Nation BrandsMuhterem İlgüner

Brand Finance plc

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Countries, like corporations, have brands; reputations that shape the decisions of foreign consumers and investors

These brands can be positive (“German engineering”) or negative ….(?)

Countries seeking to boost their exports, encourage foreign investment, or attract tourists and talent need to develop strong Nation Brands

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Brand Finance Nation Brands IndexTM

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Introduction to the Nation Brands valuation exercise

• Brand strength determined using IMD (World Competitiveness Yearbook) and World Economic Forum Global Competitiveness Index

• Brand strength analysis includes three macro categories consisting of: Infrastructure &

Efficiency Brand Equity Economic Performance

Data Brand Profiling• High level valuation of

nation brands using publicly available information

• Currency: USD$

• Brand Value calculated using Royalty Relief method

• Countries included in scope of exercise determined by availability of financial and market data as well as consumer research

Scope• GDP used as a proxy for

brand revenues

• Historic and forecast GDP sourced from IMD (World Competitiveness Yearbook)

• GDP was segmented into the following categories: Primary (Agricultural/

Forestry/ Fishing etc) Secondary

(Manufacturing/ Industry etc)

Tertiary (Services/ Financial & Insurance etc)

• Individual royalty rate ranges determined for each of the three categories

• Discount rate calculated using WACC, data sourced from Bloomberg

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Segment Internal External

InvestmentDomestic investmentEncourage local commerce to

invest domestically as opposed to investing overseas

Inward investmentAttract Foreign Direct Investment

(FDI), including business relocation

TourismDomestic tourism

Encourage citizens to exploredomestic destinations rather than

vacationing abroad

Foreign tourismPromote the nation to foreign

tourists and conference delegates

ProductDomestic brands

Encourage citizens to buy locally made products and services

i.e. reduce imports

Export brandsPromote nation’s products and

services to international marketsi.e. increase exports

TalentDomestic talent

Encourage citizens to study and work locally, rather than going

overseas i.e. avoid “brain drain”

International talentEncourage foreign students and skilled workers to come to study

and work in the country

The Nation Brand Impact FrameworkTM

This framework identifies the 4 segments in which countries can build the economic value of their Nation Brand.

The Nation Brand Impact™ framework identifies the 4 segments that enable countries to identify, build and unlock the potential economic value within their nation brand.These 4 segments each have a crucial role to play in leveraging and improving a Nation Brand’s ability to enhance GDP growth.

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Determining a nations brand strengthTo conduct the valuation, it is necessary to determine the strength of the nation brand against other nation brands under review.

This chart summarises the conceptual approach of measuring brand strength within a single index. Our BSI incorporates a range of measures covering Infrastructure & Efficiency, Brand Equity (‘BE’) and Economic related to the nation brand relative to competitor nation brands.

The chart demonstrates that brand equity is only one macro level component (derived from various micro level attributes) of brand strength.

Brand strength therefore measures both quality and size:

i. Quality - the equity the brand has with users of the brand;

ii. Size - the physical presence of the brand in the global market. &

Brand strength is considered a snap-shot of the brand’s performance at a given point in time. BE is considered to be a leading indicator of the brand’s future performance.

Brand Strength Index (100%)

Infrast. & Effic. 33.3% Brand Equity 33.3% Econ. Perform. 33.3%Productivity 1.8% Image Abroad 8% GDP 2.4%

Brain Drain 1.8% Quality of life 8% GDP Growth 2.4%

Attracting talent 1.8% Customer Satisfaction 8% National Debt 2.4%

Worker Motivation 1.8% National Culture 8% Resiliance of Economy 2.4%

Adaptability of Companies 1.8% Exports of Goods 2.4%

Ethical Practices 1.8% Exports of Services 2.4%

Social responsibility 1.8% Trade to GDP Ratio 2.4%

Health Concerns 1.8% Tourism Reciepts 2.4%

Globalization 1.8% Imports of G&S 2.4%

Flexability 1.8% Employment 2.4%

Value System 1.8% Consumer Price Inflation 2.4%

Corporate Values 1.8% Cost of Living 2.4%

Internet Users 1.8% Investment Risk 2.4%

Tech Funding 1.8% Fin risk factor 2.4%

Pollution 1.8%

Health Expenditure 1.8%

Sustainable Development 1.8%

Illiteracy 1.8%

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RANK 2011 NATION BRAND VALUE ($ bn) RATING 2011

1 USA 11,370 AA-

2 GERMANY 3,146 AA

3 CHINA 3,001 A+

4 JAPAN 1,940 A

5 UNITED KINGDOM 1,849 AA-

6 FRANCE 1,673 A

7 ITALY 1,515 A-

8 CANADA 1,309 AA

9 INDIA 1,266 A+

10 BRAZIL 959 A

73 LEBANON 31 A-

Source: Brand Finance® Top 100 Nations Brand Index

Top 10 Nation Brands 2011 ($ billions)

Brand LebanonSource: Brand Finance® Top 100 Nations Brand Index 2012

2011 2012Brand Value ($ Billion) 37 31Change in Brand Value -16%

Brand Strength

Index

INVESTMENT A- A-TOURISM BB B

TALENT A A+PRODUCT A- A-

Overall Brand Rating A- A-

Rank on the League Table (Total= 100 countries)

