The importance of branding is increasing and companies are investing increasingly heavily in it. Many studies are being prepared all over the world in order to throw light on the subject and determine the strength and value of brands. But in Turkey these studies have not gone beyond telling us what we already know. So Capital and the famous British consulting firm BrandFinance prepared a special survey to fill in this gap. This study reveals the ‘Strongest Brands in Turkey” and the “Most Valuable Brands in Turkey” and, unlike other surveys, also includes ‘financial values’ and ‘future calculations’.
Throughout the world 80 percent of the value of companies is in unseen assets. The largest of these assets is ‘brand value’. In the last five years in particular, ‘brand value’ has also begun to increase in importance in Turkey and has had a major impact both on companies’ market value and on how they are regarded by customers. But, with the exception of studies carried out by the companies themselves, there has been no study of brand value in Turkey.
Capital recorded a first in this field by setting out to reveal the real state of what is happening in terms of brand value, this subject which is dominating companies’ agendas. Together with BrandFinance, which is one of the most prestigious brand evaluation companies in the world, it chose the 30 strongest (highest brand coefficient) and most valuable brands in Turkey.
Experts from BrandFinance used the universally accepted ‘royalty relief’ methodology in the study. Many global giants, such as SAB Miller, QData, Danone and Easyjet, have calculated the value of their brand through using the ‘royalty relief’ method. The method is trusted because it reveals the company’s performance in the market.
The royalty relief method calculates how much a company would have to pay to a third party for the brand if it did not own the brand itself. The value of these royalty payments reveals the value of the brand.
Using this method, BrandFinance calculates the brand values of publicly-owned companies and companies whose financial information is accessible. For example, some companies, including Telsim and Avea, do not disclose their financial information and are thus not included in the study.
Working methodology The ‘royalty relief’ method which has been used to determine the most valuable brands in Turkey comprises four stages.
BrandFinance Managing Director Michael Rocha says that, in order to evaluate Turkish brands, they first made an approximate estimate of the brand’s future sales by looking at its growth rates over the last five years. In the second stage, they drew up a brand strength index in which brands were awarded points based on evaluations by experts in the sector in Turkey and BrandFinance’s own sectoral expertise.
Rocha says: “In order to determine the number of points in the brand strength index seven basic features were evaluated, including the extent to which the company is preferred, historical development, created added value, distribution processes, awareness, creativity and quality.” At this stage sectoral experts evaluate the brand according to these seven criteria and rate them on a scale ranging from a low of 1 point to a maximum high of 10 points. Rocha adds that, when evaluating contributions by sectoral experts in Turkey, company ‘preference’ account for 10 percent of the final rating, while the other 6 features are given a weight of 15 percent each.
BrandFinance analyses all of these data and produces a brand index. It is this index which determines the “30 Most Powerful Brands in Turkey”.
The royalty rate is calculated using the points in this brand strength index. For example, if the royalty rate is between 0 and 10 and Y brand has 50 points while Z brand has 75 point,s then the royalty rate for Y brand is 5 and that for Z brand is 7.5.
Rocha explains the third and fourth stages of the ‘brand value’ calculations as follows: “We determined the future earnings of the brand by using the current value discount rate. In the final stage, we brought all of these processes together. We used the royalty rates that had been determined starting from forecasts of the brand’s future sales and with the help of the brand strength index points. So we finally determined the future royalty revenues of the brand. We then chose the 30 most valuable brands in Turkey by applying these royalty revenues to the current values.”
The secrets of the most valuable brands In fact, during the last ten years brand value has been one of the most widely discussed topics all over the world. In the producer-focused approach of the 1950s, the brand was only important in terms of awareness and the degree of trust it generated. But as global production capacities and possibilities increased, the importance of the plant declined. In the new environment, it was the perception of the consumer which came to the fore. Turkish companies have accelerated their efforts in this field over the last five years.
One of these companies is Petrol Ofisi, which heads the rankings of the 30 Most Valuable Brands in Turkey with a brand value of US $2.116 billion. Petrol Ofisi General Manager Jan Nahum says that Petrol Ofisi is trusted on the market, sets the rules and is the leading brand. He adds that they are taking new initiatives to ensure that the development of the brand is sustainable in the medium and long-term. Nahum says: “We shall develop our brand, particularly in our filling station segment, in order to provide a better response to customer expectations and needs.” He notes that they are implementing initiatives to ensure that the brand’s energetic, technological, innovative, practical, aesthetic and popular face remains to the fore.
