Corona, Valued at US$3.33 billion, Ranked First among Mexican Brands by Interbrand and Expansión
Telmex, Telcel, Televisa and Elektra Follow
CNN Expansión
By Gisela Vázquez, Leonardo Peralta and Verónica García de León
Mexico City, November 9, 2009 – Marketing experts and academics have a maxim: crises are cyclical; brands are not.
In 2009, Mexico’s GDP will fall more than 7%.
“In the middle of a recession, some leading Mexican companies are riding out the crisis thanks to trust in their brand names,” says Laurence Newell, director of the Interbrand México brand consulting firm.
This is the case of Corona, Telmex, Telcel, Televisa and Elektra, the five top-ranked companies on the list of Mexico’s 40 most valuable brands developed by Expansión magazine and Interbrand.
For the complete list, see below.
Of an original list of 160 Mexican brands, only 40 registered a positive economic value added (EVA).
To develop the ranking, researchers calculated, among other things, the profit made by the brand after brand operational asset costs.
Now more than ever, Mexican companies recognize the importance of investing in their brand names.
“They’re managing them well,” says Carlos Ruiz, IPADE professor and expert in brand building.
Grupo Modelo cut its administrative spending this year, but did not touch the budget items for publicity for the Corona brand name, its ambassador to the world.
“Companies have to keep up their strengthening programs. Otherwise, they’re mortgaging their futures,” says Jorge Vera, a professor at the Monterrey Technological Institute of Higher Learning, or Monterrey Tech.
Telmex opted for a strategy of promoting its landline telephone, long distance and Internet services, offering customers up to 45% in savings.
Sister company, Telcel (mobile telephony), has made coverage its main selling point. It currently covers 90% of the all Mexico’s inhabited territory.
Grupo Televisa has gone for differentiating its strategies in Mexico, North America, Asia, and Europe to win new markets and audiences.
In furniture and household appliances, Elektra is the best known brand.
Taking advantage of its popularity, the company is broadening out its reach, offering customers financial and tourism services and cars.
Come In and See Mexico’s Most Valuable Brands
Grupo Modelo’s ambassador in the 159 countries where it has a presence is the Corona brand. “It’s so important that, in the face of the economic crisis, they decided to cut administrative costs before touching the funds earmarked for brand promotion,” says Ana Paula Pedroni, an analyst for IXE Brokerage.
Given that Corona beer exports represent a substantial part of their earnings (in the second quarter of this year, they came to 31.2% of total sales), the brand’s global presence is an indispensable tool for keeping up sales in a market that is currently consolidating, says Pedroni.
The Corona brand’s strategy is different in Mexico from abroad. “Abroad, Corona publicity shows beaches, relaxation; in Mexico, it underlines national pride in natural beauty and our music,” says Jorge Pedroza, a researcher at Monterrey Tech’s Graduate School of Business Administration (EGADE).
Grupo Modelo’s flagship brand has not been built overnight. “Corona is an example of a coherent brand: it has allowed it to maintain its place with strategies designed years, even decades, ago,” adds Ramiro Martínez, a researcher at the Iberoamerican University.
Telmex, Right to Your Pocket
Being perceived as a brand concerned about the family budget is one of Telmex’s main strategies. “For the ninth consecutive year, we have lowered the price of our services,” says company Commercial Director Andrés Vázquez del Mercado. The Perro Wow (or “Wow Dog”) is an icon of Telmex package deals (landline telephone, long-distance and internet services), one of the products that has most boosted the brand, with customer savings of up to 45%.
Offering computer sales charged to your phone bill put Telmex at the top of computer sales nationwide at back-to-school time. The brand’s strength also involves cables: the investment of extending its fiber optic network and offering free Internet access to its clients in 12,200 public places has also enhanced the image of [Telmex’s] Infinitum. “People notice the quality of the connection, if it’s fast and unbroken,” says Vázquez.
But Telmex’s future is clouded by not yet having the permit for offering video services to make it a triple-play company. “It doesn’t hurt us, but it doesn’t make us more competitive, either,” admits Vázquez del Mercado. Since Televisa went into the triple-play business, Telmex’s brand has been hurt. Just in the third quarter of this year, it lost 50,000 lines. “Offering packages and laptops have given it visibility, but they can’t make up for not having video,” says Andrés Coello, an analyst with BBVA-Bancomer.
All of Mexico Is Territory…
Building a brand involves more than creating icons, promotional campaigns, and ads. For Mexico’s leading cellular phone company, besides being a technical and service issue, coverage is also its brand’s highest value feature. América Móvil’s subsidiary covers 90% of the country’s inhabited territory, or 200,000 towns and cities, and 58 million people, 78% of the market. “Customers associate it with the possibility of being in contact and permanent communication from anywhere,” says Marcela Velasco, director of Telcel marketing.
