Improving economic prosperity through nation branding
While a nation’s brand affects its tourism industry, the brand also has powerful effects on the value and volume of the nation’s product exports and FDI, which have a direct impact on GDP
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We have become quite accustomed to brands in our lives. Companies such as Apple Inc., Google Inc., Coca-Cola Co., and Toyota Motor Corp. are four of the most valuable brands in the world. The most successful companies spend considerable time, energy, and money managing their brands. Why do they do so? Because it is economically beneficial for them.
As they build their brand image in customers’ minds, they are able to have a more loyal customer base willing to pay extra for their products and/or buy more of their products. They recognize that to maintain and grow their customer bases most effectively, they should carefully nurture positive consumer perceptions of their products or services and correct negative misperceptions.
For many years, Google knew it had a great Internet search engine, yet never tried to manage the brand. Only later did it realize that its brand was one of the most valuable assets. Users would opt to do web searches on Google over other search engines simply because it was Google, never even exploring whether searches on Bing or Yahoo or Baidu would yield better or faster results. They had become brand-loyal. This provides value for Google as it is able to very successfully sell its traffic to advertisers.
Similar to companies, nations have brand images of their own. Would nations’ economies similarly prosper if they adopted similar “brand” strategies?
Branding consultancies have developed methods to estimate the value of global product brands and regularly publish rankings based on those estimates. I teamed up with US News & World Report and WPP’s BAV Consulting on the “Best Countries” study to measure nation brands—and how nations’ brands affect their economies.
What is a ‘Nation Brand’?
Like the perceptions of a company’s products or services, individuals’ perceptions of nations are based on their experiences as consumers, investors, tourists and followers of global news and social media. Their perceptions are also based on experiences communicated to them by others, including family, friends and colleagues—even casual acquaintances. Based on these experiences, people learn and develop generalizations about various nations of the world.
For example, people might develop generalizations that products from Italy are stylish, that French wine is superior to all other wines, or that German cars are well-engineered. There are some nations that are perceived to have unique capabilities, such as Israel for its cybersecurity, or China and India for their low-cost manufacturing capabilities. The extent to which these generalizations correlate with objective facts may vary. What is critical for the study of nation branding is perception. Positive perceptions of a nation lead to commerce in a variety of forms. Similarly, negative perceptions of a nation may reduce national commerce.
Some companies take explicit advantage of their nation’s positive brand image by promoting the country of origin, along with their brands and products. For example, Swiss army knives take advantage of the perception that Swiss products are superior in precision. Similarly, the subscription shaving-products company Harry’s promotes its razors as “German-engineered” to capitalize on worldwide perception of German precision, whether or not German engineering makes any difference in the smoothness of a shave.
Some businesses might take advantage of the positive brand image of a nation or region by creating an undeserved or attenuated association.
Häagen-Dazs ice cream is a brand name that most associate with being from Scandinavia, which carries a positive wholesome dairy association. But Häagen-Dazs originated in the Bronx, a borough of New York City that is not well known for its dairy products.
The effect of a nation’s brand on its economy cannot be understated. While a nation’s brand certainly affects its tourism industry, the brand also has powerful effects on the value and volume of the nation’s product exports and foreign direct investment, which have a direct impact on the nation’s gross domestic product (GDP).
Just as businesses use methods such as advertising to influence consumers’ perceptions of their brands, nations may invest in campaigns to try to shape global views.
The branding of geographical regions is not a new practice. Various regions have famously employed branding techniques to boost their economies. Notable examples from the US include the municipal branding campaign, “What Happens in Vegas, Stays in Vegas,” and state branding campaigns such as “I Love New York” and “Virginia is for Lovers.”
On the world stage, major nation branding campaigns include “Come Back to Jamaica,” an effective campaign to boost tourism, and more recently “Make in India,” aimed at encouraging businesses to manufacture in India. As with a business and its brands, marketing metrics can help a nation manage its brand. Survey research can provide valuable feedback to nations about how they are actually perceived globally. The goal of the ‘Best Countries’ study is to provide nations with a data-driven model that demonstrates the direct and indirect impact of nation brands on economies and that offers prescriptive measures for change.
You can find details of our methods in a book co-authored with BAV’s chief executive officer John Gerzema, Best Countries: Defining Success and Leadership in the Twenty-First Century, and you can access the full ‘Best Countries’ study on the US News website at www.usnews.com/news/best-countries.
Our criteria for the inclusion of the 60 nations in the ‘Best Countries’ study were gross domestic product (GDP), tourist arrivals, foreign direct investment inflows, and human development. For the 60 top-scoring nations in these criteria, we surveyed more than 16,000 global participants (including business decision-makers and educated elites, along with the general public), asking about 65 core brand attributes—such as bureaucracy, strength of international alliances, education levels, economic stability, religious freedom, gender equality and richness of history, just for example.
We grouped the 65 attributes into nine general sub-rankings (see chart 1) that reflect how the nations were perceived in terms of (1) adventure, (2) citizenship, (3) cultural Influence, (4) entrepreneurship, (5) heritage, (6) movers (up-and-coming economies), (7) open for business, (8) power, and (9) quality of life. To arrive at the final country rankings, we applied statistical weighting based on the relative correlation between the sub-rankings and the countries’ per capita GDP at purchasing power parity.
It is possible for a nation to be perceived as strong in one sub-ranking and weak in another. Brazil might be viewed as strong in adventure, but not necessarily strong in entrepreneurship. Sweden might be viewed as one of the best nations in terms of quality of life, yet not necessarily dominant in terms of power. In addition, the nine perceptional sub-rankings correspond more to certain parts of a nation’s economy than to others. For example, being perceived high in adventure clearly supports greater tourism. A high perception of entrepreneurship correlates with high foreign direct investment.
A comparison of the detailed rankings of two countries—in this case, the US and India—may also be useful. As can be seen in the chart 2, there are a number of areas where the US and India rank high in the ‘Best Countries’ study and a number of areas where they rank low, even unexpectedly low.
Although the US ranks high for power (No. 1), cultural influence (No. 3), and entrepreneurship (No. 3), it is out of the top 10 for citizenship (No. 11) and quality of life (No. 14), and out of the top third for heritage (No. 22), movers (No. 22), openness for business (No. 23), and adventure (No. 27).
In comparison, India ranks in the middle of the pack for adventure (No. 35), citizenship (No. 39), open for business (No. 29), and quality of life (No. 26). However, India ranks in the top 10 for movers (No. 1) and heritage (No. 6), and just out of the top 10 for power (No. 14). Since India has many sub-rankings in the middle, India’s overall middle rank (No. 22) is justified.
Some people may not agree with their nation’s rankings, but the rankings are not a reflection of objective facts. Rather, the rankings reflect how a large sample of residents, business decisionmakers, and educated elites worldwide subjectively perceive the nation. Whether or not the perceptions are accurate, they exist. To the extent the people of a nation believe they are misperceived, they must work to change those misperceptions by improving reality. Which nations had the highest self-evaluations relative to how the rest of the world views them? Israel and India. That is, the people of these nations perceived their nations to rank higher than the rest of the world would rank them. The gap between self-perception and external perception suggests that these nations would benefit from well-designed and well-executed long-term branding campaigns. Whether they like it or not, nations have brands. The value of their brands has a direct influence on their economies. Like successful corporations, nations would benefit from creating effective nation branding campaigns to improve their brands.
David J. Reibstein is the William S. Woodside Professor and Professor of Marketing at the Wharton School of the University of Pennsylvania. The world-renowned expert on linking marketing metrics to financial consequences is collaborating with the Indian School of Business (ISB) to develop branding strategies for India.