onto Wi-Fi to use the mobile music store in certain places that required a log-in screen.

But it seems ridiculous to me to sell a powerful device with Wi-Fi and a huge screen, and to leave out things like an email program, even though you can use Web-based email programs. I assume Apple was concerned that the less costly Touch might compete too much with the iPhone if it had these features. In fact, if somebody can jam a voice-over-Internet capability into the iPod Touch, it might be more of a threat to the iPhone, which is tethered to a single cellphone carrier, AT&T.

In Australia, where the iPhone is yet to released (strange decision from Apple but then again it's not even 3G), the release of the iPod Touch was seen as something we should hold our collective breath for. However, what seems clear from both these reviews is that the Touch is merely an interim lower storage device available in a lower price bracket to the iPhone, with a lot less of it's features. It plainly exhibits planned obsolescence as both reviews attest to.

However, as symbolic obsolescence it would be difficult to find a better example. In a year's time the coolhunter buyers of this year's Touch will be out buying their hopefully 3G iPhone (unless they brought in a hacked version from the US or Europe) and the touch will be relegated to eBay dustbin. Why? Because to have one and to display it, both among our peers and to society, defines us.

Just as Moore's Law helped define the inevitable rise and rise of technology at the end of last century, symbolic obsolescence will significantly influence almost all brand owners and our pattern of consumption of brands this century.