Business Down Under
Australia’s European heritage and American-style entrepreneurialism is well balanced with Asian influence yielding a cultural blend of individualism and collectivism, celebrating the uniqueness and equality of every individual, while also promoting social mateship and strong teamwork. Global companies looking to enter the Australian market will find low cultural and integration barriers, which is why BAV ranked Australia third in the world in “desirable headquarter location”. Australia also has top BAV ranking scores in cultural influence (#10) and entrepreneurship (#9). These attributes help local companies attract global talent, support entrepreneurs, and draw investment.
Power, weakness, and opportunities for “The Big Four”
BAV ranks Australia’s banking industry as the safest in the world. Australia’s economy has been growing for the last two decades with low unemployment rates, contained inflation, strong government securities, and low debt, the banking sector is its linchpin. However, most bank brands are perceived as dishonest, and consumers exhibit a general lack of trust suggesting that brand building opportunities are critical to the long-term brand health, particularly in a world of mega-corporate institutions growing larger through M&A activities and takeovers.
This is a great opportunity for brands, especially those in the Banking sector. Optimistic brand messaging, warm and accommodating employees, corporate investment in socially supportive programs, environmental responsibility, and simple, personalized digital experiences are all important components in building trust. Both strong established brands have delivered cues triggering nostalgia and mateship, and together with newer brands that deliver meaningful differences, trust is built by communicating a friendly, relaxed, and informal tone. Getting the message right will help brands in global expansion, where they can deliver on showcasing Australian culture.
Brand equity & differentiation
Brands with strong equity are 3x more powerful in driving demand and increasing volume, while also over 3x more capable of justifying premium pricing. Brands that are well differentiated correlate well with a brand’s ability to convey meaning and saliency to their customers. Dan Murphy’s, Bunnings, Tim Tam, Qantas, even Vegemite are easily recognized by consumers and perform well on important metrics. None of the banks, insurance companies, Telcos or energy companies appear in the top 10 most meaningfully different brands, suggesting that some of the top Australian brands can improve on delivering clarity to consumers as to what makes their brands special.
Top 40 vs. the World
According to 2018 BAV rankings, Australia ranks as the world’s seventh best country. However, the Top 40 brands fall short of global competitors. The total value of the Top 40 brands is the lowest and the average value of a Top 40 brand is the lowest compared to other top ranking countries. Its high concentration of value in the top 10 brands representing over 75% of the ranking’s value is second only to Spain indicating a large discrepancy between the top brands and the rest. Its strongest sectors, i.e., banking, retail, and telcos, are relatively weak on the global stage. Alcohol brands like Foster’s, Bundaberg, and Victoria Bitter and Airlines like Qantas and Jetstar only derive a fraction of their revenues from global markets. For brands wishing to defend their market and consider accelerating growth through new market penetration, these statistics may seem daunting but can be overcome by concentrating on improving capabilities across business areas from logistics to customer care.
Australia’s GDP is the world’s 13th largest, the ASX has demonstrated consistent growth, and Australia is ranked at the very top of BAV Best Country rankings in Economic Stability. Unlike most of the countries with larger economies driven by technology or manufacturing goods, Australia’s core strength is derived from Banking, Retail, Insurance, and Telco. Missing in the industrial mix are technology brands, key drivers of most leading countries and easily transported into global markets. Though some of the BrandZ Top 40 companies have expanded into global markets, their success is still mostly predicated on locally derived revenues.
Retailers are strong
Woolworths, a global top 20 retail brand, and Coles are both in the Top 40. Westfield, Bunnings, and BWS are in the Top 20, and six more retail brands appear in the ranking. Brands including David Jones, Bunnings, and Harvey Norman are responsible for the high degree of consumer trust and collectively are responsible for retail ranking well above banks, insurance, telco, and energy sectors.
Reliance on China
Australia has not experienced a recession in over 25 years. Australia’s core sectors have all grown and one of the key factors has been the free trade import/export relationship with China. Nearly 32% of Australia’s exports (primarily raw materials) go to China and 23.4% of its imports come from China. As China grows, so does Australia. Strengthening trade ties further and ensuring a consistent market for Australia’s big ticket sectors will contribute to continued growth, with China certainly and for its strong brands, with the rest of the world.