Communicating the benefits of belonging to its network, the quality of its service and its money-saving special offers are the axes Telcel has used to strengthen its brand since it became possible to change companies and still keep your cell-phone number —even more so in a crisis year like 2009. According to Cofetel, cell phone use in Mexico slowed more than 40% since the beginning of last year.
Telcel is number one, but the competition is dogging its footsteps. “Telephony is picking up the most new customers,” says Ernesto Piedras, director of The Competitive Intelligence Unit consulting firm.
Of the 342,000 new mobile phone customers every month, 42% are for the Spanish firm. Telcel has responded with payment plans “at competitive prices with attractive units” and numerous free frequently-called numbers, says Velasco.
Televisa, an Emotional Patrimony
Televisa’s is a kind of umbrella brand covering many sister brands like Noticieros Televisa, Televisa Deportes and Fundación Televisa. As a media corporation, “we are very visible,” says Manuel Gilardi, Grupo Televisa’s vice president of image and publicity. Since 2004, the company has focused on new markets and audiences, which is why they have developed differentiated strategies for North America, Asia, and Europe. According to Gilardi, the big goal is for “the business communities in these regions to see us as a serious company that produces quality content.”
Strange as it seems, Grupo Televisa, headed by Emilio Azcárraga Jean, works to ensure its brand does not overpower its products’ brands. “We reformulated the corporate brand approach so that, instead of a sales pitch, it would become a stance, recognition and back-up,” says the exec.
Although the audiovisual entertainment sector is very competitive, Televisa knows its markets well. “About two-thirds of the time that people spend in front of the television, they’re seeing the Televisa brand,” says Jorge Pedroza, researcher at Monterrey Tech’s Graduate School of Business Administration (EGADE). Once you know the audiences, the next step is to intensify the relationship. “Viewers consider it part of every Mexican’s emotional heritage,” emphasizes Gilardi.
Elektra, from Blenders to Motorcycles
“The Elektra brand shows how we improve our quality of life through the things we acquire,” says Grupo Salinas Marketing Director Ninfa Salinas. With almost 60 years in the domestic market, Elektra stores have become the leader in furniture and appliance sales among low-income homes (segments C and D+).
Now, taking advantage of brand popularity, the company is attempting to lead its customers by the hand to its new products: financial services, automobiles, and tourism services.
“Elektra has taken very good advantage of its positioning at the base of the pyramid to not only strengthen its brand, but to help launch others like Banco Azteca and Viajes Elektra,” says Iberoamerican University marketing professor Ramiro Martínez. The company is using trust in this brand to broaden out its product line, says Jorge Pedrosa of Monterrey Tech’s EGADE.
Elektra uses its 795 points-of-sale national network, plus TV Azteca broadcasts to put over its brand. “We have a repurchase rate of between 65% and 68%, and we’ve already cornered half the market in motorcycles,” reports Salinas.
In a strategy to forge a symbolic relationship with the public, the company has emphasized three concepts to strengthen the brand: easy, quick, and friendly. It has exported this strategy to other Latin American countries like Brazil. “The public knows that we are with them in creating a better quality of life,” says Salinas.
For some, their publicity lacks creativity, and it’s true. But its communications plan and brand positioning are consistent and tailored for its target audience. “That’s what Elektra publicity has to be like. It’s authentic and targets the kind of market it’s serving,” explains Pedroza.
After a recent overhaul of the brand’s image —according to Salinas, to reach new generations— Elektra is paying more attention to women —housewives— between 30 and 40 years old.
In 2010, Grupo Salinas will boost its marketing strategy to consolidate Elektra as synonymous with access of the lower classes to the middle class through small payment plans.
Methodology: the Value of a Brand
The methodology the brand consulting firm Interbrand used is based on measuring what profits will derive from the brand in the future. It includes three components:
Financial analysis: with current and past earnings data, they estimate future earnings attributable to the brand. That is, in the case of a brand that represents the entire corporation, they will use the comprehensive earnings. If it is only one of the corporation’s brands, they use the proportional earnings attributable to that brand. Operational costs attributable to the brand are subtracted to arrive at the operational profits.
Analysis of the brand’s role: this is the measurement of a brand product’s intangibles for generating demand. Of all the intangible earnings, a calculation is made of how much is attributable to the brand, and the rest is attributable to the product as such. This is the result of qualitative and quantitative market studies. In some sectors like perfume or fashion, brand plays a more important role than in others (around 80% to 90%). In the financial sector, the brand’s role is 40% to 50%. The percentage is applied to the value of the economic earnings associated with the brand.
Brand strength: this analysis looks at seven areas, like leadership capability, positioning, communications support, capacity to transcend geographic barriers, and level of legal protection. The result of the analysis is the assignation of certain number of points indicating brand strength, which is a reflection of the security of earnings associated with the brand. The weaker the brand, the lower the brand-associated earnings.