What does the chart show?
The chart shows the percent change between 2016 and 2017 of a selection of the biggest global brands in market capitalisation and the consumer perception of brand value. The brand value data originates from Brand Z’s annual Top 100 Most Valuable Global Brands, determined by calculating each company’s financial value (revenues and profitability), and then multiplying this by the brand’s ‘contribution score’, a measure obtained through the survey of 3.1m consumers in 51 countries. Market capitalisation figures are of each brand’s parent company, taken on July 12 of 2016 and 2017.
Why is the chart interesting?
Reflected in this chart are some of the major current trends in the world economy: the rise of tech is evident, with companies such as Facebook and Apple dominating the right side of the chart. Traditional telecommunication companies are faring much worse. With decreasing stock prices and brand perception, companies such as Vodafone and Verizon are increasingly feeling pressure to diversify in order to remain competitive. The decline of bricks-and-mortar retail stores is also evident with companies such as Walmart and Costco. Once considered giants in what was the biggest consumer market, they now face declining valuation figures, low to negative growth in consumer perceptions and are investing heavily into their online offerings in response. In their place online retailers such as Amazon and Alibaba have emerged, reflecting the shift in consumer habits towards online shopping. Interestingly, Alibaba, the company with the largest increase in its market capitalisation, saw minimal increase in brand value. However Amazon, whose market value increased by only half of Alibaba’s gain, experienced twice the growth in brand value as Alibaba. This may be reflective of Aliibaba’s predominantly far-eastern consumer base and the relative high proportion of western consumers polled. Indeed Alibaba’s low market share in nations other than China is illustrated by the generation of only 10% of their revenue from international commerce in 2017 so far. In their operations outside China, Alibaba often serve as an intermediary, working with other platform retailers such as Amazon and eBay to connect buyers outside China with sellers inside. Although these activities obviously increase their profits, it obscures the brand from western consumers.