Leading Local Disruptors
Dan Murphy’s, Bunnings, Qantas, and AGL are the only four of the Top 40 brands to also be listed in the top 10 disruptive brands. Disruption is about challenging the status quo of a category with a new offer and innovation, generally to the benefit of all consumers. It forces the evolution of a category in some significant way. Brands that are successfully disruptive can quickly gain momentum and fuel rapid expansion. Disruption also emerges from novel ways to use tech in new, useful ways. For Australia’s most valuable brands, fresh ideas, new approaches, and looking at the global markets to spark creativity will help both defend against foreign competitors while forming and strengthening relationships with customers.
Amazon, in just a short time, has become Australia’s second largest electrical retailer and third largest DIY outlet. Exhibiting adventurousness, creativity, and rebelliousness, Amazon scores high in Innovation, enjoyable brand experience, and differentiation leading to more than a third of Australians having already purchased products through Amazon, between 10%-20% regularly buying and a staggering half of Australians considering buying in the future. There is a clear sense of momentum and anticipation and consumers are excited, and expect Amazon to gain importance by leading the way into the future, sending a clear message to Australian retail brands...beware the Amazon tide!
For the first time, in 2016 online usage (2.85hrs/day) outpaced TV viewership (2.3hrs/day). 88.2% of the population are online and users are increasingly using mobile devices including smartphones (80%) and tablets (72%). Brands are increasingly investing in AI, ML and personalization technology. However, Australian consumers are also finding digital ads too intrusive and annoying, more so than the global average - a situation that increases the risk of damaging brands with digital expenditure. Successful brands deliver fun, adventurous, not-too-invasive, and respectful personal experiences across advertising formats. Consumers want digital experiences that are supportive, cohesive, contributing to quality of life. Brands need to pay attention to consistency and build storylines across media that are poignant and engaging.
Securing data is a core component of building trust with customers. Data breaches have occurred throughout the world and have become headlines with greater frequency in recent years. While everyone is concerned over their private information, Gen Z is particularly sensitive, ranking privacy as one of the highest priorities. As brands collect data on customers, privacy and security must be ensured and effectively communicated.
Successful, upstart brands offer improved simplicity and convenience and successful established brands invest in improved technologies designed to eliminate pain points. Whether banking, buying insurance or interacting with FMCG brands companies like Bunnings, Westfield, and Telstra understand that brand experiences should be seamless and hassle free. Making the interaction easy from the laptop to the smartphone helps improve brand experience, a key element in improving brand equity.
Fun & Adventure, the epitome of Australian lifestyle
Australia’s desire for fun and adventure is seen globally as one of its prominent strengths. Ad campaigns featuring happy and rebellious Australians with positive attitudes showcasing clothing and sporting goods have successfully penetrated global markets by delivering brands synonymous with fun and excitement. Companies like Billabong, Crust, and Pacific Fair are seen as highly creative and adventurous, Roxy and Tiny Teddy are synonymous with fun. However, none of the Top 40 Australian brands are highly ranked in creativity or fun. While fun and adventure may not be qualities inherently important to every category, there are certainly clever ways to latch onto these positive attributes to enhance and differentiate brands. Leveraging the global perception of Australian culture can be helpful to launch both well-entrenched as well as new brands onto the global stage, providing a meaningful point of difference for local industry.
Tell a good tale
Many of the Top 40 companies have storylines that span decades that often enter into popular culture. AAMI’s ‘Rhonda and Ketut’ and VB’s ‘Hard on thirst’ are great examples of brands with great messaging that have become cemented into the Australian landscape. Australians prefer humorous, optimistic stories that “feel” authentic, sincere and local. The key to achieving this success is by showing relatable people and scenarios across all media touchpoints, not just TV ads. However, over the last few years, Australians have increasingly reported less cohesion across formats. Overall, Australian consumers lag behind the rest of the world in recognizing fit across formats. To succeed, brands should focus on clear, engaging and linear storylines that can engage local audiences. In doing so, brands can transition from wallpaper advertising to deeply entrenched parts of the Australian consciousness.
The Power of Nostalgia
Many of the companies making the BrandZ Top 40 Australia Brands list have been around for decades, a few well into their second centuries. Some aged, successful brands deeply integrate into society and as children mature into adulthood, become associated with feelings of youth or with meaningful experiences that create nostalgia and a sense of belonging (to that brand). Nostalgia, as a brand strategy links age groups together around the brand and can be continually reinforced, further enhancing and reinforcing social connectedness. Shared nostalgia is a powerful marketing tool that reinforces social bonds, helping to build iconic brands that stand the test of time. Victoria Bitter, Bundaberg, David Jones, and Arnotts are just a few of the brands that have successfully utilized nostalgia to drive revenues and market share.
