Benefiting from low-cost manufacturing and economies of scale through volume-driven strategies in their huge domestic markets in China, these previously unheard of brands are making a strong impact in international consumer markets by providing decent quality products at very affordable prices. Having achieved sizeable market shares, the current strategic priority of these Chinese companies is to strengthen their brand equities and command the respect and price premium enjoyed by Japanese and more recently Korean brands such as Samsung and LG.

Sony, Panasonic and Sanyo historically enjoyed strong brand premiums in global consumer markets but are facing rapid market share erosion due to the aggressive “more for less” value propositions of the Korean and Chinese brands. High cost manufacturing and distribution structures and excessive product proliferation have meant that these Japanese consumer giants are pricing themselves out of the market and therefore need to rebuild their market shares to benefit from volume and consumer reach. Their strategic preoccupation is to build on their brand leadership and regain lost market share, i.e. market share leadership.

From the contrasting fortunes of Japanese and Chinese brands over the recent years and those of US and European brands in the preceding decades, one can deduce the predominant business challenge of any company: What does it take to realize sustainable and profitable growth? Is it brand leadership or market share leadership? Benefits of brand leadership include strong consumer awareness and recall, price premium, and loyalty. Coupled with opportunities for brand stretching or extensions, brand leaders tend to enjoy profitable growth in most market segments. Market share leaders on the other hand tend to enjoy broader market penetration due to ‘value’ pricing but may not benefit from higher margins and/or consumer loyalty.

In the increasingly competitive global market landscape both brand and market share leadership are needed for sustainable and profitable growth. In other words, global and regional companies need to adopt a market coverage strategy where they have products and brands in both ‘volume’ and ‘value’ customer segments across key markets. These translate into profitable growth opportunities by enabling companies to enjoy both market share and value share. The global battle between Creative’s Zen versus Apple’s Ipod in the portable digital entertainment space clearly illustrates the importance and benefit of aligning brand leadership with market share leadership. Apple despite being a late mover has leveraged on its strong emotional branding and iconic design as well as an integrated market share leadership platform comprising of a strong partner eco-system in hardware, software and services to clearly dominate the portable digital entertainment market.

Market share leadership provides the benefit of volume and is driven by low cost manufacturing advantage, efficient supply chain management, and strategic outsourcing and strong channel partnerships. Brand Leadership provides the benefit of value and is driven by product innovation, design leadership, ownership of dominant technological platform, and user friendliness.

Are they any examples of brands that have achieved this quest? Yes, Nokia in mobile telecommunications, Intel in microprocessors, Nike in shoes, Microsoft in computer software, Coke in soft drinks and more recently, Google in the online search space. These companies are in an enviable position of having the largest market shares across many product/market segments globally and enjoy price premiums which translate to healthy bottom lines.

Market share and brand leadership can be gained and lost due to the fast changing competitor and consumer landscapes. Take the mobile phone market as an example. Motorola was clearly the market share and brand leader in mobile phones until the mid nineties, only to be upstaged momentarily by Ericsson and then eventually, by Nokia which has been in a commanding position in terms of brand and market share leadership in the last 5 years. Nokia continues to enjoy relative price premiums for its entire range of mobile phones ranging from entry level to high-end state-of-the-art 3G phones and strong customer loyalty which translates into sustainable and healthy profits. In fact, Nokia’s successful launch of its luxury mobile phone brand, Vertu, in the couture, lifestyle mobile space is further testimony of its dominant and sustainable market position in the mass and luxury segments.

In consumer electronics, Samsung having benefited from heavy investment in innovation, design and manufacturing in the last decade, is strategically investing in branding to enhance the brand image and equity of its extensive consumer product lines. Samsung realized many years ago that ‘playing’ the market share game in the very competitive consumer electronic space is going to be very costly and unsustainable in the long run. Rather the focus should be to leverage its significant market shares in key consumer segments (e.g., mobile phones and flat screens) to build brand equity. The reward - benefits of brand leadership - and rising valuation of the Samsung brand. In the 2007 Interbrand’s ranking and valuation of top 100 global brands reported in Business Week, Samsung was ranked No. 21, ahead of its main rival Sony which was ranked 25 - quite an achievement in about half a decade.

What does it take to achieve and sustain the twin strategic pursuits of brand leadership and market share leadership? Looking at the successes of brands such as Nokia and Nike in the B-2-C space and Intel and Microsoft in the B-2-B space, these companies have in addition to aggressively pursuing cost reduction, innovation and market coverage, have also clearly articulated and executed on their strategies to strengthen customer intimacy. This is the ‘strategic glue’ that binds consumers emotionally to these brands and helps build customer ‘heartware’ and loyalty for these companies (see Figure 1)

Figure 1. Sustainable and Profitable Growth

Strategies for customer intimacy that is, building ‘heart share’, include investment in emotional branding and experiential marketing, developing strong brand communities and dedication to customer service and care. A good example is Nike’s heavy and strategic investment in Nike Towns (“experience centres’), its interactive, online website that allows customers to personalize their shoe designs and colours, and generous sponsorships of grassroots organizations and community events. Nokia with its strong emotional brand advertising campaigns and Nokia centres which in addition to being aftersales service touchpoints also double up as concept stores and provide a cost-effective base for building a strong brand community among Nokia mobile phone users. Singapore-grown OSIM is another good example of a company which has successfully anchored its lifestyle products business strategy with a strong customer intimacy platform delivered through its experience-centric retail stores. Similarly, Intel and Microsoft have strong corporate social responsibility platforms and have made conscious attempts to reach out to PC end users and grassroots communities, while focused on nurturing strong B-2-B partnerships to strengthen their market position and reach.

In a nutshell, companies aspiring to achieve sustainable and profitable growth need to align brand leadership (value share) and market share (volume share) building strategies with a strong customer intimacy (heart share) platform to create satisfying, meaningful and memorable brand experiences with key customer segments and with the community at large.