Turkish consumers gaining loyalty to brands: expert

By Andrew Jay Rosenbaum

ANKARA

 Turkish consumers, initially suspicious of big brands, are gaining in loyalty to some well-known products and services, head of a leading brand valuation consultancy firm has said.

"Brands are promises to the consumers. Companies must stand behind their brands. Brands are not only names or trademarks, they are more than those. As most of the Turkish brands realize this, Turkish consumers are becoming more loyal," Muhterem Ilguner, managing director of the Istanbul office of Brand Finance, told Anadolu Agency on Monday.

Brand Finance published a ranking of Turkey's highest-valued brands for 2014 in June. The top brands included Akbank, Turkish Airlines, and Arcelik. The total value of the top 100 brands was around $25 billion to $30 billion, according to the report.

The total value of the top brands in six sectors respectively was: banking $12.7 billion, telecommunications $4.2 billion, durable goods and consumer electronics, $2.8 billion, air carriers $2.4 billion and food /retail essentials $2 billion.

"Since 2006, starting with the new economic program, Turkish companies entered a new era where marketing and branding is important. Now with the help of a state incentive program named ‘Turquality’ and master class education/training programs of some major universities, especially among new generation executives and university students, the interest for branding is increasing day-by-day," Ilguner explained.

It is too early, however, to talk about a Turkish branding strategy. "We cannot speak about a real Turkish branding strategy like the ‘Great’ campaign of the U.K…Turkish brands are not there yet,” he said.

But Turkey's top brands have different levels of success at home and abroad, he pointed out.

“Turkey’s foreign trade balance is negative. Turkey knows how to produce but Turkish companies have difficulty in adding value to products. When we analyze our league table, we see that, of top brands in Turkey, 70 percent of the total value belongs to service brands but few of them operate outside of Turkey. About 30 percent of the value generated by products," he said.

The global list is exactly the opposite, Ilguner continued.  "Services account for 30 percent of the brand value for Turkish companies operating abroad, and products make up 70 percent.

"The conclusion is that Turkey is not creating enough valuable product brands. For example, the technology sector in Turkey should concentrate more on branding, so that it will add more value to the national economy and help in the development of other sectors," he said.

But there is progress for some high-tech brands. "Even if they are not on the Turkey 100 list, some Turkish high-tech companies are achieving branding success, for example, Yemeksepeti, Bitstream, and Musion Turkey have successful brands.”

The study also showed that banks had the most valuable brands in Turkey.

But how does Brand Finance evaluate the value of brands? "Brand Finance uses an income-based approach which is standard. But our own methodology is based on 'Royalty Relief.' We determine brand strength to establish an appropriate royalty rate for the use of the brand as if it were owned by a third party. The royalty rate is applied to future forecast revenues and then discounted back to a net present value to derive the brand value," Ilguner said.

However, valuing brands in Turkey is still a controversial process, he said.

"In mergers and acquisitions, the auditing companies still value intangible assets without a marketing view, generally from accounting perspective. Of course, many brands are not fairly valued in this way. In Turkey, tangibles are still viewed as the most important assets for companies," he complained.