Woolworths is no longer the most valuable brand in Australia, according to Brand Finance’s 2016 Global 500 report.
Last year, Woolies topped the list, but this year the supermarket giant sunk to second place behind Telstra.
Coming in at third for 2016 is the Commonwealth Bank, followed by ANZ, BHP Billiton, Coles and Westpac.
In order to rank the world’s most valuable brands, Brand Finance determines the value a company would be willing to pay in order to licence another business’s brand name.
Brand Finance says it also takes into account factors such as people’s emotional connection to a brand, as well its financial performance over the past 12 months.
Woolworths’ market share has dipped slightly over the last few years, coinciding with the increasing popularity of Aldi and stiff competition from the likes of Coles.
In addition, Woolworths has suffered from a number of marketing mishaps over the past 12 months, including its “fresh in our memories” Anzac Day social media campaign to commemorate the centenary of World War I.
However, branding expert Michel Hogan told SmartCompany determining the worth of a brand isn’t straightforward if you take into account people’s emotional responses.
“Every single one of those organisations that’s listed spends an inordinate amount of money maintaining a high profile,” Hogan says.
“From a surveying standpoint, people typically remember what they see a lot, not necessarily what they feel connected to. I don’t know their methodology… but what makes a valuable brand is a really core question.
“If you just use a market-based valuation, a capitalisation valuation, you don’t get the nuance of meaning and connection to what people care about.”
Hogan says at the end of the day, a valuable brand is determined by what people care about not how well it is known.
“These are companies people love to hate,” Hogan says.
“What a brand means to you is a very personal thing.”
Hogan says the key to building a successful brand is to examine your customer and employee retention figures.
“Use those things as a foundation for business and what you do,” Hogan says.
“Then you will attract customers that care about the same stuff and they will tend to be loyal and stay with you. Likewise, you will attract employees that care about what you care about.
“Those are two far more powerful indicators of a brand, as the brand is a result of doing all those things and keeping your promises.”