Aygaz redefined its brand identity after a study by the international brand consulting company Enterprise IG in 2004. Today it ranks second amongst the most valuable 30 brands with a brand value of US $1.576 billion.
Aygaz General Manager Mehmet Ali Neyzi says that these efforts have brought dynamism while protecting the essential value of the brand. He notes that in all of these renewal efforts they are aiming to form a closer bond with the customer. Neyzi defines the values of the Aygaz brand as being trusted, mutual support, giving value, innovative, sincere and attractive. “The concept of Aygaz as a ‘member of the family’ appeared as a result of these studies and the essence of our brand was determined,” he says.
Investments produce results Ever since the day that it was founded, Turkcell has been at the forefront of those companies which have invested the most in their brands. These efforts have secured it fourth place in the rankings of the most valuable brands. Turkcell General Manager Muzaffer Akpınar says that to its customers the Turkcell brand is seen as something which brings together as a whole a confidence in, preference for and recommendation of the company. He adds that Turkcell’s characteristics include trust, leadership, sensitivity to customer needs, sincerity, innovation, speed and creativity. In addition to these characteristics it has become synonymous with values such as using technology to make life easier, representing Turkey on the global stage and benefiting society. Akpınar adds that in the future Turkcell will continue to believe that all of the activities which it undertakes to increase its brand value are based on its brand value.
Pınar, which is one of the Yaşar Foodstuffs Group’s most important brands, ranks sixth. Yaşar Holding Foodstuffs Group Marketing Director Kaan Tanık says that the level of awareness of the Pınar brand in Turkey is 99 percent. He says that producing and distributing goods and services are only the starting point when it comes to creating added value for the economy. The area in which added value is really created is the bond that is established between the brand and the consumer. “Over time a brand becomes more than the name of a product or a service and develops a personality through its relationship with the customer,” says Tanık. He adds that in this regard they have unique position which no rival company can take away from them.
Tanık stresses that they are aiming to expand the success of the Pınar brand in Turkey to other countries. “In order to do this we shall make investments which are mainly concentrated on marketing,” he says. “We see the success of Pınar in the Gulf States. We are continuing to work to extend this success to other countries.”
Hüsnü Dinçsoy/Pwc General Manager For Turkey How Did Brand Valuation Appear? Brands Changed Hands Brands and other non-material values first began to be taken seriously in the 1980s. In those years companies which had significant brands began to change hands for prices well in excess of their net active values. This situation demonstrated the very high prestige that they had. The Product Of Need Many companies noticed that they needed an accounting method which would give them the opportunity to reflect in their financial tables the real values of their brands. The lack of such a valuation was having direct impact on investor’s perceptions of the company’s value and thus on its share price.
Makes A Contribution Brands became much more important for knowledgeable consumers and, as a result, made competition more difficult. For this reason, in this century the value of the brand has become one of the most important elements of a company’s value. The most important contribution of calculations of brand value is that it enables people to see that the company owns. Effective Use Of Resources It is only in this way that resources can be used effectively. If the company knows the value of its own brands, it can both manage the brand in a more effective and measurable manner and reflect the value of the company to its shareholders and investors in an accurate manner.
THE 30 STRONGEST BRANDS IN TURKEY Company Brand Index Turkcell 74 Akbank 71 Garanti Bankası 71 Şişecam 69 Ülker 68 Türkiye İş Bankası 68 Arçelik 68 Anadolu Efes 67 Pınar 67 Petrol Ofisi 66 Ford 65 Hürriyet 65 Koç Holding 65 Aygaz 65 Denizbank 64 Mavi Jeans 63 Vestel 63 Eczacıbaşı İlaç 62 Finansbank 61 Doğuş Otomotiv 60 Goldaş 60 Yapı ve Kredi Bankası 59 Migros 59 Doğan Gazetecilik 59 Sabah 58 Borusan Otomotiv 58 Banvit 58 Vakko 58 Anadolu Sigorta 58 TEB 58