Eric Salama (wpp.com)

In August, market research firm Millward Brown, under parent company Kantar, released the BrandZ Top 50 Indonesian Brands list for 2016. The top 10 was dominated by firms in the banking and tobacco industries, with Bank Central Asia (BCA) claiming the top spot for the second year in a row, despite its valuation having decreased. To explore what constitutes a valuable brand in Indonesia, The Jakarta Post’s Dylan Amirio spoke with Kantar CEO Eric Salama about how Indonesian brands can improve their worth. Following are edited excerpts of the interview.

Question: A decline in consumer spending triggered an economic slowdown, exacerbated by a weakened rupiah exchange rate in 2015, but the BrandZ report showed that customers stayed loyal to the brands that they trust. Can you elaborate more on this?

Answer: We take brands that have some kind of public valuation and we can get their financial numbers. We then look at how strong the connection is with their consumers through their practices and innovations, and the proportion of stock market valuation to make a calculation from that. We haven’t got any private companies in the rankings, as we only rank companies that are publicly listed.

Brands’ strength is judged on how many customers they have and how those consumers see the brand. Are they meaningful to them? Are they different? Are they relevant? Salient? When you meet all those aspects, you have a very strong brand.

To help create that reputation, brands need to build a deep emotional connection with the consumer and also show a functional leadership position in what they do. Virtually all brands that have a combination of functional and emotional appeal are meaningful, strong and relevant.

With the history of brands in Asia, a lot of brands started with the concept of functional superiority: a better tasting food, a better tasting cigarette, a better bank, etc. Earlier on, they would start with that mindset but as time goes by, it becomes easier to imitate that kind of thinking. Pretty soon every brand aspires to be different.

Brands in Indonesia such as Indomie, for example, have very strong emotional connections with consumers. But I wouldn’t say that building an emotional connection is the most important factor. They also need to have technological innovation to go along with it. There are brands that stop innovating after a certain period of time and then lose relevance to their customers.

How can brands increase their value when business is slow against the backdrop of weak domestic economy?

Some brands like BCA, which is the number-one brand in Indonesia according to our ranking, saw its valuation fall compared with last year but because it is such a strong brand, it did not fall as far as other banks.

You can’t always protect the brand against everything happening in the economy or what’s happening around the world, and which can result in lost equity or trust. If you’re a strong brand in a category that’s declining, you can do a lot better by focusing on protecting the value of the brand.

Some brands decreased in valuation but their position was saved because of their genuine relationship with their customers. An example is a bank that I use [back in the UK] called FirstDirect. I love their service as they’re warm and engaging over the phone whenever I call them. Sometimes things go wrong but I’m more forgiving than I am of them than I would any other banks. It’s like if you have a friend that does something, if they do something wrong, you forgive them.

Do you see a change in behavior in Indonesian consumers lately?

As economic slowdown takes place throughout the year, consumers are spending less and therefore premium brands are losing the power to charge higher.

I think what’s happening in Indonesia is that younger consumers are looking for different things from brands, like more of a purpose in their choices. Finding out what’s behind the brand is more important as they want to know what they’re buying.

What are the main problems surrounding Indonesian brands?

Companies in Indonesia are not investing enough in research. So when also compared with other markets in Asia like China, Malaysia, Singapore and India, who spend a considerable amount of funds on market research compared to their GDPs, Indonesian companies are simply spending less. They can get a lot more benefits and fulfill more potential if they invest in those factors.

But despite many brands in Indonesia not investing in research or marketing, many of them have always expressed interest in expanding outside of big cities such as Jakarta. What we are seeing in Indonesia is almost exactly the same as we saw in China 10 years ago.

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