65 73

Source: Brand Finance® Top 100 Nations Brand Index

Brand Lebanon: Brand Strength Index components

2009 2010 2011 2012

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52

50

51

2009 2010 2011 2012

54 53

52 52

INVESTMENT

PRODUCT (GOODS & SERV)

Investment Development Authority of Lebanon

Effectiveness of anti-monopoly policy

Trade tariffs

Business costs of terrorism

Favouritism in decisions of government officials

Direct investment flows inward ($bn)

Venture Capital availability

Reduced burden of customs procedures

Time required to start a business

Exports as a percentage of GDP

World exports contribution (%)

Public trust of politicians

Judicial Independence

Source: Brand Finance® Top 100 Nations Brand Index

Brand Lebanon: Brand Strength Index components

2009 2010 2011 2012

54 54

56 56

2009 2010 2011 2012

49 49 41 39

TALENT (PEOPLE & SKILLS)

TOURISM

Tertiary education enrolment rate

Internet access in schools

Quality of management schools

Reduced brain drain

Extent of staff training

Female participation in labour force

Visitor Satisfaction

Image abroad

Tourism Receipts

Cost of Living

Quality of overall infrastructure

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Every brand is a promise to be demonstrated«let visitors experience this promise!»

A soft factors world!

… a story about gaining added value by moving from:

Low complexity High Complexity

Tangibles Intangibles

Domestic Companies

InternationalCompanies

BusinessInvestors Visitors

Tourists

BusinessVisitors

PotentialResidents

PresentResidents

Residents

starts with visiting..

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Nation Branding Agency

Nation Branding Strategy

CultureHistory,

Famous peopleImportant events,

Etc.

Nature

Location,Climate,

Etce.

Unique ProduceFood,

Natural source,Minerals,

etc.

Talent

Capability,Mastery,

Etc.

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Nation food branding is becoming more important

20 b. € revenuefrom geographical

indication;wine,liquor,

cheese,…

15 b. € revenuefrom geographical

indication;olive oil,

ham,cheese,

...

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City branding is becoming more important

More than half of the world population is living in cities«urbanisation»

Cities are now;• attracting talent• attracting visitors

• attracting investors

İstanbul, 20129 m. visitors,

53 multi-national congresses with more than 500 delegates (No.1)

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National and commercial brands work together

Background

Commercial brands help define the nation brand and visa versa

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Other developing nation brandsA huge opportunity

Background

? ?

? ?

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Segment Internal External

InvestmentDomestic investmentEncourage local commerce to

invest domestically as opposed to investing overseas

Inward investmentAttract Foreign Direct Investment

(FDI), including business relocation

TourismDomestic tourism

Encourage citizens to exploredomestic destinations rather than

vacationing abroad

Foreign tourismPromote the nation to foreign

tourists and conference delegates

ProductDomestic brands

Encourage citizens to buy locally made products and services

i.e. reduce imports

Export brandsPromote nation’s products and

services to international markets

i.e. increase exports

TalentDomestic talent

Encourage citizens to study and work locally, rather than going

overseas i.e. avoid “brain drain”

International talentEncourage foreign students and skilled workers to come to study

and work in the country

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An accreditation system encompassing all processes from production to marketing, and from salesto after-sales services, of products/services having a competitive advantage and branding potential

Turquality has four principal mission statements given the complex and tough structure of the hyper-competition which today reigns in international markets:_ to support the branding expenditures of the selected Turkish brands_ to provide coaching and consulting services to Turkey’s best companies in order to allow them to compete globally_ to act as a catalyst and incubator for the selected Turkish brands_ to provide PR and communications activities in order to create and promote a positive Turkish image.

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An accreditation system encompassing all processes from production to marketing, and from salesto after-sales services, of products/services having a competitive advantage and branding potential.

Including all expenditures/costs for this purpose %50 refund

85 companies, 101 brands

A master’s degree education programme on marketing/branding

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BRAND LEBANON• quantitatively evaluate current

policies and develop a strategic approach

• target limited resources to create the best results

Development and implementation of nation and sector level plans for nation brand development in concert with stakeholders. Cover’s immediate tasks and implementation paths over 5, 10, 15, 20, 25 years

Detailed analysis of sectors within the nation. Leads from initial research to developing sector level development strategies

Nation as a whole at a high level. Centrered around initial engagement with key nation brand stakeholders and building a base of research knowledge.

STRATEGYNation Brand Development Strategy

Stage 1: Macro Analysis

Stage 2: Micro Analysis

Stage 3: Implement & Monitor

STRATEGYNation Brand Development Strategy

Stage 1: Macro Analysis

Step 1: Engage key stakeholders in government, business, finance, media

Step 2: Research the nation as a ‘business’ and a ‘brand’

Step 3: Review legal rights, stakeholder research and national accounts data

Step 4: Analyse key regional and global trends across the 4 segments of the Nation Brand Impact FrameworkTM

Step 5: Set initial priorities for nation brand development

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«The brand of a country has a direct impact on the wealth of the nation and its ability to compete and grow in

the global economy.»