[MUSIC] Regardless of whether you agree or disagree with inter brands methodology or some of the other ones that you can find in the literature. There is one thing that is clear. Brands, once they have value, it must be reflected in the following three components. One is premium pricing. Next is market share. And third is profitability that can be directly attributed to the brand. Think of the case of Dodot, the case that we used in week two. What was the problem? The market share was eroding, its price was being threatened by lower price private label products, but its biggest asset to defend both its profitability and its market share was its brand. Correct? So does it mean that once you have built a strong brand, it can last for a very long time, or forever? Absolutely not. And a staggering 47%, that is 14 out of the 32 firms, did not make up this top 32 list, 15 years ago. Let's look at a couple of examples of companies that have either disappeared or have significantly lost part of its value, companies like Nokia and Ericsson. Do you remember them? They no longer make up the top 100 brands in the world. Or Ford that has suffered severe problems and has lost a significant portion of it's market cap and the brand value as well. Companies that are clearly on the descent such as Marlboro and most of the other cigarette companies. Because of particular cultural changing of times and what is the society level of acceptance of cigarettes. PC Manufacturers, like Compaq and Dell, Compaq because it was bought by Hewlett-Packard, but Dell PCs are clearly on the way down. Right? So these companies no longer make up the top 50 or 32 list of their most valuable brands. Kodak and AT&T. Remember, Kodak lost the battle for digital cameras, and digital cameras since then have been sort of replaced by smartphones. AT&T has become a commodity and no longer commands the level of respect and recognition that it once had. For even financial institutions like Citi Bank that once used to make up this list but the banks have suffered tremendously since the financial crisis. In part due to self infliction. And most financial institutions have either disappeared or dropped considerably in this list of the world's most renowned brands. So as you can see, having made it to this list does not ensure that you will remain over there. You need to stay active, alive, and evolve with the changes. And not just in the case of logos, as you can see in the case Coca-Cola, right? Here we have the logo as it evolved all the way from the end of the 19th century all the way until today. Right. You really need to stay relevant, and staying relevant for the new generations of consumers is one of the most important and one of the most tricky things to perform. Because the new generations of consumers typically do not want to be associated with the entity and the values of the previous generation. And that's why achieving and staying relevant between generations is a particularly difficult but the most important thing that companies should be looking at achieving. So as you can see, some of these examples, companies have lost a significant portion of the value of their brand or entirely disappear because of many reasons, including technological shift, including a financial crisis and many other things. But can the pain be actually self inflicted? Can a world known brand actually get it wrong and cause itself the trouble? Let's look to what Howard Schultz, the CEO and founder of Starbucks had to tell us about what went wrong with Starbucks in 2007 when it started a very slippery slope and lost somewhere close to 70% of the market value of the company between the end of 2006 and the end of 2008. In January first of 2008, he came back as the CEO of the company and this is what he had to tell us about this time and why he thought the Starbucks experience was diluting itself. >> I think the truth is that what I described in the book happening to Starbucks, I don't believe is that unusual that companies go through cyclical changes. In our case, I was very honest in describing what I thought was the fact that growth and unbelievable success in some way covered up a undisciplined level of decision making. And I also said that I thought that there was a sense of entitlement that was going on inside the company. And although we had record sales and record profit and a record stock price, it didn't show up right away. And when I returned to CEO in January of 2008, I think that coupled with the cataclysmic financial crisis, it began to, I think, uncover that there were a lot of issues that we had not faced. Then unfortunately we're about to raise their ugly head. [MUSIC]