Owning your niche
Many of Australia’s most valuable brands occupy and dominate important niche markets. Not every successful brand must infiltrate people’s lives in multiple ways and strong niche brands know how to do a few things completely right rather than a bunch of things somewhat well. Owning a niche helps create the meaningful difference that drives Brand Value. Brands including Qantas, Tim Tam, and Billabong each do well in owning their niche, building brand value, and succeeding.
Analytics, not just Demographics
Data capabilities have become sophisticated allowing marketers to move past simple demographic shifts that target groups towards understand the psychographics of the individual. Instead of targeting school moms or blue collar workers, marketers can leverage data analytics to drill down to decision-making processes and communicate why and how brands can fill needs resulting in the feeling “this brand gets me.” Brands need to keep things simple and match the language of their consumers, continually test messaging over time and learn about what resonates best.
The Price of Paradise
One of the few drawbacks to the Australian lifestyle is it’s cost of living. Driven by the remoteness of the country, global imports often carry heavy taxes and manufacturing costs are amongst the highest in the world. Factor in stagnant wage growth, the increased costs for global travel, and the fact that home prices are high (Most Expensive Cities Ranking: Sydney #2, Melbourne #6) and the result is a country with one of the most expensive lifestyles in the world. While seen by many as fair compensation for living in paradise, this poses risks for brands. Many consumers buy on price pressuring marketers into deep discounting. But this is a race to the bottom. Instead focusing on brand building and consumer relationships over price reductions is the winning strategy for the long term.
Nothing irks a local more than the stereotype of the Australian as a shark-hunting, outbacker with “shrimp on the barby”. In general, Australians find stereotypes distasteful, and poking fun at gender, age, or race is seen as negative. Australia is a melting pot of cultures and shows great diversity. Due to this historical inequality, Australians are sensitive when it comes to race and equality and contributes to why they feel that a lot of advertising is significantly less positive than their global counterparts. Ads that poke fun “at” people or groups are distasteful and can quickly backfire. Times have changed, and so have Australians.
Where is Tech?
The owner of Domino’s Pizza recently said that his company was not a pizza business using technology, but rather a technology company delivering pizza. The impact of artificial intelligence, machine learning, and advanced technologies enables brands to get a 360-degree view of customers with deep insight to support key strategic decisions for investment. Brands that look to improve Brand Experience and other key metrics will increasingly need advanced tools to transform their paradigms to stay ahead of the curve and make a difference. Australian brands like Westfield, Billabong, and Chadstone are seen as innovative and increasingly, across the world, consumers are flocking towards innovation.
Take a stand
Australians care. From social equality to the environment, Australians share a culture of caring about the health of the planet and valuing fairness. Australia requires acknowledgement and acceptance of equality by its immigrants and new citizens. Similarly, ecofeminism is woven into the fabric of its economy; Australia ranks #7 globally in environmental caring, #8 as the best place for women to live and work, and #8 in Citizenship. Brands that take stands on socially relevant issues can find rich territory connect with their customers.
The Digital Workforce
Within the business community, financial activities (i.e., online banking, invoicing and making payments) was the most common internet activity (87%), followed by digital enabling of employees to work from home (46%) which was most prevalent in the banking, insurance services, Information media, and telecommunications industries. Many leading global and local companies have invested in technologies allowing their employees to improve quality of life by reducing the pressure, time and expense of commuting to work. For Australians who value a less stressful lifestyle, enabling digital workforce capabilities can be a great way to help employees balance work and life, while building employee loyalty, which can be highly profitable as turnover, recruiting and training can be costly.
Today, Australians have a mix of ancestries that include native and UK roots along with some Chinese, Italian, German and others. Not surprisingly, Australians aged 20-44 make up the largest segment of the population in large cities as older Australians generally live in rural areas. BrandZ winners understand that context is critical in delivering brand message based on their diverse interests and needs.
Diversity & Equality
More than half the population identifies as Christian with only a small 5% representation of Islam, Hindu, Buddhism, and Judaism. The second largest group of Australians do not identify with any religion or are atheist. Nearly 20% of the population has converted from one form of belief to another, and in general, Australia is considered to be a secular nation. At the same time, as equality and diversity are lauded, there are few if any pressures to associate with any organized religion. Advertisers recognize that religion used in ads can be attractive if delivered with sensitivity and humor. For example, Australia’s Lamb industry has delivered a campaign using religious figures to convey a sense of belonging wherein everyone agrees that Australian lamb is delicious, “tastefully” feeding into the Australian’s enjoyment of good food and togetherness.